with us is michael mckee. michael: we are looking for the numbers as they come out.lding permits up 10.4% on the month. good news in terms of a december building. housing starts dropped 6%. we have a trade off there. it looks like contractors think we are going to be building more houses but we will see smaller contribution to gdp in the first quarter because we see january numbers falling. looking at this quickly, single-family housing starts, 12.2% above the rate in december. below the rate. i read that wrong. for multifamily dwellings, down 402,000 dollars. 2.3% decline in housing completion. everybody wants to know about jobless claims. jobless claims coming in at 861,000. tom's font hopes of a better number go by the board. last week revised update hundred 48,000. not only did we lose the seven handle on jobless claims, they go up to 848,000 for last week, and 861,000 for this week. still a lot of people without work. i want to mention a couple of other numbers. that is the philadelphia fed business outlook up to 23.1. the forecast was for a forecast -- was for

alix: and it will only get wider, michael mckee joins us now. michael: good morning. the interesting number in the existing home sales number is that revision, we revised from 6.76 26.75, which means when we got the rate for the month of january, it was an increase of .6. even though it would have been a decrease if the numbers had not been revised. we are getting stabilization. single-family home construction -- sales rose by .2%. condos, co-ops by 4.1%. those numbers go back and forth eight -- each month. mortgage rates and existing single-family home sales, rates have flattened. so have home sales. inventory, a home supply .9, they have gone down significantly. that is one of the things weighing on home sales and prices. the median price goes down to 3907. maybe people are getting out of it. pmi is good news for the service industry and manufacturing industry, both of them up on the month. that puts the composite tire. at 58.8, this number is not widely followed on wall street. guy: we focus on the pmi and we watched with envy what is happening. talk about that tom

michael mckee is always with the smart conversations. time flies. rs in for the gentleman from dallas. michael: yes, who was the gentleman from boston and new york before that. we have known him for a long time. he is a symbol that life goes on. robert kaplan is the president of the dallas fed and a kansas city chiefs fan. we thank you for getting up and continuing on even though that was a rough one. pres. kaplan: there is always next year. we will be back. michael: there is a question of what kind of inflation dangers are there from additional government spending. if inflation does break out, you have to deal with it. what is your estimate? if we get the kind of additional stimulus from washington, what kind of inflation danger does that present? pres. kaplan: there is no president that if -- there is no question that if we are able to get people broadly vaccinated and defeat the variants of the virus and we have a reopening, that along with fiscal support will mean we have strong gdp growth. we will make big improvements on unemployment. it would

tom: let's stop the show on radio and tv, michael mckee last question to professor summers? jonathan: i think it's more likely that michael mckee gets the fed chair than larry summers. i'm sure mr. summers would be very upset about that. yields lower. a break of 1% on two year yields. tom: this is math. there's something about the fear of zero, the fear of negative. 0.10% is a big deal. it was just for a big but -- it was just for a moment. jp morgan i think it was two summers ago. tom: a wall of money. jonathan: nowhere to go. tom: a cash spiral to deflation. jonathan: lisa, do we have a debt shortage? lisa: this is the question. it is a structural issue. the u.s. government is doing a number of aspects that are technically leading to a demand for a place to put cash. this is the backdrop of an economy that is not recovering as quickly as people would like. it: 30 a.m. we have u.s. initial jobless claims. the are expected to come in a little bit. 750,000 new jobless claims we are expecting to get. why this is such a big problem, job creation is not nearly fast enough. 28,00

not michael mckee. thank you very much. joining us now to get perspective on this is the global head of fixed income at columbia. the consumer is not going to have an exact handle on where inflation is but there's an expectation that inflation will go higher. the curve is steepening today. where do you sit in this inflation debate? >> two critical points on inflation. the first one is that the signal to noise ratio over the next six months will be incredibly low. there will be a lot of inflation data volatility including the university of michigan survey that you talked about that will show inflation perking up because we had such a catastrophe last year, the year on year effects of that are coming through. we have heard powell say loud and clear they will not react to that from a policy standpoint. that is transitory. the second piece that is important, and this is where the market has missed a little bit. we have pent-up demand in the economy, but that demand is not in goods but services. goods is where we have seen the i

michael mckee, looking at the bundle of economic data, can you signal a better american economy? slightly. you cannot say it is hugely better. the numbers in terms of the headline numbers seems to be very much based on transportation equipment. cars-vehicle manufacturing and orders down by .8%. we have seen a shortage of chips. do we see a change in the outlook? part to say if we will see shutdowns of factories because we can't get the parts. nondefense aircraft and parts, new orders up 389.9%. that is boeing. any time they get a shift in the number of orders and it does not line up exactly what the durable goods numbers it has a huge outsize effect on the durable goods orders. lisa: if you look at the trajectory there is really encouraging numbers here. this is a huge surprise. i understand about the potential disturbance with respect to the storms. claims dropped from eight revised 4.5 million to a lower than expected four one million. people still on the -- 4.4 one million. people still on the unemployment rolls. are people getting jobs or is it too early to make any conclusio

michael mckee joins us. michael: it is two steps forward, one step back situation. without the economic surprise index, the gdp turned sharply up after strong retail sales number and they are flattening out. the numbers we got today were not good for the economy. jobless claims 861,000 up from 848 thousand, which is a revision -- 848,000, which is eight revision. building permits were up 10.4%, there are homes in the economy but contractors taking it easy. philadelphia fed 23.1, reasonably strong but down. we are importing inflation, the weak dollar enterprise and energy costs sends us to the first zero year gain for the import price index since last january. energy prices have only gone up. jobless claims, it is hard to get any movement in the chart because the beginning of the year, beginning of the pandemic number was huge. we had a 700 handle last week and that was revised to 840 eight and now we go up to 861. we are going in the wrong direction, a lot of that might be fraud or catch up. this was the week for the payroll survey for february. the one other thing

here is mike mckee. michael: ppi, everybody is keeping an eye on inflation. you talking about it in the last segment. 1.3%, that is a significant jump from the .3% in the prior month. without food and energy it is up 1.2%. we also want to check out the ex-food, energy, and trade, 1.2%. big jump even if you take out gasoline prices that have jump significantly. we seem to have some pressures at the lower end of the economic scale. we will continue to watch that. let's take a look at retail sales. retail sales up 5.3%. this was expected but not that much. the forecast was for 1.1%. you had a number of things happening for the month. seasonals, we had a terrible year last year and the seasonal suggested there may be overcompensation. the other thing is you have the $600 checks. people spending money. taking a look at where the money was spent. i want to look at gasoline stations, gasoline stations up 4%. that is a price change. we know gasoline prices went up. electronics and appliance stores up 14.7%. the narrative in december was people stopped buying stuffer

with your economic data, here is michael mckee. hello. one is keeping an eye on jobless claims and the feeling is that we will get a big drop in jobless claims, and we do. 779 drops, low 800,000. the forecast was 830,000, better than people anticipated. the thing you have to keep in mind is that we are not out of the woods, and you and i will talk about this later. the airline announcements, american airlines, 13,000 job cuts coming. united, 14,000 if they do not pass additional stimulus. this is a bit of good news going forward, that is a drop of 33,000 from the previous week's level, so we will keep an eye on how this is going. farm productivity was expected to fall and falls more than expected down 4.8%. the forecast was for a 3% gain as labor costs rose 6.8%. the productivity number is hard to interpret because layoffs and the incredible swings in gdp. we saw the big drop in the third quarter and productivity went way up, and now we have come down in terms of gdp and productivity. you have to dismiss that and look beyond it. jonathon:

from our, let's break it down with michael mckee. looking for inflation, where is it? michael: we are looking for the economy to run hot and it is not. wholesale is pretty much trade and imports. the fact that the inventories did not rise as fast as sales may be good news for imports going forward. we have had a problem getting imports into the country back up. that may raise prices, but right now, we are not seeing it. we see cpi for the month of december or january come in at .3%. that is on the forecast. at 1.4% for the year, but the core rate is the surprise. it is flat. it did not go up. that drops from 1.6% in december to 1.4% this year. gasoline, the one thing that went up a lot. 7.4% for the month. it does show you what is happening with the economy and why we are going to see inflation go up. in the past, last spring, we saw a big drop in cpi deflation as the economy shut down because of the virus. those numbers are going to start dropping out. they are going to start dropping out of the calculations and we are going to get a higher inflation. 2.7% by the end o

tom: claims coming up later with michael mckee to attend that and the jobs report tomorrow. what is remarkable about this thursday is i don't think i have mentioned gamestop yet this money. jack ablin has new goodie and mathematics at investor that means he writes really sharp research notes and has but that cresset capital mind to what we have all witnessed with gamestop and robinhood and the rest. we get a briefing from the mathematician this morning. jack ablin, let me go to the math of a no free lunch. there we were four years ago at schwab, free commissions, fidelity, free commissions. robinhood started it all, free commissions. how is that free lunch going? ? jack: what we found where the free commissions combined with the fact that a lot of professional sports were sidelined, las vegas mothballed and a lot of people in home with stimulus checks found, the odds are better betting on wall street than they are betting with sports look. tom: jack, what are the lessons learned? if we assume robinhood is somewhat co-opted as they go public, how do you perceive the free comm

let's get to the headlines with michael mckee. michael: you're not going to get a whole lot of jay powell's prepared testimony. we heard pretty much everything he's said before. the path of the economy continues to depend significantly on the course of the virus and the measures undertaken. the recovery remains uneven and far from complete, and the path ahead is highly uncertain. color him cautious. there's almost no engine -- no mention of inflation, while consumer prices have rebounded some, but remain below target. the main focus is unemployment. millions of americans remain unemployed. those least able to shoulder the burden have been hardest hit. there's a bit of optimism. guy: is he saying what he's said before? is that a tacit acknowledgment that he's ok with yields where they are at the moves we have seen? michael: one would assume at this point that the fed is not looking at the way the markets have moved as a real problem. it hasn't slowed down the interest-rate sensitive sectors of the economy. what he is trying to say i

i want to get some perspective from michael mckee who is looking at where the economy stands as we looke if momentum can continue in the second quarter. michael: happy new year, alix. china was the 2020 economic champion because their immediate lockdown put a floor underneath the economy and they did manage to eke out some growth for the year. 2.3% is the forecast. we do not have the final figures yet but that is what everybody is estimating. the white line is the growth estimate for next year according to the economists surveyed by bloomberg. they think it will be over 8%. a quick rebound for the chinese. it looks great but there are clouds on the horizon. for one thing, the return for china has been predicated on the industrial rebound they have seen. factories have gotten back to work. let's look at the next chart. it shows you that manufacturing has come back strongly. interestingly the drops in manufacturing, that is the seasonal lunar new year, when the chinese economy generally shuts down. you can see this year the big rebound we have seen in terms of production, but a lot of tha

here are the stats from michael mckee.nd the other category which incorporates the $600 payments, there was a 256.9% increase. do not get used to the 10% increases in personal income. personal savings rate has gone up to 20%. that is the intuiting factor to the savings rate. all this will change as the economy reopens and we reengage with the economy. lisa: it also raises the russian that if people are not getting money from jobs and cannot see how long they will have this income, will they spend their savings are have a bigger savings cushion for an amount of time to gird against fluctuations in employment. we are seeing younger individuals saving more because of what they just went through. jonathan: we have the bank of england and the fed basing the -- embracing the move. lisa: you have very different economic pictures in the u.k. and the u.s.. jonathan: coming up, bloomberg opinion columnist on this bond market move. what a lineup we have for you. we will get the thoughts of blackrock. from new york, this is bloomberg.

tom: i will leave that to michael mckee. he will parse every word of it. all stuff we do on the bloomberg terminal from our complex where we are looking across all the asset. the ozzie n -- auzzie-yen, it has moved 18 big figures off the low. that is a huge pro commodity move. jon: 11, 12, 13 percentage points. and just watch, three to four months? lisa, take something defensive. the growth side of the story has outperformed. lisa: which twists the idea of risk. risk is in duration. that is what people are saying. traditionally, u.s. government debt. now, people are saying the least risky places are areas where you take the most credit risk, having to do with companies in the economy. jon: should we get you some price action? this is what we look like. good morning, equity futures are down. negative 32 points on the s&p 500. the bond market a big return, yield comes in at 135.51. tom talking about what is happening in the commodity market, 62 on wti by about .9 of 1% -- .9%. lisa: let's talk about the chair powell testimony at 10:00 a.m.. he will be testif

jonathan: that dropped on bloomberg from michael mckee this morning. when you compare the size of the output gap in 2009 and in the coming months, and then look at the relative stimulus programs, relative to that output gap, it basically says, in my words, this is huge. it is really big. what are the risks around it? he point by point goes through it. where's the space going to be if this gets pushed through to do the infrastructure spending, the public investment spending we need to see? this plan does not address that yet. tom: he puts a three factor on, as well. when you bring that into the markets like what you and lisa follow, look for the real yield this afternoon. very important. is the vector of inflation expectations, and this was the story of 2021, and that line points to what summers is looking at, higher inflation's. jonathan: you have been on top of it. the yield curve is up a basis point, to almost 116 on the u.s.. your estimate,, as you pointed to the week, that estimate has kicked a little bit higher in the last couple of days. tom: pay

michael mckee and abigail doolittle.e surprise and ugly revisions. >> this is a wolf in sheep's clothing number. it comes in at 6.3%. that is a big drop. .4% on the month. 400,000 people left the labor force. that is why we saw the unemployment go down. a lot of jobs, a restaurants closed because of covid during the month of january. there were no jobs to go to. the other number on the headline side is the number of jobs

michael mckee, thank you very much.eoffrey yu is an emea market strategist for bank of new york mellon. we talked to our guest yesterday, he reckons there will be a one-year gap between the data we are seeing in the u.s. right now, and that kind of data showing up in europe. would you agree with that? geoffrey: that is too long. this week we have seen from the basic headlines surrounding vaccinations and the availability of jabs, that there will be a strong push. we need to bear in mind that europe had its own strategy in place well ahead of the u.s., they were done last july. whereas in the u.s., it is still under the --. so the market is pricing in its realization at this point. yes, there is a gap between the services and manufacturing side. the manufacturing side has created a cushion for income within europe. now the europe challenge is to just china led in the rate place -- the right place. we are seeing that led by prime minister draghi, channel 200 billion euros, we need to make sure that does investment forward

joining us to break it down is michael mckee. we do not get any catwoman references today. what was your take away so far? michael: it is more like groundhog day. bill murray could be playing the chairman because we are getting what we got yesterday before the senate. the fed chair telling everyone the fed is still in line to keep stimulus going as long as the economy needs it. stocks turned around on that. what happened yesterday? stocks turned around. the fed does the inflation coming but it is going to be transitory because it will be based on supply-side shocks for commodities and things in short supply. then the economy will get going. there is not a problem. house members, depending on their political party, have pressed him on the question of whether or not they should put more stimulus into the economy and how much and where and he is completely declining to answer. they have tried every way possible and he is totally staying out of that today. nothing new from the chairman. he again said there are some assets that may be frothy but overall the economy is not overlev

michael mckee joins us. most important, what is a catwoman? i am googling catwoman and budget. michael: senator john kerry of louisiana asked about the debt that has been rising because of the spending the government has been doing and they asked if they should go catwoman on the debt. nobody knows what that is. people have said is a southern thing. ok. if you have an answer, tweet me back. let me know what the answer is to that. the real headlines are the fed is status quo. they will keep interest rates low for long. they will not stop the bond buying for a while because they are still a long way from their goal of full employment. the chairman was asked about inflation and the danger of inflation from all of the spending the government is doing and he said it is not a problem. we expect volatility in inflation as the volatility starts to inflate. there is excess spending, but that will pass. commodity prices will pass. what we want is inflation around 2.5% for a period of time. the message from the fed chair, fairly consistent. not much in the way of any comment at all on the

let's talk to michael mckee, bloomberg economic and policy correspondent. maybe the market is taking a cue from powell. using that is the case? do you think you will be happy -- do you think that is the case? do you think you will be happy to see yields rising today? michael: i don't think you will mind it. the fed chairman speaks to congress, but he is really speaking to the markets in these hearings. his message to the market is steady as she goes, but that is not changing its mind at all, no matter how he was asked -- mind at all. no matter how he was asked, he refused to say anything about stimulus. he basically said we will see rising inflation, but that will be transitory, and we are still far from our employment and inflation goals, so we are not going to change policy. you can see the market reaction to that, and you wonder if they are believing them or not. bonds falling again today. those yields rising. one argument is that the market is just repricing for a different economy. we are in a very different economy than we were in the their .5% 10 yea

bloomberg's mike mckee joins us to work our way through the data. michael: at 8:29 wall street 10 this morning, the story was -- wall street time this morning, the story was the economy is in trouble. at 8:31, the narrative changed. the pbi comes in at 1.2%. that is just for the month, not year-over-year. industrial production more than double what was forecast. is this the new narrative? not so fast. the one thing with retail sales to keep in mind is most americans got $600 checks during january, and much of that was spent. that doesn't happen every month. second, seasonal adjustments, the government adjusts the numbers on a seasonal basis to take out the highs and lows. that doesn't work when you are in the middle of a pandemic and half of the country is locked down. adjusted sales were higher by 5.3%. unadjusted sales, down 17%. so it is a 22.5% swing by seasonal adjustment. that really accounted for much of the retail sales change. in terms of ppi, when you look on a year-over-year basis, ppi up by 1.7% on the headline and 2% on the core. that is off a

mckee. you are really good at going below the surface and maybe we start with durable goods. michaelle strength in durable goods but not as much as the headlines would appear. these are january numbers and we are almost into march, so there's -- we are a little it behind. 3.4% for durable goods orders which was more than forecast, but look at where the strength came from. boeing started selling 737s again and started flying off the lot, so almost 400% increase in civilian aircraft.