michael mckee, still waiting for the trip feed of that communication. it is not as quick as we would like. we are waiting on personal income and personal spending. personal income up .6% in january after a .2% gain in the initial release in the month of december. personal spending up 1.8%. that is better than the 1.4% expected. pce numbers, inflation numbers on a month over month basis up .6%, bigger than expected and much bigger than the .1% we saw in december. the euro over your number for the headline is 5.4%. we were at 5% so we bounced in the wrong direction. the core up .6%. that is two ticks higher than december and puts year-over-year at 7%. inflation stronger. personal income is stronger than it was in december and not as strong as expected and personal spending is up 1.8%. americans are still out there spending. i bet you have some movement in the market. jonathan: i bet you can guess where it is. equities down on the s&p a little more than 1%. in the bond market yields up five basis points. 4.75. that is the highest level we have seen since 20

let's get straight to michael mckee live from the federal reserve.ichael: at our february 1 meeting, federal reserve officials

michael mckee standing by from the federal reserve.s is bloomberg. ♪ kriti: this is "bloomberg markets." i am kriti gupta. 40 minutes away from the federal reserve decision, followed by a news conference from chair jay powell. all eyes on washington. michael mckee joins us from the federal reserve. mike, thank u.s. always for joining us. walk us through what we can expect. michael: not much doubt the fed will be raising interest rates and the bet on wall street is 25 basis points. they talked about a going into the quiet period, the idea that they want to scale back a little bit so they can make sure of what is going on in the economy and not push it into recession. they are getting close to what they said in a december would be there terminal rate. they have it at 5.1%. we are 4.5 right now. the question is how do they signal that they are getting close, or do they signal that they are getting close to the e nd? each statement the last couple months said that ongoing increases in the target rate would be appropriate. do they drop the

kriti: you, me, michael mckee. we are all confused. the bond market is focused on that but the equity market varies. you heard mike talk about them hiking even more. we are now looking at 5.5%. that should send stocks lower than the .5% that they are right now on the s&p. because of the carnage of 2022, a lot of this is priced in. it feels like the equity reaction is muted relative to what it should be. the other reaction here, they've been brainstorming to make sense of this market reaction. if you look at the sensitivity of these hikes have been priced in, there might be this idea that if they go higher for longer they won't have to reprice like they did in the 70's. that is one theory put forward. but the stock market is puzzling. the bond market is straightforward. the 10 year yield, we are at 375 right now. alix: so maybe a little more rationality in the bond market. dani: is your monthly budget inflation-adjusted? maybe that's why it's not coming through. alix: should it be? i had to take a moment for that. as for discretionary s

to help us try to answer this is katie and michael mckee. chael, given that another hot data print, is 50 back on the table? >> it is important to note that loretta did not say she wants 50 at the next meeting on march 22. she said she could see a compelling case for at the february 1 meeting. one would assume that the case only gets more compelling given the numbers we have seen. i think what we really need to do is take a step back and look at what was suggesting in their sep, their views of what is going to happen on december 14. you can see that the 2023 dots consensus was for 5.1%. but there are seven dots above that including two at about 5.5%. and so they were thinking an awful lot at the time that they needed to go higher than the market anticipated. so now it becomes a reality. if you are 4.7 5% and inflation is hot, 50 basis point becomes a real possibility. the only caveat is another cpi, ppi retail sales drop report so we could all be coming back to the show and the question of the day would be "is the fed going to cut rates?" i d

we are meant to turn out to michael mckee

joining us are michael mckee and katie greifeld. mike, we had been looking for the confirmed trend of disinflation. did it confirm that or throw it out of the picture? mike: it is a little more confused after this month although there are technical reasons why we saw inflation come in hotter and then there is actual price increases that affected the cpi numbers. but when you look at the overall numbers it is performing as it has been and as expected. the goods prices are going down not down,, but rising at a lower rate. services prices are increasing. the number everybody wants to see because jay powell highlighted it is services ex housing. housing plays a big role in the overall inflation numbers particularly in the core. once you take that out you see what is really happening with inflation and it is going down. the disinflation process is underway. it is just going to be lumpy and as tom barkin said, sticky, take longer to play out then folks would like. dani: i feel like stocks would not like that. alix: but this is a bit confu

the fed derby, the dots derby, the michael mckee there be. jay: i think so. i think there will be a high weight on what the fed is doing. if we get a few months from now and it looks like the economy is really starting to slip, i think what really becomes important our initial jobless claims and other label market variables. but for the foreseeable future, i think it is all about the fed. tom: i'm looking at this almost as domestic final sales. can we "slip, or just say it is the housing market and other financial distortions slipping, and the rest of it does pretty well, like durable goods to show? how does that mix play out? jay: if you think about the consumer right now, it is very, very strong financially. you could have a recession this year in manufacturing. strong dollar, weaker growth than the rest of the world, may be weakness in the housing market. that is what we have seen for the last year now. consumer spending could continue to hold in there. even the fact that consumer spending is 70% of the economy, you could have a few sector

who better to ask than michael mckee. there's is a lot to digest here.pecifically when we talk about what the european inflation data is telling us. to what extent is this record french inflation data and spanish data that had ticked backup some sort of crystal ball or signal inflation is not a done deal when it comes to the u.s.? michael: it's a signal that inflation is not a done deal. there situation is a little different. much of what drove the price levels in those countries where food prices. it is not as directly translatable here were the wholesale food prices have been going down. we are waiting for that to transfer into the cpi. it did have a major affect on the bond markets today. it is the wrong direction for inflation. that has everybody in the markets suggesting what we will see is an ecb that has to do more, go higher for longer. does that sound familiar? we are up to basically bets that we will see the ecb had 4%. they started the year at -50 basis points. there is a long way for them to go. it is a surprise to a lot of people inflation h

kriti: i want to bring in michael mckee who is on the ground at the washington economic club. to add to the point of what abigail was talking about, that 2% global standard, if you are sticking with that, doesn't that mean cuts already given at some point -- cuts are a given at some point? michael: in a long enough time, everyone is dead. the thing is that the fed is using 2% as a target. that is what their target is. they may revisit this when they do a review of monetary policy. that is their goal. it looks like inflation is moving in the right direction. a strong economy according to the models should push inflation up, especially a labor market as strong as it is. the fed is wary about declaring victory and say we are on the way down. the bottom line of powell's appearance is not so much what he said. as applicant noted, he did not say anything new. it is what the markets heard. did the markets get the message she was trying to sent last wednesday? the fed is going to keep going. if inflation doesn't come down and the inflation market stays too high, the fed will raise rat

lisa abramowicz and tom keep with michael mckee.k about that in a moment. mr. mckee, go. mike: the president of the cleveland fed bringing the 50 word saying she saw a compelling case on february 1 to raise the fed fund rates by 50 basis points instead of 25. one would assume that she would carry that belief over into the march 22 numbers considering the ppi we got today. she does not think we will get back to 2% inflation until 2025 and wages are a primary reason. they are above a sustainable level. she is also suggesting, she sees weakness in the economy ahead in many of her contacts are preparing for recession. now only if that showed up in the numbers. if she were pat harker that might explain the philadelphia fed numbers. but the rest of the country seems to be moving along fairly well. tom: s&p -46. we will drag mckee into this because of his experience with 1998 and imf moments. i have been wanting to speak to damian sassower. he is expert it buenos aires inflation, black-market pesos 300 73 according to bloomberg news. how c

kailey: michael mckee, thank you. let's continue this conversation with chris williamson. thank you for being here. let's talk about services here in the u.s. and in europe. what is going on? >> michael raises a good point and it is afflicted in the responses. that is the weather, unseasonably warm and many parts of the world, whether it is outdoor restaurants, recreational activities, or things like construction activity. there are ancillary services to construction. it is an example of how good weather can skew data in a positive direction. there is an element of that here , so take it with a pinch of salt. the good numbers we are getting in these winter months -- whether you get payback later on. it will be interesting to see if this fades or if we keep good weather. the other aspect, which i think is important, relates to the housing markets. in october, november, we saw a peak in the mortgage markets, just wondering how high rates are going to go. people are scrambled to get an idea of terminal rates and mortgage rates. the market is getting a slightly better handle on

will there be value, michael mckee, to the michigan confidence series, plural? e numbers on inflation if they think it's still coming down. that helps the fed case forgetting to 2%. it's an opinion based in large measure on gasoline prices. gas prices hanging in there, they have gone up a bit. hanging in at lower levels it should continue to improve. then the question is what do they think of the economy? there isn't a direct link but there is an implied link. it's more coincidence that anything else. so if we see people getting more confident in the economy, then that suggests maybe recession is a little bit farther away. tom: michael mckee, inc. you so much again. chair powell and david rubenstein today, noon time. michael darter, good morning to you. i thought you and paul krugman, you're always on the same page. he said look there's a battle as to whether it's 70's inflation or korean war inflation where we went up and we went down. which is it? back to 50-50 one with true eisenhower inflation or is this a more tangible, persistent, higher inflation? michael:

tom: michael mckee, thank you very much.y a lot of money for roses. lisa: and people offer you gifts. tom: nasdaq up 1.2%. we have an important point here we have, moments ago, out of manila to tent spread let me explain this the difference in yield between the two year and the 10 year printed nt five basis points it breaches through what we saw in early february. lisa: what's interesting is it's being driven by a rally in the 10 year in other words people are seeing even more value in buying 10 year treasuries for 3.6% which are yielding the least relative to two year treasuries going back a long time. tom: we are back to december 7 on that. on the american economy chief economist the state of the american labor economy it's a jumble to me claims on jolts, everything odd. what do you end woman to trust make of our job economy? >> it's obviously an incredibly tight labor market. the low level of claims releasing sub with what we saw with job growth. if you look at the nonseasonally adjusted numbers you usually get 2.8 or 3 m

if michael mckee were here, he would hit me over the head and tell me to shut up and say that's interestinga because there has been a dramatic uptake in the layoffs announced. he would also say but look at the jobless claims number and it seems that they are finding jobs really quickly. alix: that's why the apple is interesting. it feels like it's an underlying demand thing. ed: that's why talking about apple and lenovo it is worth it. if it is cutting contractors and those contractors are in the thousands. the stock is down a percentage point. in line with market. is this reacting to that slow down and demand? we had earnings in the outcome was mix for this year. alix: i am looking at apple and microsoft and they are the biggest losers on the nasdaq. i also like the no tie look as well. wewe will take a look at the u.. efforts to ease tensions with china. how is this going to go? will we see them try to make inroads in that? this is bloomberg. ♪ as a business owner, your bottom line is always topf mind. so start saving by switching to the mobile service designed for small business: comcast

let's ask michael mckee that question. let's ask ira jersey that question. ke, will the markets be listening to powell or and what will they be listening for? michael: they will be listening for any kind of deviation from his message on wednesday when he said we will raise rates and we will leave rates high. what he didn't say is we are going to go higher than we anticipated and now that's what you are hearing from the other members of the open market committee. what wall street wants to know is does he joined that chorus or does he just say i am sticking with what i got and we will stay the course and see what happens? i suspect that's most likely out come to keep the markets from overreacting but the i dia is do they go farther than they already have suggested they will. alix: they say don't get excited about that possibility, what do you think? >> we need to get more excited about the possibility that the fed might go higher. you look at internal pricing and cpi and it suggest that maybe prices will not come down so fast. the important thing that powell ke

the spring and michael mckee for a reaction to this. does this make jay powell's jobs more difficult? mike: it will depend on the ism services number, that's a wild number. new orders go up to 60.4 from 45.2. the other numbers come in really strong as well. except for prices, they continue to fall. 60 78 from 60 81. it doesn't make jay powell's job hard but it makes is communication in the sense that everyone will talk start landing in the fed, maybe not. we should point out that a three month rolling average of the annual average earnings of the year-by-year is a little bit stronger wage growth than we had seen. alix: that services number, the biggest advances 2020. new orders really coming in. let's make this part of our question of the day, too hot to handle? is this job market too hot to handle for the fed? they have to go even harder to get the job market down. i'm surprised the bond market wasn't more reactive. your thoughts on the bond move? ira: there were some seasonal factors that mucked up more than the head by suggest. the s

francine: that was michael mckee on who's in and he was out of the fomc.reat decision day guide on our website. we will push that out on our social media channels. the federal reserve likely pushing back against any suggestion it will halt interest rate increases. that is the view of jeffrey gundlach. we had a lot of time with him yesterday, interesting to see how he sees traders positioning in terms of dollar until the end of the year. the other big story is the budget in india. prime minister narendra modi has been commenting on the full year 2024 budget. this is what stocks are doing overall. indian stocks rallied, and then they lost ground. higher government spending on roads, ports and infrastructure while keeping the deficit under check have been starving optimism that measures will lead to higher consumer spending and a boost of economic growth. let me remind you how much they are expecting capital spending to be by, it is by more than a third, potentially 122 billion dollars. capex spending will increase 33% in the fiscal year. it will in vest in a

michael mckee, ready to give you the data here.e in a number of minutes. right now we are thrilled to bring you neil dutta. he has been more than optimistic. the market is confirming the optimism as well. within the jobs report it seems like the wage dynamic is so important. what is the renaissance macro view of the use of average hourly earnings here in 12 minutes? neil: certainly it is useful because of how freaked it is released. obviously i think like most economists i think the eci number that was released earlier in the week is more significant. that does show some moderation in wage growth. i think the broader issue, at least as far as i see it, is just how far we can push the kind of immaculate wage disinflation story with the labor markets as tight as they are. sure, there is a little bit blessed church -- a little bit less turn in the market, so companies don't feel the need to build people up as much as they had, but ultimately if economic growth is remaining healthy, and potentially running above trend in the first half

kriti: michael mckee, our correspondent, always a pleasure. continue the conversation, picking up where mike left off. he joins me right here on set. the pce deflator numbers we are getting tomorrow, what can we expect? how big of a deal is this in terms of what the fed is going to do next? >> it's very important. basically sending the message, defeating inflation is job one. it is the precondition for anything else. this fed has been more resolute than any fed in a long time in dealing with the inflation problem that they were responsible for leading out of the bag. and so, the inflation data are important. in a discussion panel that is unbanked call, the title is taming inflation. based on new york fed research. in the actual inflation numbers with this revision today is probably around 4.5%. whatever measure you use from 2%, i think the market makes the mistake of seeing a peak in inflation. we are going back to the old regime. we are not going back to the old regime and its going to come at a cost. it's going to come at a cost of higher in

michael mckee and kriti gupta, thank you very much. coming up, we will have more of our question of the day. are the hawks placed in? we will talk with mark connors, next. this is bloomberg. ♪ [office sounds] ♪upbeat music♪ ♪♪ ♪when the day that lies ahead of me♪ ♪♪ ♪seems impossible to face♪ ♪a lovely day (lovely day)♪ ♪(lovely day) (lovely day)♪ ♪(lovely day)♪ a bank that knows your business grows your business. bmo. kailey: stocks are attempting a rebound after four straight days of losses on the s&p 500 as markets have tried to come to grips with a repricing of expectations for the federal reserve. let's get back to our question of the day -- are the hawks now priced in? mark connors joins us for more. what do you think? mark: i think the hawks are priced in. we look at the volatility structure right now. it is focusing more on rates. it is appealing at first, provides no nutritional value. for the last 10 years, you had to look at the move index. when that popped, equities retreated. we see right now there will be a decline in thi

we do that with michael mckee with data that is important all of a sudden. mponent of gdp and does suggest gdp baby smaller -- may be smaller than it was in the now cast. the advanced trade balance from january comes in at -91.5 billion, down from 89 .7 billion in december. it looks like that widened a little bit. wholesale inventories fell .4% which suggests fewer imports came in and retail inventories rose 5.3%, less than in december but more than forecast. we still have some inventory built. the most interesting thing is this wraps up the january data. now that we are in march we will start to get the february data, which is what will play out. tom: let's go to mere mortals like stephen stanley at morgan stanley. or steven ricchiuto. i am only quoting stephen economist. the answer is this is january data we are wrapping up the end of february and all anybody cares about is where we are march 31. can they make an informed guesstimate now about this present quarter? michael: i do not think you can because there is so much still outstanding and the data we ha

michael mckee, think he is off until february 14, valentine's day, when we get the inflation report. ow to see jay powell. tom: tomorrow, the state of the union, before that we had the state of the powell. lisa: the state of the powell might be more interesting than the state of the union, in terms of what he plans to emphasize. whether he decides to walk back or what he emphasize, he doesn't need to walk back. tom: ladies and gentlemen, the chairman of the federal reserve. stay with us. ♪ lisa: with the first blurred -- first word, i'm lisa mateo. search for survivors after earthquakes in turkey and syria. the first was a 7.7 magnitude quake struck along the border of the two countries and the most powerful to hit turkey in a century. the kremlin said vladimir putin is offering help to both turkey and syria. american lawmakers demanding to know if the chinese balloon that was shot down over the coast -- coast of south carolina was carrying technology from the u.s.. divers are trying to salvage what they believe is spy equipment from the balloon and expected to be hauled up in the cou

to michael mckee on the dexterity of his data world and the death -- the debt ceiling. at 8:30 wall street time? mike: we have the latest refunding decision from the u.s. treasury department and the extraordinary measures that treasury is taking to stay under the debt ceiling are enabling them to sell as much in terms of refunding fonts -- bonds this quarter as they did the prior quarter and the option sizes have changed. they will sell $96 billion of securities next week. 28.9 billion in two cash, the only way they can do that is because they are taking the measures to stay under the debt ceiling. they say it is unlikely that the debt limit will be reached before early june but expect variability in bill and cash management. treasury going to say as we get closer to the debt ceiling, we will sell very short-term securities so they don't run into a debt ceiling problem. tom: what is the so what in terms of who buys the debt? is it the u.s. institutions or american public or foreign institutions? mike: it is a mixture of all of those and we have seen the central banks go

always think michael mckee for piercing questions. lisa: foreknowledge that we do not have. et his advice. we went to copley square for nba finals last year. he had tv set up. they need bigger ones. pacs needs to get bigger tbc company for the nba finals. tom: you have a great weekend as we celebrate american football. we've got much more coming up, really important day with good conversation to get you through the weekend. richard haass at 12 noon, a wonderful new book. omers, fast. i know some consultants with great ideas. can they help us improve our digital experience? absolutely. they've invested over $2 billion in tech. that could really help us manage inventory. and save us a ton of dough. then let's take back our market share. checkmate, chess heads. girls, i said “bedtime”! >> we are separate the biggest weekly loss on the s&p 500 on the year so far. we are set for the first weekly loss of the year so far. equity futures are down .5% rate the countdown to the open starts now. >> everything you need to get set for this start of u.s. trading. this is bloomberg, the ope

we are diving into the data, michael mckee, is this time it is different? forget about the fed. the super number comes in at .27, so .3 percent gain during january compared to a .37 to the month of december. take out housing and as stephen says you have 40% that you are whacking out of the cpi in terms of the core and you have progress. we are still seeing some gains. lisa: isn't this too cute, especially if you look at the assets? you strip out everything and you get what you get. on one level i understand and on the other label -- level you have seen re-inflation areas including a whole host of different metrics. so how do you parse out? mike: the key is that you can strip out stuff and get what you want to get. the fed is not trying to get anything, they are trying to use it as a measure of what inflation is doing. because housing is such a big part of cpi it distorts the rest of the price movements. so if you want to see what is going on you take that out and it does not mean that inflation is gone, but it means that there is progress in things other th

lisa: michael mckee says it will not be a barren wasteland. michael: this is deliberate.d sox cufflinks because football season is over. lisa: you got decked out. michael: it is baseball season. let's go! lisa: that is our public service announcement for baseball. there could be a surprise to the upside in a way that people are not counting on. michael: it could be a surprise to the upside. we know energy and oil prices have gone up. we know used car prices have gone up. what is really going to affect it are a couple statistical changes. the new seasonal adjustment factors have been applied already. they have revised the december figures. december cpi fell a 10th of 1%. that has been revised to a gain of 1%. we are looking at a core rate that was revised higher as well. right now, it looks like anything that comes on top of that could push things higher. they are also changing the weights. the idea in the longer run -- tom: they change the rules and everything of the game. lisa: they are changing the -- michael: they are changing the weights of inflation. tom: as you know

michael mckee joins us with a brief here. how r starred is our morning here? liams will say seems important. michael: he is the president of the new york fed, which makes him the vice-chairman of the open market committee. by tradition, the vice chair does not descend from the chairman. -- dissent from the chairman. what williams says -- we have had powell speak first. i would not expect a lot of deviation from john williams. lisa a.: how much does tone matter though? how much did jay powell sound a hawkish message with a dove tone that markets have thrown away? michael: i asked you yesterday while we are on air or they should have said, because that is the hard part. they are saying what they mean but the tone has not been strong enough. williams is not someone who will come out and plow the table. i think he will probably push the idea that the fed is not done yet, but i don't know he will say to the markets, "you are wrong." tom: give us a view of claims tomorrow. i i'm not used to under 200,000. is it a fully employed america? william: it is a fully employe

tom: i want to look at housing and michael mckee will have all of that for us.vision. this is bloomberg surveillance. good morning. ♪ this is ge vernova, helping generate and move the energy that our world needs. ♪♪ welcome to a new era of energy. i screwed up. mhm. ♪♪ i got us t-mobile home internet. now cell phone users have priority over us. and your marriage survived that? you can almost feel the drag when people walk by with their phones. oh i can't hear you... you're froze-- ladies, please! you put it on airplane mode when you pass our house. i was trying to work. we're workin' it too. yeah! work it girl! woo! i want to hear you say it out loud. well, i could switch us to xfinity. those smiles. that's why i do what i do. that and the paycheck. when people come, they say they've tried lots of diets, nothing's worked or they've lost the same 10, 20, 50 pounds over and over again. they need a real solution. i've always fought with 5-10 pounds all the time. eating all these different things and nothing's ever working. i've done the diets, all the diets. before

michael mckee, delivering an upside surprise. your -- that print is a new high for 2023. euro-dollar shaping up as follow. euro-dollar looks like 1.06. tom: i think of a lot of people in congress saying, "i know the fed wants to break our backs and slow us down, but it is not happening." our team has put together wonderful voices, ken rogoff yesterday, jim bianco moments ago. the currency strategist has decades -- are you close to amending your view? are you close to making a mcquarrie shift here? is this what we have been dealt, full speed ahead? >> we will delay our view, not amend our view. a recession will start this year. it will not be in the first quarter. on the other hand, surveys are still pointing to a recession coming in the u.s.. look at the pmi's they are below 50. it is still pointing towards downbeat expectations. so are the conference board surveys. the consumer while, he may be spending is not in a happy mood, tom. jonathan: -- tom: how can you say the consumer is not in a happy mood given the data we just saw? thierry: the u.s. consumer is in afraid of

four-day workweek, there is -- and a four-day workweek, it is important to readjust economic data to michael mckeeef economist at barclays with far more tours than the u.s. and dallas fed. thank you for joining us. when you are at princeton studying with people there, there were theories you talked about. is there any operative theory for mr. paul and the fed? >> good morning and thank you for having me here today. i think the fed has increasingly used its tool, the forward guidance over the past couple decades, and has become more adept on using that and i think this is a theory that has been largely debunked in those days at princeton. tom: describe the barclays guide path of suppose a disinflation. describe the glide path and timeline of that glide path. >> very good. so we have course come down from very high inflation rate when we were at 9% cpi inflation last year. inflation has come down quite a bit over the past year. we are now expecting inflation to overall continued to decrease throughout this year despite the fact that the last reading has been stronger-than-expected and we expect pc d