we're talking about jim bullard. what has he been saying and why do we think this is a change of tune in the making? >> jim bullard led the way back in the second half of 2021 starting to talk about needing to hike rates, do it more aggressively through last year. when he says that there are brighter signs of inflation and we've all been talking about goods prices falling, core services, the monthly gains not as biggest they were, he talked about inflation expectations looking more moving in the right direction, he said 2023 could be a year of disinflation. let's listen. >> the point of this is we have gone all the way back to the pre-inflation stock level of inflation expectations macro theories tell us that bodes very well for the future of actual inflation. this is a good signal for disinflation in 2023. >> let's look at the dot plots. he said the fed is getting closer to restrictive, they still have to get to 5.1%. that's the level he things will be high enough which is the median. for this year. he still sees ra

both of these, it seems like they are outweighed by people who want to slow down, jim bullard said no, let's do 50. shery: they want to stay the course. the message? do not fight the doj, no change in the policy status in the tweak in the program, what does that mean? kathleen: it means they are doing everything they can to keep the 10 year jgb, its range. they widened the band and they want to keep it there. they wanted to be sustainable until the next governor takes over in april. this loan program makes it easier and cheaper for banks to borrow from the be oj to buy bonds. get a return, not a huge deal but it's making them some money and at the press conference yesterday, one of the key things the governor said, they cannot rule out imagine if you are a bank and you get a negative rate tomorrow. when you pay it back, you pay back $95 billion. it's a tweak, it's technical. it sends a signal they could do what they can. markets say inflation is rising, there will be a new yield control, it is not sustainable. there could be a collision course in the markets. shery: capping hayes. --k

mike: that was exactly the message jim bullard tried to give today. you're getting ahead of yourself if you think this is anywhere close to finished. even if you are looking at the results of the core today, that is still 3.7% more than the fed's 2% target. they have a ways to go. expect that housing will start to fall out. it is a matter of the way the index is constructed. they are looking beyond that, there are other areas in which there is inflationary pressure, and they have to keep working to get that out. kriti: that is just the u.s. side. we have not bothered to open up the pandora's box that is china. michael mckee, we thank you for your time, insight, and the information you have. joining us for more of that, quincy krosby, a strategist of lpl financial. i believe her first time on the show. thank you for joining me here on bloomberg markets. let's start where mike picked off. are we looking to step down too fast when we are looking at still a very hot housing market and hard labor market? quincy: no, 25 basis points, the market has been pri

jim bullard once rates above 5% as soon as possible. we are counting down to the bank of korea's rate decision and a possible end to its current tightening cycle. >> we have the open of the asx 200 in australia. we did have futures indicating gains as well. the focus on the u.s. inflation front. we did see signs of prices easing. possibly we could see a slower pace of rate hikes in the weeks ahead. the aussie dollar now trading fairly flat. the focus today on equities as well. risk on treating that. -- trading. we saw big moves in the big tech session overnight. materials, you can see they are a little bit high today. 1.5% away from the all-time high for the materials index. the reason we have seen 4% of gains for the mining index is down to the optimism about reopening in china. we have some details from the imf highlighting how important it is for the global economy, need to 2023. they say it is the key factor, china's pivot away from covid zero policies. in terms of what else we are watching, we see equities mostly pointing high toda

kathleen: jim bullard said he still thinks you've got to get to the terminal rate. he's in the 5.1% cap. get there as soon as you can. don't leave the sense of, well are they trying to achieve a soft landing? he did not say that. that is the concern that some fed officials have and the fact that services inflation is staying high. and jay powell's key gauge which is core services, housing went up .1% showing it has both sticky price pressures like wages. and labor market is still tight. that's why a lot of people say that 50 basis point hikes is on the table. the two bigger ports are out. we will see how that goes. the boj is barely putting his foot on that path. it is clearly leaning in the direction which so many people say it needs to go and has been needing to go for a while. rishaad: kathleen, i was going to ask you what the skeptics are saying. we have not got all day. give us a sense of a few of them. kathleen: jim bullard is not a skeptic, but he does think that this is not the time to let up. did he say anything about a 50 basis point hike? the boston fed p

jim bullard overnight made the point money supply is starting to contract across the u.s., that would lend itself to slowing and that the fed will pause at some point. right now the story is expected to be another strong u.s. jobs figure. that will pressure other central banks. dani: maybe the markets will stop pricing out cuts. it feels like that will not happen. enda, thank you come our chief asian correspondent. republican lawmaker, kevin mccarthy, has been blocked for the 11th time in his bid to be the speaker of the house of representatives. the group of 20 gop -- let's bring in derek wallbank and get into the drama. it was six votes that failed, and then 11. are we any closer to getting a speaker? derek: what they say, yesterday was deja vu all over again for kevin mccarthy. more votes and more losses. he was anticipating these. there was a framework that is on paper of a list of concessions that the would be speaker is giving to his right most flank to get votes. even if that goes through and ok , he is still not going to get all of the votes he needs to be speaker. the house c

we also had jim bullard out yesterday, the fed needs the push into restrictive territory and make sure they get the job finished. it seems to be confirming that slowdown in the u.s. economy. on the other hand, even though the fed is talking about slowing the pace of rate hikes, they are saying they are not finished yet and interest-rate still going up. dani: even though the market starts to bet a lower terminal rate, we are now below 4.8%. thank you so much as always. new zealand's prime minister just sent out she is stepping down. it is a shock to the country. >> this summer, i had hoped to find a way to prepare not just for another year, but in other two. -- another two. i have not been able to do it. so today, i am announcing, that i will not be seeking reelection. and that my term as prime minister will conclude no later than the seventh of february. dani: touching statement there. let's get to then wescott. -- ben. she was a progressive female leader, something we rarely see among the worlds, country's top leaders. what was her popularity at home? what drove her to this resignatio

jim bullard will be speaking at an event appropriately. >> i wonder how hawkish he will be.n lots of fed speak about over 5% let's see how much that confirms. coming up congressman brendan boyle of pennsylvania will join balance of power. diane dyer headed to the cable. this is bloomberg. -- cayenne dyer headed to cabell. this is bloomberg. ♪ as a business owner, your bottom line is always top of mind. so start saving by switching to the mobile service designed for small business: comcast business mobile. flexible data plans mean you can get unlimited data or pay by the gig. all on the most reliable 5g network. with no line activation fees or term contracts. saving you up to 60% a year. and it's only available to comcast business internet customers. so boost your bottom line by switching today. comcast business. powering possibilities. >> from the bloomberg tv studios and washington, d.c. into our tv and radio audiences worldwide, welcome to bounce up -- balance of power. we are here for david westin today. compacted groundhog day. if you are playing along at home, they are

alix: but then you have jim bullard saying that we have to lean into the high side to avoid the 70's and the raise of 5% plus core inflation is not moderated as much. the bullish and the hawkish arguments are still there and the markets are passing that by beer he guy: absolutely. the -- we continue to see europe outperforming and we see evidence of that today. you will see the fed delivering what it will deliver and the dollar will rollover and that is good news. this continues a theme running since the beginning of the year which takes to the question of the day, sell the u.s. buy the rest of the world? does that concept has -- have legs? sarah joins us now. sarah, sell the u.s., buy the rest of the world? sarah: that is a tough call. if you have done that on the first day of the year you would feel good. i think we are having a little bit of a relief that winter has not been as terrible as people expected. if there is some feeling that you might get moderation in how much rate hiking that we will get going forward. i also think that the u.s. is healthy and i see issues outside of

we will be joined just before break and jim bullard is speaking to the fed president. he is speaking in wisconsin. a few things he is noticing. fourth-quarter gdp gdp growth is looking better than expected and the global outlook has brightened. he is at europe and china. he says hat household savings will be a bullish factor entering between 23. he seemed positive. this is bloomberg. >> asset manager's ceo joining bloomberg tv. >> keep you up-to-date with news from around the world, here is the first word. the u.k. in the european union are entering intense negotiations to end their dispute over brexit. the talks are set to begin next week. the disagreement has to do with trade. both sides are agreeing to allow northern ireland to remain in the custom arrangements paid so far, the u.k. has failed to implement part of the accord. more pressure is being heaped on to the government. some 100,000 civil service announced plan to strike next month it that news came after rail union signaled they are far from resolving their employment problems. in ukraine, fierce fighting is

because jim bullard the fed president is pushing back. enough pricing in the markets for the upside risk of inflation he says there's probably too much optimism. inflation is probably going to return to 2% goes onto say policy is going to have to be higher for longer to continue to put downward pressure on inflation. recession had diminished the last 90 days and second half gdp is going to be stronger than the first half this inflation he says will not be a smooth line he does not rule out a 50 basis point hike and said specifically he was asked and said it doesn't matter much. he prefers front loading so, scott, another day with better inflation news and another day where officials are heading to 5%. >> what you threw out to us at the beginning of this week if not the end of last week, the idea the fed isn't as data dependent as one would like to believe. and let's also note if i'm wrong correct me, please, if bullard doesn't have a vote. >> you know who has a vote, the 20th member of the fomc is the market take a look what's happening w

. >> that was jim bullard of the st. louis fed had >> he said exactly what chairman powell said in the news conference, which is we are getting closer to sufficiently restrictive. that is precisely what the chairman had said in the news conference that market will do its thing. equities are unchanged. good morning. the s&p 500 is going nowhere. unchanged on the session. yields are up basis point. 370 253 on a 10 year. just to break it, 105 for now. 10497. we are negative a quarter of 1%. a problem in the euro zone even if cpi is fading. what's the story in europe? let's get to southwest. pulling a number on things, the stock is down. we expect a net loss in four q. a pretax negative impact with $75 million with operational disruptions through december. putting a number on those disruptions, canceling more than 700 flights between december and december. are they going to get a bailout during the pandemic? they all did. this is what we were talking about. i was listening. >> the capital return programs over the last five y

this jim bullard this afternoon said disinflationary year. >> and you have cash kari on the other side and the fed has tried to tell you, again and again, we have to beat inflation and i don't see that as a short-term -- i mean that is a difficult thing to do so i think we're higher for longer. and so just as tim was saying, if you're underpinning is a lower interest rate, so you discount those future earnings that even if they do come will be worth less. so i just think you have to be in much lower p.e. stocks and the higher ones, even though they're down, they never should have been where -- when money was free, you could pay anything and that is what people did. they never should have been there. so they're down 60, it could be down another -- you know, 40, 80. >> are there any good valuations >> yeah, the point we were trying to make is the fed could stop tomorrow and the stocks are still expensive. rates will stay higher for longer because they've told us that the jobs or adp number made the jobs more difficult and you have other central banks around the world acting in kind and s

we're hearing from several fed officials today about an hour ago, jim bullard, president of the federal reserve bank of st. louis, non-voting member. he said the most likely scenario is inflation remains above 2% but the prospects for a soft landing are pretty good. what are the chances the fed can pull this off? get inflation from 6-plus percent to 2 ferricks per without recession, maybe. right before the open, we heard from philadelphia's patrick hark er, he is a voting member and said it's likely going to take a couple of years to get to 2%. so the point is, again, clear trend, inflation is coming down in december you're looking here, prices rose 6.7% annually. that's the lowest in 14 months so the president, joe biden, took a victory lap. >> even though inflation is high, and major economies around the world is coming down in america month after month giving families some real breathing room and the big reason is falling gas prices. lauren: energy prices did fall 4.5% from november to december but the market is saying we have a long way to go. food and rent big drivers of inflation

louis fed president jim bullard saying several factors may combine to make 2023 a disinflationary year factors are the fed's front loading and aggressive policy rate hikes he says the policy rate is not yet sufficiently restrictive, but he said it's getting closer. and he showed one of his charts, remember the one in november we talked about this idea of a range of 5 to 7% there's some suggestion that maybe 5% is closer -- or above 5% is where he thinks it ought to be. the policy rate, he says, will become sufficiently restrictive during 2023. inflation remains too high, but he notes that it has declined recently inflation expectations are back to relatively low levels, again, crediting the fed's aggressive rate hikes for that. the second half of gdp growth, he is making note of the stronger data we've had. he said it's going to be stronger than the first half, but he does see growth slowing down to being just below potential growth the current labor market situation, however, he says, is unprecedented. and he's concerned about the possibility of increased financial stress, but notes t

i would be honored to sit with a phd from indiana, huge respect for jim bullard.m line, review this, he was moving us up 5, 6 headlines of 7% and now we are managing down to 5%. jonathan: that's in their projections. tom: mckee would say it is in the dot plot. jonathan: they are looking at the data, it is coming their way, sing disinflation trends emerge. unemployment is still pretty steady. you are looking at the data and they tried to wonder whether they need to be tighter to keep things tight or if they can sit along right where they are another 25 basis points. tom: i get all the hate mail but we have a guest coming on right now who is perfect for this. jonathan: you are distracted enough. tom: i am looking at twitter spaces, then is here and he puts us out with our title for our soccer thing. soccer for dummies is what we are going to call it. our first guest can be the guest right now. jonathan: bloomberg tv we get pulled over every morning without pharaoh acting as the --ferro acting as the designated driver. we have seen some real dollar weakness come thro

jim bullard of the st. louis fed coming in at 1:20 trying to follow-up on what you were talking about yesterday. they talk about terminal funds right in the balance of risks being friendly with inflation and not necessarily torpedoing in the economy. perhaps looking up today a little bit more. . jonathan: here's a line from morgan stanley. let's get the russ's view on that. >> there's this tension in the federal reserve. if there is not a new thing. you're concerned about the market getting ahead of itself, whether that is a function of the stock market going too high, credit markets getting two types. there is a concern that if financial conditions ease off too much, is that going to hamper their fight against inflation. tom: i look where we are. we have to piece this together. you have the responsibility to piece it together with portfolio allocation. how are you reallocating? russ: we are going in 23 the way we left 22. we are not making a major change. what does the portfolio look like? underweight equi

louis fed president jim bullard said he thinks the market is too optimistic about inflation in failing fed have and what if the market is wrong? steve liesman joins us now with that i'm more about commodities again because of china, steve. i have some empathy for this. >> it's an interesting idea, joe, for sure. let's focus now on the gap between the fed and the market on the outlook for rates it continues to widen nearing levels we haven't seen since this summer raising questions whether the fed is going to need to respond perhaps pushing rates even higher or if it will ultimately relent. as of yesterday the fed funds future markets look for the overnight rates to end at 4.39%. the feds projecting 5.31% so you can see the gap there. 74 basis points. among the biggest we've seen since the summer when it was 1.14 percentage points the market -- separating the fed and the market that led to fed chair jay powell's speech where he said the fed will be focusing on inflation. it worked then and rates rose. former fed vice chair told the exchange yesterday the fed may have to do more than tal

speaking of change at fmoc kansas is the rotating position off along with jim bullard and cleveland's on the phone to discuss this is joanne feeney and zachary hill these are the inaugural appearances. it is important for the new year it sets up the next 12 months, joanne how is it looking for you? >> good morning, joe we will still have the fed news and risk of recession and concerns of interest rates still pushing markets around investors should expect that volatility in this situation, labor markets continue to be tight the fed made it clear they will get the inflation under control. they need to maintain that credibility. they are facing that with the shortages in the labor market which will keep pressure on upper wages. they have to hold firm are raising rates and holding it high for as long as it takes investors should be careful to read into the data that might make them think rates will be cut soon we have labor hoarding in the market which is a signal that firms might be talking about threat of recession, but ultimately think it is a good idea they hang on to the labor they h

we heard from jim bullard last week and he said we are getting closer and everybody's said we're gettingctive. do they know what sufficiently restrictive is? for a lot of people we might have been near 100 basis points. lisa: lori calvasina said the dirty secret out loud where she said she is surprised with some of the questions that have nothing to do with inflation. people are looking for anything other than that to talk about. economists said we have no idea, we have been terrible with inflation. perhaps people are throwing up their hands. tom: to get in front of the importance of thursday. the 18th is retail sales, the state of the american consumer, which falls into the gdp gas. those are the signposts around the way. jonathan: this is what the equity bulls want come unemployment at 3.5%, growth resilient, and inflation to profession -- inflation to soften. is it sustainable to expect wage growth to accelerate and unemployment not to climb? unemployment dropped to 3.5 and wage growth softened. connect continue? -- can that continue? it is way too early to make that call. lisa: can y

testified, and this, i would say, don't you have better things to do >> meanwhile, jim, getting some fed speak today, bullard'sospects for a soft landing have improved markedly >> yes, yes. >> we'll get laurie logan later today. and then brainard tomorrow that's the one people are watching but coming from bullard, who -- >> i love that >> -- at least to date has been a pretty sub botubborn hawk >> st. louis fed does the best, most rigorous work, and i have often felt that bullard, post-the 2015-2016 period where he was not as concerned as i was about what was going to happen >> you were feuding with bullard back then. >> bullard had a full head of hair, and i had nothing. that was really the issue. >> okay. just about that. got it >> i think that bullard is probably, again -- i think he's the guy. and i felt that way now for seven years. he does incredible work, and i'm glad to hear him say this, because the last thing -- i thought he was doing it with a six fed fund six fed fund david, you and i are saying, which one of us is not staying? we had to cut "squawk on the street" to two people. >> easy there. i me