will michael mckee talk about super core inflation? he will weigh in. pushing ahead to cpi in america. the final month as we get down to five. a real disruption yesterday. we will talk about that next. tom: bramo got nailed. jonathan: futures are unchanged on the s&p 500 in your cpi or in 15 minutes -- report in 15 minutes. lisa: keeping you up-to-date with news around the world with the first word. investors in the federal reserve will be looking closely at today's u.s. consumer price index. projected 5.7% increase would be well above the fed goal that would explain its intention of keeping interest rates higher for longer. the year-over-year price route would also show moderation cpi is due at 8:30 a.m. new york time. the u.k. and european union are preparing to enter an intense phase of negotiations to end their dispute over brexit the talks will begin next week area the disagreement has to do with trade. both sides originally agreed to allow the northern island to remain with their arrangement but so far, the u.k. has failed to implement parts of th

let's get to michael mckee. iting for the number to drop in terms of the computers but i can tell you the trade balance comes in much lower than anticipated, 61 point $5 billion, 78 point $2 billion the prior month and $68 billion -- $63 billion was the forecast. this means they are growing faster in the fourth quarter than we thought. as of yesterday, the olanta fed was suggesting we were rowing at a 3.9% annual rate in the fourth quarter so significant change there. jobless claims come in at 204,000, down from the initially reported 200 when he five last month -- last week. however, i will put a caveat in front of this and note this is the weak that included new year's, holidays, and christmas holidays and so probably this number is somewhat meaningless and will be revised higher and we will get a bit of a snap back later. it does show we are still in the very low jobless claims vicinity , and that is further evidence the labor market remains healthy. jonathan: equities roll over by .5% on the s&p 500 and yield

michael mckee, we don't see gdp yet, do we?hortly. there we go. better than expected, 2.9 percent. that is down from 3.2 percent in the third quarter, but still a very good number. we are not going to complain about that at all. i will get you the breakdown on that in just a second. let's go through all of the other numbers, which is a lot. the trade deficit actually widens in december, $90.3 billion from $82.9 billion. that is a bit of a surprise, and i'm sure it will have some effect on the overall gdp numbers. speaking of gdp, the price index, the pce index on a quarterly basis drops to 3.5% from 4.4%. those are better than the prior quarter, but not as good as what was forecast. make of that what you will. we get the rest of the gdp, the december numbers, which really matter to the fed, tomorrow. wholesale inventories rise .1%. inventories, .5%. jobless claims, hold onto your hat, tom. tom: i'm holding. mike: and you have a good-looking hat. 186,000. these are not the droids we looking for. that is revised down. tom: folks,

i want to bring an michael mckee attempt digest all of the information. lk to us about what this headline means. is there a consensus? mike: there is a consensus at this point -- >> it looks like we are losing mike mckee but we will bring him back in just a moment. these headlines are in fact coming. he is saying some of these headlines or miller road excuse me is saying you are starting to see this terminal rate get hit into the summer. if you look at some of the pricing we are seeing in the options market, specifically what the european equivalent of the fed funds rate would be, it is not that out of consensus. it is being pricing at 3.75% and july is where we are looking. milroy says if we look -- we hit that terminal rate by the summer, it is not going to be that contrarian a take. it is coming from france. he does echo some of the statements you have heard from the president. christine lagarde was saying the ecb should defend on the data. they are still looking at that core inflation. i want to bring in michael mckee one more time and talk about these

tom: michael mckee on radio and television.e look at the ultimate conundrum which is picking up the pieces of an equity market to forget in 2022 making her first appearance on bloomberg surveillance where people have allowed her to come in before trading season. i don't want to go economics on you right now, i want to go on what your team is thinking about into earnings season. what is the number one ministry? >> i think is where is the margin growth going to come from later in the 2023 when we look at the consensus expectation if is pricing in a recession. earnings are now expected by the consensus to fall for three consecutive quarters overall for the s&p 500 so the consensus is getting more bearish but where they are getting a little more optimistic is getting the idea that we are in the midst of forming our popcorn on the index if that is the case we are likely to see earnings in 2024. it's a bit of a conundrum of where that is going to come from. the consensus right now, comes from tech. showing some degree of improvement

michael mckee standing by with the readout. >> no real indication of what the fed is thinking of forext meeting on february 1, but

tom: that means michael mckee will dissect like he did. a buoyant gdp statistic earlier. ael: buoyant headline, not so good below. we will take it. here is the numbers you want to see. pce deflator up .1%, that matches last month. that is a little bit ahead of the expectation for a flat reading. year-over-year basis pushes us down to 5% from 5.5%. core rate is up .3%, a 10th more than last month. that matches expectations, pushes us down to 4.4% for the year-over-year, down from 4.7%. the fed is getting progress in its inflation fight. personal incomes up .2% on the month. personal spending down .2%, those both match estimates. bravo to the economists who did the forecasting. incomes number down from a revised .3%. spending is down from a revised -1/10 percent. interesting note. this did not show up as much in gdp because that comes out as a quarterly number. october personal consumption was up, but november and december down. the sequential move is to a slowing consumer at this point. tom: i want you to go to the basics. amateur year-over-year pce deflator, 5.5% down to 5

we turned to michael mckee. thanks for being here. when they first came out, the headline number lo

let's bring in jess menson and michael mckee. how do you parlay that wage data into the decision-making? is waller outlining 50 basis points into march when we then pause? michael: chris waller's statement was he said he needs to see six months worth of data. the eci is three months worth of data and we've seen inflation falling for the last two months. it's significantly lower on a month over month basis than it was earlier in 2022. they are starting to see what they want to see and they are seeing evidence the economy is slowing down. there is a reason for them at this point to dial back to 25 and not feel the need to go to 50, buzz that count as a turning point? that's the hard part. alix: it is a change. for the market, at a turning point in the market or did we already do that? >> that's the million-dollar question and if you look at the big name from this earnings season, big misses are escaping big penalties. if you pull data and you look at what's happening when it comes to those misses, the least negative they been in eig

let's start with the data and michael mckee is here to break it down. what have we learned? chael: we learned that things are not as bad as anticipated they would be. we seem to be going in the right direction even if we are still seeing signs of contraction. let's start with the united states -- the latest number is the richmond fed manufacturing index, not part of the s&p global one but people follow it -- that one is not so good, down to -11 from a positive 1. in the mid area, things are not eight but the u.s. as a whole, the s&p manufacturing index goes up to 46.8 from 46 .2, the services index, 46.6 and the composite also the same. sequential improvements and we saw much the same and most of europe with a couple of countries in a couple of areas going over 50 due to expansion with french manufacturing and german services and the eurozone as a whole. it's beginning to look like europe is dodging the bullet. the u.k. is the laggard. is the only one that saw a significant decline across the board and that's understandable given their economic outlook area alix: great roundu

covering all of our beings and michael mckee the only guy who knows who jack robin is.s weekend just fascinating as we reset for january. features -37 dow futures -269 six 1.924. >> evening up today with this from around the world with the first word. i'm lisa mateo. in alabama and georgia by that weather killed at least seven people. much of the damage took place in a llama where a tornado cut a 20 mile path. six people were killed and more than three dozen homes were damaged. the faa is out with preliminary findings on the computer failure that grounded all departing u.s. flights on wednesday the agency says it was caused when a data file was damaged due to a failure to follow government procedures. according to the faa unspecified personnel were responsible for corrupting the pile. two of the largest airlines are giving up on the new york stock exchange. they are joining a raft of government controlled firms and have announced their departures from u.s. exchanges. the companies attributed the decision to commercial factors including the cost of maintaining u.s. listi

appreciate it, michael mckee. taking a look at intel. shares are terrible. looking at at one point the biggest drop since 2021 in october. they gave a grim forecast. our question of the day, then, is, what is the intel on ships? is this an intel story, a chip story, a cyclical story or a macro story? we are joined by mandeep singh and ed ludlow. command -- mandeep, what is your take? >> because intel is the largest player and you saw them talk about bloated inventory and have not called a plot them yet and it will progressively get work, so it is a divergent characteristic when you compare pcs to data centers and autos. pc as well as execution on the data center side, because that is where intel continues to lose share to nvidia and other companies. guy: ed, is this an intel issue, a market issue or a macro issue? >> all three. there's clearly evidence that intel is suffering from an ongoing loss of market share to rivals. this is a continuation of a story that they are trying to turn around since the current executive came back to intel and deputy one. you

michael mckee and ira jersey. coming up, reaction to the december jobs number. we break it down with katerina simonetti. this is bloomberg. ♪ >> these were good numbers. they showed a strong economy with slowing inflationary pressure. in so far as there is strong signal in them, it has got to be encouraging. ♪ >> all the indications are of an economy moderating, inflation coming down, which we are confident that i think we will see that next week in the cpi data. it is good. is it still an economy that is vibrant? i think it is. when you cut through the data, hiring is hiring an the service sector is behind pre-covid in terms of where they need to get to, and you see this in health care, and that is buoying good consumption in the economy with some slowing. pretty good data for the federal reserve. alix: that was rick rieder reacting to the payroll number. markets really like that number, falling below 50 for the first time since may 2020. it gets us to the question of the day -- 25 or 50 from the fed ? joining us now is katerina simonetti of morgan stanley. kat

michael mckee joining us. let's get more with joanne hsu, director of the university of michigan consumer survey. what is your read on if inflation expectations can continue to go down or if that reverses if gasoline prices rise? joanne: consumers are going to be aware of gas prices but they are responding to the prices of everything. inflation expectations one year ahead declined quite a bit the last few months. two months ago it was 4.9% and now it is 4%. consumers are expecting these slowdowns in inflation to continue. guy: the sentiment numbers are amazing. the current number has gone from 59.4% to 68.6%. that seems like a big jump. my reading that right? joanne: it is a big jump. the slow down in inflation has helped consumer's pocketbooks. buying conditions for durables have gone up and that is because consumers are perceiving that supply chain issues have eased or disappeared for durables. both of those things are popping up current conditions. alix: what about the labor market? how was that helping or

alix: let's get more from michael mckee to break down the numbers. what do you make from this, and how does it set up the fed next week? michael: i don't think it has an impact on the fed. they have similar situations but they are different. canada has had a major collapse in home prices because of a lot of canadians with adjustable mortgages. the higher the bank of canada goes, the more it hurts the housing industry. that is one major difference from the u.s. the inflation rate has really dropped in recent months, specifically the headline number but even the core starting to come down and you can see they are with the headline target rate. so they could take a pause, as they make clear, it is not a certainty that this is going to be it, they just want to make sure they see what happens to the economy afterwards. the fed is not have the real estate situation, what they do want to see what is happening with the economy. guy: this is the narrative paul central banks are grappling with, that they have done a lot and relatively quickly, and they do not k

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 pricing that in, despite some of the more aggressive rhetoric from the fed. 25 basis points in february, then march again, 25 more basis points. then rate cuts at the end of the year. initially as we started to hear the fed talk about stepping down , they had priced in two rate cuts for the end of the year. over the last couple of weeks it has moved toward one rate cut at the end of the year. that is a question mark. we don't know. the fed doesn't know. we are data-dependent. the one thing that the fed has to see is wages continuing to come down. they are an important input cost . it manifests in higher prices. higher prices re

thank you, michael mckee. for more, we are joined by tim fiore, the institute for supply management chairman. what led to the declines in manufacturing? tim: let's talk about the employment side. every three panelists that are reporting, two of them are still hiring. i was surprised it went up, but not a lot. less than 52, marginal. from a prices paid standpoint, we are at 87% of respondents saying they are paying the same prices are lower in november, which is up from a 67% in october. there is definitely an impact going on here. the big story with the ism manufacturing is the lack of demand. it still continues this month. you can see the new order number probably had the biggest influence on the pmi easing off again. my whole demand measurement is export orders, new orders, customer inventory -- which is about right -- and the backlog is still weak. we are waiting for buyers to reenter the market here and re-up on their order books so we can get things flowing properly with the proper leadtimes. guy: to that

is michael mckee. also with us, ira jersey. mike, let me start with you. what do you think 2023 actually looks like? if you come at it from an economist point of view. what are the biggest risks you see for investors, having price, but not completely understood? damian: i'm --michael: i'm glad he used the plural of risks. i think there are several instead of just one. what the g7 folks put out today in their annual risk ahead for 2023 of risk is a rogue russia. i don't know what could happen with them, but it hangs over everything because of energy and food. that could be a major issue. i think the things we know about at this point, the biggest is going to be the fed. the consensus is we're going to have a recession at some point this year. i think the risk is that it is a mild and slow forming recession, which means the fed won't recognize it's happening at the time and it would take longer to react to it. a fed that is already determined to keep rates higher for longer, this may be a risk that may send us into a deeper recession. one other thing i would

jonathan ferro, and i think we will get some color from that, but the other thing you listen to michael mckee who goes beneath the headline data and is not just about 20 two or the unemployment rate or six other numbers. there is some real nuance under there that can show which part of the economy is moving in which way. that's what i will do. >> it depends where you look. industry to industry is a very different story. tech and what is happening with tech jobs hasn't spoken to labor market that we've had for most of the week. equity futures on the s&p 500 are totally unchanged on the session. the s&p is down on the week for a fifth consecutive week. we will see if we can change that a little later this morning. >> this is under this 11 ratio. good morning to our team who invented this on bloomberg financial conditions from moments ago. but we are moving to a new accommodation, and we are buttressed right up against more accommodations, and away from restrictive joy in jobs that we are seeing in the data we seen the last number of days. it is pushing against where chairman powell wants to be.

we will get you all the headlines from michael mckee as well. euro dollar is back with a $1.07 and goldman dropping its recession call, saying we no longer look for eurozone recession reflecting the growth momentum sharply lower gas prices and early china reopening. mariatodeo joins us now, where is the eurozone optimism come from? annmarie: maria: you talked about the note from goldman sachs and they drop the recession call. they talk about this mild temperature and the reality is we were told this was going to be the winter from hell. i had a nice break in spain and temperatures were not freezing. we had that are then expected weather. gas prices have dropped massively which removes a lot of the risk premium and the china reopening which they say will be good. we also had a note from deutsche bank almost an hour later that said when you look at the pmi come it looks like the recession can be averted and noted the china reopening is positive for the euro. jonathan: if we can escape the recession, the ecb will go harder? maria: if you are a memb

tom: michael mckee with us front and center with our economic coverage.a more global scale, seth carpenter. i know you're going to run our team here as they analyze eci. is china a 3% story? or is it a 5% story that can make things more complex where the chairman of the federal reserve? dr. carpenter: a fantastic question. the china reopening story is the big narrative going on in markets. we have been bullish. i think we are above consensus. five and three quarters above and may be a bit more. very bullish. for us, reopening. it when you talk about spillovers back to the u.s., when you think about what it does for chair powell, there are probably a little less dramatic than you might otherwise think. a big story for people who are investing in china and the region. let's go back to the u.s. in terms of inflation, it is not going to be quite vague right now -- big right now. we imported a lot of goods from china but we know consumer goods prices have been falling for the last couple of months as people pulled back and redirected their spending. the first

michael mckee will break that down. 10 year yield lower by nine basis points. 3.4537. rs and we are expecting a decline in retail sales. he certainly got one. the expectation was for a 9/10 fall. the question is where to be come in with the retail sales control the number to pop-up. here are the ppi numbers. down half a percent on the headline. the expectation was down a 10th. x food and energy is down 1/10. the ppi for final demand at 6.2% for the year. the core for the year, 4.6%. the core matches but the final demand was expected to be 6.8%. another decline in an inflation indicator that is going to look good for the fed. here are the rest of retail sales. x auto and gas down 7/10 of a percent. that had been expected to be down 3/10 and was down to tenths in november. it looks like a very poor month in retail. i will let you do the reaction to this while we get details. jonathan: we have a downside surprise on retail sales which is the wrong kind of downside surprise. we have the right kind on ppi. features right now a half of 1% on the s&p 500. we do see a bit in th

i might ask michael mckee. tom: maybe he is at the -- [laughter] -- there is a secret envelope.d yardeni joins us now, founder of yardeni research. what do you make of it, the rally that we are seeing in base metals and copper? edward: last year, there was a lot of talk of recession around the world. we started out last year with concern if the fed was going to tighten, fed inflation was going to be persistent, that the u.s. might fall into recession. there was a lot of chatter in the first half of the year when real gdp was down. but there is also talk about the euro going into recession because of the war in ukraine and what that did to energy supplies. china has been struggling with another wave of the pandemic. you put it all together and the outlook for the last year was for the global economy to be weak. now the markets are signaling that the plunge in natural gas prices in europe suggests europe may not have a recession at all. with china abandoning the covid policy, there is a perception we may get a terrible wave of the pandemic for a few months but then it should abate

guess what, i have never said this the philadelphia fed business outlook, i am on that and so is michael mckeeed to drop what we have we have housing starts and they are worse than last month not as bad as anticipated. down 1.6% during the month of december. building permits are down 1.6%, they fall 11.2% revised to 10.6 but housing starts forecast to be done for .8%. so we are seeing finally maybe some of the higher mortgage rates working their way into new home construction. it's going to be something to follow. builders had a lot of backlogs we will see if they are starting to slow down or if it was weather-related. the philadelphia fed is out and the philadelphia fed comes in at -8.9, that is an improvement from -13.7 which was the december figure. now the number everybody wants to see in all of these ideas and kind of things is the price paid index. it falls to 24.5 from 36.3 the prices received index versus 20 81. we are getting a much better inflation story in almost every bit of data that we get. jobless claims, 190,000. i don't even know what to say. tom: stop and discuss. >> seasonal

michael mckee joining us now.h the labor market and whether you could end up with a recession that is fed induced that just not include a material softening in a labor market that we get a lot of indicators for that seem to be showing a lot of strength. michael: i think bill explains it well in his column today. the fed is looking at service price inflation which is being driven by a lack of workers. as long as wage pressures stay high that would be the thing to watch for on friday. as long as wage pressures stay high the fed has to keep additions tight. if we see them come down, bill says 3% to 4%, most people are looking to 3% to 3.5% as a level of wage increases. if we get to that point the fed can start to back off. we will see this tug-of-war between average hourly earnings driven by the fact we do not have enough workers, and the fed trying to slow the labor market. you look at the forecast for this month. i think economists are guessing. everybody is expecting the labor market to loosen and it has not. to s

. >> next the state of the state address from missouri governor michael parsons then rhode island governor dan mckee delivers his state of the state address from the capitol in providence. later the inauguration ceremony for pennsylvania governor josh shapiro. >> missouri governor mike parson gave the annual state of the state address from the capitol jefferson city for the governor touched on a variety of topics including the economy infrastructure investment, education healthcare and public safety. [applause] [applause] [applause] [background noises] [background noises] [background noises] [background noises] >> i am good. thank you lieutenant governor, mr. speaker, state wide officials, judges of the missouri supreme court and state legislators. it is an honor to join -- be joined by the first lady as a stand before you again today is the 57th governor of the state of missouri. today i stand her with excitement a renewed sense of optimism for the missouri and its people. this past year was one of opportunity. we recognize and took advantage of that both today and tomorrow but working together we

michael: per final interview as president of the kansas city federal reserve. we will send it back to you. guy: thank you very much indeed, mike mckeend kansas city fed president esther george. we wish her well and thank her for her service. coming up big tech, big cuts. google the latest company to slash the workforce. 12,000 jobs said to go. details to follow. the start up his next. this is bloomberg. ♪ ♪ ose in life - a “why.” maybe it's perfecting that special place that you want to keep in the family or passing down the family business or giving back to the places that inspire you. no matter your purpose, at pnc private bank, we will work with you every step of the way to help you achieve it. so let us focus on the how. just tell us - what's your why? lisa: it is a time for a look at some of the biggest business stories. elon musk could testify as soon as today in the tesla fraud trial internment cisco. shareholders contend his 2018 tweets about a plan to take the electric carmaker private amended tell lies that cost them big losses. his lawyers are arguing he was not sincere. saudi arabia's sovereign wealth fund considered by