>> indicated recession should be happening right about now. >> this is an economy that's proving to be more resilient than people expected. >> we came into the year feeling recession was inevitable. >> we see the market getting down to 3400 and possibly flatlining. >> for us it would take a lot to see the october lows again. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. romaine: jonathan: good morning for our

audience. we have 5% and a fed chair opening the door to a 50 basis point move this month. tom: viewers are on top of this story. did we see this coming? i did not. jonathan: we saw that based on the fed communication he opened the door so wide to increase the pace. it's open to 50 everything we talk about through the next three hours is highly dependent i would say at the mercy of what we see friday morning and what we see next week in cpi. lisa: this is a new level of data dependence. you asked a question last week will he revisit the disinflationary process not only to be basically suggested it had started. completely upended their view

they have been completely surprised and by the way we have to go hard and were not that restrictive. tom: looking at stronger dollar thinking we've come a long way what he really talked about the data dependence out there and we've never seen this level of intensified data dependency i don't want to do the numbers now and bog it down but when you look at the numbers of these spread we've never seen this spread after spread. jonathan: let's get to those numbers right now to tense of 1% we snapped a three day winning streak the he down by one .6%. 39736. 5%, -106 basis points the last time we saw that, lisa, 19 81,

the early 80's. lisa: people are wondering what's the historical anabolic to this moment. jay powell is on day two of testimony. will he revisit after yesterday course double down and say we have no idea what's going on today we also get a bank of canada rate decision this is interesting because they signaled a divergence from the u.s. possibly a pause in they rate hiking cycle what does that do to the currencies of next that want to move back from some of the rate hiking cycle they are in if the u.s. is going as quickly as jay powell hinted at does adp matter? we are in this new moment of data dependence that's going to be really interesting do we get

an ongoing reject celebration? that see data difficult to parse through the accuracy and the market will trade on each of these data points because nobody else has a better guide. jonathan: payroll on friday. here is the chairman of the federal reserve. >> the latest economic data have come in stronger than expected. nothing about the data suggests we tightened too much. we have more work to do we are very far from our price stability mandate. the ultimate level of interest rates is likely to be higher than previously anticipated. the process of getting inflation back down to 2% has a long way to go we will stay the course until the job is done. jonathan: compared to what we heard from him in the news conference i'm not there so ago fantastic exchange.

senator warren will play that a little later on. global chief economist and strategic investment management francis, what did you make of that? >> that's not an easy one because there's a thought of personal through there but the main take away for me, talking about terminal rate estimates but what i'm hearing is just more data dependence. it can always be dangerous but is particularly dangerous in an environment or we have seasonal adjustment distortion low survey responses we are in data that is really having trouble sending us a clear signal at least over the long-term and i'm concerned were going to see markets that are overreacting and potentially of central bank moving too quickly and making big policy changes off of data that i think is going to be very bumpy. tom: the shock we saw yesterday does disinflation come to the

rescue? can we get sharply lower inflation? >> i think the fed may not be focused on specifically some of those traditional inflation measures but we've seen a rise in market-based measures that is moving in the wrong direction. it's countered by inflation expectations that are still going lower i'm hoping the fed is focusing on those long-term inflation expectations. one of my bigger concerns is this summer were probably going to lose some of the momentum. the downward momentum we have seen as probably going to stall and if we haven't seen slowdown in jobs by then a fed that's going to stay hawkish through the summer. tom: is that walk it back wednesday? >> the only way were going to

break -- walk back the pricing is what we see in the jobs data. we've got jobless claims, we've got job openings. it's a buffet of job stated that's going to be coming through and now one number is going to be the sum of the stories. especially in an environment where we have to look at private sector jobs data, job postings on things like linkedin and indeed. if you want to understand what the fed is going to be doing a year or two years from now you have to look at all the data available at make sure that you understand the comprehensive story behind it. lisa: i understand how unique this moment is. the flip-flopping of his messages is jarring for markets and people who were trying to get a sense of what the compass is for the federal reserve. do you think that is detrimental

or advantageous given that that uncertainty creates some of the market conditions that are possibly tighter than they otherwise would be. >> it makes our job harder because instead of saying we provided forward giant's best guidance we have to be a lot more flexible when it comes to the data coming in. when you're an economist you're always looking for what is the next big story and i don't want to miss the point. we have a lot of data that's moving to steps forward and one step back. we have portfolios that are needing to be moving off of that. a lot of this is nice distracting from the signal you need to focus 12-18 months or produce five-year forecasts to tell us where our strategic portfolios should be positioned. some of this focus on the fed moving back and forth it's not valuable to investors. it can be distracting and in

some cases dangerous. lisa: or do you think the market is getting the economy right right now? >> it depends on your timeframe. q1 is much stronger than people expect. the strong -- the challenge comes back where are we going to be down the road? it's difficult to process -- there is no problem saying the economy is stronger than we expected that if you want to argue for no recession you have to discount almost every single leading indicator. you can try to do that we have a very different labor market we have excess savings but from my view it's a very hard sell. i would just focus on your timelines. are you talking about the economy in the next three months

with a 18 month output? a lot of strategists need to work on their timeline for the forecast. jonathan: do you have more confidence about where we will be in six months then maybe next week after cpi? >> absolutely. what is it look like 12-18 months from now? i think it's going to look a little more stagflationary then we would be comfortable with. i'm are concerned about 18 months from now we have been in a slow growth environment and we have inflation stuck around 3-4%. inflation that has rested in the system is likely to be less interest-rate sensitive. so the verge stuck for asian, there's lots of ways to define it. i think it's going to be more everything for us then we thought it was going to be.

jonathan: wonderful to get your perspective. we came out before the last fed decision. said if they go 25 they would risk a flip-flop and here we are. he said this is the new dilemma for chairman powell. provided just a month ago, stick with the guidance and fall further behind in the battle against inflation. tom: joining him as james bullard of st. louis, the phd from indiana. in his latest effort to save its get it done quickly he is out front on the dialogue. lisa: i think he highlights this important point, is there a policy area and pitted in a lack of direction and violently

swinging approaches from one month to another and the reality at hand is there something that undermines confidence and the mooring that markets look at? jonathan: it was too early to impress -- embrace this narrative. i made the point yesterday were kind of narrative did you have to begin with and a cap broken with one months worth of data? lisa: it's a tricky moment. again, this is like missy data so there getting pinned to everything. tom: it's uncharted territory. jonathan:. true. sarah hunt is coming up in the next hour. in about 48 minutes time. >> keeping you up-to-date with news from around the world with first word, i'm lisa mateo. bond traders have stood bets

that the federal officer for speed of the pace of interest rate increases. powell told lawmakers he is ready for investor monetary tightening of economic data justifies it. a half-point hike is more likely this month. the euro economy failed to expand at the end of 2022. worse than expected readings. gross domestic product was unchanged the final three months of that year. the largest economy shrink by 4/10 of 1%. the former soviet republic of georgia police used tear gas and water cannons to discuss -- dispense protesters. critics fear georgia is sliding away from the eu and nato and is increasingly more russian.

adidas has slashed dividends and shaking out management. there is no word of what adidas will do with the $1.3 billion of unsold easier the company halted sales after cutting ties with the rep are known as ye. global news 24 hours a day on air and on bloomgerg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. i'm lisa mateo and this is bloomberg. ♪ go. go brain. no, not that one. go this one. go optimizing data. go efficiency. go results. emerson's plantweb digital ecosystem is the brain for smarter, safer and more sustainable performance. go plant go. go boldly. emerson.

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welcome to a new era of flight. >> the fed's goal is to slow

inflation if you hit your projections do you know how many people who are currently working >> >> will lose their jobs? inflation is extremely high. it's hurting everybody under high inflation. >> putting 2 million people out of fort is just part of the cost. >> will working people be better off? jonathan: fantastic exchange between elizabeth warren and jay powell that is more than drama there is a lot of information involved in that exchange. from the fed share a failure to restore price stability. i'm going to speak your but there is a sense from the senators you can see it they feel like the federal reserve is

being dishonest about where this is going are they going to put unemployment up without causing a recession? is that not the cost we'll need to pay to get inflation backed onto its target? a lot of people are not being open and honest about that. tom: i don't know if you did that release it did that but that's america right there. this is really important in defense of the senator from massachusetts i met her when no one knew who she was. she is very different from the washington cause. lisa: the fed saying this is our tool we have to bring down inflation and you guys have other tools talking about the debt ceiling and other things. senator warren singh or are doing this?

tom: jerome powell part of the fancy class elizabeth warren is not. she clawed her way up to the elite pillar of bankruptcy law more than qualified to talk about the dynamics of the american economy. our bloomberg washington correspondent that was really some moment amory and sums up wall street. >> i was the one that asked for the exchange to be requested. you see powell jump on senator warren. would it be better off that we have higher inflation? remember last time powell was in front of lawmakers inflation was nearing 9%. he was able to get it down a bit the big concern on capitol hill which you constantly heard yesterday is what does this mean

for the labor market? what do how your reits mean for people trying to buy homes or pay their mortgages? this is something that was continuously brought up and it was a difficult one but as mike mckee said yesterday his remarks have a 72 hour shelflife because we need to see what comes out friday morning. tom: warren herself said she grew up on the ragged edge of the medical loss -- middle-class. jerome powell had warm. -- more. who is winning the day in washington? mean straight off wall street? >> main street when yesterday the questions constantly on jerome powell or about the struggles of everyday americans whether or not it was the republican or democrat asking the questions.

there were a host of other issues put forward to jay powell. whether it was about capital requirement banks the bank lobbyists have been working overtime the past few weeks because that was brought up a number of times or whether or not the fed should be involved when it comes to climate change what they think about the debt ceiling and who should be his number two because there is a growing course that think there needs to be a latino pick. many democrats and republicans are concerned a lot of democrats that are up for reelection including the chair of that committee the worry and the risk is there will be high unemployment rate and potentially a recession. lisa: i am looking at a 10 year yield hovering around 4%. it did not go up yesterday but it raised questions for long-term borrowing costs.

how was that underpinning the discussion? you can start to see deficits pick up in response to receiving in the bond market. >> these concerns, a lot of lawmakers brought up you did have one senator say he thought he had of hell of a deal and since then rates have been quite low but these are concerns across the political spectrum and this is the moment where politicians have their chance to ask fed chair how he sees this playing out but a lot of questions remain. we will hear from the president tomorrow about how he thinks he can bring down the deficit and the same time make sure that these entitlement programs like medicare and social security remain solvent. they really don't have any legs

in getting through congress. lisa: when he proposed this tax a lot of people didn't even talk about it because it was assumed to be dead in the water is their increasing support for this type of proposal? >> now, this is dead in the water. the democrats had control of the house on the senate and there were still trump para tax cuts and they still were unable to close the interest loophole that benefits wall street so if you think this congress that republicans have control of the house is luck going to happen. jonathan: i will take 90's house prices with a 10% mortgage any day of the week. lisa: that's the key point how much has the housing market changed? tom: erratically. jonathan: in a massive way.

annemarie, thank you. we're going to see more of that in front of the house committee. tom: they say let's walk back the town a little bit i don't have a strong opinion. my opinion is the markets back and we haven't talked enough about it yet of course all of these spreads, they are historic. jonathan: it's pretty deliberate and they had a lot of thought put into it. tom: i'll go with that. jonathan: i think maybe he knows it's dependent on next week. if the cpi comes in beneath expectations. lisa: nothing that happened in this market will do real has message. nothing broke. you so 1.5% s&p.

we are talking the realization that 6% interest rates may not be out of the picture sink that's without over the runoff possibility the fact that we did not see gains to take that was a lot about where we are. tom: i was surprised that the vix didn't move all that much. i that we would see a greater move in equity. jonathan: i will say, 50, 2 interesting points here for a lot of people on the south side i think it was a sensitive 50 being an option if you get another blowout figure on payrolls on friday. you get around 300 k, as store is still wide open. mala said again i were back and forth yesterday evening over deutsche bank 300,000 on payroll as what they're looking for. if we get that the market is going to go with 50.

the fed is likely to go with follow through. if they don't go 50 they have a bit of a problem haven't they? lisa: absolutely. jonathan: payees financial restrictions. tom: it became more accommodative yesterday. i did not expect that. jonathan: i was surprised by that. tom: the answer is we want more accommodating as we go into this data. jonathan: i'm not sure i will call that accommodating with the front end of the curve right now. this is bloomberg.

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jonathan: let's start with equities the stock market looks like this futures, i don't even we can call this a bounce. the nasdaq up a third of a percent. the s&p 500, that's pretty resilient compared to what we saw in the bond market. this is basically a 100 basis point move of the lows of fed second. you've now got to year, tenure and version breaking through 100 basis points. the curve has not been this

inverted since 1981. if you look at the rest of the curve, it has not done much. that screams the heartland inc. in the last 24 hours. penn state going back to early november last year the euro-dollar going back in one of five territory. as we look at-longer but faster as well. tom: how do we get back to where we gotta get back to? we go back to the real yield the inflation-adjusted yield is the one we can latch onto without the insert in the confusion. i did a careful study off the bloomberg today have the five-year, not the 10 year. the five-year and if you go back to before the chaos it was roughly on a moving average basis to .13%. we are at 1.78%.

there is more to go to get to the goal that jerome powell, the governor of the bank of england, lagarde, and the rest want. jonathan: i'm not saying it's the base case but floating the idea that perhaps if we go to six, we're finding out through this process that may be the economy is resilient. with that in mind if you had said 1% 12 months ago some people would have pushed back and said we can't take that and here we are looking at two. tom: i want to emphasize high inflation solves high inflation. let's remind ourselves that there is people like david rosenberg and others that say service sector inflation will flat and will come in a distant

fleet. -- distant fleet. jonathan: they wish it was that simple don't they. they are incredibly concerned about the higher inflation becoming entrenched. i mention they believe the clock is ticking which speaks to this faster point. i'd sit here and say where is it too they have any idea? tom: you don't see this, folks we have the banner up on tv a negative 107 beeps? that was supposed to be like back to school. jonathan: its early 80's stuff. that's nuts. tom: when you're at the university as jon ferro says it you go over and look at the roman ruins. how did goldman sachs off the london desk synthesize

yesterday's festivities in washington? how did goldman sachs london adjust? >> i agree with your comments i feel the adjustment we have seen has been quite small given the news that we had from powell that the view will be that they need to tighten a bit further in a way in order to push inflationary trends down and stop inflation becoming more embedded. we have increased by 25 basis points where the terminal rate will be. we expect them to keep hiking all the way through to july. we are looking at 5.5 so i have been surprised at the lack of reaction i guess you could say. assets like equities. tom: i saw that yesterday and the vix not moving. 21, 22 feel. within equities, sharon, when you talk to peter about how you

bifurcate equities given what is to come is it profit-making? what are the factors that matter in what and equities? >> we think returns will be quite low because you got this kind of non-ideal environment you have rates going up and you don't have a lot of progress on earnings so that combination is not for equity markets. where do you go? europe looks a little bit better than the u.s. because you are seeing crude pickup in china and europe has a lot of exposure to asia and china. also europe has lower value stocks. i would be looking at more value and so the market. commodities have been a little bit left behind on all of this as well. i would've expected a striker commodities market.

we think as global demand picks up with china reopening you will see prices rise again perhaps some stocks exposed to that and more value areas like financials. lisa: has the trade already been played out? we have seen the reopening kind of enthusiasm around china and we just got data kind of throwing cold water on the feeling that could avoid some sort of recession or stagflation with euros feeling to grow in the fourth quarter. >> i don't think europe is going to run away with fantastic growth and i do agree with you european markets have done well year to date. i think the big difference between the europe and the u.s. and that is valuation. u.s. companies trade on average. so there's this big cap between the two. i think you are not pricing so much into european even with the rally here today. european earnings have been quite resilient's.

the economy may not be all that strong but the earnings have been reasonably resilient. the resilience and low valuation makes it feel all the more caustic. we have very low returns for equities this year. lisa: how vulnerable are some of the big corporations to a euro that could depreciate the u.s. really does surprise to the level of rate hikes? >> it's a tricky one, isn't it? you can say depreciation is good for your -- european countries -- companies. 60% are outside a lot of that is dollar earnings if the dollar is going up you're making much more earnings when you translate that back into euros. actually, generally, you're totally right. there is a correlation. they believe growth is going to be better.

tom: there's a drinking game so get your to hang out --tang out. maybe i see some gdp growth like we saw in japan. does that fold over to eight mr. of a new guess or revenues do better 10 modeling? >> that seems to have been the case. margins have held up much better than we expected and our models would've predicted last year. we've been surprised on both counts that the topline has been better than expected. companies have been able to pass on a lot of the cost, additional costs they've been seeing through to the consumers whether that be businesses are household consumers. margins being a bit more robust as well and i think that's been a bit of a surprise to us in

europe particularly. european earnings being a little more resolve yet and global in nature. those things are good but what's rising interest rates. lisa: before we let you go you're talking about the exposure to reopening china. we talk about this is a positive for growth we talk about the geopolitical risk, the people used to talk about the increase simply -- increasingly firing rhetoric between the u.s. and china have you seen pushback from companies that are very exposed to china that could get hit by some of this? or do you just shrug it off and say it won't happen? >> i think there is a view that having a wide international spread isn't such a bad thing you get some economies growing, some economies are weakening. you have a normal spread of exposure. having purely a china exposure

that does leave you very open to geopolitical risk to china, to supply chain risk, etc.. i think most of the companies are very global so they're not just solely focused on china. jonathan: wonderful to hear from you. thank you. i remember she joined the program a few months ago and said long european banks and i pulled that phase, like what are you talking about? tom: i've never seen that. jonathan: i pulled the face a few times over the last few years and the individual becomes right and i have to take it back. big stocks in europe are up more than 20% year to date. it's been phenomenal to see. tom: let's be clear on a ratio basis and an ample dividend the price is way below the american profit-making and dominant

banks. i think we have to talk about surveillance entertainment here. jonathan: what would you like to do? tom: i would like to have the camera on us. jonathan: would you like us to lineup and sing as well? lisa: this is the european bank face. jonathan: we should all shake hands before the game starts. lisa: really? with who? jonathan: go sport type broadcast. lisa: would we chickens with each other? tom: what was the highlight yesterday? and han making clear mercedes is going to do better. that's what the show is about. jonathan: it's f1 overload on this program. tom: kristin horner said tom, and that. jonathan: capital markets looking after catching up with

her on foreign exchange big move on the u.s. dollar. the bond market is are the entertainment is depends on where you are on equities. we really did too much on a 10 year yield yesterday the heavy lifting on the front end of the curve the two-year for the first time since 2007. this morning we had more weight to it. yesterday in front of the senate banking committee, jerome powell. today in front of the house financial services committee. that's coming up a little bit later. >> keeping you up-to-date with news from around the world with first word, i'm lisa mateo in less than five weeks federal reserve chair jerome powell has changes 10 on february 1 he said the distillation area process had begun but on tuesday he told the senate committee the ultimate level of interest rates

is likely to be higher than anticipated. he's ready for faster monetary tightening if economic data justifies it. in germany the chancellor may give companies tax relief on investment spending hunt is looking for measures to boost economic growth. he's under pressure to act because the tax break expires on april 1. ukraine says the proposal to buy ammunition isn't enough the country's defense minister says ukrainian forces made about four times as much the eu's defense ministers has given their cautious backing to sending ammunition to ukraine from existing stock. the white house has endorsed a bill that could give the president the authority to ban or force the sale of tiktok. that could break a deadlock over how to address privacy concerns. the bill doesn't mention tiktok but the video sharing app is the clear target. it has about 100 million users

in the u.s.. silver gate capital is in talks with u.s. regulators on ways to salvage the crypto friendly bank. one possible option fdic officials are discussing is lining have investors to help silver gate shore up its liquidity. global news 24 hours a day on air and on bloomgerg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. i'm lisa mateo, and this is bloomberg. ♪

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this is ge aerospace, advancing flight for future generations. ♪ welcome to a new era of flight. >> i think the goldilocks scenario that we see is the least probable of the outcomes that's what the market has been pricing this year it's this idea that we do get this gradual fading of inflation and the

fetter able to engineer this no landing or soft landing. we don't get a collapse in margins. we expect to see a recession this year, economists have push that back from q2 to q3. jonathan: i think he felt good yesterday, didn't he? looking for 575 on rates. we are just south of that. lisa: so far. jonathan: he's looking for 3400 on s&p year and. to your point, you said a couple times this morning i think a lot of people will say that resonates with me we saw a big move on the bond market that we have been hit in decades. for the first time since 2007 and equities down 1.6%. i looked at high yields yesterday, nothing. tom: why? lisa: i honestly can explain it.

if i give you a real explanation, i'd be lying. this economy might be more resilient to higher rates and if that's the case you can see rates go higher without a downturn in the economy. if you take a look at 10-year gilts, so the 4% that's indicating a soft landing. were not going to crash in some sort of phenomenal way and they're looking for the yields to go down because that's perhaps too optimistic. tom: you said something really important. jonathan: i said a lot of things, don't sure some of it though. [laughter] there is a fly over here on the wall. jonathan: be selective here. tom: i'm going to be selective. what you need to know this morning as we go to the germans for the comments today we further steepen this morning i think that's not in the does

this morning we move forward to further inversion. jonathan: yeah, and other three basis points. deeper, deeper inversion, tom. 107, look at that. -50, that was a few months ago. that's crazy. what's the equity market and here we are at -107 basis points. tom: something that was measured 60 and 70 beeps. and now the difference between the two. it is a perfect time to talk to global head but far more school on the interdependency, the dynamics of our major sector banks elsa, an open question as you try to figure out what to write about this weekend how linked are the central banks right now? >> it's a great question, tom.

that's one thing that really stands out about some of the moves. we haven't actually seen big groups. a lot of this is happening in sync. you have the bank of japan being repriced it makes an interesting market. most of these are coming from asset class interface. tom: does the dollar move up? i need to on dollars can we see a foreign fled into a strong dollar trade? >> we've got have framework we've been using for more than a year that we find really helpful in predicting currency movements. it's really thinking about the play between bond and equities. when we see them selling off together as we did in february we tended to see strong dollar environment. rallying together the talent of 2022 stock this year, the weakness for the u.s. dollar and

when you are in this no man's land its are at the moment. lisa: i fear for the bank of canada today. it's one of the more interesting aspects of today. if bank of canada does come out and do as expected and pause the rate hiking cycle this could potentially be negative for the currency how closely are you watching this in terms of understanding the pressure? >> that's a great question because of the a lot of people expect the bank of canada to have to follow the fed given the very strong economic times between the u.s. and canada and yet sometimes the u.s. actually does the work for the canadians so they almost have to do less of the margin and the currency may take a hit as a result but to a large degree and has been priced for that. we have one more hike at the moment so i don't think it should be too big a shock to currency markets if the bank of canada does stick to that course.

lisa: do you just see more dollar strength going forward fan perhaps people have been expecting? with respect of what we see with the euro, with what we see in particular over in asia or a lot of the opening trade has been priced in? >> we did start figure when it was very popular we did start figure a little more cautious we were looking for some dollar weakness, probably not so much as we saw. as the year plays out it's hard to really get carried away. this on to say it falsely don't think 2023 is going to be the mayor which 2022. to really make a decision on the i think you have to get into the individual currencies. we still like dollars and higher. lisa: given this not man's land that you're talking about with

the dollar and also the idea of an economy that likely will deteriorate near the end of the year how concerned are you about the developing world given the scarcity of dollars and some of the concert coming to light over the past few months? >> we had the announcement of the weekend from the chinese authority sitting a growth target at the low end of peoples expectation around 5% suddenly no payback for the weakness we saw lester trader earlier again not seeing signs of that big import that some are expecting. it doesn't look like a picture or the rest of the front is going to be booming it's just the u.s. slowing down in isolation. jonathan: i sit his going to hike more this year that ecb or the fed? the consensus was overwhelming. i said where are you on the question now? >> that's a great question is a net? the ecb's to have a lot of work

to do as well but you and i have discussed this before on the show as well the fact is that the u.s. was stronger heading into the pandemic and its stronger coming out of the pandemic. yes, and has tightened up but there's a reason for that. the ecb was not in the same position. jonathan: kind of skirting the question of out of it there. i don't point her. i wasn't going to push back too hard. it's really difficult to answer right now. if the central bank has its way they have another 200 basis points. i'm not sure that's where the consensus is. if elkanah crazy a couple months ago, it doesn't feel as crazy anymore. certainly the probability around the view has shifted. tom: citigroup level of data dependency is of the chart. we've never seen it because, you know, we make a joke about it

but on a theory basis this is uncharted territory. there is no theory right now. lisa: you know or not talking about today? nobody's talking about long and variable lags. this is actually important. there is a feeling of a lack of patience. there hasn't been the progress made. you are a saint revisions to the upside, not what the fed wants to see. you have to start wondering the balance of risks is it going too far? they are not considering that at that point. jonathan: they touched on it briefly it's worth considering that chocolates ago i think we haven't even had the anniversary of the first rate hike yet. we were still doing qfii the shift has happened because people thought we price high rates and it would be faster. you can see it's not spreading through in quite the same way. lisa: and is not consistent.

we saw a big pop in used-car prices. the biggest going back to 2009 this is sort of arbery inflation of some of the goods sectors that had the source of the disinflationary process how do you come up with some sort of sense, there were making process -- progress? jonathan: where are we going to be on march 14 at 8:31 eastern time? lisa: you think that's more important than jobs? tom: i think inflation right now is more important because they have no ideal what the revision is going to be. i have no idea what the revision is going to be. jonathan: as the story changes you get revision. lisa: pause. jonathan: futures up on the s&p. sarah hunt coming up.

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>> are leading indicators continue to signal recession and they say that recession should be happening now. >> this is an economy that is proven to be more resilient than people expected. >> people are feeling that recession was inevitable and that's not the case. >> we do think that equities can drop lower but it would take a lot to see the october lows again. >> this is bloomberg surveillance, with tom keene, jonathan -- and lisa romanov age

-- lisa abramovitz. jon: equities futures up. some people are thinking out loud, maybe this bed has to go to six. tom: what -- as we said earlier, the adjustment continues this morning as the headline but how does the equity market adjust? that is a mystery we will discuss. tom: --jon: we were talking about the resiliency -- this has happened really quickly. tom: chairman powell, day two, does he walk it back, i have no idea but to borrow from the great mathematician -- you see the divide from the bond volatility in equity volatility,

there is noise there. it is massive the way bonds are looking at this. tom: i will say --jon: jon: i will say all week into friday morning, everything we talk about is highway -- highly defended on payrolls on friday -- depended on prey weight -- payrolls on friday. lisa: the nasdaq outperformed yesterday and the nasdaq they're better than the s&p, the tech heavy index was -- that is typically more sensitive to rates, what do you take away from this? i can explain this -- cannot explain this. i can believe whatever narrative people want to sell me because i don't understand it. jon: let's see if the narrative stands up to the next five minutes post equity futures positive -- minutes.

equities feature is -- equities feature is -- equity futures is positive. the two-year about another three year basis points and 5.04% and the difference between the two year and the 10 year is -107 basis points. we haven't seen this since 1981. tom: let's look at other spreads and john, they are more dramatic. jon: big moves. lisa: let's see if they are repeated today. jay powell testified to the house and do we get a sense we are -- they are doubling down? tom bartman -- tom barkin will speak here in ar -- an hour. they're moving in the opposite direction of the federal reserve

and they are expected to cause the rate hikes. -- pause the rate hikes. today, in terms of data dependency, which data matters most? i'm guessing a 15 but -- 815. people come out and say, it doesn't matter, it is not relevant and then people trade off it and then we get u.s. jolts. it is backward looking. does it really matter? people post jobs that they don't fill in when he goes up, everyone freaks out. tom: professor mckee has lectured me. jon: it is always noisy if it doesn't speak to you. that data work last year and this year and, can we talk about

the survey response to the economic data? we think we have a problem there. sarah hunt george is now. i am sure it is a long day working through this and lisa has made the point, we can look at the move at 1.6% on the s&p, do you think that is resilient in the face of what we are seeing develop? sarah: it is very resilient and you look at where rates are and equity markets are like, we are sign and we touched support and we are good. i looked in that -- at that and go if we are going to be higher for longer and how high we get is in the air, but if we will stay there for a period of years, i don't think the markets are pricing that in. earlier, there were present cuts in september so this is part of the reason why you are not seeing reaction in places like

housing markets. i don't need to adjust my sales prices because of higher mortgage rates and we had a really -- had it really they didn't that rates could be -- it is hard for people to wrap their heads around. lisa: percent more likely that rates markets are histrionic and going markers and a wrong or that stocks are not waking up to the reality that we are not going back to 2018. sarah: b. bonds tend to not be as histrionic as equity markets relatively speaking and i think there is a light up -- appreciation on how much i rates will make a difference over a longer period of time. use autocratic expansion by people going down and that means people are buying less cards --c ars. their behavior -- people are changing that behavior. we only had higher rates for

barely a year so i think for people to change their behavior, it takes some time. kailey: what is the clarified -- lisa: what is the clarified moment? sarah: i don't think we get a sky is falling narrative been, -- it is more about that and learning to live with higher rates and there are a lot of arguments about how much whether or not governments can afford higher rates but i think if you get away structure above zero that we lived with the last decade, there is a ability for people to move fixed income in their portfolios and there is a difference in how people are borrowing money and whether companies can -- money is not free. tom: you are right about the soothing narratives out there for the equity market and facebook was the stock is your --de jour yesterday.

how can corporations and barrooms adjust the soothing reality we have? sarah: you made a point that corporations adjust and this is where earnings may not fall off -- tom: we are up to 42 years folks -- viewers, folks. goodbye. [laughter] sarah: i think they will figure that out. scarlet: celebratory -- tom: celebratory tang. sarah: i can also raise equity so they are not the problem and the problem is people who are not used to paying higher interest rates on the credit card counters and mortgages and that consumer is going to be more stressed. tom: i come in and i get in before lisa today. lisa: he waited for me at my seat to jamie. tom: i said please wait. i went in yesterday morning and

looked at the capital structure of apple computers. they are grossly under dented. -- under debted. corporations go out and begin to get --debt up here before they get to a semblance of normal. sarah: i think you see at an earlier this morning, people were talking about how much money corporations were raising -- they may have to pay more for it later or if the curve on inverts or -- tom: curve on inverts --unin verts. jon: you have to pick stocks. what do you like? sarah: i like energy and you look at -- a 9% year -- yield and you look at something like should near --shanier.

that nord stream pipeline is a coming back so you have to have more lng globally. the emperor structure play has interesting things and there are ways to play that every think the fence -- and we think that defense, are we really getting any safer as the world is getting less problematic and are we spending less money or defects? tom: is going a defense thing? -- boeing a defense thing? sarah: i don't --you are seeing more money spent on defense and we went through munitions in ukraine so i think that is something where you have some assured being -- our surety -- jon: do you need the underlying

commodity to participate or do these levels work? sarah: these levels work but the problem is when it fluctuates. natural gas went down. you're getting opportunity on energy stocks because you have big fluctuations in the market and when you can pick that up when you have down, longer-term, if you can sit with volatility, you have a pretty good long-term story? jon: does the fed end the year closer to five or six? sarah: that is tough. do we have it higher than 5.5? will we jump to 50, i don't know. 25 makes more sense in the market could be too shocked -- and the market could be too shocked. jon: what a change we have seen in the last few months. lisa: it would shock the market to go 50 but will it? i wonder at the market is baking that in.

jon: it upends a lot. what is a like, let's go 50 again? they drop down and go flip-flop. a credibility issue attached to this. they like to say they are not in the business of forward guidance but they are in the business of forward guidance. lisa: how do you have a smooth guide have -- packed if the economy is is ruth? jon: risk management. they embrace the disinflationary story. lisa: i tell my kids that i have to embrace chaos. jon: tell me about the uber problems. tom: she is talking about monetary policy to her kids and i'm talking about pittsburgh -- picture-perfect --pitch

perfect. >> that's after fed chairman jerome powell -- he is ready for faster monetary tightening at economic data justifies it. president biden's new spending plan will include what officials call one of the nation's biggest peace time budgets ever. the total route -- will receive $835 billion. an eight the former soviet republic of georgia, right please used tear gas to disperse protesters from -- i'm happy over a so called agents bill. it would curve the -- credits fear georges is lying -- sliding away from the eu and you -- euro.

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>> the fed goal is to slow

inflation and if you hit your progression -- projections, do humming people going about their lives will lose their jobs? >> inflation is high and it will hurt working people badly. all of them are suffering. >> putting 2 million people out of work is part of the cost and they have to bear it? >> will working people be better off if they walk away from jobs and inflation is 6%? jon: that is elizabeth warren and fed chair chair powell and -- and i imagine they think -- hate the projection materials they put out now because unemployment is around 3.5% and casting a move to 4.6%. tom: it is from what we do and markets and all that but it is ancient, 19 -- 19 century --

19th century, but everyone called it, that is what the debate is about. jon: she is asking the right questions, what is the price we have to plate -- paid to get inflation to target? i mentioned this in the last hour, there is a sense from some senators that they feel the federal reserve is intellectually dishonest. can you really get unemployment from 3.5% and close to 5% without a recession? lisa: she said there has been 12 times in the past where we have seen unemployment rise by a percentage point in a year. how many times did that avoid recession? he said, zero. this is the question, half-day price that in and what is that recession look like given what the fed may have to do. tom: the lunch room at carnegie

melon, students all around -- and they work chowing down mediocre food and alan messer took my head off and i told him you cannot aggregate the economy. i told them, that is the only thing we have to aggregate the entire economy and that is what powell is saying. warren is saying, you will leave half the nation behind? jon: it is an easy line of a cap -- attacked because if she is right, fantastic and she looks good and it she is wrong, it doesn't matter. it is good for the democratic party. tom: when will we hear from the gentleman from the carolinas today? he does not have the depth of education that he had from brown or warren but he rubbed since a

youth was. kailey: --lisa: this is a reason why these hearings are difficult for me. there are no easy answers. it has to come down to a stable economy and employment. the question is how and what chairman powell says, the risks are not balanced. inflation is the preeminent risk. jon: the best chase that chairman powell has done is in wyoming. you go back and read the speech, that speech has stood the test of time. he backed away from it 3:04's -- three or four times. it is not the first time we have heard him. he did the interview with mr. rubenstein and did not back away from that and this has been the problem with this fed chair. i have a ton of sympathy with them and i think we have been

surprised by how this economy is much less rate sensitive. the moment they had a sniff of the disinflationary process beginning, they embraced it. the risk was always, an people afflicted -- and people flanked it, they said let's go 50 because if you drop down to 25 prematurity, you won -- run the risk of clip popping which will cause more pain. jon: let's go to emory horton and she keeps score for us. to me, this is the greatest shift in modern politics to go from maxine waters north of watts to mr. mchenry of north carolina. what an abrupt shift on the house financial services committee. who is patrick mchenry and why should global -- wall street listen to them? >> he is an individual that our

audience knows about. he has been, in the financial world, outspoken about these issues in congress and we will see what he has to say today when it comes to the fed chair but what you will hear today from lawmakers is likely similar to what we heard yesterday. there will be the issue on capital requirements on banks and who will be his number two and the important issue is where the fed chair sees inflation and tom, something you brought up about they cities versus rural areas -- big serious versus rural areas --cities versus rural areas. the quote was, you are trying to raise the unemployment rate? that is what he said to jerome powell because of people lose their jobs, this is a concern for lawmakers. tom: i want to know what the

republican response is and the democrats driving the show yesterday and got the visibility. do the republicans focus on boring surveillance economics or do they take a different path? >> the republicans will focus on issues that they want to highlight in terms of how their economic agenda is better the -- than the democrats. the democrats want to talk about -- one jay powell to talk about the debt seal -- ceiling and the republicans want to talk about how spending -- added to the cause of inflation and you will see these issues. mike mckee and i spoke after the hearing and testimony and we were shocked at how many republicans came out and talked about the fed governor bars recalibration looking at bain

capital -- bank capital requirements. the majority of republicans touched on this and there are bank lobbyists that want to focus on this. he is going to be diplomatic about it but they really want to point to federal spending and what they call excessive spending? jon: this is something lisa and i want to talk about but the president expected to post a 5.2% raise for federal employees. this is the largest in 43 years. i understand why he wants to do this but do they acknowledge that this might country to the overall problem? >> we will see because the president will map out what he thinks will bring the deficit down and there have been a lot of calls from individuals and the federal government because inflation is going up and they want to see wages go up. whether it is this issue in

terms of federal wages or if you will call tax or go into -- going to call for contributing to be tax on share buybacks, none of this will get through this congress. jon: thank you and well said. let's be careful about framing the point, for the federal reserve, everyone pulled one for pay rise against the pay drop of higher inflation but this is the past conversation and this is why this can last. tom: i don't think americans understand, the imf had a great bar chart in the last 70 -- 72 hours. how long -- it is shocking to look at that chart. lisa: there is a story about members of the european central bank researchers asking for a raise and the central bank pushing back and saying we don't want to be part of the problem

and this highlights the reality. you need to have a wage increase to maintain the quality of life. tom: we have this event here at 10:00 and we had the surveillance nap and we have to put in place but matters which is the countdown to where ac milan takes out the tops. --totts. bayer up one goal. -- they are up one goal. jon: we should have gone to this game. tom: we tried and they were blocked. jon: it wasn't approved. [laughter] ♪♪ ♪when the day that lies ahead of me♪ ♪♪ ♪seems impossible to face♪ ♪a lovely day (lovely day)♪ ♪(lovely day) (lovely day)♪ ♪(lovely day)♪

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jon: what a session yesterday and lets pick up on the moves. three-day winning streak. the every market unchanged on futures and we snapped the three-day winning streak on the s&p with a one point six move lower and the banks were hammered. confronting this move in the bond market, the 10 year through 5% and we have another three basis points. the difference between the two year and the 10 gear, or than 100 basis points, -107. that curve inversion gets deeper with the tenure not doing much. -- tanvir not doing --ten year

not doing much. chairman powell opening the door to 50 basis points. the euro-dollar looks like this. a touch weaker by the 10th of 1% and 1.0539 on the euro-dollar. the chairman from the door to 50 and we are at the mercies of payrolls and cpi. lisa: we will go to a suit maker, campbell soup. jon: that was perfect. lisa: i won't be here next week. [laughter] hold on a second. jon: you think in italian household, my family reached for super. that is simple -- sinful. lisa: a lot of people in my home reached for a 10 up soup because

i didn't grow up in culinary haven't like jonathan ferro and i wish i had. let's start with campbell and those shares starting at 7.1%. and seeing better than expected net sales for the full year up to 10% of a game versus 7.9% will that be considered a staple? john would say no and other people who are classic americana would say yes. it is coming off a low base and it comes after they said they will be in talks to ways of hundreds of millions of dollars in capital to support the business? are we bear in adapting and the adjusting face. tesla is down 1.3% and not the biggest will considering u.s. automakers have opened an and

events -- investigation for reports of stealing -- steering wheels falling off. , tom: are they supposed to be deductible -- detectable? in formula one, they come off all the time. lisa: it is about the screw coming undone and i don't think you can take car tips from formula one. jon: i can spell eight truck of tomatoes in our town in italy and leaving the high-rises and coming out and we had these oil barrels out the back and we used to take a winters worth of tomatoes and cooked them over night. you can smell it and you had tomato sauce to get you through. tom: what do you do in the aisle? jon: that is what you do when you have no money in the south italy. tom: when you go through the same -- a whole paycheck in the

summer and you see fancy homegrown hampton's tomatoes, at $15, how do you react? jon: it is ridiculous. lisa: my grandfather grew tomatoes in his backyard and every time i went near them, don't touch them. jon: this was nice. i can tell you more stories in the future. tom: only person in america who went to college and the food got better. that is how bad things were. jon: we have cassie barra -- kelsey berro with us. i have no idea what this is about but here is the quote from him and he thinks if we go back to 50, it would be confusing to the market. i hope they don't do it and i hope they are willing to one a

string of 25 basis point increase is. that chairman has opened the door to 50. how problematic is that? kelsey: if you think about the way that powell has been communicating about getting restrictive, there are three dimensions. there are the pace, the level and the direction and what powell has been doing is saying, we have hiked a lot. don't worry about the pace. it is about the level we get to and the direction we stay at that level. yesterday, he threw that out the window. that is confusing and i think the key takeaway is that if we are going to consider re-accelerating to 50, based on the data and they are data dependent, the risk of a hard landing goes up and the yield curve is selling u.s. much. what we saw yesterday, 12 basis points on the two year and flat on the 10 year.

to 10 --2/10 is picking up. your seeing sticky resistant on tenants. --tens. the yields are there. the diversification's will be more important. tom: one person writes this morning about the importance of the level we are at. does that level indicate restrictions and indicate not the drama of super restrictive but we are finally at levels that are clicking in? kelsey: this is the debate. we think that we are getting to levels that are sufficiently restrictive. last year, the thing i was quoting was the real fed funds rate, saying that the fed would not stop hiking until the real fed funds rate turns positive.

you needed the fed funds rate to move above inflation. we are making progress. the fed is now expected to get to five or 5.5. that will be a positive fed funds rate and i think we have to think about the way in which policy impacts the economy. it impacts housing first, then manufacturing, and consumer he -- and labor. it is playing out that way. housing and home prices have been deflating for six straight months in business investment is rolling over and what is left is the consumer and the labor market. we have the patients as long-term investors that the fed may not have the luxury of having. lisa: perhaps patient that the fed doesn't have and i was looking at the 10 year yield at 4% and you're talking about value in bonds. are gilts at this level pricing

in a soft landing of sorts where rates are remaining higher for longer and no crash? kelsey: with the yield curve this inverted, you are looking at reit's market that is suggesting adjusting the risk of heart lending is rising. where the disc -- discontinuity is at the spread market. spread is at the narrow end of recent regions and history. that is where i would say more of the complacency is in the race market, -- rates market, you are seeing the risk of typing plane through within the inverted yield curve. lisa: there is a feeling that we get some sort of recession or landing, outside of the know lending people were talking about, people -- we will get higher rates for longer. do you think if the fed crashes the economy, we will end up with higher terminal rates for a longer period of time?

kelsey: yes, we think we are in a new regime and the starting point was the fact that this is the first hiking cycle in 30 years that the peak of that hiking cycle is higher than the prior one. we were having lower highs and lower lows for 30 years. that is the bull market of fixed income and we are going to the -- opposite possession -- direction. the next time the fed cuts, it won't go back to the zero lower bound so there are changes happening but they are slow-moving and going to be cyclical shifts in yields throughout our broader structural view that we could enter a phase of higher highs and lower lows. -- higher lows. jon: are you thinking about repeated cycles of them over the next couple decades? is there reason to believe we have tailwinds for it. kelsey: there are some reasons

and these are abstract topics, things we won't know until very far into hindsight. there are tailwinds as it relates to demographics. we think that inflation, structurally, is not necessarily going to struggle as much to get to the 2% level. iv think about pre-covid -- if you think about pre-covid, post gse --gfc, -- we were missing it to the downside about this seat -- 50 basis points and are you can think things are shifting because a deglobalization and other factors, that it will be easier for the fed to get to 2%. we are not suggesting a materially higher regime but it is shifting. jon: it could be the last 30 years in reverse.

tom: the call here is that you are not leveraged players but it is a huge part of the alternative investment in fixed income market that is utilizing leverage. do they get hammered yesterday? kelsey: i think the strength of the move in twos shows that some people were offsides and there are positions that need to be cleaned up. [laughter] how is the austria bond doing? [laughter] jon: that is the perfect place to leave it. kelsey berro, that was gordon. -- golden. how is the austria bond doing? tom: i can't retire off that. it is brutal but it speaks to longer duration and i am talking about 97 years. lisa: it speaks to the point that kelsey berro is talking about a regime change and we were at a time where austria

could tell a zero coupon -- cell 80 coupon hundred year bond and people bought it and we are looking at a scenario where that is absolutely out of the question and possibly will look like a complete throwback. jon: it is like that hot potato, you want to sell to a greater fault because you have no intention to holding that to the majority whatsoever and i feel sorry for the persons left with that -- it. lisa: who are you talking about? jon: tom. tom: the grandchildren will love it. lisa: 21, 20. tom: happy third birthday. jon: futures down to 10. this is bloomberg. >> i am lisa matteo. in less than five weeks, jerome powell has changed his tune. on february 1, he said the

disinflationary process had become but on -- begun on -- but on tuesday, he told the senate committee -- he says he is faster -- ready for faster typing if the economic data -- is looking for measures to boost economic growth in his spring budget. the british corporate tax break expires on april 1. the white house has endorsed a bill for congress that will give the authority to ban or force the sale -- the bill does not mention tiktok but the video sharing app is the clear target and has 100 million viewers -- users in the u.s.. the embattled adani group --

some banks had balked at the refinancing and the death filing a report from short seller and diverse research in january that set assets tumbling. the most popular place for super rich to own a home is new york according to a new report. they look at the network of people -- network of people having more than $30 million. u.s. took 14 of the 20 places on the list. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am lisa matteo and this is bloomberg.

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j.p. morgan wealth management. >> we lack a holistic enter agency --interagency whole of government approach so instead of doing whack-a-mole, we need a

comprehensive approach to evaluating and mitigating threats posed by foreign technology from adversaries nations. jon: that was mark warner on the latest effort perhaps taking a except -- a step closer to bending to call -- banning tiktok. tom: this got his first class and he was a scrambler -- scrapper and hustler out of georgetown and he failed at business and he got successful with nextel and cellular phones and made lot of money but what i remember was the shop -- the shock of the douglas wilder win in virginia. this guy not only could do the tech mumbo-jumbo but could manage winning campaigns. jon: what do you make of this bill? tom: they have to get their act together and get holistic and that is tough.

connect the dots of our technology in a nation that instinctively does not want to do that. jon: there is the toys if you need them and you make the decision. i thought this was going through cynthia's -- lisa: we will see what happens. what is the popular pushback and i keep going back to footloose and i know this is perhaps anachronistic but i wonder if there is a feeling of don't keep us down, the young people to the politicians and they say that the chinese -- tom: is this kevin bacon doing a super bowl commercial? lisa: is sounds flippant but it is true. tom: you see kevin bacon on there and you are sinking kelly loggins -- sinking kelly -- kenny loggins?

lisa: we do watch the commercials. i watch the game the commercials -- jon: you are there for the commercials. lisa: i am therefore it all. don't you watch the commercials and you watch the best one they see, the art and what they are trying to appeal to? jon: how do you convince people to eat food that poisons you. [laughter] tom: this -- the founder of pangaea joins us. i have to redux what i did with annmarie hordern and and today, that house financial services committee with chairman powell is a different committee and we have gone from maxine waters of los angeles to mr. mchenry of north carolina and that is a wild shift. what is maga monetary policy. president trump and those associated with him, what is

that monetary policy? >> i disagree with the premise and mr. mchenry is a solid conservative but i would not put him in the maga crowd but what the committee is largely going to do is support powell. you will see the same kind of split you did in the senate where republicans will generally say, pushing -- you pushing it and democrats will be concerned about the impacts on the vulnerable and the last one -- less fortunate and the impact of the housing market and the like. remember that progressive democrats did not want powell in place even though the joe biden people were pushing it as a relatively dovish character and now they have gone hawkish and progressive feel free to attack.

tom: i was with spencer abraham the day the energy policy as a nation went down in play -- claims years ago -- flames years ago. can we make our technology policy or is it like energy where we will not make a tiktok policy. terry: we will not make a tiktok policy. what you see is a twofold policy. you are seeing ramping up of investments of manufacturing in critical areas. think about this, it is not a lot different from what we have done in the past major conflicts and you will combine that with a -- senator warner after -- accurately says a more holistic approach on which technologies may be harmful and technology as part on -- of national security. and there's the process -- of

problematic investments and that is the policy the u.s. is developing. is a comprehensive? it is in the sense that it addresses difficulties but it does not mean we will have a full born technology policy. lisa: to seems like people are highly skeptical that people -- stable been tiktok. two thirds of american teens are doing dances on this app. what is the ultimate goal of this? if it is not to ban tiktok, is it just to get a sale? terry: until people yesterday that i thought this bill was 75% likely to become law. bills get introduced every and i am in a the business of telling people that bills don't matter but this is different. warner and others are serious people and you have the biden administration falling in behind

and the whole idea is to not do a ban tiktok, but to put together a process that identifies potential threats across the board. that said, i think tiktok gets banned. that is instinct if nothing but you have half of the state governments telling folks that, -- and the federal government telling people to take it off devices. i think it gets banned. lisa: what does a tiktok man look like --ba look liken --ban look like? terry: theatrical's away and it gets flushed out of the united states system. the algorithms are blocked. every technical measure taken to make sure it does not infiltrate the country. jon: you have any insight on the

lobbying effort taking place in washington #i imagine facebook and snapchat getting excited. >> the teams are forming up. they are trying to figure out whether this helps them or hurts them but one of the things that will cause a lot of people on the tech world and the lobbying world in washington concern is the broad based measure of the common cash commerce department led review. i can see other folks salivating about this but at the same time, this legislation is not about whether or not to ban tiktok and i heard marco rubio say he was generally supportive of what warner and tim were doing but rubio has only built that will ban tiktok. they are going to be concerned

about the breath --breadth of the review. this won't be a snap think that happens, it will be a developed process that goes on. jon: wonderful to get your perspective. more clarity from terry haines. big pickup. lisa: how much people are expecting other social media to pick up. you do wonder what the lobbying is like and i love the idea of them going down and think we have to protect security and protecting children. give our children a greater sense of being together with their peers and not just floating about social media. it is isolating them further. jon: told elite on board with that, tom -- totally on board with that, tom?

ok. tom: how do we ban the technology. jon: we banned the tech. what do you come go short on youtube? lisa: maybe read a book? tom: original. i am on the phone and say, this is tiktok? lisa: thursday -- seriously. jon: features unchanged. this is wilbur -- bloomberg. >> the big news out of -- before up always it was that djokovic won't be playing in the california desert and he will skip the fifth major for the third year after he was refused a visa to enter the u.s. and you can watch all the action on tennis channel daily at 1 p.m. eastern.

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>> credit markets stay healthy, the consumer continues to spend and rages are still strong. this is not the typical bear market, the 50 basis point is actually inflammatory or with

raise lots of concern and markets. >> this is an exercise of central banks defending their credibility. >> this weekend the next week will be important weeks for subsets of what is the data telling us. >> this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. tom: good morning everybody on radio and television. the indicator for equity bonds currencies come out. a print of one away, we may get a 109 train. jonathon: two years are doing the heavy lifting. for many it wasn't that chairman powell open the bar for 50, he lowered the bar for 50. what we need on friday to get 50 basis points. deutsche bank says 300,000 on payroll, they think this market

is going to go with 50. tom: let's go with the historical perspective. he is her friend. we are back to volker , this is not an analog to paul volcker. jonathon: they think we have burns. to say this is volker, this is about a flip-flop and thus a problem. step down to 25, risk reintroducing 50 and all of a sudden, and then backing away introducing 50. tom: a couple of years ago i looked at the arthur burns shift and that is what greenspan saw. greenspan invented measured 25, 25 and 20 five. and now we risk what john says lisa: he now expects a 50 point basis point hike because of what

they said and what we heard yesterday. he sees a terminal rate of 575 from the previous expectation of five 50. on one level this is deliverable what happens if the fed does not deliver that. haven't they already flipped and flopped in the eyes of the market that has taken there that is from tom: the rhetoric we have heard? tom:report what you saw in the high-yield market? lisa: the same thing we saw in equity markets. tom: why did that happen? jonathon: i have no idea. thus a story so far. why is tech leading? you think stocks would be cratering. you would think that would hurt. tom: i just got elbowed by alicia levine, let us do the data check right now. i have to look at 100 eight basis points on the spread. we are supposed to be there eight months from now. jonathon: city just dropped, to

25 is what they are looking at for payrolls. core cpi next week. they think that's enough to get it done. my question on friday, if we have something like 180, two hundred? this is the problem when you open the door to 50 again. it is not the size of the single hi, it's a communication. once you downshift and introduce a bigger hike. you go 50 and then what? what you do after that? what's the path look like? lisa: if you want to get to 575, why not raise to 575 and hold it there? why hold it slow? at a certain point if they say we are going to raise it to this and hold it. why are you crying? tom: i'm not crying, i got elbowed by alicia. she has been very patient. she wants to jump in. respond to what we were talking

about? this hurt. alicia: what powell did yesterday with the right thing to do the data has been hot. if you did not put 50 on the table, it threatens of further loosening of financial conditions which will un anchor expectations. now the problem is that he is locked in. if they do not go 50, it has been a series of locking in. the fed talks too much. i thought that route the soulcycle. too much talk of disinflation weeks ago, 13 times. in the end by putting 50 on the table in the near term they are almost forced to go through with it. i think at 200 number on friday would do it. jonathon: i want to pick the theme so far if 200,000 is the number, --

alicia: even after the price action yesterday, stocks were where they were out on thursday. the disconnect between the bond volatility in the stock market is ever widening. the market has been remarkably resilient as have credit spreads, as you just talked about. which is what is holding up the market here. what the market is seeing that ultimately, that 10-year is having a hard time over four percent and ultimately, the 10 year will move lower because the slowdown will be coming. the fed will end up pushing us into recession. lisa: i get a lot of emails about being too gloomy and i should have some more fun. if you take a look, let's take a look at the bright side. maybe stocks and credit suites are seeing something were not. maybe strength will carry

through even if rates go up to 6%, do you buy that? alicia: i by the thought that the economy appears to be less sensitive to rate hikes than originally thought. we are now at 454,'s weather the crisis, whether the knock on effects. we are nowhere. that surprised a lot of us who have seen other rate cycles here. that has to do with the fact that mortgages are fixed rate of 3%. people are making the spread on a 5%, six month treasury. they are actually making money on this trade. even if the economy is less resilient, the fed will probably have to go higher and eventually work. it will just take longer. the data in the real economy tends to be fairly strong. you see weakening in certain parts of the economy such as housing, clearly commercial real estate is at risk. that's flushing a warning sign here.

thus the beginning of it, it just hasn't happened yet. as long as labor is strong and our workers are getting wage increases, which they are. you can keep this going further. lisa: what you do with the idea of a 6% fed bond rate, how does that change what you buy? alicia: so far, cyclicals have worked as have growth. that begins to change a little bit. you have to think about this if the fed has to go to six percent or higher, it is not a base case but you have to open your mind to the fact that it could happen then you start having to see a recession by the end of the year or into 20 24. the confounding part of this year is that the recession has not happened yet and it's hard to predict with the strength we see in other sectors such as the service sector which holds up the economy. you have to expect it within the next 12 months and with that, you start to ask the question will cyclicals continue to

outperform? that is where you have to go with this. the defensive stocks have been terrible this year. health care has been tough, staples have been tough and cyclicals of ribbed. what happens if the recession really starts be priced in? tom: i'm not going to mince on international women's day, you have of bulletproof mathematics education. your path here was painful in terms of the lien over the desk. right now, we are out of moment when we have massive first and second derivative moves and it comes down to the math. the gravity is back in you have to have skin in the game which means all the shadows are out there and you study it with a plaissant distribution. i'm not going into the mat this morning but are we there now? are we have legitimate tail risk

or the unknown unknowns out there. alicia: we always thought that because we don't think you can get out of a rate cycle that quickly. what's unspoken in this conversation is the debt ceiling. that could change what the fed does rather remarkably and rather quickly as well. and the fact that the u.s. has not had a recession in the third year of a presidential term because it's an election cycle coming up. what happens to the pressure on powell if we get that recession by the end of the year? can he finish the job? i don't think powell is burns yet. will he be burns in the future? he is sticking to the volker playbook. if we get that recession and your unemployed rate goes to three .5. he will be getting pressure from

the right and the left. jonathon: you are much more diplomatic than i am. to this point, the tension happening in the semiannual testimony, what happens if it starts to climb and they're still pushing? tom: i would overlay on that this continuing belief that we are working with what alicia says, the volker playbook. it's not analog back to the 80's, its original. lisa: powell is in between a rock and a hard place, the idea of an election cycle will be interesting. is there a little more weakness, all of a sudden a pause, all of a sudden i don't know. jonathon: senator warren is going to find some company pretty quickly. alicia, you will stay with us because we have an ap be report, -- adp report. mike mckee will break those data

points down and alicia will respond to it. we will catch up with the brilliant analyst diane swonk. equity futures look like this on the s&p. tom: 109. jonathon: i would love to be just waking up. lisa: even if you wake up every day at 4:00. jonathon: i'd love to start my mornings at 6:05. futures are up point 07%. yields on the 10 year 3.95. unbelievable. decrease of the curve invasion going back to the 19 80's. this is bloomberg. >> keeping you up-to-date with news from around the world. bond traders have boosted best that the federal reserve will speed up the pace of interest rate increases.

that is after jerome powell testified before a senate committee. he told lawmakers he is ready for faster monetary tightening of economic data justifies it. traders see a point five hike is more likely. president biden spending plan will include the biggest piece time budget ever. 800 35 billion dollars that includes big increases for weapons buying and research and development. in the former soviet republic in georgia, riot police used tear gas to disperse protesters unhappy over a foreign agents bill. it would curve the influence of groups are rely on funding from the u.s. and europe. critics fear georgia is sliding away from the eu and nato is increasingly pro-russian. u.s. safety regulators have opened an investigation into teslas model y suv. the highway traffic

administration received two complaints that the vehicle steering wheel can come off while you are driving it. it covers one hundred 20,000 models that were built for the 20 20 three model year. the chairman sports shoemaker a data has shaken up management. the new ceo is personally replacing the head of global lands. weldon is floating the idea of selling the $1.3 billions of easy care and donating it to charity. global news powered by more than 20 700 journalists and analysts. i and lisa mateo, this is bloomberg. ♪ okay, great. j.p. morgan wealth management.

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jonathan: we don't care about the adp report. michael mckee has that right now. good morning mike.

mike: it is a 242,000 number, it changes to the u.s. payrolls. that is up from 106,000 which was their initial report for the month of january. two hundred thousand was the forecast but that comes an even better. it looks at this point most of the jobs were created in media and large establishments. bars and restaurants have been looking for people but according to adp, small establishments lost 61,000 jobs. also losing jobs, construction. that is something people have been waiting for as the housing market slows down. a lot of that was made up for an manufacturing where 43,000 jobs were added. 83000 and leisure and hospitality. not sure how that works with the 61,000 lost in that area. adp puts up a growth index and

according to them, pay growth for people who stayed in their jobs was 7.2% which is the slowest pace of gain and 12 months for job changers and fell a 14.3 from 14.9. i did some calculations, since adp came out with their new numbers in system, they have been off by 132,000 a month compared to the nonfarm labor bureaus. jonathan: very briefly the two year, 10 year spread drop below --year two year is high by four, five basis points. what are you seeing on the tenure? the 10 year yield is lower by a single basis point. three 90 five, will pick up on that story and just a minute. equity futures are pretty resilient, only down .1 percent.

you have an upside surprise, 242,000 against the previous month. people will look at this number and say, like we do every single month, what is that mean for me on friday going into payrolls and how close was the adp print to what we got from the nfp a few days later? mike: it didn't make adp look good because they forecasted 106,000 jobs created. they have revised the us up to one hundred 19,000. there are still three hundred thousand disparity between the two. i don't think you can draw many conclusions from this report about what we are going to see on friday. a lot of statistical noise in the january numbers, jay powell talked about that yesterday. we had weather, seasonal adjustments and we had population adjustments. it's hard to get a reading on

what we might get on friday as well. that is the number that is going to move the markets much more than adp. tom: how will you study the revisions that we see in non- farm payrolls? mike: we have the revisions to january so we have to look at february, it's very hard every year to compare january to december because of the changes they make. we can compare february to january and we note that the weather wasn't quite as bad in february in most places as it was in december. january was warmer. we will look at all those factors and try to figure out whether it had a significant impact or not. it will be the headline number, is going to make a big difference. jonathan: mike mckee, thank you sir. breaking down that headline number on the adp. equities are little bit softer down .1%.

the two year versus tenure, that spread drop below 110 briefly. negative 100 nine basis points. tom: we have to get to alisha but how can you model in quiet since when you look at what happened in france, spain and germany. jonathan: slowly pricing an end, a 50 basis point move. tom: as an aside, argentinian pesos or two hundred which is a huge benchmark of the fertility of that nation. damian sassower will get said that in a minute. explain as an equity person how i can avoid going to 4.97% cash? alicia: we have signaled to our clients very explicitly that we are in the regime change for equities here that worked in the

last 15 years. the financial crisis of zero rates in multiples is not the playbook this year and it needs to go a little lower on the cap scale. what we saw in january was if last year was 1974, this year is 2019. grab the same old stocks and they sold off 50 percent, 70%. we think that's a mistake for the world we are in which is structurally higher inflation with the structurally tighter labor force at higher rates. that's where you have to be. you have to be in sectors that do well with higher rates and some inflation in the system. lisa: a lot longer term investors say they don't trade on adp, payroll support, they collect the data and they adjust their review over time. is this time different? do you find yourself trading or making views --moves on these

data points? alicia: we look out 12, 18 months. we don't trade or advise our clients to trade because trading is the way you kill your equity performance. and other asset classes for that matter. we take the long view in the long view here is higher inflation structurally, higher rates structurally, may r squared higher which means he will wind up with the fed funds rate at over 3%. we are not going to that two percent world. it's a very different world for investing in that is what we advise going forward. you can't trade around this, is too volatile. lisa: how do you know what equity markets and risk assets have woken up to the reality betray? alicia: the issue is what's rallying what's working? what's working as a playbook from the post global financial crisis of near zero rates. in all of our analysis, that is

not the world we are in. could we get to a place where there is a deep recession and the fed cuts? of course we can. but once inflation is in the system is hard to get rid of it. you are in that world where the cyclicals will work, the materials, the industrials will work. a little bit lower on the market cap, i don't like using value because right now there are plenty of tech stocks that are value stocks. i don't like using that because it has to be in sectors but just companies that can earn, that have some dividends in increasing their cash flow, thus what were looking for. you can't trade around that. jonathan: i'm thinking about what kind of data point we would need on friday to cause the most amount of pain? where would that leave us? is there is enough data over the past month or so to take that revision and put it to one side and say things are still heading in that direction do we flip all over again? alicia: it's an interesting

question because the answer to that is a mess on the number, and the 50-one hundred range, because the market is all in on higher rates for longer. whatever the market is all in the pain is on the others. you have positioning that reflects i. it's been a weird market. every four weeks we are ping-pong inc. which is why we take a long-term view because you can't trade around it. we thought since last summer, higher for longer. the fed will hike and hold, don't look for the pivot. we knew the pivot was wrong months ago. jonathan: i didn't know. you could've told him. alicia: the point being, we invest with that view. you cannot trade around the data points, it too difficult. jonathan: alicia levine, brilliant as ever.

payrolls on friday and then a to cpi next week on the 14th. lisa: you asked a great question, what's going to inflict maximum pain because that happens all the time. that is the data we get again and again. you thought this, ha ha. jonathan: we get to celebrate world-class woman on wall street. at this lineup would be a great lineup anyway. look out for that, counting down to the opening bell. this is bloomberg. ♪

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tom: bloomberg surveillance, lisa abramowicz and jonathan keene. an historic moment, the yield in version negative 100 10 basis points right now on the two, 10 spread. equities are turning. the dollar is stronger today. lisa: dollar is stronger across everything. as the strongest going back to late november. where are the pain trades and how much will they get unwound? tom: we have a wonderful half-hour. michael, what you have on trade? mike: the trade balance comes in

at negative 68 .5 billion, which is up from the 67.4. lower than the anticipated number. trade a little less important than it has been in the overall market thinking these days but it does suggest a little bit lower gdp profile. tom: in this historic moment, it's michael mckee that offers clarity. for you on the radio, this is the to, 10 spread. i call it the vanilla spread. what mckee has done is establish the timeline of events before this collapsed inversion and it could be as simple as what we saw with payrolls, what we saw with retail sales bringing it all the way out to bullard. when did we really break in the further inversion? mike: yesterday?

we broke into further inversion march 2. but those numbers came in earlier. if you look at what happened after payrolls, cpi, retail sales numbers and of course we had bullard come out saying they could have done 50 at the last meeting. the market traded sideways to up in terms of the yield curve. it didn't go down at all. the only time it started going down again as when we got the pce numbers in this big drop yesterday when jay powell said i looked at the chart and i see all these numbers were hot in january. if they stay that way work and have to move. where were you? where were the markets, where was this yield curve when all this negative information came in that would have told you that the fed might take that position? lisa: jay powell did seem to embrace a disinflation narrative

until he came out yesterday and talked about the revisions to the data, the backward looking revisions. how significant have the revisions been to reshape the narrative at the beginning of the year? mike: they reshape the narrative, because we did see some revisions. but those were revealed when these other meditators came out. the fed was looking on february 1 at numbers that had not changed and so we are doing a little bit of risk management and going to 25 because at that point the data is telling you they might be getting close to really restrictive and they didn't want to go too far. now the data tells them to do something different. tom: michael, thank you so much.

we should point out on international women's day you can be a reporter that says i got a fancy degree from chicago but i know nothing about bonds and through sheer inspiration you learn about bonds. what was that like lisa abramowicz your first day in the bond world? lisa: it wasn't 2000 seven when the commercial paper market, a moment of real tension and drama the people don't associate with bonds. tom: did you just pile up 15 books and read fibosi cover to cover? lisa: i do wonder, we saw the lack of drama for a decade or more, almost two decades and here we are in the drama is back. tom: diane swonk from kpmg.

in 1985, i think she was out of junior high school at the time, she was in chicago landing a job at first chicago corporation. what was that like the first day on the job diane? out of michigan, it was unique at the time? diane: it was unique and to be honest with you, i went on to university of chicago as well. i wrote up the escalator and i described the person i was mentoring in the 80's and that person was me and i look like a man with my short cropped hair and male dominated women suit

and i even had wing tipped pumps. i had a bow tie and i took it off. i just couldn't take it anymore. until i got to step into my femininity, my career didn't take off. i had a terrific mentor. you always need someone who is a terrific mentor and he said to me, you make me look good. tom: why do we need looking forward to international women's day. you have lifted. what do we need to do going forward to get more women into economics, finance and investment? diane: it's a sad commentary and economics, the bottom line is we need to all be able to step into our truth and who we are.

that is not allowed in a lot of these fields and that is something i have a hard time struggling with because it took me a long time to do that. i had to work through two maternity leaves. my son almost died. i was on tv for weeks after i delivered my daughter. i don't wish that for anyone. we have to acknowledge the biology and geology is women are delivering babies and same-sex couples are able to have children. we have to support maternity leave and that is really important. there are female participation rates and or male participation rates among 25-54-year-olds is the lowest in the g20, which is really the she 19. that is really despicable. our neighbors to the north has a 12% higher participation rate

among primates women than we do. i have a sadness to this day in the fact that i was not able to do more and i still have a lot of work to do for everyone behind me. tom: lisa, why don't you pick up here. there are some themes in transient and how alone america is in this debate. lisa: i want to go to what you were able to accomplish which is an incredible reputation and prowess and academics at a time that is highly tenuous. what did you make of what jerome powell said yesterday or capitol hill? diane: i thought he finally stepped in to where we knew the fed was in the fact that all the same chairman jay powell is really important and that is they are debt independent. the narrative is shifted and

that does put .5 on the table. there are two more key data points before they meet on march 21st. i think it is important that he laid out just how data dependent they are in the willingness to play with that. we could get .25% in the rates are going higher faster. that is very important information to have. as one that we have been arguing in the data has been out there. officially since the valentines day massacre, the revisions to that were out the friday before it and we were looking at it thinking, oh my gosh, this and changed the entire narrative. lisa: has the data that we have gotten since then, has a confirmed that strength or is there any sign that perhaps we are going to see some kind of downward revision or downside surprise in the labor market

which has surprise for almost one year to the upside. diane: we could see some cooling and i think we are seeing some cooling in the adp data is the way that they have redundant, i give a lot of credit over to neil or richardson for not making it a forecast of the payroll data. it still shows there is a lot of strength and wage gains that's terrific for wage earners but to the extent that we are seeing continued upward pressure on inflation tied to demand which is tied to the wages people earn. that data, we know the month of january part of the reason that the adp report was week is because it was sensitive to things like california. it was not the same for the national data.

if they got paid a dime they showed up on national payrolls. we will see some downside surprises as we come off this unseasonably hot january in many ways. the bottom line is, you need the threshold to get us to the fed feeling like it's actually got inflation under control and inflation will not become more entrenched inflation is very high. the threshold so slow down rate hikes is high right now. tom: diane swonk thank you for joining us. on radio, you can listen as well. stocks have turned around, they are positive again. i wasn't going to go there. lisa: i think that's interesting

because the lack of any conclusive move after what we heard from jay powell yesterday, after data that confirms that narrative. to me, it's amazing the resilience and it continues. tom: we are going to break and when we come back, will it be right on the screen? the way we are moving this morning, who knows? what you need to know on this historic day as we did print -110 points on the inversion curve. stay with us throughout the morning, this is bloomberg, good morning. lisa: in less than five weeks, federal reserve chair has changed his tune on february 1, powell said the disinflationary process had begun. but tuesday he said the level of

interest rates will be higher than anticipated. he is ready for faster tightening if economic data justifies it. jeremy hunt may give companies extra tax reliefs on investment. he's looking to boost economic growth. he's under pressure and to act because there corporate tax rate expires on april 1. the white house has introduced a bill that could give the president to ban the sale of tiktok. the bill does not mention tiktok but the video sharing app is a clear target. it has about one hundred million users in the u.s.. mortgage rates have risen to the highest level since mid-november. according to the orange bankers association, the contract for a 30 year mortgage rose to six .8%.

and the most popular place for the superrich to own a home is new york. that's according to a new report . the report looks at those with a net worth of over 30 million dollars. london is second in the survey followed by hong kong in los angeles. the u.s. took 14 of the 20 places on that list. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am lisa mateo, and this is bloomberg. ♪ there's more to business than the business you're in. (robot whirring) want smarter factories? that's the internet of things business. accelerating r and d? data science business. hey. have a look. managing global supply chains? shrink our carbon footprint business. thank you. (in foreign language) that's where deloitte comes in. with a potent blend of acumen and technology to help advance and connect all that it takes to excel in business ...

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advancing flight for future generations. ♪ welcome to a new era of flight. >> credit markets stay healthy, the consumer continues to spend and wages are continuing to stay strong. these are not the signs of a typical bear market. at the same time we are not

expecting a bull rally because we don't see the catalyst there. we think equities can drop lower but it would take a lot to see those october lows again. tom: anna han pushing against the caution out there. i thought she was quite optimistic yesterday. i thought there was a framework there for equities. lisa: the idea that perhaps were not in this bear market in the bear market rally, she rejects the premise. tom: thank you for being with us today, towards an hour and 10 minutes. the day after ascendant our house day with mr. mchenry of north carolina. lisa: what is the questions you wish they would've asked jay powell yesterday? tom: i always want to know because of the historic idiotic

lack of consent, as they go to the march 2 meeting where is the debate over where we are right now? i don't think we know where the debate is. lisa: what's the liability of not having a consistent message. what's a possibility of increasing rate hikes and then deep creasing them and not having a reliability in the market. tom: unanchored is the theme. some of our guests, eluding that the two percent is over. seema shah from principal global investors, are you working and the side of central banks that aren't going to get back to what there was. they are not going to get to sub two percent, to point x percent

is there a new level we have to get used too? seema: what we are going to see is you will see them reach 2% temporarily. especially if you start to think about a hard landing. we think over the next decade or so, we are going to see a world that is a lot different than the past 10 years. tom: with the turmoil of the last 24 hours, i'm looking at 109 basis points on the two, 10 spread. translate for our audience that are not spread sophisticates, what is it mean for nominal rates forward? seema: the key take away is that it doesn't necessarily tell you what is going to happen but

in 10 years time, the fed will have to cut rates in response to something. 100 basis points only been seen a couple of times in history. it was seen a 1920 nine before the great depression, in 1973 before another terrible time in markets. and then again volker came in and took control of the situation. history is not on our side and is telling us that even though economic indicators are strong today, there is pain coming ahead. investors need to get prepared. lisa: what's at fair value then? seema: i don't think investors have gotten there yet. investors are getting accustomed to low volatility and high returns. there is an necessary shift in mind that needs to take place in

order to prepare your portfolios and clients, this is not a world where we will have high returns on low volatility anymore. you need to think about more fixed income quality and increase your portfolios and absence of them. we have increased moving into the high quality segments. this is on the short end of treasuries, increasing to investment grade. we are underweight to high yield. if you look at high yield spreads, the only times they have been tighter than they are today is when the fed has been dovish or you have expansionary data. this is the best is going to get in credit markets.

increase your exposure to fixed income. but make sure that you are focused on the high-quality end of the market. tom: that's too complicated for me, do we flip 60/40 on his head? seema: i don't think you need to flip it quite like that, we are thinking you have to have a significant portion focused on equities going forward in the long term. the same thing for fixed income. you need to start introducing alternatives in your market if you want any hope of getting any reasonable return going forward. we do believe the diversification benefits of bonds despite being terrible last year. tom: in the turmoil here, i need a guide. i make a joke about it, i need a guide for the next 78 minutes. i need a guide to get to monday.

we have to get in front of key u.s. data as well. what you do if you are scared stiff to get to monday? seema: as i understand, the fear of getting to monday. they are as stated dependent as the market is. even to get through to monday we will think about the tuesday cpi number. i think it is unsettling, is not helpful for investors or the public. i believe there is too much transparency from the fed and taking a step back and giving a slightly longer term view and the importance of looking at the longer view. lisa: alicia levine said stop talking so much. thinking of all the narratives that got turned on their head.

does that change is the fed potentially becomes much more hawkish than people expected? seema: i think you could see some coming around for year. i think they will carry it further, we think the u.s. is heading for recession europe feels like recession is behind them. their weaknesses in their past. it is a fairly solid recovery which is helped along by china's reopening and fundamental improvements focused on esg which i think will be important for investors going forward. i think the european story is stronger then you will see from the u.s.. if i'm going to rape local regions, i'll look at china and europe because they have a different economic regime going

on there. tom: thank you so much, just a terrific brief. seema shah from the printable group. let's go back 90 minutes ago where we talked about with alisha levine, we talked about bond issuance. you have a company and they have talcum powder, baby oil, you know that company is johnson & johnson. lisa: hold on a second. they have a debt offering that they're selling right now. they are selling dollar bonds and at a parts including a 40 year security. there are two ways to think about this. one is you might as well on the

spinoff do this now. second is, if you want to get in get in now. that to me is really interesting especially with the 40 years, what are they trying to do now? tom: let's look at another upstart company that's having trouble generating cash. apple computer, 5.1% lisa: let's see would verizon sales because they are coded timing the market. apple and verizon managed to sell debt. tom: 51% debt, what a historic davis has is ben. stay with us, this is bloomberg surveillance, good morning. ♪

jonathan: get ready for chairman powell day two, equity futures just about unchanged. the countdown to the open starts right now. >> everything you need to get step for just to get set for the start of u.s. trading, this is bloomberg, the open with jonathan ferro. jonathan: live from new york, a second take of cap -- of chairman powell on capitol hill as investors contemplate the return of rate hikes and the adp report comes in hotter than expected. open the door to 50. >>