>> we have more political, geopolitical risk. >> by having conflation, you eventually slow down and reduce the real valances and the consumer feels squeeze. >> there is a lot of excess buffers in financial markets. >> it is a question whether the fed takes the high road or the low road. >> if we have to hold at 6%, i think we are increasing the probability of a hard landing. announcer: this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. jonathan: live from a beautiful new york city, good morning. this is "bloomberg surveillance."

i am jonathan ferro. futures, just about positive on the s&p 500. tk, looking ahead to payrolls and chairman powell. tom: michael writing that the fed is in an awkward position. it captured the clumsiness of the moment. this morning, the awkward position is defined by a spread out to a new record wide 92 -- -92 basis points. jonathan: i made the point yesterday, i think that might be the best news chairman powell has had. lisa: on one hand, this is disappointing to people who are on this global recovery, fueled by an incredible move in china. on the other hand, this reduces potential inflationary pressures. by the way, position perhaps to go lower going forward. jonathan: need to catch up with credit suisse as well.

this stock right here, david herro, he said this to the financial times. why go for something that is burning capital when the rest of the sector is generating it? this is negative on the year. tom: this is a storied career. i am a good acquaintance but david has earned a claim and international lou chip investment and he has gone down in flames over a long duration with this holding. lisa: i wonder if this will be -- not the straw that breaks the camels back -- but this is a long-standing backer of a company that is getting least money. does that lead to a question of where the leadership and ownership and influence is coming from? jonathan: european banks are performing really well. not just in the euro zone. why would you watch all of that

happening and stay in this with trouble after trouble, quarter after quarter? tom: that conversation could have been had eight years ago, six years ago, 10 years ago. you are capturing a giant enormous dividend while you are waiting for the european banks to finally move. jonathan: squeezed out a week of gains on the s&p 500. futures are unchanged. 4% plus on the u.s. 10 year yield. just about negative by 1/10 of 1%, euro-dollar. lisa: this is an important week. i want to give you a sense of the difference assets that will be playing at market. central banks -- jay powell testifying on capitol hill.

wednesday, you get the bank of canada meeting. they have been talking about moving against the grain and not racing as quickly as people had been expecting. they continue that and what are they signaling with higher and hotter inflation? on friday, this will be interesting. the governor of the bank of japan, this is his last bank of japan meeting. does he deliver a surprise? president biden will be releasing his budget fiscal year 2024. this is important to get a sense of what his goals are and what he could get accomplished. and how that dovetails into hosting the european commission president. you get the job openings were poor on wednesday and the u.s. jobs report on friday. that will be key, especially with a data dependent fed. the february job support completely changed the narrative.

how much does that increase the rate hike expectations? tom: buried in the weeks data is the household change in net worth. this is not a small item. it is the oddest america right now. so many people are struggling. inflation is tangible. house prices won't come down. i believe we have observed that. it is a generalization. you wonder what the state of the well is going to be -- wealth is going to be. jonathan: manchester united, do you want to squeeze that in? tom: i think they are vulnerable. jonathan: make it a safe place for them. lisa: who are you? what got into you this weekend? tom: i turned it on. christian horner will join us later. it was 0-0, it was a good match. i turned it off, boom. jonathan: come back in the

second half and bang. it is a safe place for manchester united fans. lori joins us. -- said we remain in the camp that good crowed is -- good growth is good for stocks. is good growth good for stocks? >> i think it depends on when it comes. markets are trying to ignore 2020 three and people are ready to get past it. in 2020 four, valuations look reasonable. i think investors want a sense that if we get a recession, it won't be that bad. we are getting closer to the point that we can start to play the recovery in 2024. i agree with stuart on that. tom: if we have inflation extended, what does it do to revenues? to me, that is the heart of the stability and the lift that we see in equities. >> it's a great question, tom.

the answer is quite -- complicated. when i find is cpi has a higher correlation with s&p 500 revenues than gdp. we know that if inflation stays elevated, it will boost the revenue numbers. there is another complicated factor with pricing power as well. if you want to keep your pricing power, you need to keep a little bit of inflation. if we have higher inflation, it keeps your revenues elevated but it depresses your multiple. tom: it depresses the multiple but what do multiples do through the year if we are vigilant, stable, dare i say we even appreciate and value? how does the price to earnings or free cash flow multiple move? >> it is somewhat controversial. i don't know why because it is

just math. but if you go back to the 1960's, and we have good data going back to the 1960's, and we built a model. if you plug-in, why y, and z on interest rates, here is what your pe should be at the end of the year. we look at inflation rates and 10 year yields. if we have 3.5% on the 10-year treasury yield and we baked in 5.05 on fed funds. having optimism for a little bit of easing in the final part of the year. still high relative to where expectations were. we think we can get above a 21 times multiple which should give us some lift in equity prices. we came up with the idea that you could get above 4100 price target, in the 4300 to 4400 range. i don't know why it is

controversial. i feel like i've been talking about it since last summer at length. that is what the math shows. we need moderation and easing on the 10 year yield. lisa: it's controversial because people think something has to happen in the economy that has to play out in equity valuations in order for inflation to get down to that level. are you saying that's not true? that you're seeing this disinflationary forces from economic signals that give you confidence that you are right and we could see ongoing momentum in some of these earnings without huge layoffs and the natural disinflationary process? >> when we bake in the earnings number, we are at 190 nine, below the consensus. we may end up being too cautious. are 199 model is banking in that inflation.

it is baking in not a fantastic economy but not a terrible one, either. we think we have the right call. our numbers might be off a little bit, here and there. the idea that the economy can get hit, not too badly but get hit in line with the consensus expectations and inflation rates can stay above where they have been, we think that it is enough. i think what confounds some of my peers is they think that multiples did not fall enough to begin with and we disagree with this. if you look at where the markets were at the october lows, it is close to where my model said you should have ended up at the end of last year. that is a key difference. it is time we can start seeing some of that recovery, as opposed to a lot of people think we didn't see a trough multiple. jonathan: the perfect guest to

be with us, lori. looking ahead to chairman powell's testimony on capitol hill. lisa, tom and i have asked the question, will the fed data confirm the boom of january? our core view is the current activity upswing is unlikely to develop into a fully fledged acceleration. we advise the q -- to use the q1 strength in order to reduce exposure. tom: johnstone -- john published moments ago. the one thing i am not seeing is bullish optimism but resilient. you can afford to be resilient if you sustain inflation and nominal gdp. it may not be instructive but it helps out. jonathan: speaking of bowls,

should we talk about red bull? the team principle of red bull racing in formula one, tk dominance. tom: i'm the dumbest guy in the room and mr. ferro will lead the interview. we have never seen this in sports, entertainment and film, ever. jonathan: and this sport is breaking in the united states in a major way. tom: his children have wonderful table manners. jonathan: great teas. christian horner of red bull, coming up, we hope. >> keeping you up to date, i am lisa mateo. china has set a modest growth target.

beijing's goal for a gross domestic product both this year is around 5%. economists had expected a more ambitious target following a rebound in consumer spending and industrial output. u.s. lawmakers are stepping up the push to band tiktok. mark warner plans to introduce a bill this week to allow the u.s. to systematically ban chinese technology including bytedance's popular video service. one of the top concerns is that tiktok gives china access to american data. another norfolk southern derailment in ohio within a month has congress calling for rail safety legislation. saturday's derailment happened outside springfield, ohio about 180 miles west of east palestine where a derailment spilled toxic chemicals last month. the ceo of norfolk southern will be questioned thursday when he testifies before a senate committee. negotiators have agreed on the wording of a landmark united nations treaty assigned to protect maline -- marine life in

the ocean. if it is ratified, the treaty could build in new hurdles for corporations on high seas. it does not regulate overfishing, which is managed by other organizations. credit suisse has lost one of its biggest backers. david harrah has sold the entire share. he held a 5% stake last year. credit suisse hit a record low last week. global news 24 hours a day, on the air, on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. use it to set and track your goals, big and small... and see how changes you make today... could help put them within reach. from your first big move to retiring poolside and the other goals along the way wealth plan can help get you there.

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>> the growth may be pretty respectable. i get a sense it is good coming out of covid. and it would still be something of a growth engine for the local economy. but, a knee-jerk reaction that they will buy commodities is probably not right in the markets are guessing that that is probably true. jonathan: fantastic to hear from michael spence. tk, i think you would lead with the fact that he is a laureate, wouldn't you? tom: spence is extraordinary. he reinvented graduate education in america. what he did at stanford years ago is taken for granted. he was the first to restructure a masters degree in america. nobody talks about that. jonathan: fantastic to hear him talk about the new growth target out of china. it is 5%. it is being described and i say

this word should be in quotations, disappointing. we will see if it is disappointing. is 5% disappointing to you, lisa? lisa: some people are talking about potential for a six or 7% increase. is this the high point? will it only lower from here and what does it imply about the fiscal policies in china if they are not going to prioritize growth? jonathan: another interesting piece below the radar, the biden administration is nearing completion of an executive order that would restrict investments by u.s. companies in parts of the chinese economy. tom: the china tech issue is tangible and real. ben had a quote early this morning, we are in love with our consumer products from china. that is the end of it. what does the administration, what do republicans and

democrats do limit the stuff we love from china? lisa: u.s. lawmakers are working on a bill right now to band tiktok and they will roll it out. tom: this is not what i was thinking about. i was thinking about cell phones. jonathan: this is stuff that helps chinese military. however you would fold tic-tac-toe in -- tiktok into that bracket, some people might. lisa: there was a story about cranes being built by china and the concern that that could have secret spy equipment in there. they are saying the u.s. is paranoid but it gives you a scope. jonathan: that sounds kind of paranoid. lisa: when i say that, it definitely was. but if we are talking about spy balloon's, that is paranoid as well. jonathan: what are we onto now? tom: the mystery of 5%. in the current -- enda curran is

our chief agent. we have to get from eight down to six and back on. over the weekend, did our bloomberg team discover that once again they are bailing out the property sector? >> there was some messaging in there about extra support for the property sector. the big takeaway was the 5% growth target. disappointing because most came in around the 5.5% area. there seems to be some managing of expectations by beijing. tom: so important here, in all of your work, can we parse half

a percentage point of guesstimate on china gdp? i would suggest that is foolish. >> yeah. i think the way a lot of people look at this is five percent is going to be a floor for china's economy. it's a target they should hit easily, because of post-covid zero consumer sentiments. 5% should be easy to hit. the second half of the year might be harder. that is where the governor will kick in with spending. whether or not it goes beyond 5%, 5.5 or higher, that is where you get into an academic debate about what the net contribution will be. lisa: there is always tension from outside analysts about where the priority lies. is it growth as it was for decades or is it some of the social and governance aims of xi jinping, including trying to

increase certain types of production in china and making more investments on that level. is the 5% goal a sign that the other aspects, the noneconomic aspects could take a higher priority in the upcoming year? >> i think tackling inequality has been a priority for xi jinping. it has been for previous administrations. no doubt, absolutely, it is on his agenda. we had comments from president xi jinping. he was arguing protecting the rice bowl has been among his top priorities. as has been driving manufacturing development in china. he wants to push china to the next level of manufacturing development. that is where it will get interesting. how can china pull that off? you have export restrictions

coming on the u.s. what seems like every other week or so. it will be interesting to see if xi jinping can pull off that agenda, which feeds through to what it can do for a broader standings -- standards of living for the rest of the population. it's difficult to say what they can do. it is hard to say if they can -- they can't strike back and hurt u.s. firms the same way the u.s. can hurt chinese development on this issue. only a few months ago, we were talking about janet yellen heading to beijing for talks. that was supposed to get the economic relationship unstable footing. we were supposed to have the secretary blinken visit that got political things back on track.

but now none of that is happening. jonathan: a 5% growth target from china. lisa, some fiscal stimulus might be in the mix. it is not going in that direction. not yet. lisa: if it was that, would that be great? you could get a pop in oil prices that we haven't seen yet. on the flipside, does this reduce some of the inflation you could see on the margins? jonathan: i don't think it is good for the ecb. they are set to go 50 basis points at a meeting this month. it will be whether they go toward another 50 after that. i guess we will see. tom: i think we will see that

across all central banks, including what we see here day after day, including this morning. the data dependency has never been wider. i can't emphasize enough, we are still coming out of pandemic debris. jonathan: year three. tom: pandemic dynamics, into using normal analysis is just not appropriate. jonathan: we will debate whether they should provide firm guidance to the basis point hike? lisa: they don't have forward died and unless they do. tom: this is important. for those of you in america waking up at 6:25, i am living on the continent of europe, telephone calls about inflation. it is not like america. jonathan: and the rate is different too. so much quicker in the u.k.

lisa: andrew sheetz of morgan stanley brought this up, the question about how much inflation is driving from the energy prices and whether you could see more disinflation than people are currently pricing at. jonathan: the only reason i'm here is because christian horner is joining us in five minutes time. that's it, tk. christian horner, coming up next. nkingconventional results. at allspring, we break away with purpose. harnessing data-driven insights and boundless curiosity. we dissect the market from every angle. helping to build portfolios that redefine what's possible. because investing isn't one size fits all.

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jonathan: live from new york, a big week ahead for equity markets. jay powell on capitol hill later this week. can we build on a week of gains? the biggest weekly gain going back to january. futures totally unchanged on the nasdaq. a lift of 1/10 of 1%. on the 10 year yield, 3.90. as philipp lane talks up more rate, it looks like this. 1.0626 on the euro-dollar. tom: you are right to watch currency. i'm not on the 100 basis point

watch yet but we are headed there quickly. jonathan: if i tried to talk formula one on this program seven years ago, tom would have said what are you doing? in 2015, bernie had this to say to espn. we ought to try to be for a little bit in america. it's hard for me because i'm not enthusiastic about america. they are a big island and they are slowly starting to learn what other people do. he was wrong. with the help of the netflix drive to survive series, look at this. average viewership has gone from half a million in 2017 to 1.2 million last year. tom: where was it yesterday? jonathan: probably bigger. tom: christian horner will join us and mr. ferro will lead us. it is a safe free zone for

manchester united. bloomberg surveillance is a safe free zone for everybody in formula one got their clocks cleaned. jonathan: christian horner joins us. congratulations on the win over the weekend. what goes into it over the winter to turn up and absolutely dominate the way you did? christian: thanks very much. it was a great start for us yesterday. the regulations are constantly being tuned and evolving. the basis of the car is similar to the 2022 race. it has done a great job of involving the car and almost every component is new for this year. with only three days of practicing and testing, it was great to get that first big score in yesterday. jonathan: we have heard about the rule changes in the last 18 months. it was meant to make it more

competitive. a lot of people might be saying what happened? what is it about this set up that suits you and the team so well? christian: i think we have only run the cars at this track. we tested and raised there and it suited up well. there were 23 different races and circuits. different conditions. the big question is is that kind of performance going to carry over? it will take two or three races. i know people are saying we are going to run away with it but we are not thinking like that. we need to see a few more races to see how things pan out. jonathan: we started this conversation by talking about the changes we have seen in your sport. the attention it now gets from the rest of the world. can you give us a flavor of that and how some of the nature and sponsorship deals have increased over the past couple of years? christian: we have seen massive

growth. the phenomenon through drive to survive has introduced formula one to a new audience. a younger and american audience. i think out of the 25 new partners we have introduced in the last three years, 21 of them are u.s.-based. three of them are in the fortune 500. formula one is on fire at the moment. it has done a great job of explaining the sport. and bringing a new fan base in, a young fan base, a female fan base as well. it shows some of the characters in composition -- competition behind the scenes. it's like the kardashians on wheels at times. jonathan: does that work for you, tom yucca -- tom? tom: i want to see that on the

side of max's car, kardashians on wheels. jonathan: is there a chance we sacrifice track and race quality for commercial expansion? christian: i don't think so. the monaco's, the silver stones, they are bringing new circuits on. we had miami last year as a new venue and this year, we got las vegas. i think it will be the biggest sporting event on the globe this year. the demand for that race is off the charts. of course, the commercial demand for the sport is at an all-time high. with 23 races at 23 different venues around the world. so, there is a mixture of street tracks and some of the old classic circuits. tom: unlike some of the owners and the elites of formula one, you have actually raced the cars. i'm fascinated what you think

about the extension to four more cars within formula one. i know a $600 million buy-in is out there. it seems low. can the track take four more cars and that first dangerous turn? christian: the tracks are certified to be able to take more cars. the commercials, like in any business, are going to drive the decision-making on this. a franchise has their values through the exclusivity of the 10 franchises. i think the key to protect that is the fia, the regular, they are looking to see kenmore teams be accommodating? --

at the end of the day, it will come down to who pays for it. lisa: you were talking about expanding to the u.s. and things won't be sacrificed, but with the nature of the sponsors and the audience, which target already and's are you going after -- audience are you going after and is formula one going after in the united states? christian: we are bringing in a young audience. we signed oracle and hard rock and cash app. the biggest was the announcement with ford in 2026. we are looking to appeal to a younger demographic. red bull is an agt. we have drivers that push the boundaries. and teams that push the boundaries. our following in the u.s. is bigger than any other team. i think it is only a matter of time that an american driver

will be running in formula one and we want to be at the forefront of that. we are looking to make sure we protect the diehard fans and that we attract the new and younger audience and a more diverse audience into the sport. jonathan: that will mean cheaper tickets, maybe. i was looking at some of the prices in vegas. it was cheaper for some of us on the east coast to fly to europe than it was to get a ticket to some of the stuff at the united states. what can be done about that? christian: the demand for vegas is off the charts. anybody who is anyone will be at that weekend. and i think it will be the most-watched sporting venue of the year. we do need to look out for the fans. we need to have a sensible entry price so fans can come and see these incredible cars.

until you see it live, you can't comprehend the speed of these machines and what a human being is able to control around the streets of las vegas. that is a responsibility that we as teams and commercial rights holders have to protect and look after for the diehard fans. jonathan: can you just discuss the risks surrounding your relationship with a new partner and when the planning really begins? christian: for 2026, it is new regulations for a new engine. we as red bull decided to take home the challenge ourselves. as an independent and a subsidiary. mercedes, ferrari, audi and so on. we felt that it was right for us to align ourselves with a manufacturer to give us access to some of the r&d.

discussing with jim from ford and bill ford, they were looking at formula one. and a partnership with red bull was a natural thing on both sides to do. we get to benefit from their knowledge and technical know-how and certainly in the electrification. when that process has started already, 2020 six as far as the engine is concerned, is literally tomorrow. jonathan: i think you joked there were three red bulls on the podium. number three was the aston martin. you have been in the car before. can you describe how crazy it is what fernando is doing in his early 40's? christian: fernando is a fantastic driver. he is one of the best of all time. he is -- has finally got himself in a competitive car. at 41 years of age, he is giving

all of the 40 some things something to root for. he has lost none of the racing spirit, drive, determination or skill. he is in great shape. he will be a competitive driver and team this year. we have to keep an eye on them. they could be the dark course of this championship. jonathan: i was hoping you would say for ari, but maybe it will be aston martin. tk ferrari not getting it done over the weekend. congratulations, i hope we can do this again soon. christian horner of red bull racing, after a dominant race weekend. tom: what did we learn? jonathan: going forward, they want to build up the expansion in america. do not get a sense of that? tom: they have three races in boston, miami and las vegas and that screams l.a. and new york.

lisa: how do you placate the diehard fans while also dealing with u.s. insanity? tom: complete amateur but i can tell the difference between monaco and miami. to me, miami wasn't formula one racing. jonathan: it will be interesting to see how they do it. tom: i called mayor adams and asked can you fix a pothole between lexington and 59th. jonathan: live from new york, this is "bloomberg." >> keeping you up-to-date with news from around the world, i am lisa mateo. china will take forceful measures to support and develop high-end manufacturing. china's tech industry has been hurt by u.s. trade sections and

big electronics assemblers are setting up more facilities outside of china. china reportedly will create a new regulator to manage the countries huge stores of data according to the wall street journal. the journal says the agency would set data collection and sharing rules for business. it would decide whether multinational companies can export data collected in china. ukraine forces say -- ukraine says russian forces are trying to cut off the besieged city of bakhmut where the russian attack is preventing ukrainian troops from reaching residents who want to evacuate. still, analysts at a u.s. based institute for the study of war says russians will probably not be able to encircle bakhmut any time soon. president biden sought to strengthen ties with black voters at a hallowed site for the 1960's civil rights movement. he spoke at selma, alabama, to honor the anniversary of bloody sunday. president biden's approval

rating among black voters has been falling. for the second time, tesla is cutting prices this year. they are reducing the base price to just under $100,000. tesla slashed prices up to 20% to boost sales. global news powered by more than 2700 analysts and journalists in over 120 countries. i am lisa mateo and this is "bloomberg." ♪ every day, millions of things need to get to where they're going. and at chevron, we're working to help reduce the carbon intensity of the fuels that keep things moving. today, we're producing renewable diesel that can be used in existing diesel tanks. and we're committed to increasing our renewable fuels production. because as we work toward a lower carbon future, it's only human to keep moving forward.

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when active investing and disciplined risk management are needed most. drawing on deep expertise across the world's public and private markets in pursuit of long-term returns... pgim. our investments shape tomorrow today. and move the energy that our world needs. ♪♪ welcome to a new era of energy. >> there are ways to stop inflation. one of them is to tighten monetary policy but the other way is to let the inflation happen. by virtue of having inflation, you slow down and reduce the real balances. one of the reasons we will see a

resumption of the trend of disinflation in the u.s. is that reason. jonathan: looking for big things to happen in europe. they are calling for european economic outperformance in the year ahead. futures in the s&p are just about negative. off the back of a decent weekly gain last week in the face of some big moves in the bond market. 10 year yield almost at 4%. on the session, down three basis points. chairman powell in the next couple of days and onto payrolls on friday. tom: after payrolls, we launch across the weekend into the inflation report and retail sales is out there. are we in a recession watch? i can figure it out. jonathan: based on the data, absolutely not. that might change. things could really change in

the next two data points we get for payrolls and cpi, the same way things changed after the previous payrolls report. have some sympathy for chairman powell going into this testimony. the payroll report comes out on friday. then when cpi comes out, it is the quiet period for the fed. they shouldn't come out and say anything at all after the cpi prints out. tom: we will have to see. i could invent a new phrase. we have secular stagnation -- stagflation. it is not stagflation. it is resilientflation. kim joins us. thank you for joining us. what i find fascinating is the

economic growth bolt on to insistent inflation. does that surprise you? >> our core view is we will see economic resilience but some gradual disinflation over the course of the year. it is true the last releases for that have not been disinflationary. but i think there is a danger here that the market swings too far from one side to another from learning about u.s. recession risk in january to know landing in february. i still think that you are likely to see the bumpy part lower in the inflation metrics. these things are volatile. they take a few releases before you get that payback. that is the real question for chair powell this week. whether you get enough of the information before the next fed meeting. tom: is dollar a movable feast?

does dollar move on the surprise growth or surprise resilience that we have? >> the dollar has moved on the back of that resilience. you need to take a slightly longer picture. if you look at november and december, we re-rated european growth higher. we had a phase where the cny re-rated higher because we had china reopening. most recently, february, we have seen the dollar move higher because we have evidence of suggesting u.s. growth resilience. when you look at anyone of these things, it looks like it is just the u.s. and the u.s. is exceptional. the reality is when you step back and look at the past three months, global growth is more resilient and that is what has pushed rates up everywhere, with a much more choppy or backdrop for currencies. lisa: we were talking about the

at length last week. we heard from morgan stanley and angers sheets, talking about a number of narratives that have gained traction and markets. they questioned, one of those is is inflation as sticky and problematic in europe as people think? that they will make inflation go down much more significantly in europe than people expect. do you agree with that? >> i agree that european inflation will increase and decline. i think this will be a slow process. we have come out of a period toward the end of last year where we had some helpful inflation releases across the world and more recently, inflation releases have been surprisingly to the upside. it will be up and down. core measures will be stickier and still end the year at levels of inflation that central banks

won't be comfortable with. they are going to be substantially above target. will it decline? yes. is it still going to be sticky and high that central banks will want to maintain their rhetoric of higher rates for longer? i think i will be with us to the end of the year. lisa: there is a question about differentials. if you see greater inflation, albeit at high levels, does that mean the euro has more room to depreciate versus the dollar, where there could be a stickier, less energy dependent aspect to price increases? >> that can certainly happen. it also depends a little bit on what the global growth backdrop is. what we have tended to find is that environments where growth is strong in most parts of the world, including in europe, the dollar tends to weaken somewhat at that point. i think that both europe and the u.s. are places where probably rates can stay higher for

longer. i would be -- i think the depreciation is more likely to come among jurisdictions which are likely to fall off the pace of the hikes of these two jurisdictions. i would be more cautious on places like the u.k., like sweden, which are likely to fall off that hike pace. lisa: when you talk about a stronger dollar, i wonder what that means for the emerging markets trade, which has been so hot. you have the 12 punch where china -- 1-2 punch where china is expecting 5% below expectations for growth this year. what does that mean for this trade that so many people piled into? >> i think it does mean that from the local side of things, it is more challenging. you have the dollar moving back to this likely stronger level. it means that for the vulnerable

parts of the emerging complex, spreads are pretty much already at distrust levels. some of those will find it challenging. we saw a huge cloud of issues from emerging markets in january. most of that was investment grade among the high yield segment. you saw very little in february. what it tells you is that for the riskier group of emerging markets, financial conditions remain very challenging and are likely to remain so for the months going forward. jonathan: thank you for being with us. let's talk about disinflation over at tesla, shall we? the model s and model x. they start at $89,000 90 -- $89,990 and $99,990. tom: it will be fascinating. i am seeing price cuts and i am

being told by friends that they are waiting five years to get a car. i don't know what to think. lisa: when i talk to car executives, they say tesla got greedy and their margins were so fat and they are trying to bring them down a little bit and corner the market. that is a theme that it is not necessarily because of a lack of demand. they want to be the dominant player and there is so much competition they may have to accept a slightly smaller margin but the margins are still incredible. jonathan: this is what elon musk said on march 1. tesla's investor day. we found that small changes in the price have a big effect on demand. tom, his words, very big. tom: i agree with that point. i wonder where the branding structure comes in where you are perceived as a lower price point car. that has to happen at some point. it might be five cuts down. lisa: at what point is this a

low-cost car? tom: they are trying to compete with the nissan leaf that we decided grandma has to have. is that the car america is going to buy at $38,000 plus the $695 two-tone paycheck? jonathan: this country is reluctant about buying small cars. when it comes to ev's and being green, sometimes you would be better off buying an internal combustion engine in a small vehicle than the electrified hummer. it's about looking cool. lisa: and feeling less guilty about it. how do you feel about that? [laughter] jonathan: everyone knows. futures -1/10 of a percent on snp. david leibowitz running up next.

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>> in this brave new world, we have geopolitical risk, higher inflation, higher rates. >> by having inflation, you slow down and reduce real balances and the consumer feels squeezed. >> there is a lot of excess buffers in financial markets and among households. >> it is a question whether the fed takes the high road or low road. >> if we get the 6% rate and have to hold, i think we are increasing the probability of a hard landing. >> this is "bloomberg surveillance." jonathan: a double dose of power

coming up, the fed chair on capitol hill tomorrow and wednesday. good morning for our audience worldwide, this is bloomberg surveillance. equity futures down by .1% on the s&p. you have to start in china and make our way to the united states. a 5% growth target over in china over the weekend. tom: resilient is the word of the day. the bolt on of what happens to economic growth given the angst of the week. jobs, inflation, retail sales. what does it do for economic growth and what the adults are saying is resilient? jonathan: jobs, 570,000 in america. inflation, still sticky. arguably for those just tuning in, arguably the best news they have had for chairman powell and president lagarde, the modest growth target out of china. lisa: if china is not going gangbusters, perhaps that means inflation is not going to have the same negative approach.

this could dampen potential inflation expectations on virtue on energy demand. that said, i think today is the great reset. we have had january, gloom and doom. that was shattered. people were excited about the great disinflation. in february, everyone is worried about runaway inflation. have we overshot one way or another? this is the reset. jonathan: we set on this programs, two years, two months. it's whipped through the price action in the bond market, u.s. 10 year last week for handle, back to 392. 3.92. yields lower by a couple basis points. lisa: it is going to be a important week of central bank, government talk, discussions and data. we are looking at fed chair powell testifying on capitol hill tuesday and wednesday. wednesday, we get a bank of canada decision.

friday, it is the last bank of japan decision overseen by governor kuroda. does he give a surprise before he leaves? does he say, i will throw you a bone or make your life miserable? president biden going to release his full year 2024 fiscal budget thursday. curious to see what he projects in terms of spending and how he bridges some gaps. also, what kind of support is provided to ukraine. he is hosting ursula von der leyen friday. we are expecting the jolts data friday. fried is daily -- fridays data point may be one of the most important, if not the most important. it is the report for the jobs of the month of february. do we see this confirm what we saw in february? if it does, how much does that change the market narrative? if it doesn't, do we see the whipsaw back to january's inflation? jonathan: how big does that need to be to put 50 on the table in

the next meeting? this is backward looking data. some make forward looking assumptions of where the dot plot should be in the back end of 2023. lisa: you can start normalizing and averaging out some sort of trend, something tom has been talking a lot about. all of a sudden, if you get a 400 print or something outrageous, even a 300 print. tom: even 300. lisa: all of a sudden, you will have a different conversation. tom: i am looking more three-month annualized. i think you take three months data, is it freedom out there right now? if we get surveyed with no revisions on this drop report, that is 992,000 jobs formed in 90 days, or 331,000 per month. jonathan: that is phenomenal. tom: it is not phenomenal, it is not in the range of thinking. jonathan: federal reserve chair used a phrase, he said the disinflationary process has

started. our next asked had something to say about that. the global market strategist at j.p. morgan asset management. i remember you said, that phrase may go on the shelf with transitory. david: i think it has. when you look at the data this year, the hard data being the jobs numbers, the soft data, the survey data for february was robust. this is clearly an economy proving to be more resilient than a lot of people expected. i am mark -- not sure that disinflation in the market is going to come through. particularly when you look at where job growth has been most robust, where wage growth has been most robust, it is in leisure and hospitality, the service sector more broadly. services are not showing any signs of slowing down. tom: that is what we are doing here. we are leisure and hospitality. that is probably doing bloomberg surveillance every day. you are in the column, patient, long-term business.

what you say to j.p. morgan clients in a panic about the people that say not only are we going to drop, but drop at some point sip justly? -- pacific justly? david: a lot of folks are suffering from recency bias. and they think about 2020 or 2008. statistically, those are outliers. when we look at the fundamental data, the cyclical sectors of the economy, we do not see anything so far offsides that it suggests an outsized downturn when one does materialize. i think what we have been trying to lean on is, this economy has more momentum. yes, that hasn't locations for inflation. if the fed decides to crash the ship down the road, we do not see the pieces in place the way they were in 2007 and 2000 eight with respect to housing and do not foresee another global pandemic soon. lisa: what would it take for the fed to crash this party?

david: the one thing we have been spending a lot of time thinking about, this is an exercise in central banks and the fed defending their credibility. the fed can get inflation wherever they want it to be. they can get growth wherever they want it to be. what needs to happen to rates, what is the terminal rate look like? if this is a more inflationary economy, what that means is our start isn't 2.5 percent. it is probably higher and that hasn't locations for what the fed needs to do to snuff this inflation candle out. the worst case scenario is a fed that gets frustrated with their inability, seeming inability to get inflation back into check and keep hiking and hiking and throw that theory about leads and lags and it takes time for this to work its way into the economy into the wind. lisa: how do you game out that risk in your investing? right now, you're talking perhaps not another 2007 crisis,

so if you see resilience, that could be good for stocks. david: i think it is good short term. a lot of concerns about profits are going to collapse by 30%. that is not necessarily going to come to fruition if the economy is still humming along and inflation is taking longer to come down. i think near term, there is an opportunity in risk and risk can end up performing well in the short run. i think the challenge is, how do you get inflation back in the bottle? reduced demand. at some point, that shows up in corporate revenues and corporate profits. when earnings fall apart, that is going to lead the market back down not necessarily to a new low, but perhaps levels we saw in october and june of last year. tom: do you see evidence earnings are "falling apart?" david: maria: i think earnings estimates are coming back down to earth. i think that is a good thing. the 2023 number is down 78% year

to date. the challenge is, when you think about what the market price is off -- prices off of comedy forward multiple. everyday we go through in 2023, we are picking up a average year of earnings in 2024. tom: where is the statistic right now? where is the multiple forward right now? david: about 18 times today. we think that is about to terms expensive relative to where it should be. it is a question about 2020 for earnings. everybody was talking about how this is going to be a year where profits came under pressure. if the economy is proving more resilient, that is getting shifted down the road. i am not sure markets appreciate that. tom: what do you do with a frenzy of tech price down to 22.25? some of it is less profitable, some as growth. there are a lot of cash flow generation others -- generators. david: i do not think they are there yet. i do not think they are worth it yet. when we look about the markets

today, there are other of interesting things to do. tom: this is the key question. is john deere or whatever trading at 12 times earnings? are they value traps where they sit there forever? david: i think they are value traps if the fed returns to zero. i do not think the fed is returning to zero. my base case assumption is there is going be a cost of capital in the market going forward. that is going to be making equities less about one thing, long cap, long-duration growth and a bit more balanced. i think businesses that can generate productivity are going to be the ones that perform best in this environment because investors are not going to reward earnings growth that is a function of rising prices. they want to see business plans changing. that is going to make or break investments going forward. jonathan: i just think europe. it feels like something has changed. year to date european banks are flying. david: i think part of it is the sigh of relief trade. it has been a decade since the euro zone crisis in europe

finally seems to be shaking off its scabs and coming back into the limelight. part of it may be a long overdue dead cat bounce. i think generally, there is an expectation getting baked into that market the ecb is going to have to do more. like the fed, when the ecb pauses, it is going to be a pause. they are not going to turn around and cut. furthermore, the european banks are different today than they were in 2007 and 2008. jonathan: what is that disney line you used? tom: ♪ a whole new world ♪ ♪ lisa: you never saw aladdin? jonathan: why would i refer to it if i didn't know what movie it was about? lisa: it is a disney song. jonathan: forget it. thank you. lisa: did you watch it? jonathan: of course. lisa: did you watch -- jonathan: i watched the new one,

too. lisa: that is devotion. i take it back. jonathan: [laughter] of course i am prepared. tom: the oscars. this weekend. ms. is keen sitting there they bet bill on her lap, begging me to watch top gun. jonathan: it is emotional. lisa: [laughter] jonathan: watched that in the cinema. tom: why did i not know that? jonathan: the new one, and the old one. the old one, the cart one -- cartoon version. tom: you know what car this is? jonathan: you know, back in the day? lisa: let's move on. jonathan: futures down .1% on the s&p. lisa: keeping you up-to-date with news from around the world with the first word. china has set a modest growth target suggesting there will be less of a boost to an ailing world economy. beijing's goal for gross domestic product growth this

year is around 5%. economists had expected a more ambitious target following a rebound in consumer spending and industrial output. u.s. lawmakers stepping up the push to ban tiktok. senate intelligence committee chairman mark warner plans to introduce a bill this week to allow the u.s. to systematically ban chinese technology including the popular video service. one of the concerns is that tiktok gives china access to americans data. a breakthrough in a long-standing feud between japan and south korea. the south korean government says it would resolve this dispute over people forced to work for japanese companies during japan's colonization of the korean peninsula. the conflict has disrupted relations on everything from trade to security. a second nor focus southern train to rome and in ohio has congress calling for real safety legislation. saturday's derailment happened outside of springfield, ohio about 180 miles west of east

palestine. that is where derailments spilled toxic chemicals last month. the ceo of norfolk southern will be questioned thursday when he testifies before a senate committee. shares of apple higher today. goldman sachs recommending buying apple for the first time in almost six years. goldman was mostly on the sidelines as the iphone maker stock more than quadrupled in value. global news powered by more than 2,700 journalists and analysts in over 120 countries. i am lisa mateo. this is lou berg. -- this is bloomberg. ♪ hey david! connect with an advisor to create your personalized plan. let's find the right investments for your goals. okay, great. j.p. morgan wealth management. this is ge aerospace, advancing flight for future generations. ♪

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>> in 2016, i declared i am your voice. today, i add i am your warrior. i am your justice. for those who have been betrayed, i am your retribution. we will evict joe biden from the white house. we will liberate america from these villains and scoundrels once and for all. jonathan: former president trump over the weekend at cpac, not the only potential presidential candidate to speak. he is formerly in the race, this guy is not. i would say, yet. ron desantis, the governor of florida with this to say in california on a little bit of a media tour. he said, we have witnessed the great american exit is to from

states governed by leftist politicians delivering poor results. you can see massive gains in states like florida who are governing to the tried and true principles that president reagan held dear. tom: california -- southern california, you bring up a good point. there is lots of toes in the water. i think every candidate is putting their foot in the water peered the governor of maryland, governor hogan, a moderate. i think mr. trump would suggest a republican, he is not going to put the foot in the water. lisa: how do you take a local appeal and brought it out more generally? ron desantis talking to california. a lot of analysis about how he missed a lot of the nuance and understandably -- the visceral response to how high housing costs are in some of the states and the reason why some people are coming to florida is not for some political or moral indictment. but, it is where it is cheaper.

or, it was until people moved there. jonathan: taxes. tom: part of the matter. that is all there is to it. some people this money, the idea of mr. biden slowing down some form of taxes. greg tore him apart this morning. he said, it is dead on arrival. he said the budget today and tax lift. jonathan: aren't all of these budgets dead on arrival? tom: yes, and in england, as well. jonathan: the budgets usually get done in the u.k. parliament gets the majority, you just do it. lisa: [laughter] i feel aggrieved. jonathan: just a talking point. lisa: whatever. tom: august of next year, annmarie quarter and, the can train -- the campaign lasts forever. i remember a story during the impeachment stuff from the new york times. she beautifully identified not only on the left-hand the right, but in general aggrieved

america. boy, did it sound like president trump was speaking to his aggrieved constituencies over the weekend. how does he expand away from the aggrieved now? annmarie: he certainly was. that was on full display at cpac. you had individuals dressed up in full on trump gear, clearly in the polls at cpac he was the lead winner. others like governor desantis was not there. he was more on a national pool. the issue with the republican party and the likes of the former governor of maryland backing out because it is very wide and broad. trump still has a strong grip on about 30%. the trump campaign is thinking, if they can deflate the others, most notably the number one challenger would be once he enters governor desantis, he could have basically what happened in 2016, this huge field of 16, 17 people he was

unable to when the polarity of he has that 30% grip. it is about whether or not the moderates in the party or potentially those that are conservative but many in the republican party say do not have the baggage trump rings, is one of them able to take on? tom: i sound like neil ferguson. i am going to go there anyways. how does haley pompeo, desantis and the rest, how do they address with respect the gop aggrieved? annmarie: it is a great question. i think you are going to see them doing it in different ways. i think when you see governor desantis, he wants to make it about policy. you heard him over the weekend at the reagan library talking about conservative policies, what he is going to do. the have the republican legislature kicking off this week, that spans from tons of issues that he would call getting rid of "woke education"

in his estate. he is going to go on a national tour promoting what he was able to do with his large republican majority in flora. if you look at his calendar, he is going to nevada, new hampshire. him and former president trump are going to early state voting iowa. that is his take. it might be more difficult for the likes of pompeo to go after trump. that is their former boss. already, you see mike pompeo and recent fox news say he didn't think the former president is that conservative. he insinuated that because he was talking about raising of the federal deficit. lisa: when are we going to hear about presidential -- president biden and his potential reelection campaign? david: this week, biden is going to unveil the budget. annmarie: it feels like a campaign event, he is taking his budget unveiling to philadelphia.

this is one coming from what many expect him to announce what could potentially be in april or may, basically his wife said all they have to do is set the date. it is a way for him to set aside what he envisions for the country versus republicans. greg valley a, he said it is a thud. a dead on arrival. biden is going to propose tax increases for a lot of what he wants to do. the past congress couldn't get tax increases done. the democrats held control. what biden is going to say to america, this is my plan. i want to make sure medicare, social security are solvent. i want to raise taxes on the richest in this country and the corporations. republicans, show me your budget. it is a twofold event for biden. i think it is something about him and a pre-campaign event. lisa: is there any talk about a pipeline of potential other democratic candidates just in case things change in a year or change in six months?

annmarie: sometimes, there is whispers about this. senator joe manchin was on the sunday shows over the weekend. he would not say whether or not he would run for 2024. there was this idea a few months back potential you could have this third-party candidate. senator manchin is up for reelection for his senate seat in 2024. we know republicans are going to heavily, aggressively campaign for that seat. he would not say directly if he would back president biden. at this moment, there is not huge top of it, but there are fractures there. you could see potentially other people eyeing to get in if biden does not go the full way. jonathan: two things, message and strategy. message in the last election was clear, he was going to try and unite the country. some people have criticized the way he has governed. the strategy last time around was set -- step aside and let

mr. trump make a referendum on him. i wonder how message and strategy will change this time for the sitting president. annmarie: a lot depends on who the republican candidate is. if it is former president trump, some of that strategy could be redone. many individuals in polls, you see biden still beating a trump if it is a clear rematch of 2020. if it is a different candidate, you are correct. that strategy and message is going to have to change. what the heart of the country, the center middle, you see from the polling of 2020 is, they want it to go back to a more of a normal washington and get rid of some of the noise. if the republicans put forward another candidate, a more moderate candidate, governor sununu, ricky haley, i wouldn't say he is moderate but i look at governor stitt tant -- governor desantis, he is conservative. some of that noise and baggage, he may not come with.

potentially, the biden administration campaign is going to have to change course. jonathan: thank you, wonderful as always. tom, it is early in the process. so early in the process. tom: it is a sanctuary. for everybody but red bull and also those -- are you kidding me? jonathan: you bring up man u, that was brutal. [laughter] tom: almost as bad as the tots. jonathan: and the lamb. lisa: it took you nine minutes. i just want to say that. [laughter] jonathan: just a little bit. of up to $26,000 per employee. all it takes is eight minutes to get started. then work with professionals to assist your business with its forms and submit the application. go to getrefunds.com to learn more.

jonathan: the chairman of the federal reserve speaking over the next couple of days, senate banking committee tomorrow. house financial services committee wednesday. he goes twice into that. futures negative on the s&p by not only -- by not .1%. biggest gain going back to january. nasdaq unchanged. bond market yields look like this. two year, cycle high last week. 4.94, 10 basis points out that 4.83.

yields about a basis point. this curve gets more inverted led by the longgone. 10 year, 3.91. tom: can we pause not only with the twos, tens, 93 basis points, not in the 100 basis point watch . 20 minutes ago, a headline is stunning. i sat in the current of bloomberg surveillance in 2007 and 2008 with a 5% libor. i know libor is fading away. it is what everyone hinges on, the debt business three-month dollar libor tops 5% for the first time in 16 years. there is no other headline today. that is the headline that everybody, including chairman powell, has to adjust. jonathan: speaks more broadly to what is happening with rates more universally. where the two-year was last weekend, haven't seen those

level since 2007. the fed has not been at these levels since the pre-financial crisis days. tom: jerome schneider visiting us last week. people like ira jersey of bloomberg intelligence, they know the way that all of their world is hinged to 90 day libor. that is a huge deal. it is bigger than down 10,000. you know how big down 10,000 was. jonathan: it went that far. that was a big day. tom: it was a big day. like 100 years ago. jonathan: euro-dollar, tug-of-war between what is in the united states and the robust data out of europe. eurozone inflation data last week caused cpi all-time high. euro-dollar last week was flat. really flat. like that tension through the rope of the tug-of-war on both sides, we will see what breaks. lisa: especially given the fact inflation is a problem on both sides. it has that -- how does that

play out with respect to growth and the response i can is him with central banks? credit suisse, we were talking earlier about one of the longest standing shareholders withdrawing his full investment, selling out of credit suisse after holding that position for a long time. those shares lower by 2.3%. john was reading the quote earlier, david haro saying we have lots of other options to invest. why go for something burning capital and the rest of the sector is generating it? we have seen that throughout the banking sector in europe. apple shares, goldman sachs recommended buying apple for the first time in almost six years. seeing those shares up one point 3%. it is interesting to see tesla shares barely moving after cutting prices for the second time this year on a number of their models. how much is this some sort of statement on demand and the price point? how much of this is a statement on, we want to cannibalize your business competitors? if we can cut a bit, we want to

do it. jonathan: you know that phrase, your margins, my opportunity? my smaller margins, your problem? lisa: there margins are massive relative to other auto manufacturers. they do not have to suffer much if they want to get more traction. jonathan: equity futures not doing too much, down .1%. i imagine that might change through the week. fed chair jay powell test of paying -- testifying in front of the -- wednesday. over the weekend, we heard from mary daly from san francisco fed president. the message, higher for longer. she said, it is clear there is more work to do in order to put this episode of high inflation behind us. further policy maintained for a longer time will likely be necessary. tom: a longer time is the x axis. that has been the shock not only here but in europe. if you are part of america

global wall street, it is time to stop and lean forward. eric nielsen has been at unicredit since the advent of the italian republic. he joins us now, chief economics advisor at unicredit and one of the great optimists in the european experiment. he nailed that coming out of the crisis of greece and such. thank you for joining us today. i love your research note where you say ecb and others have it wrong. stop focusing on core inflation. why is that? eric: good to be back. i think people are way too concerned particularly in europe , less so in america, but way too concerned about these inflation numbers. they are driven predominantly by the cost of energy -- to a court of core numbers, they naturally do for a wild. then, they come back again. it is so hard to argue in europe

we have excess demand that drives inflation. this is coming down again. i worry ecb is all reacting to it. tom: do they have the policy elasticity that if the ecb or if the fed and others overshoot, they can turn around and write the ship quickly? erik: no. they cannot for two reasons. one is pure pride. you are coming off, oh, my god, cannot turn around. then, it is the natural --of that. the other side is, remember, monetary tightening takes at least six to nine months, up to 18 months before it is filled. you are not going to go into this period with high interest rates, then inflation comes down and growth is going to slow down and demand has been squeezed.

then, we will see on up limit go down, we did too much. there is a pride element, the damage has been done before the effective some easing comes about. i am worried about that part. lisa: if this is a matter of pride and if we do not see the effects of some of these rate hikes a while longer, does that mean your vantage point you think people are overly optimistic about european growth? annmarie: i think the concern about this, admittedly i thought this winter would have seen a bit of a recession. it looks like it is a good -- of that. next week when the full effect of the ecb tightening is going to be hit, when the excess reserve savings in the household sector is coming down and as we see some return on the fiscal side, the movement of stimulus, i think the numbers will be lower than what you see by consensus and most forecasters. i am not talking the deep

recession, but i certainly expect a lot less then generally perceived in markets. lisa: how does that potentially get played out in markets that could be problematic for the ecb? could this make the euro weaker versus the dollar if you start to get concerned about the economic prospects, which just imports inflation and makes things more tricky? annmarie: i think that is right. erik: at the end of the day, -- is difficult. it is ultimately -- the difference between growth of the dollar, the growth prospect and the carry of the interest rates. you can certainly see a downside in parity. i am not in the camp who thinks we will go parity, but weaker than mentioned. tom: in your optimism on the european experiment, you have always said they will get along. are they getting along with the bundesbank now, the central

nexus netherlands bundesbank and others, what is their strength, their power into the rest of the year? erik: that is a good question. i think the bundesbank is a much more productive member of the euro system now then it was before, where you had it coming out and attacking the bank in the press. that is not helpful. i think now that the pundits -- bundesbank president now is doing this much better, more professional and the ecb doing a fantastic job. i happen to disagree with this stance. this is something reasonable people can disagree on. i think they are too hawkish. it is clear the northern european class, not at the dutch central bank and the germans and some northern europeans who are driving this at this stage and have basically instilled fear and everybody because the actual

inflation numbers into the core are way too high. but, we know the monetary policy should not react to these numbers. that is unfortunately what we are seeing now. jonathan: to your point, they are quieter now because they are getting what they want. higher rates. with the ecb and any central bank, it is not what we want them to do, it is what they will do. as you anticipate, the next meeting has led us to believe they will go 50. do you think they will at the next meeting? erik: i think they will. the next one is 50. given now, they have always said -- christine lagarde has basically confirmed. incidentally, a degree of forward guidance. in my mind, i had hoped they would slow it to 25 and maybe another 25. i think overwhelmingly they will do at least one more, two more from here of 50. a terminal point, over 4% is

more likely now. unfortunately. jonathan: eric nelson of unicredit, wonderful to catch up with you. brilliant. on the euro zone, the ecb over the last few decades. optimistic, speaking to bloomberg over the weekend. the former one is bank chief, i expect i will see wage increases. we will create new inflation shocks, that is a different take than what you heard therefrom erik nelson. tom: this is profound and to the point of the bundesbank, this is classic one is bank. -- classic bundesbank. this line linking right over to -- more shock, pandemic stock, supply shut. what you hear there is demand economics from dr. is saying of re-inflation. libor is 5%, german libor. i cannot remember is 2.8%. that is the difference between

the two societies. you get a wage spiral with the lesser inflation. jonathan: what do you make of the erik take? we might be on the brink of making a mistake? erik: i am a big fan of dr. nelson. he has done a great job in unicredit, being optimistic when people weren't. when he says ignore core and look at other things, it has got my attention. jonathan: over the last 10 years, optimistic when everyone was not. now he is like, slow down. tom: i am not going to mention the town he lives in. he's got a great life on the river. jonathan: his favorite coffee shop. sounds great. we've got to make that happen. we should join him. in his favorite coffee shop. lisa: he is hiding. tom: we should join him in his favorite brewery. jonathan: either. features on the s&p unchanged. lisa: keeping you up-to-date with news from around the world with the first word.

in china, president xi jingping said the country will take forceful measures to support the development of high-end manufacturing. he spoke at the closely watched national people's congress. china's tech industry has been heard by u.s. trade sanctions and big electronics symbols are setting up more facilities outside of china. ukraine says russian forces trying to cut off the besieged city of -- the russian attack is preventing ukrainian troops from reaching residents who want to evacuate. analysts said the u.s.-based institute for the study of war says the russians will probably not be able to encircle by mood anytime soon. jeremy hunt facing a tough challenge ahead of his first budget due march 15. u.k. borrowing running well below official forecasts, but there is little room for giveaways due to weaker, underlying growth. this as public service workers strike over pay and households struggle to meet living costs. credit suisse lost one of its biggest backers.

harris associates stop figure david haro sold the firm's entire stock in the bank. harris associates was one of the biggest shareholders in credit suisse for many years paired by the end of laster, the -- they held only a 5% stake. shares of credit suisse held a record low last week. global news powered by more than 2,700 journalists and analysts in over 120 countries. i am lisa mateo and this is bloomberg. ♪ conventional thinking delivers conventional results. at allspring, we break away with purpose. harnessing data-driven insights and boundless curiosity. we dissect the market from every angle. helping to build portfolios that redefine what's possible. because investing isn't one size fits all.

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anymore. that was david haro, the cio of international equities at harris associates beaking to bloomberg last summer in august. this is what he told the financial times over the weekend. we have lots of other options to invest trade rising interest rates means lots of european financials ahead and the other direction. why go for something that is burning capital and the rest of the sector is now generating it? to david's point, he is dead on. year to date, the last 12 months off summer lows, european banks have ripped. it is not just the european names, even u.s. year up-to-date is up 27%. we are seeing in a doglike credit suisse at the moment. wondering if you should be somewhere else, including the decision to make a move. tom: i have memories of my credit suisse is in my mind. you get married to a stop, there is no other polite way to put it. mr. haro is acclaimed, he is often on the international psycho -- cycle,

jonathan: another headline the credit suisse management, want to read this morning, a big investor like haro heading to the exit. stocks down 2%. the numbers went from 20% to 70%, down down -- now down to 2.72. tom: jan-patrick barnert is with bloomberg. i've got to ask the key question. is there any evidence the outflows from in a broad sense, wealth management, asset management, have slow down? is there evidence of that? >> that is the key point credit suisse has to provide. if i had to make a bet, i would say they would probably continue over the next couple of

quarters. investors are keen to see them stop that. like, consecutive quarters in a row to show the confidence that credit suisse has stopped the bleeding and is making progress. so far, credit suisse has shown us nothing to believe that. that is why some investors are leaving more. tom: what we know is a dog and pony with goldman sachs. as a generalization, they looked down two years to get to a new profit regime. when credit suisse -- with credit suisse and their trauma, as a dog and pony, is there any point of some profitability? jan-patrick: the bank is a solid business model in general. when we spoke about the lehman incident two weeks ago, the client base and business model credit suisse is running after is based on the trust issue. right now, credit suisse has done nothing to rebuild trust with investors, nor with their

clients. what they are doing is burning through capital, trying to keep ship afloat. they are still doing the business that is there, but it is not enough for a share price post to recovery. they have to come up with some solid plan that is believable, that makes sense for investors. they tell us they are going to do a, b, c. this is how we turn the ship around. we have seen big announcements, lots of turnaround, but little substance. that is lagging and needs to change. lisa: eric investors used to be one of the biggest investors in credit suisse. now, you've got cutter at the top of the list for investors. how does the nature of different investors change the nature of the direction for credit suisse's management? jan-patrick: you now have two investors from the same region on board. they may be have different plans

for the bank going forward, maybe it is not only money and investment, but it has to make money. i guess investors from the middle east are also keen to use that bank for doing their business in europe and other areas of the planet. let's be fair. let's say a good name out there, maybe if they want to and are willing, put more money -- as we heard from the bank, it is burning through capital. at some point, they need more. if those investors are willing to provide that and provide the banking to the bank, maybe that can be a lifeline or some kind of future for credit suisse. lisa: based on the profile of investors we are aware of dominate and based on what we have heard so far from management, do we have a clearer picture of what this management plans to do for turnaround? jan-patrick: i would say, no. that is my biggest issue with the stock, given it is cheap on paper right now trading on 0.2,

insane for a bank and especially in this interest rate environment. as i said, the story -- credit suisse has outlined a turnaround plan, but it is lacking the details and the results. that is the big issue. they need to deliver that first. if we see two or three quarters of not stopping and more positive sentiment towards the stock, i would say we can look further into the future and see how the bank can recover. jonathan: if you look at the chart back to 2009, it is upside down. lisa: [laughter] jonathan: it is upside down. how many names can you pick not bottom in 2009 but topped into 2009? what stopped -- stock topped into thousand nine? the reason i bring up that chart, surely that chart questions the viability of the business model at credit suisse. jan-patrick: absolutely. if you want to look at the

better way to do it, look at ubs. when they made a earlier, much clearer cut, focus area of what they want to do. credit suisse was always lacking that. it was always, let's put a little wealth management, investment banking, never a clear commitment to wealth management only and rebuild everything around this. that is what the stock is lacking. with haro leaving, it is amazing. you have an investor that has stood with you through the financial crisis and is now leaving. that says a lot about stock market performances. jonathan: that stock has been so difficult. jan patrick, they do so much. that chart is phenomenal. how do you think the chancellor would like that? topping 2009. tom: there is no other chart like it. i was looking at the relative value function and there are all sorts of tea leaves to compare and contrast. there is a thing called

institutional ownership, a percent of your stock owned by the smart guys in the room. goldman sachs, 80% of their shares are held by fancy people, institutional owners. supposedly, credit suisse is 56%. it is truly unloved right now. jonathan: that has been a problem with all of europe's banks. they look like some version of that chart, european banks to. the difference is what has happened in the last year, where european banks have started to pick up with this rate hiking cycle, with this relief europe is not falling apart year to date and credit suisse has to participate. this is the difference. european banks for a different -- a decade of being docs, now they are not. credit suisse is not. tom: credit suisse is priced under .2. bmp, the retail giant of france,

best lunch in new york is that .7. jp morgan is well above one. there is still a valuation gap there. jonathan: is it a trap at credit suisse? tom: this is important. i would predict in the next 90 days, you are going to see this concept of value trap among people. one of the reasons you get out of a value trap, you own growth. can you own growth here is the other key question. lisa: there is this question of, you complain about something for a decade about negative yields and how that is destroying your business model and all you get rates at a level where you could potentially survive, can you capitalize on that? are the people who want to borrow from you or want to create that dynamic to make it valuable, especially if that curtails growth in the region? jonathan: from a stock price specific of -- price

perspective, it is rallying. except this stock. tom: which is the reason why david haro said i understand the rise in banks. why should i avoid some of the ones that are not going to? jonathan: that stock down by 2.72. difficult time at the bank, phenomenal talent feels like a repeat of what happened with deutsche bank several years ago. there are differences, but how do you keep the fantastic people at your work? tom: our colleague, paul sweeney, worked this at credit suisse. i would suggest they move on to other places, card-carrying member of that is dominant constant, the high ground at credit suisse at mizzou right now. jonathan: futures unchanged on the s&p 500. big week ahead. we will tell you that a few more times over the next few days. chairman powell tomorrow and wednesday. payrolls friday.

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>> i think of the role of abundant liquidity is still critical in this market set up. >> do not be worried about liquidity conditions in the near term. >> we are seeing the consumer's last stand as households are

drawing down the very last of savings. >> my view is that we will see a slowdown in the u.s. economy in a few months. >> the economy is looking to outperform the u.s. this year. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning. jonathan ferro, lisa abramowicz, and tom keene on bloomberg. we adjust with a three month -- that is a major fact. jonathan: 2/10 spreads on -92 basis points. the 10 year is down about five basis points. just a massive week ahead of us. german powell speaks tomorrow. you will look ahead to payroll -- he will look ahead to payrolls. tom: he has to speak to congress

and particularly to the house of representatives. i guess we are fully employed, but there are a huge rube of people out there going -- huge group of people out there going, "oh really, are we?" jonathan:jonathan: let's talk about the senate and a couple of democrats on that committee. that is where the pushback might be. this chairman has been upfront about causing some pain. his argument is that if we do not address inflation, there'll be worse pain. tom: i would suggest that we are going from ultra accommodative to super restrictive. i would suggest in the last two

weeks, the dialogue on super restrictive has massively changed. larry had a nice summary of this. jonathan: if you look at unemployment, 3.4%. claims sub 200,000, can you make the claim that we are sufficiently restrictive? you cannot. the worry i would have for german powell tomorrow, how can you commit to a view at the next meeting when payrolls on friday and cpi could completely change the story? we have two months and narratives -- 2 months' worth of narratives. tom: that is secondary. it ends up being nine hundred thousand jobs over the last 90

days, and yet there is a lot of angst out there. lisa: this has been a line from the federal reserve. if you do not have price stability you cannot have a healthy market. they talk about how they want to weaken the economy. this has been the difficult moment. i want him to understand and put forward his new understanding of the balance of risks of inflation versus the prospects of a fully employed america. tom: i am going to go to 3 digits -93.496. the two is dramatically higher than the 10 year yield. jonathan: faster on the front end. debate on the front end. may be the fed to go 50?

i don't think the f1c is there yet. i think it is 25 basis points. the closer you get to terminal, the slower you want to go. you should be talking about 50. tom: do think he had his students at harvard? i have a column for the -- lisa: chatgpt!@ tom: on the monitorism we are studying right now, chatgpt. jonathan: it is pretty much unchanged from the s&p 500. tom: right now leadership from damon -- from jim bianco.

jim, i am thrilled to have you on here on a hallmark day. what does it signal to you? james: rates will keep going higher, the fed out minimum will be higher for longer, and the aggressive call right now is that they will move 75 or another 100 basis points and we could be talking about a 6 handle. insurance rates will keep going up, and that is a big driver of why the yield curve has become a new record inversion because it has all been driven by the long end. when the 10 year rises in yields, we get a lowering of the yield curve. jonathan: do you think chairman powell will be reluctant to lean into that argument? james: i don't think you will.

it is just one month of data and it has all been very strong, but the ark of data we have seen over the last several months has not been weak. it has not been what senator warren has been calling " millions of people losing their jobs." it has not happened yet. many people thought it. would have happened by now i think he will stay with the more aggressive moves that the fed will go with 2 or 3 more rate hikes. if the cpi data is strong, then we will talking about 50 for the march meeting. there is a 30% chance the fed will go with a 50 point hike for the march meeting. lisa: and the potential for short-term rates to go even higher is the reason we have been talking all morning about this yield curve inversion, the

2-10 spread. some people are dismissing this and saying, "you cannot read too much into it." what is the correct read on this, jim? james: a yield curve inversion is a former leading indicator of recession. once you go inverted, you should be looking for a recession. the thing about the yield curve is it can lead as much as 18 months before you eventually have to have a recession. that would put you in the early quarters of next year. a a lot of people do not have that kind of patience. they think the slowdown will happen in the next couple of months. the yield curve is a very powerful signal that we may be seeing a very big slowdown in the economy, but just because it is inverting more does not mean

it will be worse. lisa: do you think based on the readjustment we have seen in markets for the past 4 months do think there is a position that seems obviously crowded amidst all this uncertainty? james: if there is a position that is crowded in the bond market, it is definitely high or short rates. you see a lot of speculative positions and people lining up to make a bad bet. the fed funds rate will continue to go higher. the thing about those kinds of trades is those are more federal reserve policy driven trades, so they can be right at times. other than that if you want to look for crowded trades, i would wander outside interest rates and say the opening of china is on my radar. everyone is in on that trade and

the idea that they are only pushing 5% growth for this year was a disappointment for that trade. , reopening the economy will reopen, it will be stronger than it was, but this whole idea that it will be, rip roaring in china that they will produce a bunch of stuff, put it on cargo ships and descended to the u.s. and collapse goods inflation in the u.s., i think that trade is overdone. there is no evidence any of that will come to pass. jonathan: looking forward to hearing more firm you through the week as we anticipate payrolls on friday. we often tee these things up to be big deals and then lawmakers make youtube clips to send around to their constituents. lisa: i started to look into when the last time that we got

one of these hearings that was helpful and worthy. jonathan: how far back did you go? lisa: they are honestly never that telling, if they are going to go after their political message and you will not get the hard-hitting questions of what their timeframe of thinking is around monetary policy. tom: it used to be there were roles of the road. chairman greenspan never spoke about the u.s. dollar. that was -- rules of the road. chairman greenspan never spoke about the u.s. dollar. they have got to start getting back to that. are we going to see it? i don't know. jonathan: i don't know how you put it back in the box, tom. with it they had to introduce radical transparency. tom: radical transparency -- let's go to it right now.

christian -- what was his name? corner? netflix -- horner? netflix start? people ignored you. 'bramo crushed it. lisa: what are you talking about? tom: on twitter. she and the 'bramo offspring all weekend. jonathan: netflix. lisa: 100% the kardashian of driving. i did watch it. tom: domination -- the leader of her staff and was barely on camera! jonathan: fernando dropped back and made his way through the field again. tom: tyler alba started out at the backend wet out -- went up 10 levels. i wish they had showed that

more. the tracks are really important. hte -- jonathan: high temperature. he will see if he can dominate on other tracks. futures right now, close to a 10th. this is bloomberg. ♪ >> keeping you up-to-date with news from around the world with the first word, i'm lisa mateo. u.s. lawmakers are stepping up the push to ban tiktok. mark warner plans to introduce a bill this week to allow the u.s. to systematically band u.s. tech -- ban chinese technology. this week on capitol hill, jerome powell is expected to lay the framework for higher interest rates. he testifies before a house committee and a panel -- a

senate committee and a house panel this week. a second norfolk southern trained the realm and in ohio -- southern train derailment in ohio has congress calling for new legislation. the ceo of norfolk southern will be questioned on thursday when he will appear before a senate committee. i'm lisa mateo and this is bloomberg. ♪

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>> we benefit somewhat indirectly from china because unfortunately the u.k. does not export as much to china as the germans do. in germany it is big news because of the export of cars and heavy equipment. for us it is more indirect, because our trade volume is indirect. jonathan: the natwest chairman. can i pick up on that last line? "they say it is fine." can you believe the data that comes out of the country anyway? there is still that skepticism around chinese economic data that is not going away. we have heard this from the milken institute. it is not just the data we receive out of that economy. it is how banks cover that

incoming data as well. are we truly getting their view on things or is it pr? lisa: are they trying to generate some credibility in the numbers or are they signaling they want to deemphasize the economy over some of the other goals? those are the two questions with bringing the growth target to 5%. tom: tom: -- jonathan: jonathan: is that another way of saying this might not be the end of regulatory? lisa: we have seen them go after dado with the new data analysis group to govern how different groups use data in china. that will be one of the big questions, especially with what xi jinping has signaled. tom: miller said it takes a while. it is much more structured in terms of the ramp-up.

they get to 5%. it is not the cacophony we have here in the microcosm we have. it is much more structured and predictable. jonathan: 5 percent is a tremendous figure out of china. it is the growth story of next year and the one after that people are struggling with, tom. it is that shift to 3%. tom: we will have to see. right now on oil and what it will do with 5% chinese gdp. her book is "saidi inc." -- is "saudi inc."

ellen, i think r savio -- our stereotypes of saudi arabia are unhelpful. >> saudi arabia is more vibrant than it has ever been. you have the old porches in the old town. i think about it like it has never changed since the 1800s, but they are having a formula one race there next week. tom: i didn't know that! let's look into that. it is just a coincidence that we have ellen on at the same time. let's get serious on china at 5%. will that drive oil up? >> consumer demand is returning.

industrial demand is not returning as quickly. we are still in this slower climb up. when they started the reopening end everyone the -- everyone was anticipating this huge surge in oil demand. i think it is going to be a more slow climb up. the question is when will that start hitting? it seems like now the consensus is not until h2 and that is when we will see $100 oil that hits right in the middle of the summer during potentially high temperatures and lots of driving demand, especially in the u.s.. i think that is more where we are looking at in terms of a surge in oil prices and of course everyone who has predicted high oil prices, we have seen gas jump up and

then go back down on recessionary fears. we are on an upward trend but there is the potential for things to wobble. lisa a.: one of the most significant trends over the past few months is the number of people who have abandoned calls for $100 oil. the market is being a bit of a child. do you the sense that, that is becoming one of the dominant themes you are hearing from the people you talk with? lisa m.: we -- ellen: we are seeing on the whole people walking back their convictions. at the end of 2022, we kept seeing these incredible convictions -- " oil is going to be $120, $130 in 2023!" we are headed in general towards

a. 's -- towards a period of tightness in general. i don't think we can depend on u.s. producers to ramp up production as much as we have in the past, and that, that is something that is not necessarily being reflected in the forecast receipt from the eia. i think saudi arabia and the uae have potential. if things get really tight, we will see opec moving to increase their quota, maybe not until june, july, or oxidant -- or august. lisa a.: some have said that the price has remained low because of the in -- the buy-in

into electric vehicles. do you buy that? ellen: no. electric vehicles are still limited in their range. when you look at big driving, it is not people driving and electric vehicle 20 miles to do some errands around town. if you want to look at the big drivers and demand, we are talking about china and india. these are not places where electric vehicles are having a huge impact. i know it looks like a big increase, because when you are starting from very little and you have an increase, it is very big, but for every ev that is sold how many other combustion engine vehicles are on the road?

i don't think demand is really increasing all that much. they are definitely growing in interest, but i think there is a limit to how beneficial they are, given how range bound a lot of these vehicles are. jonathan: i in looking -- i am looking forward to jetta with you, ellen wald. tom: he made very clear in the last hour or two that it will be much closer. jonathan: it would be problematic for us neutrals, or us for aris -- us ferraris -- lisa a.: the ferraris are like the yankees of formula one. they always win! jonathan: they haven't won since

'07, '08. the kardashians of formula one? that hurts, 'bramo." he said it was kardashian on wheels. i'm not sure he was describing for ari. i think he was describing formula one. good stuff. thanks, guys. happy monday. lisa a.: [laughter] ♪

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tom: lisa abramowicz and tom keene. lisa a.: i'm so sorry. i don't know why she said that! tom: we are having a lot of fun with formula one. there is formula one on the stock market. the vix 18.96. lisa a.: the highlight for me was something lori cal the stena wrote in current notes.

markets are becoming a lot less correlated. in the indexes you are seeing them a lot less correlated. flows are going listen to stocks send more into indexes. to me that is fascinating. tom: the gravity is back in the market. at bloomberg intelligence, gina martin adams joins us after a weekend of really thinking about the markets. you have a portfolio that is based on some really good quantitative black box math over to fundamental research on value. how is your portfolio doing and the shock rally and equities? gina: it has been an interesting ride so far in 2023. this momentum crash was not --

it was not anything to do with profitability and value, but february's correction was really interesting because we started to see some rationality return to markets. we still sawtek leading the recovery and tech does not qualify for us on a value screen. march will be interesting as well because march could be that catchall month aware we right size our expectations for fed policy and get a better view of what is happening with the climbing conditions and we gets a more -- we get some more rationality. tom: 93.5 basis points of curve conversion. i know you and i are on speaking

terms, but what does it mean when libor hits that important mark? gina: valuation expansion is limited in the equity market. our broader fair value model for the s&p 500, it is hard for us to get to 17 times earnings when we are looking at libor so high in comparison to years past. cash is worth a whole lot more today when you are looking at libor at 5%. when we were paying nothing for cash, cash was forced into some risk seeking behaviors, and we saw that result and in norma's valuation expansion for the index. -- resulting -- that result in

enormous valuation expansions for the index. large-cap stocks should be expected to return 6% average returns for the s&p 500 versus 11% average annualized return we had. lisa a.: which is something a lot of people have trouble wrapping their heads around. i want to talk about the psychology of having money costs something and now everyone who used to be a macro trader have to become fundamental investors. how much are people aware of the fact that we will not get a flip-flop narrative, that it will perhaps be "this company will do good, this company will be bad" -- you have to figure it out. gina: expect -- i would not say

that we are there and expectations have completely normalized to this new era. 2022 is not representative of what we should expect going forward. investors generally have become accustomed to this idea that if you put money into an index fund, if you put money into any broad market exposure, you will generally do well. to the extent that, that thesis was driven by low interest rates, that goes away in an environment where interest rates are higher and you have different segments of the equity market performing much better than others. inflation is extremely meaningful in this climate. it didn't mean anything in the 10 years following the financial crisis because we did not have to contend with any inflationary

spike at all. . the investment climate has changed. 2022 introduced us to that. investors cannot rely on 2022 as the model. what does the model look like? our most recent example of what that model may look like is all the way back to 2003 and 2007 when inflation became a general driver of stocks. dispersion was a big part of the story, active managers started to do better. you have to go back quite a ways in history to get a representative example of what to expect going forward. lisa a.: will big tech still have a role in these indexes? how much will their role really shrink in an era characterized by money costing something? gina: there have -- their role

has to shrink because their earnings growth outlook has been drinking. han the broader indices, it is really difficult for tech to perform well. it is a growth oriented sector. you have to see growth irrespective of the climate, and they are not seeing it right now. , yes interest rates play, a big role but arguably what may have played a bigger role in 2022's earnings the started to fall short relative to the market. the stories that power the optimism in tech began to get dismantled. tech needs that earnings growth input in order to perform well. tom: let's talk about the use of cash -- use of all of the cash that is out there. do we ever think, underplay the

amount of cash that could go into equities worldwide because there is no other place to go? gina: i don't think of there is no other place to go, tom. we think there are reasonable are told -- reasonable alternativess. we see households in particular holding an in norma's amount -- an enormous amounts of cash. consumers are relying more on their credit cards to fuel spending in the u.s., but they also hold a lot of cash. what typically fuels consumer investment is the general optimistic sentiment about the economy. we have seen consumer sentiment depleted in an environment where the sentiment was so profound. consumers will have to contend with what we believe is likely

rise in the unemployment rate, even though an inflation scenario is more minimal relative to the year that just past. it will determine whether the consumer comes back to equities. jonathan: thank you for the -- tom: thank you for the equity brief. martin adams, lifting the stark mark -- stock market. dow future is up 37. nasdaq up 4/10 of a percent. there is, 4 days in a. lisa a.: people want to see this market rally. it seems there is a bit of a lift going forward. jp morgan said "it is not fantastic. we my go back to october, but there is still enough with the

companies that can muddle through with higher inflation, higher rates, and i think that is sort of what keeps getting sussed out on the buy side. tom: in february bonuses were paid from goldman. he is a mung a top group of producers -- is among the top group of producers at goldman. this is in program trading and equities as well. joe montesano, it is collegial, he is stepping down to take a break. it sounds like what you said friday. "i am taking a break" at least for two days. he is stepping down. lisa a.: we don't know what happened. he has yet to line up another job. there has been a real desire for talent. we were talking about credit suisse and credit suisse first

boston is granting partner like status to some of the people who are going to stay. the key to incentivize the top owners, the top producers to stay i clearly -- to stay clearly is in the forefront. it highlights how much people are getting paid, who are the producers. tom: when, things get tough people pull away and they pull away from asia, than six months later -- surprise! we are back in asia. lisa a.: there was another story that caught my attention this morning. did you see that banks, more than 20 banks have offered more than 5% cd? finally certain banks are starting to pay up just a little bit. tom: end of an era right now. we will leave you with futures up 11.

i is extraordinary -- it is extraordinary. gary ross 10 has died. he is the last of leonard skynyrd. i cannot emphasize how much southern rock changed. these guys wrote sweet home alabama. they owned the major scale. they brought the major scale back to music and they never got credit for it. mr. rusting 10, -- michelle girard next. this is bloomberg. lisa m.: with the first word, on lisa mateo. norfolk southern has unveiled a new safety plan following a derailment last month in ohio. it will install more trackside heat detectors and explore the use of newer types of sensors. norfolk southern had another

derailment in ohio over the weekend. this one did not involve hazardous materials. ukraine says russian forces are trying to cut off a besieged city. the attack is preventing ukrainian troops from reaching residents who want to evacuate. russians will probably not be able to -- for the second time this year, tesla is cutting prices. the electric vehicle maker is reducing the price of the model s to just under $90,000. tesla slashed prices earlier up to 20%. yes, the new formula one racing season began over the weekend in bahrain. max first at began his -- formula one has become a sensation in the u.s. thanks in part to the netflix series drive to survive.

we spoke to chris warner. >> have seen -- we have seen massive growth. drive to survive has introduced formula one to a whole new audience and very much an american audience. out of the 25 new partners we have introduced, 21 are u.s.-based. many of them are in the fortune 500. it is just --formula one is on fire at the moment. lisa m.: the u.s. will host 3 formula one races this year. i'm lisa mateo and this is bloomberg. ♪ within reach. from your first big move to retiring poolside and the other goals along the way wealth plan can help get you there.

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the first time you connected your website and your store was also the first time you realized... we can do anything. cheesecake cookies? [together] the chookie! manage all your sales from one place with a partner that always puts you first. godaddy. tools and support for every small business first. >> there is very much a -- you may even see some breakage of that. the process is going to be a digestive situation where they are going to digest the data.

hte market -- the market has rationalized that there are more cuts to come. jonathan: jerome schneider -- tom: jerome schneider on fire. a short discussion with the jerome schneider. a great set of conversations last week. a mental block, i'm so sorry -- there were a couple of guys who were just on fire last week. lisa a.: trying to understand how far we are and how far we could go. whether we could potentially get there and what that could mean. jonathan: darby -- tom: darby on fire with jerome schneider. we stagger into this weekend. lisa, you lifted the marker with your first questions to mr. warner. lisa a.: you said gina martin adams was the reason for the market lift, and now it is me.

tom: i got a call from bloomberg intelligence. lisa a.: how much of this is directly correlated to this feeling that perhaps people got ahead of themselves with their rate hiking expectations? it has gotten lower from the peak. there is not the same kind of hysteria about rate hikes to the moon. tom: i agree with that statement. lisa a.: the scb can take a breath and look at the incoming data. tom: the hysteria is not there right now. let's use that as a segue into michelle girard. natwest markets, wonderful economics over the years. michelle, i think that is a really important point. are we getting used to higher interest rates? michelle: the point you are both talking about, which is the hysteria over high rates will go has calmed down a bit.

i think what has happened rightly in the market is that as it was noted, it is not that we think about it being the rates being interested more than we expected. we would not rule out 6%, but it is more the market letting go of this idea that the fed could pivot it in the middle of the year and we would see rate cuts at some point in. the second half of the year the fed was pushing back consistently against that idea. the markets stubbornly held onto it, and with all of the strength of the data as we start early in the year for january, the market -- most of that has been priced out. i'm not sure we should be pricing in going to 6% or 4%. tom: -- lisa a.: we have a couple of key

dates coming up. some might argue the jolts data we get will be important ahead of cpi. what are you watching most closely? michelle: it is certainly important to cnn the friday jobs data how much payback, so to speak, we get. those 517,000 jobs in january surprised everyone. there is a lot of debate over how much of that may have been seasonal factors or due to mild weather. it will help give us an anchor on what is really real in terms of the health of the labor market. even with the more moderate gain, we have an increase of 175,000 forecast. you are still looking at a trend in payroll growth over $400,000.

everything suggests that the labor market is quite tight. that will keep the fed on guard in terms of their expectation that wage inflation could pull back. if you do not have an expectation that inflation can moderate, it is -- lisa a.: a number of the guests we have had on today, including lori calvo sena she said that even with the potential for higher rates, orchids are pricing that in and they are seeing a lot of strength from the increased demand. are you leaning into risk? a lot of these consumers are able to handle rates where they are. michelle: i think that is true in the sense that i think the market is pretty well priced for what i think is an appropriate in terms of the interest rate, given what we know now. the economy for sure has shown

resilience. i do think that some of this has been this excess savings continuing to bolster consumer spending, making it easier to sort of tolerate higher interest rates. we have also seen with the strength in the labor market real gains in the wages in terms of wage increases over the pace of inflation. we still have a recession and are forecast. i don't think we will avoid what will ultimately impact these higher interest rates in the end. tom: you have a wonderful grounding in freshwater economics and midwest economics, if you will. is the chairman a slave to theories from another time,

which do not work coming out of the pandemic? michelle: that is a great question. i don't think that the chairman is a slave to what always has been. i think there are some very fundamental roles, which still apply 0fundamental-- -- fundamental rules, which still apply. it is hard to anticipate that inflation will come down. i think operating in the same kind of general way you have approached monetary policy for the last 100 years is not wrong, but i think the chairman and the fed have been open to recognizing that in the unprecedented events of the pandemic and all that followed, they do not know. i think this is why they are trying to feel their way along. th ourey -- they are a bit data

dependent. they acknowledge there is so much uncertainty now in terms of being able to really assess if the world is working in the way it always has. tom: michelle girard, thank you. good economic briefs before all of this data. we have the eco go screen. go eco go and pretend you are smart. durable goods, and lisa, i do not think we are talking enough about them igo data. not adp, but what do we do with initial jobless claims? we got it wrong last week. now it is 195, and it is still fully employed america. lisa a.: people have said this is perhaps not a relevant

statistic, but even if the companies are posting fewer jobs that could possibly indicate that there is a softening in the hiring. not necessarily the firing because those would be the unemployment benefits people were filing for. do we see the payback we did not see last month and that revises that 500 level to make us believe we are seeing some kind of moderation? tom: a survey from 300 -- how about march 15, off our radar the day after cpi, there is a retail sales report. it is gloomy. we don't have to go into the numbers because they will change before the 14th. it is a gloomy expectation out there in the market. lisa a.: that is basically what i was going to say.

they have been gloomy expectations for a while and every time they have common gangbusters -- they have come in gangbusters. you can see this as a trend throughout. how do you put this mush together and then hold true to some theory? tom: i know john podesta has a whole series of papers on mush. lisa a.: [laughter] how long do we have to have a mush? we will see whether he comes back.tomorrow tom: -- we are tourists. we are the new, upcoming audience. tom: don't be a tourist. stay with us on television and radio today. jamie dimon, coming up in the

9:00 hour. 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. jonathan: live from new york that and the paycheck.

city, good morning. equity futures positive .2%. the countdown to the open right now. >> everything you need for the start of u.s. trading. this is bloomberg: the open with jonathan ferro. ♪ jonathan: live from new york, coming up, chair powell and payrolls. china's growth target disappoints big expectations and credit suisse loses one of its biggest backers. >> we have the payrolls report