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00:00> > MARKET LIMBO. > > THE MARGIN PRESSURES ABSENTLY EXTREME. > > WE CONTINUE TO HAVE A GROUP -- FEWER GROWTH. > > THERE A LOT OF PRICING IN THE MARKET. I'M STILL A SELLER. QUESTION GOT ENOUGH OF THE DOWNSIDE, WHETHER YOU ARE BULLISH OR BEARISH. WE HAVE A NEAR TERM TO CATALYZE IT. > > THIS IS BLOOMBERG SURVEILLANCE WITH TOM KEENE, JONATHAN FERRO AND LISA ABRAMOWICZ > > THE EQUITY DOWN STATES FROM NEW YORK CITY AND OUR AUDIENCE WORLDWIDE. THE MORNING. THIS IS BLOOMBERG SURVEILLANCE, LIVE ON RADIO. > > I'M JONATHAN FERRO. EQUITY MARKET IS DOWN .2%. WE STAY AS THE SESSION PROGRESSES. > > HAS BEEN DOING IT THROUGHOUT THE DAY ONE SESSION TO ANOTHER. HOW MUCH FURTHER DOES THE REPRICING GO. > > THE NASDAQ IS DOWN 15% YEAR-TO-DATE. THAT IS THE WORST SINCE OCTOBER. > > I WILL CATCH UP A LITTLE BIT LATER, BUT THIS IS HIS MIND. DESPITE POLICY TIGHTENING, THAT WOULD BE MY NIGHTMARE. YOU TALKED ABOUT THAT REPEATEDLY. THE PROSPECT OF THE LAST 12 MONTHS. > > HOW MUCH DOES INFLATION GET AWAY FROM THE FED. HOW MUCH THAT THE FED NOT NECESSARILY TACKLE THE INFLATIONARY PRESSURES IF THEY CAN'T DEAL WITH SUPPLY-CHAIN DISRUPTIONS, AND FRANKLY, OUR THEY GOING TO APPLY THE MOMENTUM IN THE HOUSING MARKET. > > WE WILL TALK ABOUT THAT ALTHOUGH BIT LATER. WE ARE STARTING WITH SOME STUNNING NUMBERS. THEN, WE HAVE TO TALK ABOUT APPLE. YOU CAN FRAME IT. > > ABSOLUTELY. THAT IS A STELLAR QUARTER FOR APPLE, EVEN IN THE FACE OF ALL THE SUPPLY CHAIN CHALLENGES WE WERE TALKING ABOUT. EVERYTHING EXCEPT THE IPAD, AND IT WILL SHOW UP, THIS IS A COMPANY WITH A HUNDRED $24 BILLION ON ONE HOLIDAY. , AND YOU ARE SEEING APPLE REACT TO THAT EVEN IF THE FUTURES ARE OFF THE SESSION HIGH. > > LET'S TALK THE NASDAQ AND AS WE CLOSE THINGS OUT FOR THE TRADING WEEKS WHICH FEELS LIKE A TRADING MONTH. IT IS A QUARTER. > > EQUITY FUTURES ON THE S & P ARE DOWN FIVE. WE ARE A LITTLE NEGATIVE .1%. WE STAY IN POSITIVE TERRITORY. WE ARE UP .4%. AND THE YIELDS ARE DRIFTING HIGHER BY THREE OR FOUR BASIS POINTS. SAW A LOT OF FLATTENING COME THROUGH THIS TIME YESTERDAY. THE YIELD RIGHT NOW -- 183. > > A LOT OF PEOPLE ARE EXHAUSTED BY YOUR POINT. IT HAS BEEN A LONG WEEKEND AND EVEN LONGER MONTHS, BUT WHAT I THINK MIGHT BE THE MOST INTERESTING MOMENT OF THE WEEK, IT COMES AT 8:30 A.M.. IF YOU REMEMBER, THIS IS THE INDEX THAT REALLY KEYED OFF SOME OF THE PITTING WE SAW IN THE FEBRUARY -- IN THE FEDERAL MEETING. WE ALSO GET INCOME SPENDING FOR THE MONTH OF DECEMBER, AND TO ME, IT IS WHERE THE QUESTION LIES. HOW MUCH DO WE SEE A DECLINE IN SPENDING EVEN IF WE SEE PPE, THE KEY FIGURE AND KEY METRIC. WE SEARCH FOR THE HIGHEST LEVEL. ALSO, AT THE UNIVERSITY OF MICHIGAN JANUARY SENTIMENT SURVEY, THIS IS THE DIFFICULTY RIGHT NOW. HOW MUCH DOES INFLATION BECOME A DECELERATE HER ITSELF AND IT REALLY INVADES PEOPLE'S CONFIDENCE IN THE OUTLOOK AHEAD. HOW DO WE GET ONGOING CREATION, AND HOW DO WE DEAL WITH THE VIEW THAT SOME PEOPLE SAY THAT THEY THINK THE FED IS PERHAPS PREMATURE. AND AT 1 P.M., WE GET A BIGGER RATE TOWN. THE OIL PRICE IS A KEY FACTOR RIGHT NOW. IT IS SEARCHING AT LEVELS GOING BACK TO 2014, AND THAT SHALL PRODUCERS ARE THE MARGINAL PRODUCERS THAT ARE NOT GOING BACK ONLINE. THEY HAVE NOT RECOVERED FOR PRODUCTION. HOW DO WE SEE THEM RAMPING UP VERSUS THE PHYSICAL DISCIPLINE THAT WAS INJECTED AFTER THE 2000 14 CRASH? WITHOUT THAT PRODUCTION, HOW IS IT ALLOWED PRICES TO REALLY BE AT THE MERCY OF OPEC PLUS WITH ALL OF THE GEOPOLITICAL TENSIONS RIGHT NOW? WORKS I LOVE THAT. WE'RE GOOD FRIENDS, BUT WHEN I THINK OF RATE HIKING AS JUSTIFIED? > > I DON'T. > > WHAT DO WE NEED TO SEE? WORKS -- > > PEOPLE ARE SPENDING LESS ON A REAL BASIS. IT MAY KEEP DECLINING, ESPECIALLY AS PEOPLE HAVE WAGES THAT ARE NOT KEEPING UP. EITHER YOU GET AWAY SPIRAL, OR YOU GET A REAL DECELERATION, AND IT IS A CAUTIONARY KIND OF ENVIRONMENT. HOW DOES THE FEDERAL RESERVE FEEL? > > I WOULD LIKE THAT TOO. LESSER THAT OUT. THE TWO-YEAR YIELD IS 121 RIGHT NOW. AT THE FRONT END, AND BACK OUT. LET'S GET TO DEAN KERN OF, THE FOUNDER OF METRO RISK ASSIGNMENT. I REMEMBER A YEAR AGO, NINE MONTHS, WHATEVER IT WAS, YOU SAID IT WAS JUST TRANSITORY. IT IS THE NEW SUBPRIME AS CONTAINED. WHAT DID YOU SEE IN THE DATA THAT YOU THINK PEOPLE GOT WRONG? > > I SAW A RELATIONSHIP BETWEEN THE MARKETS IN THE FED THAT WAS SO LINKED TO THIS NOTION THAT THE FED IS INFALLIBLE, AND THE FED HAD REASON, AND THEY ARE VERY WELL MEETING, MEANING, PUBLIC SERVICE, BUT WHAT I THINK ABOUT THE. JUST BEFORE THIS, 2008 CRISIS, I AM MINDED -- I AM REMINDED THAT THE SUBPRIME WAS CONTAINED, AND THE DEGREE TO WHICH THEY TRUEBLUE -- TRULY BELIEVE THAT, AND THE MORTGAGE SPIKES THAT WERE IN PLAIN SIGHT. IT'S DIFFERENT OF COURSE THAN A SUBPRIME CONTAGION, BUT THE FED MISREAD THE DEGREE OF INFLATION, THIS NOTION THAT IT IS TRANSITORY, AND THAT HIS STRATEGY WAS SIMPLY TO WAIT AND HOPE. AS THEY SAY OFTEN, HOPE IS NOT A STRATEGY. I THINK, WHAT WE HAVE LEARNED IN A VERY UNWELCOME FASHION THROUGH THE VOLATILITY, IS INTERTWINING OF THE FED AND THE MARKETS AT AN ALL-TIME HIGH. IT IS EXTREMELY UNHEALTHY, AND THE FED CROWD CONTROL EFFORT, IT I LIKE TO SAY THAT THE FED IS CROWD CONTROLLING, THEY ARE COMING UNDONE, THEY ARE BEING COMPROMISED BY THIS THING CALLED INFLATION. > > WHEN YOU SAY SUBPRIME IS CONTAINED, THE KEY DIFFERENCE BETWEEN THAT EURO AND THIS ERA IS FRANKLY, THE CREDIT. THE CREDIT MARKETS ARE COMPLETELY BEHAVE. A LOT OF PEOPLE APPOINTED TO THAT. WE ARE SEEING THAT, AND BECAUSE, THERE IS MORE FROM SOME SORT OF WAY TO REIN IT IN. DO YOU THINK THE CREDIT MARKET HAS LOST ITS ABILITY TO BE A LEADING INDICATOR FOR DISTRESS IN THE ECONOMY AND MARKET? > > I THINK YOU CAN MAKE SOME OF THE ARGUMENT. THE FED IS DONE SO MUCH, AND IT IS SUCH A PART IN FABRIC OF THE MARKET. IT IS THE RIGHT SIGNAL. I WOULD SAY AS WELL, YOU ARE RIGHT. CREDIT HAS NOT BEEN A BIG PART OF THIS DRAWDOWN. BUT I THINK THAT IS FOR THE PROBLEM FOR EQUITY INVESTORS. THE FED WILL RESPOND TO PLUMBING ISSUES IN RATE MARKETS AND CREDIT MARKETS. THEY COME TO THE RECORDS -- RESCUE IN THE NAME OF JUSTIFYING THIS MARKET FUNCTION AND OVERSIGHT THAT IT HAS. WE ARE NOT THAT SORT OF PLUMBING ISSUE AND CREDIT ISSUE, THAT BECOMES, FRANKLY, A PROBLEM FOR THE EQUITY MARKET, BUT WHAT WE DO IS BURN OFF SO MUCH OF THAT VALUATION EXCESS THAT CAME ABOUT THROUGH THE COMBINATION OF JUST INCREDIBLE FISCAL RESPONSE FROM THE PANDEMIC, AND IT WAS JUSTIFIED BUT CINDY PICKETT -- SIGNIFICANT, BUT IT IS GOING TOO FAR. FROM THE EQUITY MARKETS PERSPECTIVE, IN SOME WAYS, THE CREDIT MARKET RISK OFF WOULD BE A GOOD THING BECAUSE IT WOULD USHER IN MORE FEDERAL RESTRICTIONS TO RAISE THE FED STRENGTH OVERSEAS, AND MY CONCERN IS THAT THE FED RISK OBJECTIVES, WHICH ARE FROM A DISINFLATIONARY STANDPOINT, THEY ARE ALWAYS TRYING TO GET TO 2% PER BELOW. THOSE WERE VERY PREMARKET. THE MARKET HIT THE SKIDS IN THE ECONOMY HIT THE SKIDS, YOU HAVE THIS AIR COVER OF LOW INFLATION. IT IS JUST SO MUCH DIFFERENT FROM NOW. WHERE THINGS GET HIGH INFLATION AND IT COMPLICATES THINGS. > > ARE YOU SAYING THAT THERE'S NOT ROOM FOR EQUITIES, BUT THERE IS FOR CREDIT? > > THERE IS. IN A PINCH, THE FED WILL AND SHOULD BE THERE. I THINK THAT THAT IS JUST A LONG WAYS AWAY. I THINK THAT IS THE ISSUE. WHEN YOU LOOK AT THE DAMAGE DONE, AND THE EQUITY MARKETS, WE ALL START TO SAY, AT SOME POINT YOU WILL GET A TRADABLE BALANCE. WE DON'T SEE THE 30'S FOREVER. THE PRICES AND STRUCTURE SEND TO SOLVE ITSELF. MY CONCERN IS THAT WE ARE IN A EARLY STAGE OF RECOGNITION FOR A WHOLESALE REGIME SHIFT, WHERE THE FED DUTIES ARE TO BE A RISK MANAGER OF INFLATION, AND FOR THE PANDEMIC. IN THE ANTI-MARKET, AND THE POLICIES AND RISK MANAGEMENT OF INFLATION. > > WITH THAT MIND, DO YOU THINK WE HAVE SEEN CAPITULATION, OR THAT YET TO COME? WORKS I THINK WHEN WE GET TO THE 38, WHICH WE GOT TO EARLIER THIS WEEK ON A YESTERDAY BASIS, IT IS NOT TO SAY WE ARE NOT CLOSE, BUT CAPITULATION ON THE VIOLENCE OF THE MOVES IS ONE THING, BUT WE ARE WORKING THROUGH A LOT THIS WEEK. IF YOU LOOK AT THE REAL-LIFE VOLATILITY, THEY ARE INCREDIBLY HONEST RESTING -- THEY ARE INCREDIBLY UNDERESTIMATING THINGS. IN THAT SENSE, WHERE CLOSER, BUT I THINK THAT THERE ARE SOME TRADES FOR FOLKS WHO ARE NEEDING TO BE ON THE MARKET, THE MARKET VOLATILITY. ONLY A THIRD OF THE STOCKS HAVE A THREE-MONTH DOWNSIDE PUT IN PLACE FOR VOLATILITY. THAT'S VERY HIGH. YOU CAN USE THAT, IF YOU ARE TRYING TO GET ALONG THE MARKET. YOU CAN USE PREMIUMS AS A WAY OF GETTING INTO SOME OF THE DELTA EXPOSURE YOU WANT IN THE MARKET. AGAIN, I LOVE THE RETURN BUT THE CONCERN IS THAT WE HAVE NOT FULLY APPRECIATED THE DEGREE OF TIGHTENING, AND WE ARE JUST SO FAR FROM ANYTHING CLOSE TO NORMAL. AND THE MARKET HAS NOT FULLY EMBRACE THAT. > > ALWAYS ONE TO CATCH UP. THANK YOU. A MASK -- MACRO RISK ADVISOR. WE ARE IN THE EARLIEST STAGES OF HER SEAMANSHIP. WITH THE TIGHTENING WE ACTUALLY NEED FROM THE FEDERAL RESERVE. THE RESERVE DOES NOT RECOGNIZE HOW MUCH PRODUCTION WILL ACTUALLY IMPACT WHAT WE ARE TALKING ABOUT THE MOMENT. WE'LL HAVE TO FIGURE THAT OUT, AND THEY HAVEN'T DONE ANYTHING FOR IT WERE JUST TALKING STILL. > > WE HAVE NOT NECESSARILY SEEN THE GLOBAL TIGHTENING CYCLE. WHAT WE WERE EXPECTING LATER THIS YEAR. IS NOT JUST THE FED REDUCING THE BALANCE SHEET, IT IS NOT JUST THE FED HIKING RATES. LISA ABRAMOWICZ WITH KAILEY LEINZ. I AM JONATHAN FERRO. DK IS HAVING A NICE LONG WE CAN. FUTURES ARE DOWN. THAT SMART. WERE DOWN A THIRD OF A PERCENT. NASDAQ 100 IS UP 2/10 OF 1%. THE YIELDS ARE HIGHER ACROSS THE CURVE, WITH 183.91. WITH NEW YORK CITY, GOOD MORNING. ON RADIO, ON TV. THIS IS BLOOMBERG. > > THE RUSSIAN FOREIGN MINISTER HAS A RESPONSE TO DEMANDS COME BUT KEY POINTS WERE IGNORED. PRESIDENT BIDEN WARNED THE UKRAINIAN PRESIDENT THAT THE RUSSIAN ATTACK WAS POSSIBLE NEXT MONTH. THEY ALSO DISCUSSED WAYS UNITED STATES COULD HELP THE ECONOMY. PRESIDENT BIDEN SAYS HE WILL FULFILL HIS CAMPAIGN PROMISE AND DOMINATE THE FIRST BLACK WOMAN TO THE SUPREME COURT. THE PRESIDENT SAYS HE'LL ANNOUNCE HIS CHOICE BY FEBRUARY, AND STEPHEN BREYER HAS ALWAYS TOLD THE PRESENT HE WILL BE RETIRING IN JUNE OR JULY. THEY WILL HAVE A SUCCESSOR CONFIRMED. NORTH KOREA HAS NOW CONFIRMED THAT IT WILL LAUNCH MORE MISSILES THIS WEEK. THEY WILL LAUNCH TO LONG-RANGE MISSILES THAT COULD GIVE KIM JONG-UN THE CAPABILITY OF HITTING ALMOST ALL OF JAPAN. THEY HAVE WRAPPED UP WEAPONS TESTING TO SIGNAL UNHAPPINESS WITH UNITED STATES OVER ECONOMIC STATIONS. IT IS BEEN AT LEAST SIX WEEKS, AND 96 THE POPULATION IS 30 YEARS OLD. THAT COULD BE IN THE MIDDLE OF MARCH BEFORE THEY COULD START TO EAT THOSE RESTRICTIONS AT RESTAURANTS, BARS, AND GYMS. IN THE DEVELOPED WORLD. SALES ARE HIGHER, AND IT WILL EASILY BE EXPECTATIONS OVER THE SUPPLY CHAIN ISSUES. MEANWHILE, APPLE HAS A SALES GROWING BY DOUBLE-DIGIT PERCENTAGE POINTS IN. ON AARON BLOOMBERG TAKE TAKE POWER BY 24 HUNDRED JOURNALIST AND ANALYSTS IN MORE THAN 120 COUNTRIES. I AM RITIKA GROUP TO, AND THIS IS BLOOMBERG. > > OUR INTENTION IS FOR THE PRESIDENT TO CONSULT WITH MEMBERS OF BOTH PARTIES, AND HIS INTENTION IS TO NOMINATE A QUALIFIED CANDIDATE WHO AFTER COMPLETING A RIGOROUS PROCESS IN WORKING WITH EXCELLENT DECENCY. > > JEN PSAKI, THE PRICE -- PRESS SECRETARY. FROM YOUR CITY, TO MORNING. ALONGSIDE LISA ABRAMOWICZ AND KAILEY LEINZ, THE S & P 500 IS DOWN 22 POINTS. WE ARE NEGATIVE ABOUT HALF OF 1%. JUST ROLLING OVER INTO NEGATIVE TERRITORY. IT'S THE NASDAQ 100. WE ARE DOWN 24. 2/10 OF 1%. THAT'S JUST FOR A MOMENT. ACHING UP ABOUT 12% OF THE NASDAQ 100 PRAYED ONE SINGLE NAME IS APPLE. WE'LL GET TO APPLE AND THE FREE MARKET. WE HAVE A LOT OF POP OF NUMBERS COME OUT OF EARNINGS. QUARTERLY RESULTS, AND THE STOCK IS UP 3%. THAT RALLY IS FADING. IS FADING FAST AND LOST CLAIMANTS. WE HAVE REALLY SEEN IT TURNING, AND THE YIELDS A WRITER ON THE HIGHS OF THE SESSION. THEY HAVE SOMETHING TO DO WITH THE TECH SECTOR, BUT IT IS INTERESTING. WE ARE FRESH OUT AT WEB SAYING THE COMMENTARY IS THE SUPPLY CHAIN ISSUE LOOKING BETTER IN THE MARGIN. IT SHOULD BE A POSITIVE READTHROUGH ACROSS THE TECHNOLOGY SECTOR, AND THAT IS NOT REALLY WHAT WE ARE SEEING. > > THOSE NUMBERS CANNOT GIVE A HEALTHY FRONT TO THE MARKET, BUT WHAT CAN? > > JUST THE INFLATION DATA. IT IS WEAKER THAN EXPECTED. AT A CERTAIN POINT, WE ARE SEEING A RATE PRICING AS PEOPLE TRY TO UNDERSTAND WHAT WE ARE PRICING INTO THE FUTURE, AND WHAT KIND OF RATE REGIME WE ARE FACING IN THE FUTURE. HOW DO YOU BEGIN TO DO THAT? > > THE NASDAQ 100. LOOKING FORWARD TO THAT IN ABOUT TWO HOURS. JOINING US FROM D.C., A BLOOMBERG GOVERNMENT. THE CALL BETWEEN THE FRENCH AND RUSSIAN LEADERS. THERE IS A CALL BETWEEN THE U.S. AND UKRAINIAN LEADERS, AND IT WAS A FUSION OF OF THAT WITH THE UNITED STATES. WHAT HAVE WE LEARNED ABOUT WHAT IS BEEN SAID BY EITHER SIDE, AT THE MOMENT. EX-WHITE HOUSE CAME OUT AND SAID THAT THE CALL WAS A PRODUCTIVE ONE, BUT NOW WE ARE HEARING FROM HEALTH OFFICIALS WITHIN THE UNITE -- WITHIN THE WHITE HOUSE. THERE WAS DISAGREEMENT BETWEEN PRESIDENT BIDEN AND PRESIDENT WILL AND SKI OVER EXACTLY HOW IMMANENT THIS THREAT FROM RUSSIA IS. IT REALLY WAS PART OF A LARGER NARRATIVE WE HAVE SEEN OF THE UNITED STATES, AND ITS ALLIES NOT BEING ON THE SAME PAGE. THE U.S. IS SAYING THAT IT HAS ATTACKED AT ANY POINT, BUT WE HAVEN'T SEEN THE UKRAINIAN PRESIDENT REALLY AGREE WITH IT, FROM THAT MESSAGE. IT GOES TO SHOW THAT ALL OF THESE -- EVERYONE IS TRY TO GET AN UNIFIED FRONT AGAINST RUSSIA, BUT IT'S JUST NOT THE AREA. WHAT HAPPENED. I'VE HEARD THE PRESIDENT OF THE UKRAINE, AND WE SEE A HASTILY ORGANIZATION. > > WE KNOW THAT THERE IS A DISCUSSION. IT WAS A LONG DISCUSSION OF MORE THAN AN HOUR. THEY TALKED ABOUT THE ECONOMY. THEY TALKED ABOUT POTENTIAL SANCTIONS, POTENTIAL AID TO UKRAINE, AND CERTAINLY, THAT IS SOMETHING THAT IS BEING CONSIDERED BY LAWMAKERS IF RUSSIA DOES INVADE AND IT SANCTIONS OR LEVY. HOW DID THEY MAKE SURE THAT THEY ARE STILL SUPPORTING THE UKRAINE AT THIS TIME. WE KNOW THAT IT WAS DEFINITELY A COMPONENT OF THE FALL, AND FOR THE RECORD, THE WHITE HOUSE HAS DENIED CNN'S REPORTING THAT THERE WAS A DISAGREEMENT BETWEEN BIDEN AND WILL AND SKI OVER EXACTLY HOW IMMINENT THIS THREAT IS. HOW MUCH DOES IT ACTUALLY IGNITE SOME OF THE TENSION BETWEEN RUSSIA, AS IT SEEMS LIKE IT IS GETTING CLOSER TO THE NATO INTEGRATION IS REALLY TRIGGERING THEM? > > AT THIS POINT, THE WHITE HOUSE IS SAYING THAT IT WILL TRY TO KEEP A DIPLOMATIC SOLUTION. THEY DID PROVIDE A WRITTEN RESPONSE, TO SOME OF RUSSIA'S DEMANDS, AS FAR AS NATO, AS FAR AS MILITARY ACTION? AND THE PRESIDENT IS LOOKING FOR AN OFFRAMP. WITH HIS CALLS FOR MORE DISCUSSION, MORE WORLD LEADERS, GETTING TOGETHER, TRYING TO FIGURE THIS OUT, BUT IT IS RIGOROUS FROM THE WHITE HOUSE, AND IT REALLY HAS BEEN. THEY FEEL ATTACKED, BUT IT COULD HAPPEN ANY TIME. THAT'S WHAT WE HEARD FROM THE WHITE HOUSE PRESS SECRETARY JEN PSAKI. I WAS SPEAKING WITH UKRAINIAN AMBASSADOR, AND EARLIER THIS WEEK IN, HE SAID THAT THE PROBLEM IS A REALLY HARSH RHETORIC, WITH COUNTRIES LIKE UNITED STATES PULLING PEOPLE OF UKRAINE IS IT CREATES A LOT OF FEAR, AND THIS FROM THE UKRAINE PEOPLE WHO ARE ATTACKING PEOPLE. THAT MAY BE PART OF THE DISAGREEMENT STEMMING. BUT THE REASONING FOR THE HARSH RHETORIC IS THAT BIDEN ADMINISTRATION IS BEING SO FIRM. VLADIMIR PUTIN FEELS MORE CLINICAL PRESSURE, AND THEREFORE, THEY MIGHT NOT HAVE TO TAKE THE ACTION THEY ARE THREATENING. > > THAT HAS BEEN A PART OF THE U.S. STRATEGY. TO HAVE THE FIRST DANCE, TO HAVE THE UNITED STATES. EVEN SEE THAT IN THE PARTISAN AND DIVIDED CONGRESS. YOU HEAR FROM LAWMAKERS IN BOTH SIDES OF THE AISLE. THEY RECOGNIZE THAT ANY ACTION THEY TAKE OUR SANCTIONS ON RUSSIA AND THEY HAVE TO BE BIPARTISAN BECAUSE THEY DON'T WANT TO SEEM DIVIDED. THIS IS A STRATEGY FOR THE WHITE HOUSE, TO COME ACROSS AS AGGRESSIVE AS IT POSSIBLY CAN AND RATE TO MOVE, BUT THEY ALSO MADE IT CLEAR THAT THEY ARE TRYING TO CONTINUE TALKS, AND CONTINUE NEGOTIATIONS. THEY HAVE CLOSED THAT DEFAMATION NOW. > > RBC, WE ARE FOCUSING ON THE CONVERSATION BE THE U.S. AND UKRAINE. WHAT ABOUT BETWEEN THE UNITED STATES AND ITS WESTERN AND NATO ALLIES. WE KNOW THAT EMMANUEL MACRON WILL BE SPEAKING WITH PUTIN LATER. HOW MUCH CONSENSUS IS THERE BETWEEN THE BIDEN ADMINISTRATION AND SERBIAN LEADERS? > > WE HAVE SEEN IT HAS BEEN DIFFERENT BETWEEN BIDEN AND EUROPEAN LEADERS ON WHAT THEY ARE WILLING TO DO. YOU'VE HEARD VARIOUS TYPES OF HESITANCY, YOU HAVE TO REALIZE, THAT THE SITUATION BETWEEN THE U.S. AND RUSSIA IS VERY DIFFERENT FROM THE SITUATION BETWEEN EUROPE AND RUSSIA, IN TERMS OF TRADE, IN TERMS OF GAS, IN TERMS OF ANYTHING. THEY ARE TRYING TO THINK A LITTLE BIT ABOUT HOW THEY CAN MAKE SURE THAT THE EUROPEAN ALLIES, AS WELL AS UKRAINE, AND WE REALLY HAVE TWO NOT BE HURT. THE SANCTIONS ARE PUT ON RUSSIA. > > WE WILL, AND THANK YOU. REPORTED ON IN WASHINGTON DC. THE TIME A LITTLE BIT UP. IN THE LAST PLAY FOR HOURS, IS COMING FROM THE ORGANIZATION, AND SUGGESTING A RUSSIAN INFLATION THAT WAS ALMOST A VIRTUAL CERTAINTY, AND COURTING TO THE PRESIDENT. WE HAVE THAT CLEANED UP, AND THE SPOKESPERSON FOR THE WHITE HOUSE, AND THEY SAY TO THE FOLLOWING. IT IS NOT TRUE. PRESIDENT BIDEN SAID THERE WAS A DISTINCT POSSIBILITY THAT THE RUSSIANS COULD INVADE UKRAINE. HE SAID IT PUBLICLY, AND WE HAVE BEEN SAYING THIS, WE HAVE BEEN WARNING ABOUT THIS FOR MONTHS. THE OFFICIAL ON THE RECORD STATEMENT FROM THIS WHITE HOUSE. IT IS REALLY HARD. WHAT'S REAL, WHAT'S RHETORIC, NEGLEY, IF THERE ANY COHESIVE UNDERSTANDING OF THE YIELD THAT IS APPROACHING. HONESTLY. EVEN THE UKRAINIAN CALL, WE DIDN'T GET A SENSE IT WAS HAPPENING FOR IT WE DIDN'T GET A SENSE OF WHAT IT WOULD ACTUALLY BE, OR WHAT THE MOTIVATION WAS. OTHER THAN TO EXPRESS SUPPORT. TO BE CLEAR, THIS IS NOT A BIG FOCUS. THE BIG FOCUS IS BEEN THE FEDERAL RESERVE. WE HAD A CALL JUST MOMENTS AGO. THEY PUBLISHED IT. THEY HIT THE LIGHT. NOW WE SEE THERE IS A HUNDRED 25 BASIS POINTS FOR THE END, AND IT WILL ANNOUNCE THE REDUCTION IN THE JULY MEETING. WE HAVE COME FROM, SAY, TO MAY BE SINCERE. THEN TO THREE AND FOUR. THEN DIVIDE. IT'S BEEN FAST-MOVING, AND I'VE BEEN TALKING WITH THE BANK OF AMERICA. THEY MAY EVEN GET OUT TO SIX OR SEVEN BECAUSE OF THAT IS WHERE THIS GOES, THAT MAY NOT HELP THE MARKET. IT MAY GO AHEAD. WE HAVE SEEN A DRAMATIC RAMPING UP OF EXPECTATIONS READ MY QUESTION IS, ARE WE STILL UNDER PRAISING THE FED, OR ARE WE OVERPRICING IT? > > FUTURES ARE DOWN 4/10 OF 1% ON THE S & P. THIS GET YOU UP TO SPEED. WE ARE DOWN ON THE NASDAQ. VERY BRIEFLY, AND NOW IT'S UNCHANGED. CLINGING ONTO GAINS. A THIRD OF THAT IN THE BOND MARKET. YIELDS ARE HIGHER ACROSS THE CURVE. 93 120. THROUGH 180. 45 BASIS POINTS, AND 18445. IS BOUNCING BACK MY 6/10 OF 1%. $87 PRINT AROUND $.12. FROM YORK CITY, ON RADIO, ON > > LIFE FROM NEW YORK CITY, THIS IS THE PRICE ACTION RIGHT NOW. THE S & P. IT IS DROPPING LOWER. THE RALLY PHASE, WE ARE DOWN 13. A NEGATIVE .3% PRINT THE NASDAQ 100 IS DOWN THREE PERCENTAGE POINTS READJUST ABOUT HOLDING ONTO GAINS RIGHT NOW. YESTERDAY'S MOVE IS LOWER PRINT UP NINE. .1% PRINT THE REMEMBER THE WEIGHTINGS HERE. 12% OF THE INDEX IS MADE UP OF APPLE. APPLE STILL UP BY A LITTLE MORE THAN 3% RID REALLY NICE NUMBERS, AND DOING OK. JUST ABOUT HOLDING ON. TALKING ABOUT JUST HOLDING ON, A 5% MOVE ON THE OPEN OVER A YEAR. I AM TALKING ABOUT PMH. THAT MOVE IS HERE, AND IT'S BASICALLY UNCHANGED. UP 4%. YOU CAN'T BUY A RALLY FOR SOME OF THESE NAMES RIGHT NOW. YOU GO BACK TO BETWEEN 19, AND I'M TALKING 2019. REVENUE GROWTH IS ORGANIC. IN THE FASHION AND GOODS. IT IS UP 40%, NOT FROM LAST YEAR, BUT FROM 2019. THAT IS WHERE WE END UP. . WHERE DO WE END UP WITH THE PRICING WHERE IT SEEMS TO BE THAT RISK IS OFF, AND WE ARE GETTING A LITTLE BIT MORE ON A MACRO LEVEL. IS NOT JUST ISOLATED TO A SPECIFIC NAME ANYMORE. > > WE ARE TRADING OFF THE BOND MARKET. WE HAVE BEEN DOING THAT FOR MUCH OF THE YEAR SO FAR. LET'S LOOK AT THAT. 6/10. WE HAVE SEEN A BIG MOVE. HEAVENLY. 20. AND WE ARE SEEING 2160 ONE. ANOTHER THREE BASIS POINTS ON TENS. OR FIVE BASIS POINTS. 18040 FIVE. WE ARE SEEING A CATCH. LISA, WHAT IS HAPPENING LESS .4 HOURS, WITH PRICE HIKES, AND BETWEEN FIVE BASIS POINTS, AND A BANISHING PRODUCTION STARTS IN JULY. IS THAT BASICALLY WERE THE MARKET IS THAT? > > HONESTLY, FIVE RATE HIKES ARE BEING PRICED INTO THE MARKET. THROUGH THE END OF THE YEAR. THEY FEEL THAT THE FED WILL BELIEVE THE ECONOMY IS INCREDIBLY STRONG, AND FRANKLY, THERE IS NO RISK TO THE ECONOMY FOR THEM TO HIKE RATES THAT MANY TIMES. HOWEVER, IT SEEMS LIKE INFLATION IS INCREASING RISKS, BOTH POLITICALLY AND ECONOMICALLY FOR THEM. THE FED ASSESSMENT OF THE WAY THEY PORTRAYED THE ECONOMY, AND HIGH-FREQUENCY ECONOMICS, THEY JOIN US NOW. WHY DO YOU DISAGREE WITH THE POSITIVE ASSESSMENT OF THE U.S. ECONOMY. WE HAVE HEARD FROM THAT. > > GOOD MORNING PRIYA THINK YOU FOR HAVING ME. WE DON'T SEE THE IMPETUS FOR GROWTH THAT WE SAW LAST YEAR, OR DURING THE PANDEMIC. IT IS DIFFICULT, AND WHAT WE ARE SEEING WITH WAGES AND HIGH PRICES, IT IN THE BUDGET, AS IT IS, WE ARE COMING INTO 2022 ON A STRONG MOMENTUM, AND WE ARE TRYING TO REALLY ASSESS THE BUSINESS DEMAND, AND ORGANICALLY SLOWING EARLIER THAN WHAT WE PART. WE WERE EXPECTING A SLOWDOWN IN THE SECOND HALF OF THE A. AND NOW, IT BE HAPPENING SOONER. THAT DOESN'T MEAN, THE FED WILL ABANDON ITS INFLATION RIGHT NOW. IT REALLY HAS NO CHOICE, BUT TO MOVE ON RATES, BUT TO MOVE AWAY FROM THE BUDGET AND SUPPORT ACCOMMODATIONS. BUT I DO THINK THAT THERE IS A RISK TO GROWTH, ESPECIALLY THE SECOND HAVE THE YEAR. I DO THINK THAT THERE IS A RISK THAT THE FED WILL WORK PRICES INTO THE MARKET. AND BE MORE AGGRESSIVE. > > THERE ARE NUMBER OF DIFFERENT IDEAS THAT HERE. WHAT IS THE FED DO. WE HAVE SEEN GROWTH SLOWING DOWN MATERIALLY, BUT YOU'VE HAVE SEEN INFLATION CONTINUE TO RISE OR EVEN THE SPACE, AND WE ARE NOT EVEN DECELERATING AS MUCH AS THEY EXPECT. THAT IS THE RISK. IF YOU LOOK AT JUST THE RATE HIKE RIGHT NOW, YOU LOOK AT THE NEXT MONTH, IN TERMS OF THE CPI DATA, WE DO ACTUALLY THINK THERE WILL BE A SCALE OF ACCELERATION, SO I THINK THE FED HAS BEEN IN A VERY TIGHT SPOT. IT IS A MATTER OF FIGURING OUT, DO THEY HAVE THE MESSAGE RIGHT NOW. THE AGENDA IS THAT THEY HAVE TO INVEST INFLATION. THE ACTIONS, ANYTHING, WITH THE MONETARY POLICY ACTIONS, SOME OF THE LIKE, THESE ACTIONS ARE NOT GOING TO NECESSARILY ADDRESS ANYTHING THAT IS GOING TO HAPPEN IN JANUARY, FABRIC ON MARCH. WE DO THINK THAT THERE IS A POSITION, WITH THE ECONOMY GOING AT A VERY MODEST RATE, IT WILL HAVE POTENTIAL FOR 2022. I THINK WHAT THEY CAN DO, IS THEY CAN RAISE THE RATE, THEY CAN ACTUALLY MAYBE MOVE AT THE NEXT TWO MEETINGS, AND THEN TAKE A STEP BACK TO ASSESS, I THAT POINT, THEY EXPECT GROWTH TO SLOW DOWN ANYWAYS, AND EXPECT INFLATION TO SLOW DOWN WELL. THAT MIGHT GIVE SOME BREATHING ROOM. > > RUN LOADING POTENTIALLY FOR THE NEXT TWO MEETINGS. 50 BASIS POINT HIKES IN MARCH. IS THAT ON THE TABLE? > > NOT FOR US. I DO THINK THAT THEY, UNLESS SOMETHING REALLY GOES WRONG, ON THE INFLATION FRONT, IF WE START TO SEE INFLATION MOVE UP, IT WILL BE VERY SUBSTANTIAL. MAYBE 2% OR 3%. NOTHING IS OFF THE TABLE. BUT I DO THINK, I'M NOT EXPECTING TO SEE 50 BASIS POINTS HIKES IN THE MARKET. > > LET'S TALK ABOUT THE FACTORS IN THE INFLATION DATA. WAGES. CATERPILLAR EARNINGS HAVE CROSSED THE WIRE, WE HAVE TALKED ABOUT HIGHER LABOR COSTS THAT WE HAVE TAKEN, AND SUPPLY CHINA -- SUPPLY CHAIN CHALLENGES. ARE WE ALREADY IN A WAGE PRICE SPIRAL? > > I'VE LISTENED TO THE FED, AND IF THAT IS WHAT WE BELIEVE, I DO THINK THERE IS A LOT OF INFLATION INTO PLAY HERE, INCLUDING THE FACT THAT WE ARE NOT SEEING THE SUPPLY COMING BACK, SO THE RISK IS THAT THE MARKET IS GOING TO CONTINUE TO OUTGROW, AND THE STOCK WILL BE THAT WE HAVE SAVINGS, AND AS SAVINGS DIMINISHED, WE WILL SEE A DECLINE IN REAL EARNINGS AND WE'LL -- REAL RATE -- REAL RATE -- REAL WAGES. THE LABOR MARKET, AND IF WE DO THAT, THERE WILL BE A SUPPLY AS WELL. WE DO EXPECT TO SEE SOME RELIEF ON WAGES AS WELL. > > THERE IS A QUESTION ABOUT HOW MUCH THE FED CAN ACTUALLY AFFECT INFLATION RIGHT NOW. THAT IS BASED ON THE FACT THAT A LOT OF THESE IMPULSES ARE OUT OF THEIR CONTROL. PEOPLE STAYING HOME, TO TAKE CARE OF PEOPLE, OR WHETHER IT IS SUPPLY CHAIN DISRUPTIONS WITH ZERO COVID POLICIES. WHAT IS THE TRANSMISSION MECHANISM. WE HAVE SEEN THAT SO FAR. IT IS NOT ENOUGH, WITH RESPECT TO THE MARKET. > > TRANSMISSION MECHANISMS ARE VERY STRONG MESSAGE ON INFLATION. THIS IS WHAT THEY'VE DONE. THEY'VE REALLY LIMITED, THEY'VE SAID THAT WE ARE GOING TO DO WHATEVER IT TAKES TO GET INFLATION DOWN. THAT IS REALLY SOMETHING THAT THEY WANTED DO WITH INFLATION. THEY WANT TO MAKE SURE THAT INFLATION DOESN'T GET ENTRENCHED. THEY WANT TO MAKE SURE THAT INFLATION EXPECTATIONS REMAIN ACCURATE AT 2%. I THINK RIGHT NOW, IF THEY CAN DO NOTHING ABOUT THE SUPPLY CHAIN, WHAT THEY CAN DO IS THEY CAN IMPACT DEMAND. DEMAND MAY ALREADY BE SLOWING, AND THEY ARE LOOKING FOR SIGNALS FOR THAT. WE ARE ALREADY SEEING DECELERATION, START DECELERATION, AND SPENDING. THESE ARE THE THINGS WE ARE WATCHING FROM THE FED PERSPECTIVE. INFLATION IS JUST NOT ACCEPTABLE. THEY HAVE TO SEND A STRONG MESSAGE ABOUT THAT. > > THERE WAS A PIECE YESTERDAY WHERE THEY TALKED ABOUT HOW LAST YEAR, THE GROUP OF SEVEN CENTRAL BANKS HAVE HAD $3 TRILLION IN BOND PURCHASES. THAT NUMBER WILL SHRINK THIS YEAR TO 330 MILLION. THERE WAS A REDUCTION. IN QUANTITATIVE EASING. HOW DO WE FACTOR IN THE GLOBAL TIGHTENING CYCLE, IN TERMS OF THE RAMIFICATIONS IN THE SLOWDOWN, AND THE QUICK HIGHER UP FINANCING BECAUSE IN THE UNITED STATES. I THINK THAT IS PROBABLY SOMETHING THAT IS ALSO UNDERAPPRECIATED, BECAUSE GLOBAL ECONOMIES HAVE NOT REALLY PERFORMED EASILY. THE U.S. HAS BEEN AT THE FOREFRONT, AND I DO THINK AS YOU SEE AN IMPULSE STATE, IT WILL HAVE RAMIFICATIONS FOR THEM WORLDWIDE. SOY THINK THAT IS UNDERAPPRECIATED, AND I DO THINK ALSO IT LIMITS HOW FAR THE FED CAN GO IN TERMS OF CONSIDERING POLICY NORMALIZATION. IN TERMS OF RATE HIKES, FIVE RATE HIKES, I THINK THAT WE HAVE REMAIN FOCUSED THAT WE HAVE TO ADDRESS THE FLEET AND PROBLEMS NOW. THAT MEANS, THEY ARE GOING TO SEND A VERY AGGRESSIVE SIGNAL, AND IN THE FRONT HALF OF THE YEAR. BUT I AM NOT REALLY SURE, IF WE GET TO THE MIDDLE OF THE YEAR, WE EXPECT TO SEE IT GO DOWN. I THINK IT WILL BE A DIFFERENT NATURE. > > DIFFERENT PICTURE, JUST IN TERMS OF THE RATE HIKE MECHANISM OF THE TRANSMISSION, OR IN TERMS OF WHEN THEY MAY START TO SPREAD THE BALANCE SHEET? > > I THINK BOUNCY REDUCTION IS, THEY HAVE BEEN VERY CLEAR ABOUT THAT. I WOULD NOT BE SURPRISED IF THEY DO START IN JULY. BUT THEY DO WANT TO MOVE FOR WHAT THEY'RE DOING. THAT HAS BEEN VERY CLEAR IN THE MESSAGE. THEY WANT TO START THE CONVERSATION, AND THEY HAVE NORMALIZATION. AND THEY WILL START BOUNCING. IN OUR VIEW, LISTEN TO WHAT THEY ARE SAYING. THIS IS THEIR MESSAGE. > > WONDERFUL, AS ALWAYS. HIGH-FREQUENCY ECONOMICS. WE TALKED ABOUT ON THE TREASURY MARKET, WHAT THEY WILL MORE DO. THE GILT MARKET IN THE U.K. AS WELL. THEY MOVED ONTO THINGS. > > THE HIGHEST LEVEL IN DECADE. 1% ON THE TWO-YEAR YIELD. REALLY SEEING A LOT OF MOVEMENT ON THE SHORT END ACROSS THE WORLD, AND FROM THE FED THIS WEEK, MAYBE THE BOE NEXT WEEK, AND ALL THAT WILL BE MORE INTERESTING IS THE MARKET PRICES UP. RAMPING UP EXPECTATIONS OF WHAT THEY ARE LIKELY TO DO THIS YEAR. THIS NOT JUST THE FEDERAL RESERVE STORY. > > CAN THEY SIT THIS OUT? HOW MAY TIMES WE TALKED ABOUT THIS ON THIS PROGRAM. HAVE YOU SEEN SURVEY THAT CAME FROM BLOOMBERG? TO FROM A LITTLE EARLIER TODAY. WE SURVEYED A BUNCH OF ECONOMISTS, AND THEY ASKED WHEN THE ECB WAS GOING TO HIKE, AND IT IS MORE THAN A YEAR AND HALFWAY. CAN THEY SIT THINGS OUT FOR THAT LONG? > > GIVEN HOW MUCH IS GOING UP, IT IS HARD TO IMAGINE THAT THEY CAN, AND GIVEN THAT THERE'S GOING TO BE TIGHTENING CYCLE THE UNITED STATES, WHAT DOES IT DO WITH RESPECT TO THE CURRENCY OF THE POUND. I JUST WONDER HOW WE FACTOR IN THE FACT THAT WE ARE SEEING A TIGHTENING ALL AROUND THE WORLD. THE MAGNIFICATION OF ONE ANOTHER AS THIS GOES. > > 111, AND THE DATA THIS MORNING, IT WAS STRESSFUL. LET'S BE CLEAR ABOUT THAT. QUARTERLY NUMBERS FROM THE BIGGEST ECONOMY IN THE EUROPE. THAT'S JUST NOT GOOD ENOUGH. THE PRICE OF TECHNICAL RECESSION, AND MAYBE WE COULD BOUNCE OUT OF IT. THERE IS A HOPE THAT THE INFLATION STORY WILL A. THE ECB CAN WAIT. PERHAPS THEY CAN WAIT IT OUT. > > THE MESSAGE, THAT CHRISTINE LAGARDE IS TRYING TO PUSH, IS DATA IS FALLING DECLINE IN CONFIDENCE. MY CONFIDENCE QUESTION IS ABOUT PROGRESSION. IN IS A GOING TO BE A HARDER THING FOR CHRISTINE LAGARDE AND THE TEAM TO RECONCILE PER --. IF YOU ARE DEALING WHEN LEFT STANDING, WILL THERE BE DATA, AND WILL THERE BE AN ARGUMENT IN THE WAY? ASKED YOU MIGHT GET INTERESTING. YOU MIGHT WANT TO. > > WERE HERE FOR THE NEXT ONE. > > I WILL WATCH THIS FROM. I THINK IT WILL BE VERY INTERESTING. IF YOU HAVE INFLATION, WE WILL HAVE A SLOWING ECONOMY, AND WHAT WILL YOU DO? > > IT IS UNHEARD OF OVER THE PAST TWO DECADES. WHAT IS THE ROADMAP. AT A TIME WHEN OIL PRICES SEEMED NOT TO BE DECIDED. > > EURO AS NEGATIVE. A LITTLE MORE THAN 1/10 OF 1%. THE NASDAQ 100 AS NEGATIVE AS WELL, LITTLE BIT MORE THAN 1/10. THE S & P 500 IS -4/10 OF 1%. IN THE BOND MARKET, YIELDS ARE HIGHER BY FOUR BASIS POINTS. 183. PREMIER CITY, KAILEY LEINZ. LISA ABRAMOWICZ. I'M JONATHAN FERRO. THIS IS BLOOMBERG. > > WITH HEADLINE NEWS, THE U.K. GOVERNMENT INVESTIGATION INTO THE PARTIES OF FORCE JOHNSON'S OFFICE COULD BE STRIPPED OF KEY DATA'S AT THE REQUEST OF AN INVESTIGATION THAT IS WATER DOWN. IT WOULD BE HELPFUL FOR JOHNSON. HE IS TRYING TO PERSUADE HIS PARTY THAT THE COLLEAGUES HAVE NEW LEADERSHIP CHALLENGE. EUROPEAN UNION AND THE U.K. ARE GEARING UP TO SANCTION NEW PROJECTS. THEY SAY IT IS AN ATTACK ON THE UKRAINE. THE SANCTIONS WILL DRASTICALLY CUT BACK, AND TECHNOLOGY. CHINA AND RUSSIA WILL SIGN THE AGREEMENT TO THE OLD A RESEARCH STATION ON THE MOON. THE TWO COUNTRIES AIMED IT COMPLETE INFRASTRUCTURE CONSTRUCTION ON A LITTER STATION BY 2035. THE DESIGN HAS A RACE TO GO TO THE MOON, AND IT IS HEATING UP. THE UNITED STATES IS SCHEDULING ITS OWN PROGRAMMING, AND ASTRONAUTS WILL BE ON THE MOON LATER THIS DECADE. WE'RE GOING TO FINISH OUT 2021 AS WELL. THE TOP-SELLING AUTOMAKER, AGAIN , AS IT WAS ABLE TO KEEP PRODUCTION MOSTLY ON TRACK DESPITE A YEAR OF SUPPLY CHAIN TURMOIL. IT ADDED SOME'S -- SOME 10 MILLION VEHICLES, AND THE MARKET FELL 8.9 MILLION. THE CEO WANTS TO DOUBLE SWEDISH RETAILERS. THEY ALSO WON AND OPERATE BUDGET OF MORE THAN 10% WITHIN THREE YEARS. THERE WILL BE DISCOUNTS TO HELP LOWER THE BUILDUP. GLOBAL NEWS, TOY FOR HOURS A DAY, AND A BLOOPER QUICK, POWERED BY MORE THAN 2700 JOURNALS AND ANALYSTS, AND MORE THAN 120 COUNTRIES. I AM RITIKA GOOD TO, AND THIS IS BLOOMBERG. > > WE STILL NEED VACCINES FOR REALLY LOW INCOME COUNTRIES AND FOR PLACES WITH MUCH LESS HEALTH INFRASTRUCTURE IN SOUTH AFRICA. THERE MAY BE ANOTHER VARIANT, AND FOR ANOTHER VARIANT TO SPREAD HERE, A COUNTRY LIKE THIS MUST EVADE THE EXISTING IMMUNITIES THAT NOW IT'S VERY HIGH. JONATHAN: FROM THE JOHN HOPKINS BLOOMBERG SCHOOL OF PUBLIC HEALTH, AND FROM NEW YORK CITY, GOOD MORNING. WITH KAILEY LEINZ AND LISA ABRAMOWICZ. WE ARE NEGATIVE ON THE S & P 500 AND VERY SLIGHTLY NEGATIVE ON THE NASDAQ. YIELDS ARE HIGHER BY FOUR BASIS POINTS, AND WE KEEP THINKING ABOUT AND TALKING ABOUT, PREDICTING HIGHER INTEREST RATES AND THE FEDERAL RESERVE. WE'LL GO TO FIVE FOR THE ARE, AND UP TO 25 BASIS POINTS IN HIKE. A TWO-YEAR WILL PICK UP THE STORY. ONE OF THE WINNERS OF THE YEAR SO FAR, THE ENERGY SECTOR. ON THE S & P 500, MORE THAN 19% YEAR TO DATE. ONE NAME IS DISAPPOINTING THIS MORNING. THAT NAME IS CHEVRON. IT IS DOWN 3.6%. KAILEY: A MISS ON THE BOTTOM LINE EARNINGS COMING IN AT 256. A MISS ON THE UPSTREAM BUSINESS. A MISS ON THE DOWNSTREAM BUSINESS. I'M TALKING WITH MY SOURCES AT CHEVRON LATER TODAY. WE MAY MISS OUT ON AN OIL BOOM THAT WE HAVE SEEN OVER THE LAST SEVERAL MONTHS. WE ARE NOT TALKING ABOUT 90 DALE'S -- $90 A BALE -- A BARREL OF CRUDE. IT WILL BE INTERESTING TO SEE. WE HAVE A CROSSING, AND AT THE TOP END OF THE THREE TO $5 BILLION RATE, ACCORDING TO CEO. WE ARE TRYING TO MAINTAIN THIS. PRIORITIZE RETURNING TO CAPITAL AND SHAREHOLDERS. IT IS A DISAPPOINTMENT TODAY. JOHN: LOOKING FORWARD TO THAT. THE STOCK IS LOWER BY 4%. HERE'S THE WINNER OF THE YEAR. AN UNEXPECTED STORY. AND HASN'T WORKED OUT THAT WAY, BUT THE BANKS ON THE YEAR ARE NEGATIVE. JUST VERY SLIGHTLY. DOWN .1%. ON THE S & P. GOLDMAN IS NOW OUT AND LASTLY FOR HOURS. THE FINANCIALS ARE AT NEUTRAL, AND IT SAID THIS. THE FOCUS IS SHIFTING FROM PRIMARILY SIDE BENEFITS OF RISING RATES TO A WAY MORE BALANCED VIEW. WE ARE OFFSETTING FACTORS FROM HIGHER EXPENSES TO FURTHER CAPITAL MARKET NORMALIZATION GRID THAT CAME FROM GOLDMAN, OVERNIGHT. BY THE WAY, THE YIELD CURVE IS ASHLEY FLATTENING. NOT DEEPENING, AS MANY PEOPLE THOUGHT. HOW MUCH DOES THAT ALSO DICTATE THE ACTION AT TIMES? WE ARE FACING A TALENT WORK, AND OTHER COSTS. FRANKLY, CONSUMERS HAVE TOO MUCH CASH TO BORROW PRINT AT LEVELS THEY DON'T WANT TO SEE. JONATHAN: 121.21. WE HAVE A PROFESSOR AND FOR ALL JUST OF THE JOHN HOPKINS BLOOMBERG SCHOOL PUBLIC HEALTH. ALWAYS GOOD TO CATCH UP WITH YOU. I UNDERSTAND THAT YOU HAVE A SIBLING, AND I'M SURE FOR A LOT OF PEOPLE LISTENING, AND WATCHING RIGHT NOW, THEY DON'T WANT TO HEAR ABOUT THIS, BUT WE HAVE TO TALK ABOUT THIS. WHAT IS IT ABOUT? > > JUST TO BE CLEAR, I DON'T LIKE TO BE THE MESSENGER SEEN THEIR NEW VARIANCE, BUT THE VIRUS IS DOING ITS OWN THING AND EVOLVING AS WE EXPECTED. OMICRON HAS A SISTER VIRUS. IT IS CALLED, TECHNICALLY, BA TWO. OMICRON THAT WE HAVE BEEN STRUGGLING WITH HIS BA ONE. IT IS FROM THE ORIGINAL OMICRON, SO WE ARE A LITTLE BIT WORRIED ABOUT HOW WELL IMMUNITY WILL CROSS-REACT THAT VIRUS, AND IT CERTAINLY IS STARTING TO SPREAD IN THE WAKE OF THAT FIRST OMICRON, GOING TO THE POPULATION. ALL SIGNS POINT TO VACCINES WORKING JUST AS WELL AGAINST IT, BUT IF IT IS INCREASING, WE NEED TO MONITOR THE DEED -- THE DISEASE CENTER, AND GET AN IDEA OF HOW MUCH IMPACT MIGHT HAVE. KAILEY: WHERE THE VARIANCE COME FROM, AND I ASKED THIS MEANING WHERE IS THE LEVEL WITH THE LACK OF IMMUNITY, AND THE LEVEL OF TRANSMISSION THAT WOULD POSSIBLY LEAD TO SOME OF THESE VARIANCE? ANDREW: THERE ARE THREE VARIANTS THAT WE CALL OMICRON RIGHT NOW. ALL OF WHICH SEEM TO HAVE EVOLVED AROUND THE SAME TIME IN SOME PART OF SOUTHERN AFRICA AND ALL EMERGED FROM THE SAME TIME. WE SAW ONE SWEEP OF THE WORLD, WE ARE SEEING A SECOND ONE COME THROUGH NOW. USE OMICRON VARIANT'S ALL CAME UP AT THE SAME TIME. WHAT WE ARE SEEING IS, AS EXPECTED, AS THIS VIRUS MOVES THROUGH THE POPULATION, IT PICKS UP A MUTATION, AND IT MAKES IT A LITTLE BIT BETTER, AND IT MAKES A LOT MORE EASY TO INFECT VACCINATE PEOPLE. THAT VIRUS WILL BECOME THE DOMINANT VIRUS EVENTUALLY. WE ARE SEEING SOME OF THAT RIGHT NOW. YOU HAVE TO REMEMBER, THERE HAVE BEEN AMAZINGLY LARGE NUMBERS OF CASES, AND MORE CASES EQUALS MORE MUTATIONS, EQUALS MORE VARIANCE. WE ARE SEEING SOME OF THE FALLOUT FROM THAT WITH HUGE NUMBER OF CASES IN TERMS OF NEW VARIANCE EMERGING IS TRYING TO SPREAD. LISA: MEANWHILE WE HAVE CONTROVERSY OF PEOPLE TRYING TO FIGURE OUT WHEN THEY CAN POSSIBLY START EASING BACK ON THE MASK REQUIREMENT SPIRIT THE SOUTHWEST CEO SHIFTED HIS STANCE AND SAID IT IS STILL INAPPROPRIATE TO WHERE -- IT IS STILL APPROPRIATE TO WEAR MASKS ON PLANES. IF THEY'RE GOING TO BE A TIME WHETHER IT IS A STOPPED ALL THESE MONTH -- MUTATIONS, WE DON'T HAVE TO WEAR MASKS? ANDREW: THE SILVER LINING IS THAT VACCINATION BOOSTING IS PROTECTING AGAINST SEVERE DISEASE. IT IS REALLY A GOOD THING. EVEN THE OMICRON IS A VERY DIFFERENT TYPE OF VARIANT FROM THE VACCINE, THE VACCINE IS WORKING AGAINST THAT DISEASE. COMBINING WITH VACCINATION AND A LARGE NUMBER OF INFECTIONS THAT WE'VE HAD, IMMUNITY AND THE POPULATION IS GOING TO BE QUITE EXPENSIVE -- EXTENSIVE, AND IT SHOULD REALLY MAKE A BIG IMPACT IN TERMS OF SEVERE DISEASE AND KEEPING THEM UNDER CONTROL. THEN WE CAN START THINKING ABOUT RELEASING SOME OF THESE PUBLIC HEALTH INTERVENTIONS AND MOVING BACK TO SOME LEVEL OF NORMALCY. KAILEY: WE TALK ABOUT NEW VARIANCE EMERGING, WHAT IS THE DIFFERENCE IN INFECTION FOR SOMEONE WHO WAS INFECTED AND HAS A NEW RATE OF INFECTION, BUT VERSUS SOMEONE WHO DID NOT HAVE AN INFECTION? WE STILL HAVE A SIGNIFICANT AMOUNT OF UNVACCINATED POPULATION. IS THAT MEAN THAT YOU CAN STILL SEE SURGES OF SIMILAR SIZES? ANDREW: WHEN IT COMES TO OMICRON, THAT IS PRETTY CLEAR. VACCINATION NATION -- VACCINATION ALONE DOES NOT PROTECT YOU AS WELL AS BOOSTING AND VACCINATION. THAT REALLY IS A COMBINATION OF BOOSTING OR INFECTION AND VACCINATION IS REALLY THE BEST IMMUNITY. THERE IS NEW DATA COMING OUT, SAYING THAT IF YOU HAVE BEEN BOOSTED, OR INFECTED, YOU MAY HAVE AN EVEN -- NOT ONLY A STRONG IMMUNE RESPONSE, BUT A BROADER, MEANING THAT IT RECOGNIZES A LOT OF OTHER VARIANCE. WE ARE MOVING TO A STAGE WHERE VACCINATION HAS SET THE STAGE. IT IS PROTECTING POPULATIONS, AND NOW, EVEN IF YOU GET INFECTED, YOU ARE INFECTED FROM DISEASE, AND YOU ARE PROTECTED WITH BROADER OR STRONGER IMMUNE RESPONSES. YOU WANT TO DEAL WITH THE PANDEMIC. USE VACCINATION TO GET EVERYONE PROTECTED FROM SEVERE DISEASE, AND THEN THE VIRUS WILL CONTINUE TO CIRCULATE, AND THE INFECTION IS JUST GOING TO BOOST IN RESPONSE, AND MAKE US EVEN MORE PROTECTED FROM FUTURE VARIANT. JONATHAN: THANK YOU. YOU HAVE TO DO TWO INTERVIEWS. ONE NOW AND ONE WITH OUR PRODUCER DURING A COMMERCIAL BREAK. HE THROWS QUESTIONS THAT YOU. THANK YOU. ALWAYS, AT JOHNS HOPKINS SCHOOL OF PUBLIC HEALTH. AMAZING HOW LITTLE COVID GETS TALKED ABOUT. WE COME TO THE MARKET CONVERSATION. IN THIS IS A PART OF IT. IN THE SAME WAY, NOT ANYMORE. LISA: WHAT HAPPENS IF THEY DON'T ACTUALLY GET SOME SORT OF BASELINE IMMUNITY AND OPEN UP? OTHER THAN THAT, WE HAVE TO MOVE PAST IT. HONESTLY, THE CRUISE LINERS. THEY PERFORM EARLIER IN THE YEAR, AND IT IS NOT AS MANY CRUISES. JONATHAN: WOULD YOU SAY THE FED MOVE PAST IT? LISA: HOW CAN HE TRUST A WEAKENING IN THE DATA? PEOPLE WILL SAY THAT IT IS NOISE FROM THE OMICRON VARIANT, BUT OTHERS WILL SAY THERE IS SOMETHING HERE. PERHAPS THERE IS A WEAKENING WE NEED TO PAY ATTENTION TO. JONATHAN: I'M JONATHAN FERRO. YOUR EQUITY MARKET IS DOWN .5% ON THE S & P NOW. WE ARE MARGINALLY LOWER ON THE NASDAQ 100, EVEN WITH SOME NICE ♪ > > THE HALLMARK OF THE FED IS THEY TALK A LOT TOUGHER THAN THEIR ACTIONS. > > WHAT IS CLEAR IS POWELL IS VERY DATA DEPENDENT ON THE RATE PATH. > > HISTORY IS MISSING THAT INGREDIENT. > > INFLATION IS THE NUMBER ONE THING THEY'RE AIMING AT RIGHT NOW. > > THEY ARE NOT GOING TO HIKE ENOUGH TO REALLY SLOW INFLATION. > > THIS IS "BLOOMBERG SURVEILLANCE" WITH TOM KEENE, JONATHAN FERRO, AND LISA ABRAMOWICZ. JONATHAN: WHAT A WEEK, WHAT A MONTH, WHAT YEAR. FOR OUR AUDIENCE WORLDWIDE, GOOD MORNING. THIS IS "BLOOMBERG SURVEILLANCE ," LIVE ON TV AND RADIO. YOUR EQUITY MARKET IS -0.3% ON THE S & P. JUST THROUGH THIS MORNING, STARTING TO FADE, NEGATIVE FOR JUST A MOMENT. LISA: RAISING A QUESTION OF WHY EARNINGS DON'T MATTER AS MUCH AS PEOPLE THOUGHT THEY WOULD. APPLE HAVING A FANTASTIC FORECAST, AND THAT HAS NOT BEEN ENOUGH TO BELIEVE THE RESULTS OR SUPPORT THE WHOLE INDEX, SO WHERE THE FUNDAMENTALS FIT INTO THIS PICTURE? JONATHAN: THE EQUITY MARKET, THE NASDAQ STILL UNCHANGED. KAILEY: THE QUESTION IS HOW LONG THAT IS GOING TO LAST BECAUSE WE HAVE SEEN SUCH CHOPPY TRADING THROUGHOUT THE WEEK. YOU CAN FIT THREE TO FOUR DAYS OF PRICE ACTION INTO ONE INTRADAY PERIOD. VOLATILITY ABOUNDS. IF APPLE ISN'T ENOUGH TO STABILIZE THINGS, WHAT IS? JONATHAN: WE HAD A YEAR'S WORTH ALREADY. BREAKING OUT ON TENS, BREAKING OUT AGAIN ON TWOS. EURO-DOLLAR IS NEGATIVE FOR A FIFTH STRAIGHT SESSION. LISA: A REALLY INTERESTING POINT BY KIT JUCKES SOCGEN. HE SAID FOR NOW, WE BELIEVE THE DOLLAR STORY HAS SOME MORE LIKES TO GO, BUT OUT A CERTAIN POINT, WE ARE GOING TO PRICE AND THOSE FIVE RATE HIKE, PRESS OF THE THAT ACTION, AND GET THE ROLLOVER. YOU ARE ALSO SEEING A WE GETTING EURO REGION. THE THOSE THINGS TOGETHER AND IT IS HARD TO SEE HOW THE DOLLAR IS GOING TO WE CAN. JONATHAN: BARCLAYS JUST PUBLISHED, "WE MIGHT BE NEAR THE POINT OF MAXIMUM HAWKISH IN US AND POLICY MISTAKES FEAR IN OUR VIEW, COMBINED WITH A CLEANER POSITIONING FROM FAST SYSTEMATIC MONEY. THIS COULD HELP EQUITIES FIND A FOOT." THAT IS THE BET RIGHT NOW. LISA: THIS IS WHAT I HAVE BEEN THINKING ABOUT. WHAT HAPPENS IF WE GET SERIOUS WE GETTING IN THE ECONOMIC DATA? DOES THAT ACTUALLY SIGNAL A BUYING OPPORTUNITY FOR EQUITIES, OR DOES THAT SIGNAL A DIFFERENT TYPE OF WOOD US AS PEOPLE TRIED TO -- A DIFFERENT TYPE OF WEAKNESS? THAT IS NOT NECESSARILY POSITIVE FOR EQUITIES. JONATHAN: MIKE WILSON OF MORGAN STANLEY SAID SLOWING GROWTH IS GOING TO TAKE OVER FROM FEARS OF WHATEVER THE FED MIGHT DO. THAT IS WHERE THEY ARE FOCUSED. KAILEY: WINTER IS HERE WAS THAT HAD LOVE THAT NOTE, AND IT DOES FEEL LIKE WINTER HAS MAY BECOME FOR THIS EQUITY MARKET. TO THE POINT YOU ARE SPEAKING TO ABOUT THE SIGNS UNDERNEATH THE SURFACE THAT MAYBE WE FOUND SOME KIND OF A BOTTOM HERE, MICHAEL HARDEN AT BANK OF AMERICA WAS .2 FUND FLOWS, 7 BILLION DOLLARS COMING INTO EQUITY FUNDS. HE SEES ZERO SIGNS OF CAPITULATION. IF IT HASN'T HAPPENED YET, WHEN IS IT COMING? JONATHAN: HAVE YOU NOTICED THAT EVERY TIME THERE IS A SNOWSTORM, TK DOES NOT COME INTO WORK? [LAUGHTER] LISA: IS BENTLEY SOMETIMES GETS DELAYED. JONATHAN: HE'S TALKED ABOUT THE WEATHER NOT HURTING HIM, AND THEN WE GET A BIT OF SNOW, AND HE'S OFF. WE LOVE EACH OTHER. LOVE YOU, TOM. FUTURES DOWN 0.3% ON THE S & P. ON THE NASDAQ, BASICALLY UNCHANGED. IN THE FX MARKET, EURO-DOLLAR NEGATIVE FIVE STRAIGHT SESSIONS. JUST ABOUT HOLDING ONTO 1.11 RIGHT NOW. WE ARE -0.1% THERE. TENS, 1.84% ON THE 10-YEAR GILTS. LISA: I AM WATCHING TENS AFTER WE MIGHT GET WHAT WOULD BE THE MOST IMPORTANT ECONOMIC DATA OF THE WEEK. AT 8:30, WE GET U.S. ECI, THE EMPLOYMENT COST INDEX FOR THE FOURTH QUARTER. THIS IS WHAT TRIGGERED THE SHIFT IN THE FED THAT WE SAW FROM CHAIR POWELL AT THE END OF THE YEAR. WE ARE ALSO GETTING THE KEY INFLATION METRICS THE FED LOOKS AT, THE CORE PCE, WHICH SURGED TO THE HIGHEST LEVEL IN DECADES AND IS EXPECTED TO CLIMB FROM THERE. HOW MUCH DOES THIS EDIFY WHAT WE ARE SEEING IN PRICES FOR THE MARKET, OR HAVE WE ALREADY GOTTEN TO PEAK HAWKISH IN US? 10:00 A.M., U.S. UNIVERSITY OF MICHIGAN CONSUMER SENTIMENT SURVEY. NOT NECESSARILY WINTER AND DOOM AND GLOOM. THERE'S DEFINITELY AN ECONOMIC PERSPECTIVE, BUT THE ISSUE IS HOW MUCH ARE PEOPLE LOSING CONFIDENCE IN THE ECONOMY AS A RESULT OF THE HIGHER PRICES. REAL SPENDING ALSO IT GOING TO DECLINE. U.S. BAKER HUGHES RIG COUNT COMING OUT. IT HAS NOT RECOVERED TO THE LEVELS IT WAS PRE-PANDEMIC, AND IT IS A FAR CRY TO BEFORE THAT OIL CRASH. HOW MUCH DOES THIS SERVE AS THE ULTIMATE PRODUCTION MECHANISM THAT FILLS IN THE GAPS AS OPEC+ REMAINS A WILDCARD? THIS REALLY IS THE QUESTION AS WE SEE OIL PRICES RISE TO THE HIGHEST LEVELS GOING BACK AT WHEN HE 14 -- BACK TO 2014. JONATHAN: DO YOU REMEMBER PLAYING RIG COUNT GUESSES? THAT IS WHAT THAT REMIND ME OF. I'M JUST TELLING YOU WHAT I AM THINKING. LISA: THE FACT THAT IT IS NOT EVEN ON PEOPLE'S RADAR SHOWS THE DISCIPLINE THAT PEOPLE ARE TALKING ABOUT IN THE SHALE PATCH HAS LED TO A DISCOUNTING OF THIS MARGINAL PRODUCER. IS THAT FAIR, OR COULD THIS COME BACK ONLINE AT A TIME WHEN THE INVESTMENT JUST ISN'T THERE IN THE SAME KIND OF WAY? JONATHAN: REALLY IMPORTANT. THANK YOU. JEAN BOIVIN JOINING US NOW, OF BLACKROCK, GLOBAL HEAD OF INVESTMENT. WHY IS THAT IMPORTANT? JEAN: I THINK IT IS PRETTY CRUCIAL AND IMPORTANT. WE HAVE SEEN, AFTER STOPPING THE ECONOMY FOR THE VIRUS, A RESTART. WE HAVE BEEN IN THAT PROCESS THE LAST FEW QUARTERS. IT IS NOT OUR USUAL RECOVERY. THIS IS NOT GUIDED BY THE CONSUMERS, INVESTMENT SENTIMENT, AND ANIMAL SPIRITS. IT IS REALLY ABOUT GOING BACK TO THE ACTIVITY, TURNING ON COMPANIES, TURNING ON LIFE. THAT CAN HAPPEN VERY QUICKLY. POINT NUMBER TWO IS IT IS A LOT EASIER TO RESTART DEMAND THEN IT IS TO RESTART SUPPLY, SO THAT REALLY IS A MISMATCH. THAT IS WHERE INFLATION IS COMING FROM, AND THAT IS VERY INDIFFERENT FROM INFLATION WE HAVE SEEN. SO IT IS PRETTY CRUCIAL. KAILEY: JON WAS FOCUSED IN ON THE RESEARCH LINE. I FOCUSED ON THAT MONETARY POLICY CANNOT STABILIZE INFLATION AND GROWTH. BECAUSE IT IS LASER FOCUSED ON INFLATION, IS IT AT RISK OF HYPER TIGHTENING INTO WEAKNESS, AND THEREFORE WE ARE WORRIED ABOUT A RECESSION DOWN THE LINE? JEAN: JUST TO BE CLEAR, IS A RESTART AND RECOVERY. IT IS REALLY ABOUT LIFTING CONSTRAINTS. ON THAT FRONT, IT MAKES COMPLETE SENSE TO TRY TO START NORMALIZING POLICY, AND THAT IS IN LINE WITH WHAT THEY ARE STARTING TO DO, WHICH I THINK MAKES COMPLETE SENSE. I THINK WHERE IT BECOMES CONCERNING IS WHEN THIS IS SOLD AS AN ATTEMPT TO TAME INFLATION. THAT IS A COMPLETELY DIFFERENT THING BECAUSE THIS INFLATION IS REALLY SHAPED BY SUPPLY. WE HAVE NOT SEEN THAT KIND OF ENVIRONMENT. IN AN ENVIRONMENT LIKE THIS, YOU HAVE A CHOICE. YOU NEED TO JUST EYES -- NEED TO DECIDE WHETHER YOU STABILIZE INFLATION OR GROWTH, AND IF YOU GO HARD FOR INFLATION, IT IS GOING TO BE VERY COSTLY TO TAME INFLATION. SO THIS CHOICE IS A LOT STARKER, AND NOT WARRANTED, I THINK, AT THIS STAGE. LISA: DO YOU THINK THAT IS WHERE THE FED IS GOING, THAT WE WILL SEE DISCUSSION LATER THIS YEAR? JEAN: I DON'T THINK THAT IS WHERE WE ARE GOING. IF WE GO BY THE CUMULATIVE RATE OF HIKES UNTIL PUTTING 24, IT IS STILL VERY MUTED. SO THAT IS IN LINE WITH WHAT YOU SHOULD BE DOING WITH A RESTART, LIFT THE FOOT OF THE ACCELERATOR, BUT NOT HIT THE BRAKE. ONE CONCERN IS THEY ARE NOT EXPOSE ITALY ARE ACTIVELY TRADING IN THE WAY WE ARE TALKING ABOUT, AND THE MARKET HAS CERTAINLY PRIMED TO DO THAT. I THINK THIS IS WHERE WE CAN GET FOR A WHILE A PRETTY BUMPY RIDE, BUT I THINK ULTIMATELY, EVEN IF THEY WERE TO TRY TO DO A SLAMMING THE BRAKES, I THINK THEY WOULD BE PERSUADED PRETTY QUICKLY. JONATHAN: ARE YOU MORE ACCOUNTABLE RIGHT NOW LOOKING OUTSIDE THE U.S.? I'VE HEARD SOME ANY CONCERNS FROM YOU IN THE LAST FIVE MINUTES OR SO. ARE YOU MORE COMFORTABLE LOOKING OUTSIDE THE U.S.? JEAN: CONCERNS ARE REALLY NEAR TERM, SO IF YOU TAKE A TRADING PERSPECTIVE, FROM A LONGER-TERM INVESTMENT PERSPECTIVE, I THINK IT IS A BUMPY RIDE, BUT THE FUNDAMENTALS ARE NOT REALLY CHANGED. I THINK IT IS REMARKABLE AND WE SHOULD ALL REMIND OURSELVES OF THAT, THE PEOPLE NOW ARE EXPECTING HIM LIKE FIVE HIKES. IT TOOK ONLY A COUPLE OF MONTHS TO GET THERE, AND WHAT CHANGED THAT? IT IS REALLY AN INTERPRETATION OF WHAT THE FED WAS SAYING. SO I THINK THAT INTERPRETATION CAN CHANGE, AND ULTIMATELY, THIS IS STILL CONSTRUCTIVE. IT IS CONSTRUCTIVE EVEN IN THE U.S. WE THINK EMERGING MARKETS CONTINUE TO BE AN INTERESTING AREA, AND INTERESTING SPACE, AND IT IS USEFUL TO LOOK AT THIS AREA, BUT WITHIN THE DM WORLD, NO STRONG PREFERENCES FOR EUROPE, JAPAN, OR U.S. AT THIS STAGE. I THINK IT IS A RESTART ACROSS THE GLOBE. JONATHAN: JEAN BOIVIN THERE OF BLACKROCK INVESTMENT INSTITUTE. THE LABOR MARKET WAS STRONGER. INFLATION WAS HIGHER. HE IS SAYING THE LABOR MARKET IS STRONGER NOW VERSUS THEN. THAT IS THE ISSUE I THINK SOME PEOPLE HAVE. IS THE LABOR MARKET STRONGER NOW VERSUS THEN? THE LABOR MARKET MIGHT BE TIGHT, BUT IS IT STRONG? THAT WORD RAISES SOME QUESTIONS. LISA: ESPECIALLY LOOKING AT PARTICIPATION RATE. IF WE ARE NOT SEEING THE PARTICIPATION RATE RETURN TO PREPEND HIM AT LEVELS, CAN WE CONSIDER THIS STRENGTH? JONATHAN: WE ARE DOWN ALMOST 0.1%. YIELDS ARE HIGHER. ON FIVES, ON TENDS, AND EURO-DOLLAR NEGATIVE ONCE AGAIN. ON RADIO, ON TV, THIS IS BLOOMBERG. ♪ RITIKA: WITH THE FIRST WORD NEWS, I'M RITIKA GUPTA. RUSSIAN FOREIGN MINISTER SERGEI LAVROV SAYS HE SAW SOME RATIONAL ELEMENTS IN THE U.S. RESPONSE TO MOSCOW'S SECURITY DEMANDS, BUT SAID KEY POINTS WERE IGNORED. PRESIDENT BIDEN WARNED UKRAINIAN PRESIDENT VOLODYMYR ZELENSKY THAT A RUSSIAN INVASION COULD COME NEXT MONTH. PRESIDENT BIDEN SAYS HE WILL FILL HIS PROMISE TO NOT MAKE THE FIRST BLACK WOMAN TO THE SUPREME COURT. HE SAYS HE WILL ANNOUNCE HIS CHOICE BY THE END OF FEBRUARY, JUST AS JUSTICE BREYER TOLD THE PRESIDENT FORMALLY HE WILL RETIRE IN JUNE OR JULY, ASSUMING A SUCCESSOR HAS BEEN CONFIRMED. NORTH KOREA LAUNCHED FOUR MISSILES THIS WEEK, INCLUDING TWO LONG-RANGE CRUISE MISSILES THAT COULD GOOD -- THAT COULD GIVE THE KID ABILITY TO HIT ALMOST ALL OF JAPAN. THEY HAVE WRAPPED UP WEAPONS TESTING IN AN ATTEMPT TO SIGNAL UNHAPPINESS WITH THE U.S. OVER COMIC SANCTIONS. IN LONDON, AND ACRIMONIOUS COURT BATTLE OVER CLAIMS OF FALSE ACCOUNTING HAS COME TO AN END. THE FOUNDER OF AUTONOMY CORPORATION MIKE LYNCH -- ACCUSED OF INFLATING THE VALUE PRIOR TO HP'S $11 BILLION TAKEOVER IN 2011. HE FACES FOUR CHARGES IN THE U.S. SHARES OF APPLE MOVING HIGHER TODAY. FISCAL FOURTH QUARTER SALES AND PROFITS BEAT EXPECTATIONS, SEEN AS A VICTORY OVER THE SUPPLY CHAIN CRUNCH. AND WHILE, APPLE FORECAST SALES WOULD GROW BY A DOUBLE-DIGIT PERCENTAGE IN THE MARCH QUARTER. 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'M RITIKA GUPTA. THIS IS BLOOMBERG. ♪ > > THE BIG CHOICE PUTIN FACES, DOES HE WANT TO GO TO WAR WITH UKRAINE AND MAY BE ACQUIRE A LARGE PART OF THE COUNTRY, OR DOES HE WANT BIG CONCESSIONS FROM THE U.S. AND NATO? IF HE GOES TO WAR, HE PROBABLY WON'T GET THOSE CONCESSIONS. HE WILL ANTAGONIZE AND UNIFY THE WESTERN ALLIANCE. JONATHAN: WHAT WILL THE OUTCOME BE? THAT WAS A SENIOR FELLOW AT THE COUNCIL OF FOREIGN RELATIONS. FROM NEW YORK CITY, WITH LISA UPPER WHAT'S -- WITH LISA ABRAMOWICZ AND KAILEY LEINZ, I'M JONATHAN FERRO. ON THE WEEK, WE ARE DOWN 1.6%. ON THE YEAR, DOWN BY MORE THAN 9%. ON THE NASDAQ 100, DOWN ABOUT 3%. WE EXPECTED TO SEE A POP RIGHT HERE. NOW WE ARE NEGATIVE. EVEN WITH THE MOVE ON APPLE. SOME ARE MARKABLE MOVES HERE. YIELDS HIGHER ON TENDS BY FOUR OR FIVE BASIS POINTS. THIS CURVE HAS BEEN FLATTER THROUGH MUCH OF THIS YEAR, AND THE BANKS AND THE EQUITY MARKET NOW NEGATIVE FOR 2022. LISA: YOU HAVE SEEN REAL YIELDS CONTINUED TO CLIMB AS INFLATION EXPECTATIONS OVER THE LONGER TERM ACTUALLY COME DOWN, EVEN AS YOU SEE YIELDS RISE. TO ME, THIS MIGHT BE THE REAL STORY UNDERPINNING RISK ASSETS AND CERTAINLY UNDERPINNING THE WEAKNESS WE CONTINUE TO SEE. JONATHAN: GEOPOLITICS A BIG PICTURE OF THE WEEK -- A BIG FEATURE OF THE WEEK? LISA: NOT AT ALL. PERHAPS FOR GAS, BUT THIS WASN'T THE DOMINANT STORY. I AM WONDERING WHETHER IT WILL BECOME ONE OR IF PEOPLE ARE BASICALLY LOOKING AT THE SIMMERING ISSUE IS A POSSIBLE TAIL RISK. JONATHAN: LET'S TALK TO ANNMARIE HORDERN DOWN IN D.C., OUR WASHINGTON CORRESPONDENT. CAN YOU WALK US THROUGH IT? ANNMARIE: LET'S START WITH THE CALL YESTERDAY BETWEEN PRESIDENT BIDEN AND HIS COUNTERPART, UKRAINIAN VALLETTA MAYOR ZELENSKY -- UKRAINIAN VALLETTA MAYOR ZELENSKY -- UKRAINIAN THE LOW TO MID ZELENSKY. THEY COULD STRIKE SOON, BUT WE HEARD PRETTY CATEGORICALLY FROM THE WHITE HOUSE THAT THIS WAS A FALSE REPORT . PRESIDENT BIDEN SAID THERE IS A DISTINCT POSSIBILITY THAT THE RUSSIANS COULD INVADE UKRAINE IN FEBRUARY. THIS IS SOMETHING THE WHITE HOUSE HAS SAID PUBLICLY. HE COULD INVADE FEBRUARY. SO ANYTHING MORE ON THAT REPORTING IT IS COMPLETELY FALSE. MARIA TADEO HAS TOLD ME A CALL STARTED AT 10:46 FRENCH TIME BETWEEN PRESIDENT MACRON AND PRESIDENT PUTIN, AND IT SEEMS LIKE THEY ARE STILL ON THAT CALL. KAILEY: THAT IS ONLY A FEW WEEKS, AND YET THEY ARE STILL SAYING WE WANT TO PUSH FOR A DIPLOMATIC RESOLUTION. ARE THEY RUNNING OUT OF TIME? ANNMARIE: DIPLOMACY IS CERTAINLY WHAT THEY WANT TO PUSH FOR FIRST, AND THAT IS WHAT WE SEE THE ADMINISTRATION DOING, AND WE SHOULD NOTE ON THE RUSSIAN SIDE, WE DID HEAR FROM SERGEI LAVROV TODAY. THERE WAS A BIT OF A CALMER TONE COMING FROM THE KREMLIN. HE SAID THERE WAS A KERNEL OF RATIONALITY AND THOSE WRITTEN AGREEMENTS, AND SAID FINALLY, WASHINGTON IS TAKING SERIOUSLY RUSSIAN DEMANDS THAT THEY'VE HAD FOR YEARS, WHICH IS SECONDARY SECURITY CONCERNS, NOT THE ONES WE KNOW ARE CATEGORICALLY NOT GOING TO GET THROUGH IN TERMS OF A VOTE ON NATO AND PULLING BACK FORCES FROM THE FORMER SOVIET STATES. THE SECONDARY CONCERNS HAVE TO DO WITH MISSILE DEPLOYMENT, AS WELL AS MILITARY EXERCISES. THIS POTENTIALLY OPENS OF A BIGGER PASS FOR DIPLOMACY AND POTENTIALLY, AS THE GUEST WAS JUST SAYING, IF PRESIDENT VLADIMIR PUTIN WANTS CONCESSIONS FROM NATO, THIS WOULD BE HIS OFFRAMP. BUT WE HAVE HEARD FROM HIM SINCE BEFORE CHRISTMAS. WE DO NOT WHERE HE STANDS ON UKRAINE. LISA: HOW MUCH HAS THIS GEOPOLITICAL TENSION TAKEN THE WIND OUT OF THE SAILS IN TERMS OF PRESIDENT BIDEN'S AGENDA? ANNMARIE: THIS IS WHAT THEY ARE FOCUSING ON EVERY DAY. THIS IS WHAT THE QUESTIONS ARE CONSTANTLY ABOUT. WHAT IS THE UPDATE WHEN YOU TALK TO THE PENTAGON? THEY HAVE BRIEFINGS. YESTERDAY WE ARE TALKING ABOUT HOW THERE'S NOW MORE THAN 100,000 TROOPS, WHICH MATCHES WHAT THE UKRAINIAN DEFENSE MINISTER SAID YESTERDAY. YOU SEE IT IS A LOT OF ENERGY AND POLITICAL SPACE AND CAPITAL BEING USED TOWARDS FOREIGN POLICY, SO WHEN YOU HAVE THE PRESIDENT YESTERDAY ALONGSIDE JUSTICE BREYER TALKING ABOUT SOMETHING THAT COULD CEMENT HIS LEGACY, THAT IS A WIN FOR THE ADMINISTRATION BECAUSE THE FOCUS IN WASHINGTON HAS BEEN TOWARDS WHAT IS GOING ON IN EASTERN EUROPE. LISA: NEXT WEEK WE HAVE HEARINGS FOR THE THREE NOMINEES FOR THE FEDERAL RESERVE, AND INFLATION FRONT AND CENTER FOR BOTH THE MARKETS, AS WELL AS FROM A DOMESTIC POLITICAL AGENDA. HOW MUCH HAVE WE MOVED TO A REGIME WHERE SENATORS ARE GOING TO ACTUALLY BE ENCOURAGING A MORE HAWKISH TILT, FED GOVERNORS AND FED MEMBERS ARE GOING TO BE EAGER TO RAISE RATES AND TIGHTEN POLICY? ANNMARIE: THIS IS THE DECISION THAT FACED LAEL BRAINARD AND JAY POWELL. THE QUESTION IS GOING TO BE INFLATION BECAUSE INFLATION IS HURTING LAWMAKERS AND THEIR CONSTITUENTS. THEY ARE GEARING UP FOR MIDTERMS. I THINK A LOT OF THE QUESTIONS WILL BE POLITICAL IN THE SENSE THAT THEY WANT TO SHOW THAT THEY ARE TAKING CONSUMERS AND THEIR VOTER ISSUES TO HEART, BUT THERE'S ALSO A LOT OF CONCERN RIGHT NOW WHEN YOU LOOK AT THOSE FED HEARINGS COMING UP NEXT WEEK ABOUT SARAH BLOOM RASKIN, GIVEN THE FACT THAT SHE HAD THIS OPINION PIECE ABOUT WHY IS THE FEDERAL RESERVE STILL HELPING FOSSIL FUEL COMPANIES. THERE'S A LOT OF INDIVIDUALS WHO ARE GOING TO TAKE AIM AT HER AND HER CLIMATE POLICIES OF THE PAST. JONATHAN: IS D.C. BUSY YET, AND YOUR EXPERIENCE? ANNMARIE: IT IS A BIT MIXED, AND THE SENSE THAT THERE IS DEFINITELY LESS PEOPLE AROUND, BUT IT IS STARTING TO GET A LITTLE BIT MORE BUZZY. I SAY THIS BECAUSE IF YOU ASKED ME 24 HOURS AGO, I WOULD SAY NO, BUT I WENT OUT TO DINNER LAST NIGHT AND IT WAS HARD TO GET A TABLE, SO I THINK IT IS SLOWLY CHANGING. BUT ALREADY, I FIND D.C. A LITTLE MORE SLEEPY THAN NEW YORK , BUT I GUESS YOU CAN COME HANG OUT HERE AND GIVE ME YOUR TAKE. JONATHAN: I WILL PAY YOU A VISIT SOON. THANK YOU. DRIVING DOWN PARK AVENUE, REALLY BUSY THROUGH MIDTOWN IN A WAY I HAVE NOT SEEN FOR A WHILE. MAYBE THINGS ARE GETTING BUSIER AGAIN. LISA: IT FEELS LIKE THAT. THE NUMBER OF CASES HAVE COME DOWN DRAMATICALLY, SO PERHAPS PEOPLE ARE GETTING THERE ISN'T SHOPPING ON. JONATHAN: THAT IS WHAT IT IS -- THEIR EVENT SHOPPING ON. JONATHAN: THAT IS WHAT IT IS, REVENGE SHOPPING? [LAUGHTER] LISA: I'VE NOTICED IT AS WELL, PEOPLE GETTING A LOT MORE CROWDED. JONATHAN: JUST TO PROMOTE SOME GUESTS EARLIER, WE WILL BE CATCHING UP WITH ROBERT KRONENBERG. LOOKING FORWARD TO THAT, ALONGSIDE MOHAMED EL-ERIAN. THAT IS GOING TO BE A REALLY IMPORTANT CONVERSATION ON EMERGING MARKETS. DON'T MISS THAT AT AROUND 9:30 EASTERN TIME. TO RUN THROUGH THE PRICE ACTION OF THE MOMENT, DOWN 33 ON THE S & P. DOWN BY ALMOST 70, ALWAYS 0.5%. JONATHAN: EQUITIES DOWN, YIELDS UP TO 1.8355%. WITH LISA ABRAMOWICZ AND KAILEY LEINZ, I'M JONATHAN FERRO. FOR OUR AUDIENCE WORLDWIDE, ON TV AND RADIO, THIS IS BLOOMBERG. ♪ JONATHAN: GIVEN THOSE APPLE NUMBERS AFTER THE CLOSE YESTERDAY, THIS IS PROBABLY NOT THE MOVE YOU WERE LOOKING FOR. WE ARE DOWN ABOUT ZERO POINT 3% ON THE NASDAQ. THE S & P WE ARE THEY GET A 0.3%. THE BIGGER WAITING ON THE NASDAQ 100, 12% OF IT. APPLE CAN'T EVEN GET YOU AGAIN THIS MORNING ON THE NASDAQ 100. THE EQUITY STORY SOFTER, EVEN WORSE FOR THE NASDAQ. ON THE YEAR, THE S & P 500 DOWN 9% AND SOME. LET'S TAKE A LOOK AT THIS TOGETHER. YOUR TWO-YEAR YIELD, 1.2181%. WE HAD A MOVE OF ALMOST 50 BASIS POINTS ON THE YEAR SO FAR IN FOUR WEEKS. ON TENS, HIGHER BY FOUR BASIS POINTS AT 1.8373%. WE JUST KEEP BAKING IN MORE HIKES. NOW WE ARE TALKING ABOUT FIVE OVER AT WELLS FARGO. THIS YEAR, INCLUDING SOME BALANCE SHEET REDUCTION COMING. IN THE MIDDLE OF THE YEAR, MAYBE JULY FOR THE LIKES OF WELLS, EVEN EARLIER FOR OTHERS. HOW FAR CAN YOU PUSH THAT, AND FOR HOW LONG CAN THIS ECB SAID IT OUT. -- ECB SIT IT OUT? ON THE SESSION WE ARE DOWN BY 0.1%. NO DRAMA. FOR FIVE STRAIGHT DAYS, WE HAVE BEEN IN NEGATIVE TERRITORY FOR EURO-DOLLAR. THE FEDERAL RESERVE KEEPS PUSHING IT. THE MARKET KEEPS PRICING IT IN. FOR THE ECB, AND OUR SURVEY THAT WE CONDUCTED, THEY DON'T THINK THE ECB MAKES A MOVE UNTIL 18 MONTHS FURTHER DOWN THE ROAD. JONATHAN: -- LISA: IT MAKES SENSE IF YOU LOOK AT THE COMIC DATA, WHERE GERMANY IS ON THE CUSP OF RECESSION, AND WE ARE SEEING NEGATIVE GROWTH. THE ECB IS CHASING A VERY DIFFERENT ECONOMIC PICTURE, AND THAT IS REALLY DRIVING THIS DIVERGENT STORY. JONATHAN: HAVE WE GOTTEN TO THE POINT OF MAX DIVERGENCE? HAVE WE REACHED PEAK CAUCASUS? -- PEAK HAWKISH IN US -- PEAK HAWKISHNESS? EVERYONE ALWAYS WANTS TO CALL THAT. LISA: IT IS HARD TO DO BECAUSE WE DON'T HAVE THE ECONOMIC DATA. YOU GET 10 PEOPLE IN THE ROOM, YOU GET TENDERED OPINIONS ON INFLATION, 10 DIFFERENT OPINIONS ON WHICH DATA POINT IS MOST IMPORTANT. JONATHAN: AND 10 DIFFERENT OPINIONS ON HOW FAR THE FED CAN PUSH INTEREST RATES BEFORE THINGS BREAK. KAILEY LEINZ IS EVERYBODY. [LAUGHTER] RIGHT NOW SHE'S GOING TO BE ROMAINE BOSTICK. ROMAINE: GOOD THING, AND ROMAINE -- LISA: -- KAILEY: GOOD THING, AND ROMAINE -- GOOD THING TOM AND ROMAINE BOTH HAVE BOWTIES, SO THEY ARE KIND OF THE SAME. APPLE BLEWITT A WHAT -- BLEWITT OUT OF THE WATER IN THE REPORTS LAST NIGHT, UP JUST 3% IN MARKET TRADING AFTER BLOWING IT OUT ON PRETTY MUCH EVERY SINGLE METRIC. SUPPLY CHAIN ISSUES REALLY NOT A PROBLEM. $124 BILLION IN SALES IN THE QUARTER, AND YET ONLY REWARDED WITH A 3% MOVE. IT SHOWS HOW HIGH THE BAR IS IN THIS ROUGH ENVIRONMENT FOR TECHNOLOGY. VISA BEATS ON BOTH THE TOP AND BOTTOM LINE, 20% GAIN IN SPENDING ON THEIR CARD. IT IS UP 3%. THERE ARE A LOT OF NEGATIVE STORIES, ONE BEING ROBINHOOD. WE ARE ABOUT A YEAR OUT FROM THE ROBINHOOD MEAN DRIVEN MANIA, AND ROBINHOOD IS SEEING ITS PROMINENCE RAINING -- PROMINENCE WANING IN A BIG WAY. IT IS DOWN 13% BEFORE THE BELL. WESTERN DIGITAL DEALING WITH SUPPLY CHAIN ISSUES, DOWN 11%. CHEVRON, THIS IS A REALLY INTERESTING ONE, IT MISSED PRETTY MUCH ACROSS THE BOARD ON PROFITABILITY. EVEN AS WE ARE SEEING HIGHER ENERGY PRICES, A LOT OF THAT HAS TO DO WITH REDUCTION IN THE VALUE OF SOME OF ITS LEGACY ASSETS. I WILL BE ASKING THE CEO ABOUT THAT LATER THIS MORNING. CHEVRON DOWN 3.2% BEFORE THE BELL. JONATHAN: THANK YOU. TOM IS WITH US. [LAUGHTER] HE'S JUST TWEETED ME, "DIVIDE AND FAMILY FINALLY HAS A CAT -- "THE BIDEN FAMILY FINALLY HAS A CAT." THEY HAVE WELCOMED A FILE NAMED WILLOW. TOM IS DOING THIS BECAUSE HE KNOWS HOW I FEEL ABOUT CATS. AND IF YOU SAY, DO YOU KNOW HOW MUCH ABUSE YOU GET FROM THE CAP PEOPLE? I LOVE CATS. IT'S MY NEW POSITION ON AIR. LISA: THAT IS REALLY HONEST OF YOU. HE HAS AT HOME WATCHING CAT VIDEOS RIGHT NOW. JONATHAN: WE BOTH HAD A CEMENT A LONG TIME ON RADIO THAT WE WILL NEVER REPEAT AGAIN BECAUSE WE OFFENDED SO MONEY PEOPLE. WE LOVE CATS. ANNA HAN JOINS US NOW. YOUR COLLEAGUE CHRIS HARVEY SAYS WE HAVE SEEN A CATHARTIC PUKE IN THE EQUITY MARKET, NOW IT IS YOUR JOB TO TRANSLATE WHAT HE MEANS BY THAT. WHAT DOES HE MEAN? ANNA: I THINK WE HAVE SEEN THAT KNEE-JERK REACTION AND WE ARE PRICING IN MORE AND MORE AGGRESSIVE MONETARY TIGHTENING. NOW WE MIGHT EVEN HAVE A COINCIDING OF TIGHTENING AND BALANCE SHEET REDUCTION, AND THE MARKET NEEDS TO PRICE THAT IN. I THINK THAT IS WHAT HAS BEEN HAPPENING. JONATHAN: WHERE ARE YOU LOOKING TO PICK UP THE PIECES AT THE MOMENT? IT SMALLER BUT SIMILAR ONE ON THE S & P 500. ANNA: THERE ARE PARTS OF THE GROWTHY TECH MARKET THAT COULD STILL SEE FURTHER DOWNSIDE. THERE ARE STILL SOME PRETTY HIGH VALUATIONS ON WHAT WE LIKE TO DUB STORY STOCKS, STOCKS THE DON'T REALLY HAVE THE STRONGEST FUNDAMENTALS, BUT HAVE BEEN BID UP WITH SOME EXPECTATION. HAVE THEY SEEN THAT RISING RATE ENVIRONMENT, AND IS THERE LIKELY A 50 BASIS POINT HIKE IN MARCH? FOR US COME THE LEADER IS GOING TO BE WHAT CAN PLAY WELL IN THE RISING RATE ENVIRONMENT, BUT ALSO CONTINUE TO BENEFIT FROM CONTINUED POSITIVE GDP GROWTH. SLOWING, BUT POSITIVE DP GROWTH. KAILEY: CAN WE -- POSITIVE GDP GROWTH. KAILEY: CAN WE THROW EARNINGS OUT THE WINDOW? ANNA: I WOULD NOT THROW IT OUT THE WINDOW, BUT IT IS GOING TO BE TWO DIFFERENT FACTORS HERE. WHAT HAS BEEN INTERESTING ABOUT EARNINGS IS WE ARE STARTING TO SEE MARGIN COMPRESSION IN A SEQUENTIAL BASIS. WE ARE TALKING ABOUT EPS BEATS, COMPANIES BEING ABLE TO MEET EXPECTATIONS, BUT WHEN YOU LOOK AT HOW REVENUES HAVE BEEN GROWING, YOU ARE STARTING TO SEE THAT THEY ARE SUFFERING A LITTLE BIT ON THAT PROFITABILITY, AND THE REWARD IS REALLY GOING TO BE FOR COMPANIES THAT DON'T JUST BEAT ON THE TOP AND BOTTOM LINE, BUT ALSO GROW THAT PROFITABILITY. KAILEY: AS WE WORK OUR WAY THROUGH EARNINGS SEASON AND WE WAIT FOR MORE REACTION ON THAT, DO YOU EXPECT VOLATILITY TO TAMP DOWN? I AM EXHAUSTED FROM THIS WEEK. ANNA: WE SAY THAT, BUT KEEP IN MIND, SEEING THE VIX AROUND THE 30 IS NOT 40, IT IS NOT 50. IT IS SHORT-TERM VOLATILITY. WHAT IS IMPORTANT HERE IS HOW THE INVESTOR RISK APPETITE HAS BEEN. EVEN LAST YEAR, YOU SAW THERE WAS A STRONG BID FOR RISK AVERSION, AND A HIGH VOLATILITY STYLE. THINK THAT IS CONTINUING, AND THAT WILL PERSIST FOR THE NEXT COUPLE OF MONTHS. LISA: DO YOU THINK THAT BY THE DEBT HAS BASICALLY GONE THE WAY -- THAT BY THE DIP HAS GONE AWAY, AND THAT IS NO LONGER THE STRATEGY? ANNA: IT IS MUCH WEAKER THAN WE HAVE SEEN IT, ESPECIALLY BECAUSE NOW LOOKING FORWARD, PEOPLE ARE BEING MORE PARTICULAR. IT IS NOT JUST EQUITY RALLIES WITH ALL OF THIS MONETARY LIQUIDITY. IT IS A REVERSAL OF WHAT WE SAW IN 2021. WE ARE GOING TO TIGHTEN MONETARY POLICY, TAKEAWAY ACCOMMODATION, SO YOU'RE GOING TO SEE A BIT OF A WEAKER HAND. LISA: YOU PUT OUT A BULL CASE AND A BEAR CASE. THE BULL IS THAT CHAIR POWELL ENDS UP WALKING BACK SOME OF THAT WHILE WE STILL GET GROWTH . THE BEAR CASE IS HIGHER INFLATION CONTINUES, AS WELL AS SOME CONCERNS ABOUT HOW LONG THIS CAN LAST AS U.S. CONSUMERS TAP INTO THEIR SAVINGS. WHAT IS THE DIFFERENTIAL AND EQUITY PERFORMANCE FOR THOSE TWO SCENARIOS? ANNA: FOR US COME OUR PRICE TARGET IS 4715. THAT IS NOT AN OVERLY AGGRESSIVE FED. BUT IF YOU SEE CHAIRMAN POWELL REALLY WRESTLING WITH INFLATION AND GRABBING INFLATION BY THE HORNS, BUT HAVING A DIFFICULT TIME CAMPING DOWN ON THAT. YOU COULD SEE MUCH FURTHER WEAKNESS. YOU SHOULD SEE HIGHER VOLATILITY, MORE SPIKES. THAT IS THE KIND OF ENVIRONMENT WHERE WE WOULD LOOK TO REVISE DOWN, BUT SO FAR, I THINK THAT IS STILL A TAIL CASE SCENARIO FOR US. JONATHAN: YOU CAME IN THE YEAR LOOKING FOR A FLAT MARKET, AND 4700 WAS NOT THE MOST BULLISH CALL. IT FEELS MORE BULLISH NOW AS THE YEAR PROGRESSES. GREAT WORK AS ALWAYS. ANNA HAN OF WELLS FARGO SECURITIES. ROLLING OVER A BIT, DOWN 0.75% ON THE NASDAQ 100, DOWN ABOUT 1% ON THE S & P. SOME UNDERPERFORMANCE IN EUROPE. THE STOXX 600 NOT DOING SO WELL. LVMH NOW NEGATIVE ON THE DAY. THIS IS A STOCK THAT OPENED UP HIGHER IN EUROPE BY 5% AND IS NOW DOWN BY 0.5%. IF YOU WANT A FEEL FOR THE EARNINGS, ORGANIC REVENUE, THE MAIN DIVISION, FASHION AND LEATHER GOODS, REVENUE WAS UP 42% FROM 2019. NOT FROM THE YEAR BEFORE, FROM 2019. THOSE ARE UNBELIEVABLE NUMBERS, AND THEY CAN'T BUY A RALLY IN THIS EQUITY MARKET. LISA: IT SEEMS AS THOUGH PEOPLE ARE TRYING TO QUICKLY CAPITALIZE ON ANY RALLY WHATSOEVER AND GET OUT AS QUICKLY AS POSSIBLE. IT FEELS LIKE A TRADING MARKET BECAUSE OF THE LACK OF CERTAINTY, AND YET KAILEY ASKED, WHERE DO FUNDAMENTALS FACTOR INTO THIS? IT IS HARD TO KNOW THE ANSWER GIVEN THAT WE ARE CONTINUING TO SEE UNDERPERFORMANCE, EVEN BY NAMES THAT ARE DOING JUST FINE. JONATHAN: TRADING LOWER IN PARIS, DON'T BUY MORE THAN 2% THERE. THE BENCHMARK AND FRANK FOR IT, GERMANY DOWN BY ABOUT 2.5% -- BENCHMARK IN FRANKFURT, GERMANY DOWN BY ABOUT 2.5%. KAILEY: IT IS NOT ENOUGH TO SUPPORT FUTURES ON THE TECHNOLOGY GAUGE THIS MORNING. IT HAS JUST BEEN AN INTRADAY VOLATILITY STORY OVER THE LAST WEEK. I BELIEVE WE ARE COMING OFF THE FIRST TWO DAYS WHERE WE HAVE SEEN THE S & P 500 MOVE FROM A 2% GAIN BACK TO BACK, GOING ALL THE WAY BACK TO 2008. WE ARE SEEING PRICE SWINGS WE HAVE NOT SEEN SINCE 2008 OR THE PRICE BUT WILL. -- THE PRICE BUBBLE. I'M NOT SURE THESE ARE PERIODS THAT THEY WOULD LIKE TO BE COMPARED TO. JONATHAN: IT IS STILL POSITIVE, BUT ONLY BY 2.5% OFF THE BACK OF SOME REALLY STRONG NUMBERS, AND GOING INTO THAT PRINT, WE HAD SOME REALLY WEAK PERFORMANCE ON THE STOCK YEAR TO DATE. LISA: AGAIN, WHERE DOES THE CASH FLOW FIT INTO THE PICTURE, OR IS THIS GOING TO BE A TALE OF THE LESSER LOSERS, THE ONES THAT CAN WITHSTAND A BIG DOWNTURN IN OTHER STOCKS OF THE SAME CATEGORY, SIMPLY BECAUSE THEY ARE SO CASH FLOW POSITIVE? JONATHAN: COMING UP, WE WILL CATCH UP WITH TORSTEN SLOK, CHIEF ECONOMIST AT APOLLO GLOBAL MANAGEMENT. HERE COME THE MESSAGES. "YOU HATE CATS, WE ALL KNOW IT." [LAUGHTER] I DID NOT SAY THAT. FROM NEW YORK, THIS IS BLOOMBERG. ♪ RITIKA: WITH THE FIRST WORD NEWS, I'M RITIKA GUPTA. AND THE U.K., A GOVERNMENT INVESTIGATION INTO PANDEMIC PARTIES IN PRIME MR. BORIS JOHNSON'S OFFICE COULD BE STRIPPED OF KEY DETAILS AT THE REQUEST OF POLICE, CONDUCTING THEIR OWN INVESTIGATION. A WATER DOWN PROBE COULD BE HELPFUL FOR JOHNSON, STARTING TO PERSUADE HIS CONSERVATIVE PARTY COLLEAGUES NOT TO MOUNT A LEADERSHIP CHALLENGE. RUSSIA WILL SIGN -- CHINA AND RUSSIA WILL SIGN AN AGREEMENT TO BUILD A RESEARCH STATION ON THE MOON. DO COUNTRIES AGREED TO COMPLETE BASIC INFRASTRUCTURE AT 2035. IT IS THE LATEST SIGN THAT THE NEW RACE TO GO TO THE MOON IS HEATING UP. ASKED MONTH, THE U.S. HAS SCHEDULED A MAJOR TEST OF ITS ARTEMIS PROGRAM, AN EFFORT TO RETURN ASTRONAUTS TO THE MOON LATER THIS DECADE. THE EUROPEAN UNION AND THE U.K. REPORTEDLY ARE GEARING UP TO SANCTION NEW RUSSIAN GAS PROJECTS IF THERE IS AN ATTACK ON UKRAINE, ACCORDING TO "THE FINANCIAL TIMES." THE SANCTIONS WOULD DRASTICALLY CUT FINANCING AND TECHNOLOGY TRANSFERS TO GAS FACILITIES. DISAPPOINTING FOURTH QUARTER PROFITS AT CHEVRON. THE OIL GIANT FAILED TO TAKE FULL ADVANTAGE OF SURGING ENERGY PRICES. CHEVRON'S OVERSEAS UPSTREAM BUSINESS AND DOMESTIC REFINING NETWORK FELL SHORT OF THE EXPECTATIONS. THE COMPANY IS ESPECIALLY VULNERABLE TO GYRATIONS IN THE FOREIGN MARKET. THE MAKEUP MORE THAN 60% OF ITS OIL AND NATURAL GAS OUTPUT. 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'M RITIKA GUPTA. THIS IS BLOOMBERG. ♪ > > INFLATION WHEN IT GETS EMBEDDED, WHEN IT BECOMES A SECULAR LIKE THE 1970'S, IT HAD A LOT TO DO WITH PSYCHOLOGY. WE KNOW THE FED CAN'T SHORTEN THE PROBLEM IN TERMS OF SEMICONDUCTOR AVAILABILITY. THEY CAN'T SHRINK THE NUMBER OF SHIPS SITTING OFF THE PORT OF L.A. AND LONG BEACH. BUT THEIR WORDS CAN SOMETIMES CHANGE PERSPECTIVE DOWN THE ROAD , SO I THINK THE JAWBONING ASPECT OF WHAT THE FED DOES I THINK WILL CONTINUE TO BE IMPORTANT. JONATHAN: LIZ ANN SONDERS, CHARLES SCHWAB CHIEF INVESTMENT STRATEGIST. TRYING TO STAY UP TO SPEED WITH WHAT IS HAPPENING IN THIS MARKET. FUTURES ARE DOWN 47 ON THE S & P, DOWN MORE THAN 1%. THE NASDAQ 100 IS DOWN BY ALMOST 1% AS WELL. LOOKING AT APPLE, JUST ABOUT HOLDING ONTO GAINS. STILL POSITIVE, BUT SESSION LOWS UP TO 15%, EVEN WITH SOLID NUMBERS. LISA: PEOPLE SAYING WE WILL BE RESCUED BY THE FUNDAMENTALS, AND IF THE FUND MENTAL'S COULDN'T RESCUE THIS NAME, WHAT WILL? THIS RAISES CONCERN HEADING INTO AN EARNINGS SEASON THAT MIGHT NOT BE A STRONG AS WE SAW FROM APPLE. JONATHAN: LVMH IS DOWN 0.9%. I'M GETTING A LOT OF MESSAGES ABOUT THIS. THESE NUMBERS FOR MOST PEOPLE WERE BETTER THAN SOLID. THEY WERE GREAT. KAILEY: BLEW PAST EXPECTATIONS. A REALLY STRONG RECOVERY IN THE LUXURY SECTOR. YET IT IS NOT ENOUGH TO SEE A FIRM REWARD FOR THE SHARES. THEY STARTED THE DAY UP 5%, BUT AS WE SAW BROADER EUROPE ROLL OVER, THEY ARE ROLLING OVER AS WELL. JONATHAN: WE ARE TRADING SOFTER THIS MORNING. LET'S GET TO KRITI GUPTA FOR HER CHART OF THE DAY. KRITI: WE HAVE TO TALK ABOUT THE COMMODITY SECTOR BECAUSE WE ARE SEEING A LOT OF PRESSURE IN THE EQUITY MARKET, CERTAINLY IN THE BOND MARKET AS WELL, BUT YOU ARE NOT NECESSARILY SEEING THAT TRANSLATE INTO THE DOLLAR, WHICH CONTINUES TO BE STRONGER. THEREFORE, EVEN THE FACE OF COMMODITIES CONTINUING TO RISE, THAT BRINGS ME TO MY CHART OF THE DAY, WHICH LOOKS AT THE BLOOMBERG COMMODITIES SPOT INDEX, WHICH DOES NOT JUST INCLUDE OIL AND NATURAL GAS. IT ALSO INCLUDES THE LIKES OF WHEAT AND ALUMINUM. IN 2007, COMMODITIES HIT THAT PEAK RIGHT BEFORE THE 2008 CRASH. THE NEXT ONE WAS IN 2011. A LOT OF THAT HAD TO DO WITH THE RUSSIAN CROP CRISIS. RUSSIA AND UKRAINE TOGETHER MAKEUP 1/4 OF THE WORLD'S GRAIN EXPORTS, SO THIS WILL BE A KEY PIECE OF THE EQUATION FOR PRESSING AND A POTENTIAL INVASION INTO UKRAINE. THAT IS REALLY WHAT IS DRIVING THAT NEXT LEG HIGHER IN THE BLOOMBERG COMMODITIES SPOT INDEX, ONCE AGAIN TO A RECORD HIGH. JONATHAN: LET'S TALK ABOUT CRUDE. BRENT AT $90 PER GET WTI AT $87. JOINING US NOW, THE BRILLIANT ELLEN WALD, SENIOR FELLOW AT THE ATLANTIC COUNCIL. THE LAST TIME WE SAW CRUDE WEAR RATE IS AT THE MOMENT, YOU WOULD HAVE TO GO BACK TO OCTOBER 2014. THE MONTH AFTER THAT COME OF THE SAUDI'S STARTED THE MARKET SHARE WAR. ARE THE SAUDIS AND OPEC COMFORTABLE WITH WHERE CRUDE IS AT THE MOMENT? ELLEN: I THINK THEY DO BELIEVE CRUDE IS A BIT HIGH, PARTICULARLY FOR THE SAUDIS' LIKING. THEY HAVE BEEN MUCH MORE CONCERNED WITH THE COMFORTABLENESS OF CONSUMERS WITH THE OIL PRICE. THEY WOULD PROBABLY PREFER SOMETHING A BIT LOWER THAN WHAT WE ARE SEEING NOW, AS OPPOSED TO SAY IRAQ, OR EVEN A RON, WHICH -- OR EVEN IRAN, WHICH IS QUITE HAPPY WITH PRICES GOING AS HIGH AS THEY CAN GO. OPEC IS NOT THINK THESE PRICES ARE REALLY DUE TO FUNDAMENTALS. THEY ARE DEFINITELY CONVINCED THAT THIS IS MUCH MORE DUE TO SPECULATION IN THE MARKET, GEOPOLITICAL RISK, SO THERE IS NOT A WHOLE LOT THAT THEY FEEL THEY CAN DO. THEY ARE MEETING NEXT WEEK, AND IT IS VERY LIKELY THAT THEY ARE JUST GOING TO CONTINUE WITH THEIR VERY GRADUAL INCREASES IN PRODUCTION QUOTAS, BUT REMEMBER THAT JUST BECAUSE THEY SAY THEY ARE GOING TO INCREASE 400,000 BARRELS A DAY FOR NEXT MONTH DOES NOT MEAN THAT THAT OIL WILL ACTUALLY GO ON THE MARKET BECAUSE A LOT OF THE OPEC+ PRODUCERS ARE BASICALLY TAPPED OUT AT THIS POINT, AND WE ARE ONLY GOING TO SEE INCREASES FROM THE NATIONS THAT ARE ABLE TO INCREASE SUPPLY AT THIS POINT. LISA: THERE IS SO MUCH TO UNPACK. YOU WERE TALKING ABOUT HOW THEY DEFINITELY SEEMS TO BE A WISH FOR OIL PRICES TO BE LOWER BY SAUDI ARABIA, AND THEY CAN'T DO ANYTHING ABOUT IT. IS THIS BECAUSE OF SOME OF THE GEOPOLITICAL SPECULATION, OR BECAUSE OF EXACTLY WHAT YOU WERE JUST TALKING ABOUT, THAT THEY CAN SAY THEY ARE GOING TO RAMP UP PRODUCTION, BUT THEY WON'T ACTUALLY BE ABLE TO ACCOMPLISH IT BASED ON THAT TAPPED OUT DYNAMIC? ELLEN: I THINK IT IS BOTH. I THINK THERE IS NOW AN AWARENESS THAT EVEN IF OPEC+ SAYS WE ARE GOING TO INCREASE BY THIS AMOUNT, THAT THE ACTUAL AMOUNT ON THE MARKET WILL BE SOMEWHAT LOWER. I THINK IN DECEMBER, THEY WERE ONLY ABLE TO INCREASE BY 310,000 BARRELS PER DAY. WE HAVE NOT GOTTEN THE JANUARY NUMBERS YET, AND WE WILL HAVE TO SEE WHAT HAPPENS IN TERMS OF THE INCREASES, BUT THERE ARE DEFINITELY A BUNCH OF NATIONS TAPPED OUT, AND NO ONE IS REALLY COMPENSATING FOR THAT. THEY ARE ALL VERY MUCH ATTUNED TO STICKING WITHIN THEIR INDIVIDUAL QUOTAS. ON THE OTHER HAND, YOU'VE GOT A LOT OF SPECULATION BEING FUELED BY SOME OF THE FORECASTS FOR BIG BANKS, ALSO THE ENERGY CRISIS IN EUROPE, AND NOW YOU'VE GOT THE THREAT OF POTENTIAL SANCTIONS FOR RUSSIAN ENERGY THAT COULD REALLY THROUGH THE MARKET INTO A LOT OF CHAOS, SO THERE REALLY ISN'T MUCH THAT OPEC+ CAN DO ON THAT END. KAILEY: LET'S TALK ABOUT THE THREAT OF RUSSIAN SANCTIONS AS IT RELATES TO EUROPE. ENERGY IS NOT EXEMPTED FROM THAT. WHAT ARE THE RIPPLE EFFECTS? ELLEN: THIS IS I THINK REALLY WHAT IS DRIVING THE MARKET A BIT CRAZY RIGHT NOW, ESPECIALLY IN TERMS OF PRICES. THERE ARE NO ACTUAL SANCTIONS RIGHT NOW, BUT THIS POTENTIAL FOR SANCTIONS THAT THE U.S. AND SOME OTHER EUROPEANS, THERE'S A LOT THEY COULD DO TO LOCK UP THE WHOLE ENERGY SITUATION WHICH IS QUITE TIGHT AT THE MOMENT. THERE'S THE THREAT THAT IF THEY CUT RUSSIA OFF FROM THE SYSTEM, EUROPE WILL ESSENTIALLY BE CUT OFF FROM NATURAL GAS BECAUSE THEY WON'T BE ABLE TO PAY FOR IT. WE KNOW THE U.S. HAS BEEN TRYING TO TALK TO OTHER NATURAL GAS PRODUCERS TO GET THEM TO INCREASE PRODUCTION. IT IS REALLY AT THIS POINT TOO LITTLE, TOO LATE. IF YOU WANTED TO HAVE PLANS IN PLACE TO ESSENTIALLY REORIENT THE NATURAL GAS MARKET, YOU NEEDED TO DO THAT MONTHS AND MONTHS AGO. IT IS SOMETHING THE U.S. HAS ACTUALLY DONE IN THE PAST, BUT NOT SOMETHING YOU CAN REALLY COBBLE TOGETHER AT THE LAST MINUTE AND EXPECT THERE NOT TO BE A MASSIVE DISLOCATION IN THE MARKET. JONATHAN: THANK YOU. ELLEN WALD, SENIOR FELLOW OF THE ATLANTIC COUNCIL AND AUTHOR OF "SAUDI INC." UP 19% YEAR-TO-DATE FOR THAT INDUSTRY GROUP ON THE S & P 500. WE HAVE SEEN A TON OF PAIN, SOME REAL PAIN BENEATH THE SURFACE OF THAT INDEX, BUT THERE'S ONE INDUSTRY GROUP THAT STANDS OUT TALL AND PROUD. IT IS ENERGY EQUITIES. LISA: IT HAS WON FROM EVERY PERSPECTIVE, INVESTING IN THE RECOVERY STORY AS PEOPLE GET BACK TO NORMAL LIFE, AND YOU GET THE FORECAST FOR MORE TRAVEL. IT HAS ALSO BENEFITED BY THE CONFLICT WE HAVE SEEN WITH GERMANY AND RUSSIA AND UKRAINE, AND THE QUESTION OF WHERE OIL WILL COME FROM. I KEEP GOING BACK TO YOU HAD TO PREPARE FOR THIS EARLIER, WHICH GOES TO YOUR POINT, GERMANY'S FOREIGN POLICY. WHAT DOES THIS SAY ABOUT THEIR LEVEL OF PREPARATION? JONATHAN: GOING TO BE A TALKING POINT FOR A WHILE. LVMH WITH SOME FANTASTIC NUMBERS, TRADED 5% HIGHER AT THE OPEN IN EUROPE. IT IS NOW DOWN 0.6%. APPLE WITH SOME REALLY SOLID FIGURES. STILL POSITIVE IN THE EARLY TRADING, UP 2.7%, BUT THE NASDAQ IS NEGATIVE EVEN WITH THAT, DOWN 1% ON THE NASDAQ 100. > > THE HALLMARK OF THE FED IS THEY TALK A LOT TOUGHER THAN THEIR ACTIONS. > > WHAT IS CLEAR IS POWELL IS VERY DATA DEPENDENT ON THE RIGHT PATH. > > WE HAVE NOT HAD THE BALANCE SHEET AND QT TO CONTEND WITH, SO HISTORY IS MISSING THAT INGREDIENT. > > INFLATION IS THE THING THEY ARE AIMING AT RIGHT NOW. > > THEY ARE NOT GOING TO HIKE ENOUGH TO SLOW INFLATION. > > THIS IS "BLOOMBERG SURVEILLANCE" WITH TOM KEENE, JONATHAN FERRO, AND LISA ABRAMOWICZ. JONATHAN: THE CAT LOBBY IS SO POWERFUL. JUST TO BE CLEAR, I REALLY LIKE THEM. IT IS TOM THAT IS A LITTLE BIT SCARED OF THEM. HAVE WE CLEARED THAT UP? I THINK WE HAVE. FROM NEW YORK CITY THIS MORNING, GOOD MORNING. THE EQUITY MARKET DOWN 1% ON THE S & P. ON THE NASDAQ 100, DOWN 0.8%. WITH KAILEY LEINZ AND LISA ABRAMOWICZ, I'M JONATHAN FERRO. GET BACK TO THE FUNDAMENTALS, FOCUS ON THE EARNINGS. LVMH HAS BECOME A DIFFICULT STORY EVEN THOUGH THE NUMBERS ARE FANTASTIC. LISA: EVEN THOUGH YOU SEE THAT 40% GAIN FROM PREPEND OF AND COULD NOW, WHEN YOU LOOK AT SOME OF THE REVENUES, BUT THEN YOU LOOK AT APPLE, THE GAINS FADING IN OF A MANAGED SUPPLY CHAIN ISSUES AND POSTED AN AMAZING QUARTER. JONATHAN: YOU CAUGHT UP WITH DAN IVES OF WEDBUSH, THE BIG BULL ON THE EQUITY MARKET FOR NAMES LIKE APPLE. HE SAID YOU CAN FRAME THIS QUARTER. THE SINGLE NAMES JUST AREN'T RETURNING THE GAINS THAT SOME OF THESE ARE LOOKING FOR IN LIGHT OF THE NUMBERS THEY ARE DELIVERING. KAILEY: THAT IS A THING, THIS IS NOT JUST A SINGLE NAME. THIS IS APPLE, THE BIGGEST TIGHTEN IN THIS U.S. EQUITY MARKET. THOSE SHARES ARE HIGHER, BUT OFF SESSION HIGHS, AND IT IS STILL NOT ENOUGH TO PROVIDE A SENTIMENT LIFT TO THE TECH SECTOR MORE BROADLY, WHICH BRINGS US BACK TO THE QUESTION, HOW MUCH DO THESE FUNDAMENTALS MATTER IN AN ENVIRONMENT WHERE WE ARE TALKING ABOUT POTENTIALLY FIVE FEDERAL RESERVE RATE X NEXT YEAR IN REAL YIELDS THAT KEEP MOVING HIGHER? JONATHAN: IT BRINGS US BACK TO RATES, AND THAT IS WHY WE ARE LOOKING AT THE NASDAQ YEAR-TO-DATE ON 14% INTO FRIDAY, THIS MORNING DOWN ANOTHER 0.8%. AT THE FRONT END, A CLEAN BREAK OF 1.1 TO PRESENT IN THE LAST -- OF 1.20% IN THE LAST FEW DAYS. LISA: WE HAVE REALLY ACCELERATED WHEN IT CAME TO RATES, BUT IT RELATE TOOK A WILE FOR STOCKS TO CATCH UP, AND NOTHING HAS BROKEN. THIS IS WHAT PEOPLE KEEP POINTING TO FOR THE REASON THE FED PUT DOES NOT COME INTO PLAY. NOTHING IS BROKEN, EVEN AS YOU SEE A CORRECTION. JONATHAN: WE'VE GOT BIG TECH TAKING A DIP, AND WE LOOK AT THE BANKS, I THINK THAT IS WHAT SURPRISED SOME PEOPLE YEAR-TO-DATE. WELLS FARGO STILL UP, BUT AS AN INDUSTRY GROUP, NEGATIVE ON THE YEAR, EVEN WITH THE LIKES OF WELLS FARGO SAYING FIVE HIKES IN 2022, AND THAT IS NOT JUST WELLS. THAT IS NOW A CONSENSUS POSITION OF A LOT OF PEOPLE IN THIS MARKET. FIVE HIKES FOR THE YEAR, AND THE BANKS AREN'T DELIVERING GAINS. LISA: I THINK A LOT OF INVESTORS WEREN'T COUNTING ON SOME OF THE BONUSES AND COMPENSATION COSTS THE BANKS ARE HAVING TO PUT OUT. THEY ALSO DID NOT COUNT ON THE IDEA THE YIELD CURVE WOULD FLATTENING. THEY THOUGHT IT WOULD BE STEEPENING. THEY ALSO DIDN'T KNOW HOW MUCH LENDING COULD REALLY PICK UP, AND IT LOOKS LIKE IT IS GOING TO BE TOUGH TO GET TO THE LEVELS A LOT OF PEOPLE WANTED FOR THAT REVENUE. JONATHAN: ARE YOU READY TO TALK ABOUT GROWTH RISK? MORGAN STANLEY IS. LISA: I AM ALWAYS READY. JONATHAN: I KNOW YOU ARE. [LAUGHTER] DO YOU THINK THAT BECOMES THE CONSENSUS VIEW, THAT WE JUMP ACROSS FROM INFLATION SCARING, THE POLICY RESPONSE, TO IT IS GOING TO TIGHTEN GROWTH AND HIT GROWTH HARD? LISA: THIS IS TO YOUR COMMENT ABOUT WHAT WOULD YOUR MARKET CALL BE. THAT IS THE REAL QUESTION. IF YOU SEE GROWTH AND YOU EXPECT IT TO SLOW DOWN, DOES IT MAKE YOU MORE BULLISH ON MARKETS? IF USING THE FED IS GOING TO BACK AWAY FROM TIGHTENING, DOES IT MAKE YOU BEARISH BECAUSE WE ARE ENTERING INTO A NEW CYCLE? PERHAPS IT IS INDEPENDENT OF FED POLICY. JONATHAN: WE ARE DOWN 0.9% ON THE S & P. IF YOU LOOK AT THE FX MARKET, EURO-DOLLAR NEGATIVE FOR FIVE STRAIGHT SESSIONS. EURO-DOLLAR DOWN AGAIN BY A LITTLE MORE THAN 0.1%. OFF THE BACK OF THIS MOVE IN TREASURY YIELDS, UP FOUR BASIS POINTS ON TENS, UP A SIMILAR AMOUNT ON TWOS. TENS RIGHT NOW, 1.8463%. THE FED IS READY TO GO. THE ECB, NOT SO MUCH. LISA: WE ARE SEEING SLOWING GROWTH AND THE IDEA THAT INFLATION ISN'T NECESSARILY DRIVEN BY THOSE CHECKS PEOPLE GOT BECAUSE THEY DID NOT GET THOSE, AND THAT IS WHAT I THINK A LOT OF PEOPLE ARE POINTING TO FOR THE INFLATION IN THE U.S. JONATHAN: SAIRA MALIK JOINING US NOW, CHIEF INVESTMENT OFFICER AT NUVEEN. YOU LIKED THE ENERGY STORY. WE TALKED ABOUT IT QUITE A LOT THROUGH THIS -- THROUGH LAST YEAR. AS A P.M., WHAT DO YOU DO NOW? SAIRA: THE THREE KEY DRIVERS FOR ENERGY ARE STILL IN PLACE. THAT IS TIGHT SUPPLY, STRONG DEMAND, AND DISCIPLINE IN TERMS OF BEING DISCIPLINED IN VOLUME GROWTH. BUT LET'S TALK ABOUT HOW WE ARE POSITIONING FROM A GLOBAL POINT OF VIEW. IT REFINERS. THIS IS AN AREA THAT HAS LAGGED. REFINERS LAGGED BECAUSE THEY ARE MORE BASED ON BARREL GROWTH RATHER THAN HIGH OIL PRICES. SO I COMPANY LIKE BOLERO IS LOOKING INTERESTING TO US RIGHT NOW. THEY JUST REPORTED THE QUARTER, VERY GOOD POSITIONS, AND THEY ARE DISCIPLINED. THEY ARE RETURNING 40% TO 50% OF CASH FLOW FROM OPERATIONS TO SHAREHOLDERS. THEY STILL HAVE MORE UPSIDE THAN OTHER ENERGY STOCKS. PART OF THE STRONG YEAR-TO-DATE RETURNS, EVEN THOUGH IT IS OUR NUMBER ONE SECTOR OF THE YEAR, IS DUE TO THE RUSSIA-UKRAINE SITUATION. IF THAT STARTS TO SETTLE, THAT COULD SETTLE THE ENERGY CRISIS. THAT DOES KEEP US BULLISH ON ENERGY, BUT MORE SELECTIVE, LOOKING FOR THE LAGGARDS FOR THE REST OF 2022. LISA: HOW ACTIVELY ARE YOU MANAGING THE ENERGY PORTFOLIO GIVEN THE INCREASE IN PRICES AND GIVEN THE FACT THAT WE MIGHT HAVE BROUGHT FORWARD A LOT OF THE GAINS? SAIRA: FOR US IT IS ABOUT REMAINING OVERWEIGHT ENERGY. WE LOOK FOR THE ONES THAT HAVE BEEN LAGGARDS AT THE REFINERS. IT IS NOT ABOUT MOVING IN OR OUT OF ENERGY AS A SECTOR. WE THINK THERE'S GOING TO BE A LONG CYCLE HERE. WE ARE LONG-TERM INVESTORS IN THAT SENSE, BUT MAKING SURE WITHIN THE SECTOR WE ARE ADDING VALUE INTO THOSE AREAS. KAILEY: WHEN WE THINK ABOUT FINDING VALUE, VALUATIONS HAVE COME DOWN IN OTHER AREAS OF THE MARKET. WE HAVE SEEN A MOVE IN THE NUMERATOR. WHEN IT COMES TO THE E PART, WHAT ARE YOUR EXPECTATIONS ABOUT WHAT IS GOING TO HAPPEN TO MULTIPLES GIVEN THAT EARNINGS DON'T SEEM TO MATTER FOR THE MARKET, BUT IN THEORY, THEY MAKE A DIFFERENCE WHEN WE TALK ABOUT HOW MUCH YOU HAVE TO PAY FOR THESE COMPANIES? SAIRA: OUR VIEW IS THAT EARNINGS WILL START TO MATTER MORE BECAUSE THAT IS GOING TO BE THE KEY DRIVING MARKETS HIGHER THIS YEAR. WE ARE NOT COME TO NONE VALUATIONS. WE THINK THOSE WILL BE FLAT TO DOWN ON THE YEAR, BUT EARNINGS SHOULD START TO SHINE THROUGH, AND WE ARE SEEING THAT WAS COMPANIES LIKE APPLE TODAY. THE OTHER KEY FOR THE YEAR IS WHAT IS THE FED DOING. THEY ARE HAWKISH, BUT THAT DOES NOT NECESSARILY MEAN IT IS THE END OF THE BULL MARKET. THE ECONOMY AND STRONG EARNINGS SHOULD BE ABLE TO SHINE THROUGH. FROM A PORTFOLIO POSITIONING POINT OF VIEW, YOU NEED TO BE SELECTIVE. LOOK FOR THOSE COMPANIES IN THE TIGHT SUPPLY AND DEMAND SECTORS LIKE ENERGY, AND THEN TO DRY THOSE EARNINGS, THE MAIN LEVER IS GOING TO BE PRICING POWER, COMPANIES THAT HAVE THE PRICING POWER TO OVERCOME INFLATION WILL BE ABLE TO DRY THOSE EARNINGS, AND THEY SHOULD GET REWARDED THIS YEAR. IT IS NOT GOING TO BE A YEAR OF A RISING TIDE LIFTING ALL BOATS. IT IS GOING TO BE A VOLATILE YEAR. OVERALL, WE ARE STILL MODERATELY BULLISH BASED ON EARNINGS GROWTH. JONATHAN: LVMH IN THE NEWS THIS MORNING, NEGATIVE ON THE SESSION, POSITIVE AT THE OPEN. LAST YEAR IT HAD A MASSIVE YEAR, UP MORE THAN 40%. IN SOME WAYS, THE NUMBERS TODAY VALIDATE SOME OF THAT MOVE. FANTASTIC NUMBERS. CAN YOU TALK TO ME ABOUT SOME OF THOSE NUMBERS AND WHETHER YOU ARE POSITIVE ON THAT VIEW GOING FORWARD? SAIRA: WE ARE POSITIVE ON THE LUXURY NAMES. WE THINK THE LUXURY IS DRIVEN BY CONSUMER BALANCE SHEETS, WHICH ARE VERY STRONG. ONE THING WE LIKE ABOUT GLOBAL LUXURY PLAYERS IS IT HELPS YOU DIP YOUR TOE INTO CHINA, WHICH COULD BE BOUGHT A MAC AT THIS POINT -- WHICH COULD BE BOTTOMING AT THIS POINT. THESE ARE COMPANIES, NOT ONLY DOMINANT BRANDS WITH A LOT OF EXPOSURE TO THE RIGHT REGIONS OF THE WORLD, BUT YOU HAVE THE BACKSTOP OF THAT STRONG BRAND NAME THAT SHOULD CONTINUE TO DO WELL. LISA: EVEN AFTER THEIR EARNINGS, LVMH HAS STRUGGLED TO HOLD ONTO GAINS. WE SAW APPLE SHARES ALSO STRUGGLING TO HOLD ONTO GAINS, DOWN MORE THAN HALF FROM THE PEAKS OF THE INTRADAY SESSION. WHEN DO YOU START TO RETHINK YOUR THESIS ON WHERE YOUR PRICE TARGET IS, GIVEN THE FACT THAT THE MACRO BACKDROP IS SO DOMINANT? KAILEY: THE MACRO HEADWIND -- SAIRA: HE MACRO HEADWIND IS GOING TO BE AN ISSUE. THE OTHER THING FOR US IS THE SHORT-TERM VERSUS THE LONG-TERM. THIS MIGHT BE WHAT INVESTORS ARE SOMEWHAT STARTING TO FOCUS ON. THEY'VE HAD BLOWOUT GROWTH DURING COVID, WITH STRONG IPHONE SALES, IPAD SALES, MACS, BUT IF YOU LOOK AT THE LONG-TERM GROWTH RATE FOR APPLE, THESE PRODUCTS ARE AT MUCH LOWER GROWTH RATES EVEN IN THE MID-SINGLE DIGITS. SO HOW MUCH DEMAND HAS BEEN PULLED FORWARD BY THESE CONSUMERS IN TERMS OF APPLE DUE TO COVID? I THINK THAT IS THE ISSUE. ON THE OTHER SIDE, $200 BILLION TAX ON THE BALANCE SHEET, SPENDING OVER $20 BILLION JUST ON R & D. WE EXPECT THEIR HEADSETS TO COME OUT NEXT YEAR, WHICH HAVE AN ELONGATED DEMAND CYCLE. THERE'S A NORMALIZATION THAT IS GOING TO HAPPEN THERE, AND THAT COULD BE PART OF WHAT INVESTORS ARE STARTING TO SEE. THEN OF COURSE THE MACRO HEADWIND FROM THE FED AND THE MOVE AWAY FROM TECH STOCKS THEY NEGATIVE FOR THESE COMPANIES, AND THAT IS AN ISSUE OVERHANGING THE MARKETS. WE DON'T THINK WE ARE THROUGH IT YET. JONATHAN: SAIRA MALIK OF NUVEEN, WONDERFUL TO GO THROUGH THE MARKET WITH YOU. THANK YOU VERY MUCH. A COUPLE OF THINGS WE NEED TO GET THROUGH RIGHT NOW. A HEADLINE ON RUSSIA FROM THE PENTAGON, AND THEN I WANT TO TALK ABOUT THE FX MARKET. LET'S TALK ABOUT THAT LINE FROM THE PENTAGON PRESS SECRETARY MOMENTS AGO. KAILEY: JOHN KIRBY ON MSNBC SAYS SOME KIND OF RUSSIA INVASION COULD BE IMMINENT, AND IT DOES SEEM WE ARE SEEING A SPIKE IN OIL PRICES ON THE NEWS. UTI NOW TRADING AT 80 WTI NOW TRADING AT -- WTI NOW TRADING AT $87.74. IT SEEMS QUITE MURKY, BUT THE PRESS SECRETARY SAYING INDEED, AN INVASION COULD BE IMMINENT. THE QUESTION IS HOW IMMINENT IS THAT. ARE WE TALKING ABOUT MID-FEBRUARY, WHICH IS WHAT THE WHITE HOUSE SUGGESTED YESTERDAY? JONATHAN: WHEN IT COMES TO U.S. RATES, THAT IS THE SECOND HEADLINE I WANT TO TALK ABOUT. WE TALK A LOT ABOUT THE DOLLAR INDEX, HEAVILY WEIGHTED TOWARDS THE SINGLE CURRENCY. THE MORE BROADLY WEIGHTED DOLLAR INDEX, THE BLOOMBERG DOLLAR INDEX, THE HIGHEST SINCE JULY 2020. IT HAS BEEN BUILDING THROUGH THIS WEEK. LISA: IF YOU START TO GET FOUR, NOW FIVE RATE HIKES PRICED INTO THE MARKET, THAT WILL GIVE YOU SOME STRENGTH. HOW MUCH WE ARE PRICING IN AND HOW MUCH STRENGTH IT HAS TO GO I THINK IS A LOT OF WHAT ANALYSTS ARE TALKING ABOUT NOW. JONATHAN: THE BLOOMBERG DOLLAR INDEX HIGHEST SINCE 2020. ON THE S & P 500, DOWN BY 0.9 PERCENT RIGHT NOW. FROM NEW YORK, UP NEXT, DAN FLAX, SENIOR RESEARCH ANALYST AT NEUBERGER BERMAN. THIS IS BLOOMBERG. ♪ RITIKA: WITH THE FIRST WORD NEWS, I'M RITIKA GUPTA. RUSSIAN FOREIGN MINISTER SERGEI LAVROV SAID HE SAW SOME RATIONAL ELEMENTS IN THE U.S. RESPONSE TO RUSSIAN DEMANDS. PRESIDENT BIDEN WARNED UKRAINE'S PRESIDENT THAT A RUSSIAN ATTACK WAS POSSIBLE NEXT MONTH. THEY ALSO DISCUSSED WAYS THE U.S. COULD HELP UKRAINE'S ECONOMY. PRESIDENT BIDEN SAYS HE WILL FULFILL HIS CAMPAIGN PROMISE TO KNOW MAKE THE FIRST BLACK WOMAN TO THE SUPREME COURT. THE PRESIDENT SAYS HE WILL ANNOUNCE HIS CHOICE BY THE END OF FEBRUARY. JUSTICE STEPHEN BREYER HAS FORMALLY TOLD THE PRESIDENT HE WILL RETIRE IN JUNE OR JULY, ASSUMING A SUCCESSOR HAS BEEN CONFIRMED. IN LONDON, AND ACRIMONIOUS COURT BATTLE OVER CLAIMS OF FALSE ACCOUNTING HAS COME TO AN END. THE FOUNDER OF AUTONOMY CORPORATION LOST HIS FIGHT WITH HEWLETT-PACKARD. HP ACCUSED HIM OF INFLATING THE VALUE OF AUTONOMY PRIOR TO HP'S $11 BILLION TAKEOVER IN 2011. HP IS SEEKING $5 BILLION IN DAMAGES. HE FACES FOUR CHARGES IN THE U.S. CATERPILLAR REPORTED FOURTH QUARTER EARNINGS THAT BEAT ESTIMATES. INCREASED DEMAND AND HIGHER PRICES OFFSET THE IMPACT OF RISING COSTS. ANALYSTS EXPECT ORDERS TO KEEP IMPROVING AFTER YEARS OF LOW INVESTMENT BY THAT INDUSTRY. SHARES OF APPLE ARE HIGHER TODAY. FISCAL FOURTH QUARTER SALES AND PROFIT BEAT EXPECTATIONS, SEEN AS A VICTORY OVER THE SUPPLY CHAIN CRUNCH. MEANWHILE, APPLE FORECAST SALES WOULD GROW BY A DOUBLE-DIGIT PERCENT IN THE MARCH QUARTER. 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'M RITIKA GUPTA. THIS IS BLOOMBERG. ♪ ♪ > > APPLE REALLY FLEXED THEIR MUSCLES, NOT JUST WHEN IT CAME TO THE SUPPLY CHAIN, BUT OVERALL DEMAND. APPLE IS AT THE HEAD OF THE LINE. THEY HAVE A GREAT VIEW, PROBABLY BETTER THAN ANYONE ELSE. THE FACT THAT IT IS MODERATING GOING INTO THE MARCH QUARTER, THOSE ARE WORDS THAT ARE GOING TO BE HEARD AROUND THE WORLD FROM THE STREET PERSPECTIVE. BULLISH FOR TECH, AND THIS WAS A GOLDEN QUARTER FOR APPLE. JONATHAN: DAN IVES, WEDBUSH SENIOR RESEARCH ANALYST COME ON APPLE. WE ARE DOWN 0.8% ON THE S & P. WE ARE JUST OFF SESSION LOWS. IN THE BOND MARKET, UP THREE BASIS POINTS ON TENS. A FLATTER CURVE HAS BEEN THE STORY THROUGH MUCH OF THIS YEAR, BUT THE WHOLE CURVE SHIFTING HIGHER. TWO LINES FROM BANK OF AMERICA. HERE'S THE FIRST. "BUY ZERO CAPITULATION IN EQUITY POSITIONING AND BUY THE HUMILIATION." SEEMS TO BE THE STORY. [LAUGHTER] I JUST GOT OFF WITH MESSAGING FROM BANK OF AMERICA ON HOW MANY HIKES THEY HAVE FOR 2022. 25 BASIS POINTS AT EACH OF THE NEXT SEVEN MEETINGS. THIS IS WHAT THEY CALL A NIMBLE CENTRAL BANK, AND THIS IS WHAT A NIMBLE CENTRAL BANK DOES. LISA: THIS IS THE KEY ISSUE, HOW MUCH THEY CAN FRONTLOAD SOMETHING GIVEN THE FACT THAT THERE IS SO MUCH UNCERTAINTY ABOUT THE BACK HALF OF THE YEAR. BUT THE CONSENSUS NOW IS ALMOST FIVE RATE HIKES IN 2022 FROM JUST A COUPLE BACK LAST YEAR. JONATHAN: SPEAKING OF CALLS, WE ARE JUST GETTING A READOUT OF THAT CALL BETWEEN THE RUSSIAN AND FRENCH LEADERS. KAILEY: VLADIMIR PUTIN AND EMMANUEL MACRON SPEAK EARLIER THIS MORNING, AND SPEND THE -- AND APPARENTLY TOLD MACRON RUSSIA WILL STUDY THAT U.S. RESPONSE EARLIER THIS WEEK, BUT SAID THEY IGNORED A KEY ISSUE. WE WILL LOOK FOR DETAILS ON WHAT THAT WAS. THEY ALSO TALKED ABOUT SPECIFIC RUSSIA-FRENCH ISSUES LIKE ENERGY COOPERATION, BUT A LOT OF DIPLOMATIC BRANCHES BEING REACHED OUT. THE QUESTION IS, ARE WE GETTING ANY CLOSER TO A RESOLUTION AS TENSIONS SEEM TO BE ESCALATING? JONATHAN: APPLE UP BY A LITTLE MORE THAN 2%. LET'S TALK WITH DAN FLAX, SENIOR RESEARCH AND LICKS AT NEUBERGER BERMAN. CAN WE TALK ABOUT THE EARNINGS? YOU TELL ME WHAT YOU WERE SURPRISED BY, AND THE REACTION IN THE EQUITY MARKET. DAN: EARNINGS WERE SOLID ACROSS THE BOARD. I THINK WHAT WE ARE SEEING IS CONTINUED INNOVATION, VERY STRONG EXECUTION ACROSS PRODUCT CYCLES, AND THIS BROADENING OF THE REVENUE DRIVERS. WE SEE A HEALTHY FRANCHISE AND THE IPHONE. SERVICES IS VERY STRONG, AND THE WEARABLES IS JUST GETTING GOING. SO A LOT TO LIKE HERE. CLEARLY OVER THE NEXT YEAR, GROWTH WILL MODERATE GIVEN HOW STRONG IT HAS BEEN OVER THE PAST YEAR, AND THE SUPPLY CHAIN IS STILL GOING TO BE AN ISSUE FOR APPLE. LISA: ALTHOUGH THEY SHOWED THEY CAN MANAGE THE SUPPLY CHAIN DISRUPTIONS A LOT BETTER THAN MANY PEOPLE EXPECTED, AND EVEN THEIR OWN FORECASTS SEEMS TO INDICATE SIX MONTH AGO. DO WE HAVE A SENSE OF WHAT THEY HAVE DONE SO WELL OR DIFFERENTLY, AND HOW LONG THAT WILL BE A BUFFER FOR THEM GOING FORWARD? DANIEL: IT IS SOMETHING THE COMPANY HAS HISTORICALLY BEEN VERY EFFECTIVE AT THAT. TIM COOK AND MANY OF THE LEADERS HAVE BEEN DOING THIS CYCLE AFTER CYCLE THROUGH ALL SORTS OF ENVIRONMENTS. WE HAVE HAD TRADE FRICTION, WHICH HAS ALSO IMPACTED HOW APPLE HAS BEEN THINKING ABOUT SUPPLY, BUT I THINK WHAT IS IMPORTANT IS THAT IT IS DIFFICULT FOR APPLE OR ANY OTHER COMPANY TO OUTRUN IT, BUT IF YOU CAN PLAN AHEAD, WORK VERY CLOSELY WITH PARTNERS AND SUPPLIERS AROUND THE WORLD, WHICH IS WHAT APPLE IS CONTINUING TO DO EFFECTIVELY, THEY ARE ABLE TO GET MORE PRODUCTS INTO CUSTOMERS' HANS, -- CUSTOMERS' HANDS. BUT I THINK OVER THE NEXT YEAR, WE WILL SEE IMPROVEMENT. THE KEY IN MY VIEW IS THE INNOVATION AND THE PRODUCT CYCLE. IF THEY CAN EXECUTE ON THAT, THAT WILL BE MOST IMPORTANT DRIVING ADDITIONAL SHAREHOLDER VALUE OVER THE NEXT ONE TO TWO YEARS. LISA: THIS ALL SOUNDS GREAT, AND IT IS A STOCK THAT HAS DONE VERY WELL OVER THE PAST FIVE YEARS. IT IS DOWN 10% YEAR TO DATE. THIS MORNING, AFTER EARLIER POSTING GAINS, THE GAINS HAVE ERODED TO 1.7% AHEAD OF THE OPEN AFTER DELIVERING SOME OF THE EARNINGS. ARE YOU SURPRISED BY THIS? WHAT DO YOU THINK IT WILL TAKE TO CATALYZE PEOPLE TO UNDERSTAND DEFUND MENTAL STORY AS YOU SEE IT, IF THE EARNINGS PICTURE WAS NOT ENOUGH? DANIEL: IN TERMS OF THE PRICE ACTION THIS MORNING, THE MARKET LOOKS TO BE SET FOR A LOWER OPEN, AND APPLE HAS COME OFF ITS HIGHS IN THE AFTER HOURS. I THINK WHAT IS LIKELY TO PLAY OUT OVER THE NEXT YEAR IS THAT APPLE WILL CONTINUE TO DEMONSTRATE QUARTER AFTER QUARTER THAT IT CAN BRING NEW PRODUCTS TO MARKET, EXECUTE ON THE PRODUCT RAMPS, AND THAT WILL DRIVE GROWTH. I THINK THAT IS WHAT WE ARE GOING TO NEED TO SEE TO DRIVE SHARE PRICE OUTPERFORMANCE. IF THEY ARE ABLE TO DO THAT EVEN IN THE FACE OF HIGHER INTEREST RATES, WHICH OF COURSE ARE VERY LOW HISTORICALLY, IF THEY ARE ABLE TO DO THAT I DO EXPECT SHARES TO OUTPERFORM OVER THE NEXT ONE TO TWO YEARS. KAILEY: DO YOU THINK FUNDAMENTALS WILL MATTER MORE THAN THE RISK OF A RISING RATE ENVIRONMENT? DANIEL: I DO BECAUSE IF YOU LOOK HISTORICALLY, EVEN FOR RISING RATES OVER THE PAST 10 YEARS, APPLE HAS BEEN ABLE TO INNOVATE AND GROW, AND CLEARLY DELIVERED VALUE FOR ITS CUSTOMERS AND ULTIMATELY ITS SHAREHOLDERS. EVEN WHERE THE TENURE TO BE AT 3%, THAT IS STILL VERY LOW IN TERMS OF THE HISTORICAL CONTEXT. WHAT WE HAVE SEEN FROM APPLE IS THIS ABILITY TO INNOVATE, TO DELIGHT CUSTOMERS, TO REINVENT ITSELF. THIS REINVENTION IS REALLY KEY TO DRIVING VALUE FOR CUSTOMERS AND ULTIMATELY SHAREHOLDERS AS WELL. JONATHAN: DAN FLAX, AWESOME, AND GREAT TO CATCH UP WITH YOU. I KNOW YOU ARE SUPER BUSY AFTER APPLE REPORTS EARNINGS. I WANT TO TURN BACK TO THAT CALL FROM BANK OF AMERICA BECAUSE SINCE WE TALKED ABOUT IT ON THIS NETWORK, I'VE HAD A TON OF FEEDBACK. THEY SEE 25 BASIS POINT HIKES AT EACH OF THE NEXT SEVEN MEETINGS. THEY SAY THIS IS WHAT A NIMBLE CENTRAL BANK DOES. THAT IS THE CALL FROM BANK OF AMERICA. WE HAD A CALL FOR FIVE HIKES FROM WELLS FARGO. SARAH HOUSE AND THE TEAM DELIVERING THAT IN THE LAST 24 HOURS. WE GOT BACK TO THE BARCLAYS QUESTION THAT CAME OUT IN THE LAST 24 HOURS. ARE WE NEAR THE POINT OF MAXIMUM HAWKISH THIS AND POLICY MISTAKE FEAR? CAN YOU DO MUCH MORE THAN THE SEVEN HIKES THAT THE LIKES OF BANK OF AMERICA ARE TALKING ABOUT? LISA: HOW DO YOU PRICE IN THE BALANCE SHEET REDUCTION? FRANKLY, HOW DO YOU EVEN GAME THIS OUT WHEN YOU DON'T HAVE THE ECONOMIC DATA AND YOU DON'T HAVE FORWARD GUIDANCE BECAUSE FORWARD GUIDANCE HINGES ON SAID ECONOMIC DATA? JONATHAN: TO LISA'S POINT, ON THE BALANCE SHEET REDUCTION, WE STILL NEED SOME CLARITY ON THE START. WE STILL NEED CLARITY ON THE IMPACT. WE HAVE NO IDEA. KAILEY: DID YOU SEE THE NOTE OUT OF CREDIT SUISSE, TALKING ABOUT IT IS NOT JUST ENOUGH TO RUN IT OFF? IF THE FED REALLY WANTS TO TARGET SPECIFIC PARTS OF THE YIELD CURVE, THEY HAVE TO SELL ASSETS. THIS A CONVERSATION WE HAD WITH JOHN RYDING BREAN CAPITAL -- JOHN RYDING AT BREAN CAPITAL. JONATHAN: GOOGLE HAD THAT CONVERSATION NEXT WITH TORSTEN SLOK -- IT IS A CONVERSATION WE WILL HAVE NEXT WITH TORSTEN SLOK. LISA SAYS HE WILL NEED TO LOOK AT THE EMPLOYMENT COST INDEX. WE WILL DO THAT WITH MIKE MCKEE, JUST AROUND THE CORNER. ON TV AND RADIO, THIS IS BLOOMBERG. JONATHAN: CHAIRMAN POWELL HAS BROUGHT SOME ADDED IMPORTANCE TO ONE DATA POINT. WE ARE SECONDS AWAY FROM THE RELEASE OF THE EMPLOYMENT COST INDEX AND A HOST OF OTHER DATA POINTS. FUTURES DOWN .3% ON THE NASDAQ. YIELDS A LITTLE BIT HIGHER, UP ON TENS TO 1.84. MICHAEL: HERE WE COME WITH THE EMPLOYMENT COST INDEX FOR THE FOURTH QUARTER. ECI RISES 1%. COMPENSATION UP 4% FOR THE 12 MONTH PERIOD OVERALL. WAGES AND SALARIES UP 4.5%. IT WAS 4.2% IN THE THIRD QUARTER AND THAT IS WHAT JAY POWELL SAID WAS THE TWO BY FOUR THAT HIT THE VET OVER THE HEAD WITH REGARDS THEY MIGHT NEED TO GET GOING WITH TIGHTENING. FOR PRIVATE INDUSTRY THEY ARE UP 5%. WE ARE SEEING ACCELERATED WAGE PRESSURES IN THE ECONOMY. THE OTHER DATA OUT, PERSONAL INCOME AND SPENDING WHICH ALSO INCLUDES THE PCE COST INDEX. THAT IS THE INFLATION MEASURE THE FED FOLLOWS. THAT IS UP .4% ON THE MONTH WHICH IS BANG ON WITH EXPECTATIONS. ON A YEAR-OVER-YEAR BASIS IT IS UP 5.8%. THAT IS HIGHER THAN IT WAS THE PRIOR MONTH. THE COURT IS UP FOR QUITE -- .5%, IT IS UP 4.9% ON A YEAR ON YEAR BASIS, .2% HIGHER THAN THE PRIOR MONTH. SIGNIFICANT WAGE AND INFLATION PRESSURES IN THE ECONOMY AS OF DECEMBER. THE OTHER NUMBERS OUT THIS MORNING, PERSONAL INCOME UP .3%, DOWN FROM A .5% GAIN IN NOVEMBER AND SPENDING FELL 5.6% -- FELL BY .6% DURING THE MONTH. I WILL SEE WITH THE BREAKDOWN BETWEEN SERVICES AND GOODS ARE. SPENDING DOWN 1% WHEN YOU ADJUST FOR INFLATION. NOT A GOOD MONTH, DECEMBER, FOR SPENDING OR INFLATION OR THE FED, BUT NOW THEY ARE ON THE JOB. JONATHAN: YIELD STILL HIGHER ON THE 10 YEAR, 1.84. WE ARE OFF THE LOWS COME THE S & P DOWN .25%. LISA: IS IT BECAUSE THERE WAS A DISAPPOINTMENT THAT INFLATION WAS NOT RUNNING AS HOT AS PEOPLE EXPECTED WHEN IT COMES TO ECI OR DOES IT HAVE TO DO WITH THE FEELING THERE WILL BE STRENGTH? CORE PCE IS THE INFLATION METRIC THE FED LOOKS AT AND IT IS NOW THE HIGHEST LEVEL SINCE 1983 ON A YEAR-OVER-YEAR BASIS. THAT IS WHAT THE NEW DYNAMIC HAS ILLUMINATED. JONATHAN: IN THE MARKET THE QUESTION YOU'RE ASKING YOURSELF IS HERE WE ARE SET UP FOR THE FED TO MAKE A MOVE. I'M HEARING THE LIKES OF BANK OF AMERICA THROUGHOUT MAYBE SEVEN, AND I'M WONDERING WHERE THE UPSIDE SURPRISES COMING FROM THROUGH 2022. KAILEY: IT IS AN EXCELLENT QUESTION. I AM NOT SURE I HAVE THE ANSWER BUT I THINK THE WAGE NUMBERS WILL BE IMPORTANT. AS THE VET THINKS ABOUT INFLATION AND ITS DUAL MANDATE COINCIDING WITH THE LABOR MARKET WITH STUBBORNLY LOW PARTICIPATION, COMPANIES HAVING TO PAY MORE TO GET PEOPLE IN THE DOOR. THOSE WAGE NUMBERS WILL HAVE A PARTICULAR IMPORTANCE. JONATHAN: MICHAEL MCKEE, HAVE YOU GOT A FINAL WORD? MICHAEL: WE ARE SEEING A MAJOR CHANGE IN WAGES. BENEFITS WERE UP .9% DURING THE MONTH BUT NOT AS MUCH AS THE WAGE PRESSURE. IT IS COMING ON THE POCKETBOOK SIDE INTO THE ECONOMY, ALTHOUGH BUSINESSES HAVE TO MAKE UP THOSE COSTS SOMEHOW. WE EXPECT THAT IS ONE REASON THEY'RE RAISING PRICES. JONATHAN: THANK YOU. TORSTEN SLOK JOINS US NOW. LET'S START WITH A BIG QUESTION. HOW DOES THIS FED ENGINEER A SOFT LANDING? TORSTEN: WHAT THE DATA IS TELLING US -- OMICRON HAS PROBABLY PUT MORE PRESSURE ON WAGES AND INFLATION. THE BIG PICTURE IS AS INFLATION CONTINUES TO BE ELEVATED IT IS CRITICAL MARKET IS BEGINNING TO PRICE IN SO MANY HIKES. IF THE MARKET DOES PRICE FIVE OR SIX HIKES THE LIKELIHOOD WE WILL GET THAT SOFT LANDING THE FED IS TRYING TO ENGINEER GOES DOWN. LISA: WHY DO YOU SAY THAT? WE HAVE SEEN THE SELLOFF WITH RESPECT TO EQUITY MARKETS BUT IT HAS NOT BEEN COMPLETELY UNCONTROLLABLE AND THERE HAS NOT BEEN ANY SIGN OF MALFUNCTIONING INTO THE UNDERLYING MECHANICS OF THE MARKET. TORSTEN: THAT IS CORRECT. REMEMBER, WHAT IS THE GOAL FOR THE FED? THE GOAL IS TO TRY TO COOL DOWN GROWTH AND THAT ALSO INCLUDES TO TRY TO COOL DOWN REVENUE GROWTH IN CORPORATE AMERICA AND THAT IS VERY IMPORTANT WHEN WE THINK ABOUT IT FROM EQUITY PERSPECTIVE THAT THE FED'S GOAL IS TO TRY TO COOL DOWN AGGREGATE DEMAND. ONCE YOU DO THAT WITH MORE AGGRESSIVE RATE HIKES IT DOES RAISE THE RISK -- SUCH AS HOUSING, OR PSYCHOLOGY PLAYS AN IMPORTANT ROLE. IT DOES BECOME MORE DIFFICULT TO MICROMANAGE THE SOFT LANDING THEY ARE TRYING TO ACHIEVE. LISA: GEORGE CEBALLOS PUT OUT A NOTE TALKING ABOUT TRYING TO MICROMANAGE -- TRYING TO MANAGE EXPECTATIONS -- PEOPLE ARE EXPECTING THE RATE HIKES TO BE KICKED IN AND VERY SLOW GROWTH AFTER THAT. HE IS SAYING THE BEST THING THAT COULD HAPPEN IS FOR INFLATION TO MATERIALLY SLOW DOWN, THE LABOR MARKET TO IMPROVE AND GROWTH TO PICK UP, OTHERWISE WE COULD BE HIKING INTO A WEEK CYCLE. WHAT IS YOUR OPINION ON THAT? TORSTEN: THAT IS A RISK. THE BOTTOM LINE IS GROWTH -- YOU HEARD JAY POWELL A FEW DAYS AGO -- HE DID NOT SEEM TO WORRY ABOUT A SLOW DOWN. WHEN OMICRON BEGINS TO SUBSIDE WE WILL HAVE STRONGER GROWTH AND CONSUMPTION, STRONGER GROWTH IN CAPEX, MORE PEOPLE TRAVELING AND GOING TO RESTAURANTS. ALL THAT SHOULD BE GENERATING MORE GROWTH. FROM THE FED PERSPECTIVE, IT IS CLEAR THEY DO NOT SEE A WORRY IN TERMS OF THE SLOW DOWN. KAILEY: WE ALSO HAVE TO KEEP IN MIND WE ARE GETTING MORE DATA LATER WITH CONSUMER CONFIDENCE AT 10:00 EASTERN TIME. WHEN WE THINK ABOUT THE CONSUMER AND THEIR PROPENSITY TO SPEND AND FUEL THE AMERICAN ECONOMY, ARE WE GOING TO SEE DEMAND EROSION BECAUSE OF REDUCED SENTIMENT BECAUSE OF INFLATIONARY PRESSURES THAT ARE NOT KEEPING UP AND THEREFORE SOME OF THE WORK WILL HAVE ALREADY BEEN DONE? TORSTEN: THIS IS VERY IMPORTANT. THERE IS A BIG QUESTION IN HOW MAIN STREET LOOKS AT INFLATION AND THE IMPACT, WHEREAS HOW WALL STREET AND MARKETS LOOK AT INFLATION. IF YOU LOOK AT INFLATION EXPECTATIONS AND BREAKEVENS, THEY HAVE STABILIZED. IF YOU LOOK AT THE UNIVERSITY OF MICHIGAN CONSUMER SENTIMENT, THAT IS AT THE LOWEST LEVEL IN 10 YEARS. IT IS BECAUSE PEOPLE WORRY ABOUT HOUSES BECOMING UNAFFORDABLE, CAR PRICES BECOMING UNAFFORDABLE. YOU ARE RIGHT THAT AT LEAST WHEN IT COMES TO THE CONSUMER, HIGH INFLATION IS AT RISK OF BEING MORE CONTRACTIONARY. THERE ARE DIFFERENT WAYS INFLATION IS FEEDING IN, BUT IT LOOKS ALSO AT THE NEW YORK FED SURVEY OF HOUSEHOLDS IS WHAT INFLATION WILL BE IN ONE YEAR OR THREE YEAR. THE ANSWER TO THAT IS INFLATION IN THREE YEARS WILL BE 4% IN ONE YEAR IT WILL BE 6%. THOSE NUMBERS TELL YOU MAIN STREET HAS ESTIMATES OF INFLATION ABOVE THE FED TARGET. THERE IS A DIFFERENCE IN HOW INFLATION IMPACTS CONSUMERS. THE RISK IS IT COULD BEGIN TO BECOME MORE CONTRACTIONARY AND THAT IS WHY THE FED IS GOING, BECAUSE THEY DO NOT WANT INFLATION TO BECOME CONTRACTIONARY. KAILEY: WE HAVE BEEN TALKING A LOT ABOUT THE FED PUT, IF THE FED REALLY CARES ABOUT TURMOIL IN THE EQUITY MARKET, BUT ALSO TO CONSUMERS THAT IS REAL WEALTH THAT IS BEING LOST. HOW DOES THAT FACTOR IN? TORSTEN: THIS IS ALSO VERY IMPORTANT. LET'S SAY THE FED BEGINS TO BACK OFF. THEN THE FEAR WOULD BE INFLATION WOULD ULTIMATELY RUN HIGHER. AND FOR INFLATION DOES RUN HIGHER THE RISK WOULD BE INFLATION OR -- CONSUMER CONFIDENCE GOES DOWN MORE. THAT IS WHY THE DATA IS VERY IMPORTANT AND VERY INTERESTING BECAUSE THIS BECOMES VERY RELEVANT. HOW ARE CONSUMERS GOING TO REACT IF INFLATION CONTINUES SO HIGH? THE MAINSTREAM MEDIA IS ALSO REPORTING AS THE FIRST NEWS ITEM, INFLATION. IT SHOWS YOU HOW CRITICAL INFLATION AND INFLATION EXPECTATIONS ARE. THE FED DOES NOT HAVE THE LUXURY OF DOING A FED PUT IN SAYING ALL MARKETS ARE OF LITTLE BIT. THE WAY THE FED LOOKS AT THIS IS TO LOOK AT FINANCIAL CONDITIONS. IF I LOOK AT MY BLOOMBERG FINANCIAL CONDITIONS INDEX, IT STILL HAS NOT TIGHTENED THAT MUCH. IT IS STILL ACCOMMODATIVE AND SUPPORTING GDP. THE CONCLUSION IN MY VIEW IS FINANCIAL CONDITIONS HAVE NOT TIGHTENED ENOUGH. THAT IS WHAT JAY POWELL WAS SAYING EARLIER THIS WEEK. JONATHAN: WHAT TELLS US WHERE THE NEUTRAL RATE IS? IS IT THE MARKET OR IS IT THE ECONOMY? TORSTEN: THIS IS LITTLE BIT OF A TANGENT HERE QUESTION, BUT IF YOU THINK AT HOW IT IS CALCULATED, THE MODELS THAT CALCULATE DO NOT HAVE THE STOCK MARKET. WHEN THE FED TALKS ABOUT FINANCIAL CONDITIONS, THEY WOULD LIKE TO TIGHTEN FINANCIAL CONDITIONS, THERE SLOWING DOWN GROWTH IN THE ECONOMY AND SLOWING DOWN CORPORATE EARNINGS. THE WAY WE CALCULATE WHAT THE RATE WOULD BE DOES NOT INCLUDE THOSE PARTS OF THE REAL WORLD. THE ANSWER TO YOUR QUESTION IS THE BEST GUIDANCE FROM THE TERMINAL RATE, WHICH IS 2.5% OF THE FED FUNDS RATE. THAT IS A GOOD GUESS AT THE MOMENT. IF INFLATION DOES TAKE OFF TO THE UPSIDE, WE COULD DEAL WITH A HIGH NUMBER. JONATHAN: THE WORD CALCULATION IMPLIES A SCIENTIFIC EFFORT AND THE WORD GAS IS CLOSER TO THE TRUTH -- THE WORD GUESS IS CLOSER TO THE TRUTH. REMEMBER THE LINE FROM CHARIMAN POWELL AND 2018, I THINK WE ARE A LONG WAY FROM NEUTRAL. I THINK WE ARE THERE. LISA: MAYBE NOT. JONATHAN: THE MORE YOU TALK ABOUT IN MARKETS, THE MORE YOU TALK ABOUT THE FEDERAL RESERVE DOING 5, 6, SEVEN, THE LESS ACHIEVABLE IT BECOMES BECAUSE THE MARKET DOES THE TALKING. LISA: I KEEP GOING BACK TO CREDIT AND CREDIT NOT NECESSARILY BEING A LEADING INDICATOR. IF CREDIT DOES SELLOFF THE FED WILL HAVE MORE OF A PUT FOR CREDIT. THAT IS A COMPELLING IDEA THAT WE'VE NOT SEEN THEM PRICE IN SEVEN RATE HIKES IN THE CREDIT WORLD. JONATHAN: COMING UP IN ABOUT AN HOUR, A FASCINATING CONVERSATION. TOP DOWN WITH MOHAMED EL-ERIAN, BLOOMBERG OPINION COLUMNIST AND GRAMERCY FUNDS CHAIRMAN, ALONGSIDE ROBERT CUMMINGS BURKE. IF YOU WANT TO HEAR ABOUT EF, WE WILL DO THAT IN ABOUT AN HOUR. NEW YORK CITY, THIS IS BLOOMBERG. RITIKA: THE U.S. IS BRACING FOR A POWERFUL SNOWSTORM. BOSTON AND NEW ENGLAND ARE EXPECTED TO TAKE THE BRUNT OF IT, GETTING UP TO 16 INCHES OF SNOW. WASHINGTON, THE NEW JERSEY COAST, NEW YORK CITY -- TRAVEL IS LIKELY TO BE AMASSED. THE STORM IS THOUGHT TO INTENSE SO RAPIDLY IT COULD BECOME A BOMB CYCLONE. PANDEMIC RESTRICTIONS ARE TAKING A TOLL ON CONFIDENCE AND THERE ARE GROWING FEARS GERMANY IS HEADING FOR ITS SECOND RECESSION SINCE THE CRISIS BEGAN. GERMANY'S OUTPUT FELL .7%. IT IS MORE THAN TWICE WHAT ECONOMISTS HAD EXPECTED. IN THE U.K. GOVERNMENT INVESTIGATION INTO PANDEMIC PARTIES IN BORIS JOHNSON'S OFFICE -- POLICE ARE CONDUCTING THEIR OWN INVESTIGATION. A WATERED-DOWN PROBE WOULD BE HELPFUL FOR JOHNSON. HE IS TRYING TO CONVINCE HIS CONSERVATIVE COLLEAGUES NOT TO A LEADERSHIP CHALLENGE. -- IF THERE IS AN ATTACK ON UKRAINE. SANCTIONS WOULD DRASTICALLY CUT TECHNOLOGY AND FINANCIAL TRANSFERS FOR GAS FACILITIES. THERE WAS A DISAPPOINTING SET OF FOURTH-QUARTER PROFITS AT CHEVRON. THE OIL GIANT FAILED TO TAKE IT VANTAGE OF ENERGY PRICES. CHEVRON SAYS THE UPSTREAM BUSINESS AND REFINING NETWORK FELL SHORT OF EXPECTATIONS. THE COMPANY IS EXPECTEDLY -- ESPECIALLY VULNERABLE TO GYRATIONS IN THE MARKET. GLOBAL NEWS 24 HOURS A DAY, ON AIR AND ON QUICKTAKE BY BLOOMBERG, POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN MORE THAN 120 COUNTRIES. > > THERE ARE NO ACTUAL SANCTIONS RIGHT NOW, BUT THE POTENTIAL FOR SANCTIONS, THERE IS A LOT THEY CAN DO TO MUCK UP THE ENERGY SITUATION WAS IS QUITE TIGHT. IF THEY CUT RUSSIA OFF FROM THE SYSTEM, EUROPE WILL ESSENTIALLY BE CUT OFF FROM NATURAL GAS BECAUSE THEY WILL NOT BE ABLE TO PAY FOR. LISA: BRILLIANT PERSPECTIVE FROM ELLEN WALD SPEAKING EARLIER. WE SEE OIL PRICES CLIMBING TO SESSION HIGHS. CRUDE ON THE NYMEX NOW $88.21. IT MARKETS YOU CAN SEE WHIPPY ACTION. THE NASDAQ NOW POSITIVE AFTER A DOWNSIDE SURPRISED. THE COST INDEX WAS A KEY FEATURE THE FED WAS LOOKING AT. THE S & P STILL LOWER .1%. VOLATILITY IS DRAMATIC AT A TIME OF SUCH LITTLE UNCERTAINTY WITH RESPECT TO FED POLICY. RIGHT NOW UNCERTAINTY ON INTERNATIONAL RELATIONS WITH THE CONFLICT BETWEEN RUSSIA, THE U.S., THE ALLIANCE BETWEEN U.S. AND EUROPE. JOINING US IS PROFESSOR OF INTERNATIONAL RELATIONS OF THE LONDON SCHOOL OF ECONOMICS. I HAVE TO SAY, I AM LOOKING AT ALL THE NOISE WE KEEP GETTING OUT OF BOTH SIDES. WHAT DOES VLADIMIR PUTIN WANT? PETER: GOOD TO BE WITH YOU. I SEE THIS IS A CLASSIC RUSSIAN MOVE DESIGNED TO IMPROVE ITS GEOPOLITICAL POSITION BY SEWING DIVISION AND THE WEST AND SHORING UP DOMESTIC LEGITIMACY. SOVIET LEADERS PLAY THIS CARD OFTEN DURING THE COLD WAR. LITTLE INTERNATIONAL SUCCESS. THE QUESTION IS WHY NOW. THE ANSWER IS BECAUSE THE WEST IS IN A BIT OF A FUNK. KEY WESTERN LEADERS ARE IN POLITICAL TROUBLE. BIDEN'S APPROVAL NUMBERS ARE LOUSY. FORREST JOHNSON IS UNDERWATER, FACING A POSSIBLE NO-CONFIDENCE VOTE. EMMANUEL MACRON IS UP FOR ELECTION IN APRIL WITH SHAKY PROSPECTS, AND THE NEW GERMAN GOVERNMENT IS INTERNALLY DIVIDED ON FOREIGN POLICY MATTERS, INCLUDING HOW TO DEAL WITH RUSSIA. VLADIMIR PUTIN IS BETTING THIS IS AN OPPORTUNE MOMENT TO GET GREATER INFLUENCE OVER UKRAINE, STOKE DIVISIONS WITHIN NATO, AND WEAKEN AMERICA'S POSITION IN EUROPE. I THINK THAT IS WHAT IT IS ABOUT. LISA: DOES HE SEEM TO BE WINNING? PETER: THE FIRST MOVE WAS STRONG AND OVER-THE-TOP. MUCH DEPENDS ON HOW HE RESPONDS TO THE MORAL RESPONSE HE RECEIVED FROM BIDEN AND NATO EARLIER THIS WEEK -- THE ORAL RESPONSE HE RECEIVED FROM BIDEN AND NATO EARLIER THIS WEEK FOR HIS DEMAND FOR CARTE BLANCHE SECURITY DEALINGS. HE COULD RESPOND BY RATCHETING UP DIPLOMATIC PRESSURE. THERE'S A LOT OF CHATTER ABOUT THIS. CYBER WARFARE IN UKRAINE, OR WORSE, USE THE TROOPS. THE NEW YORK TIMES IS POINTING THERE ABOUT 130,000 TROOPS ALONG THE BORDER. IF HE DOES THAT, I THINK IT IS LIKELY TO BACKFIRE BECAUSE IT IS LIKELY TO UNITE RATHER THAN DIVIDE AMERICA AND ITS EUROPEAN ALLIES AND MAKE IT VERY DIFFICULT FOR WESTERN LEADERS TO BACK DOWN. IN SOME CASES I THINK IT WOULD BE POLITICALLY ADVANTAGEOUS TO STAND TALL. THIS IS WHY THE SITUATION IS SO FRAUGHT. BOTH SIDES, IF THEY CAN GET THEMSELVES BOXED IN, BIDEN HAS TO BE CAREFUL, PUTIN HAS TO BE CAREFUL. KAILEY: LET'S TALK ABOUT PRESIDENT BIDEN. HOW HAS HE PLAYED HIS HAND SO FAR? PETER: HE HAS PLAYED A DIFFICULT HAND REASONABLY WELL. THERE HAS BEEN A HICCUP ALONG THE WAY. HE HAS BEEN CAREFUL NOT TO BOX IN VLADIMIR PUTIN OR HIMSELF. HE HAS REMAINED OPEN TO NEGOTIATING WITH VLADIMIR PUTIN EVEN WHILE HE HAS REJECTED DEMANDS AND PUT CONTINGENCY PLANS YOU BEEN REPORTING ABOUT, ECONOMIC SANCTIONS AND SO FORTH, IN PLACE IN CASE THE SITUATION RAPIDLY DETERIORATES. MEANWHILE HE HAS CONSULTED WIDELY WITH AMERICANS, GERMANY, AND ITS ALLIES. THIS IS A FAR CRY FROM WHAT HAS HAPPENED IN AFGHANISTAN. HE HAS MANAGED TO AVOID LOOKING TOO WEAK OR TOO BELLIGERENT. SO FAR HE HAS FOUND THE SWEET SPOT BETWEEN THAT. THERE IS SOME HARPING BY THE REPUBLICANS, BUT FROM MY LONDON PERCH THEY LOOK TOO INTERNALLY DIVIDED AND AS A RESULT A PRETTY -- THE BALL IS IN VLADIMIR PUTIN'S COURT. WE WILL HAVE TO SEE HOW BIDEN AND THE ALLIES HANDLE WHAT WILL BE A ROUGH SURF. KAILEY: HOW DO YOU THINK CHINA IS WATCHING US ALL OF THIS PLAYS OUT? PETER: WATCHING VERY CAREFULLY. I AM SURE THEY ARE SPENDING TIME SIZING UP THE U.S., THE GERMAN RESPONSE, THE BRITISH RESPONSE AND WHAT IT MIGHT MEAN IN THE ANCIENT THEATER. IN SOME WAYS THEY ARE IN THE CATBIRD SEAT WITH THIS BECAUSE THEY WATCHED VLADIMIR PUTIN DO ALL OF THE DIRTY WORK WITH RESPECT TO TRYING TO DIVIDE THE WESTERN ALLIANCE. THEY ARE ABLE TO SIT BACK AND GOT HIS BACK, PRESUMABLY. I THINK THEY ARE IN A POSITION, THEY PROBABLY DO NOT WANT VLADIMIR PUTIN TO DO THIS IN THE MIDDLE OF THE OLYMPICS, ALTHOUGH HE HAS A RECORD OF DOING STUFF AROUND THE OLYMPICS, AS HE HAS DONE BEFORE. IN GENERAL THEY ARE WATCHING THIS PLAY OUT. THEY ARE AT A POSITION WHERE THEY GET TO PLAY THE HONEST, OR TRYING TO PLAY THE HONEST BROKER. LISA: PETER TRUBOWITZ OF THE LONDON SCHOOL OF ECONOMICS ON THE SITUATION AS IT EVOLVES. OIL PRICES SURGING PAST $88, THE HIGHEST LEVELS WE HAVE SEEN IN THE U.S. AND EUROPE GOING BACK TO 2014 AS THIS CONFLAGRATION OR POTENTIAL CONFLAGRATION CONTINUES TO ESCALATE. KAILEY, I WANT TO GO BACK TO WHAT WE SAW IN TERMS OF THE ECONOMIC DATA. THE EMPLOYMENT COST INDEX, THIS IS WHAT TRIGGERS THE PIVOT WE FELL FROM THE FEDERAL RESERVE IN DECEMBER THAT THE SURGING COST FOR EMPLOYMENT WERE INDICATING SOMETHING DIFFERENT UNDER THE SURFACE. THEY CAME IN LESS THAN EXPECTED IT SEEMS AS THOUGH THIS IS ONE AREA PEOPLE ARE POINTING TO FOR A BIT OF A REBOUND, AND IN JUST AS MUCH TIME THAT REBOUND SEEMS TO HAVE FADED. KAILEY: FLUCTUATION IS THE NAME OF THE GAME THIS WEEK. HE SAW MORE OF A READTHROUGH INTO THE BOND MARKET AND THE FX MARKET WHICH SEEMS TO BE STICKING. THE DOLLAR HIT ITS HIGHEST LEVEL SINCE JULY OF 2020. IT HAS GIVEN BACK ALL OF THOSE GAINS. THESE LOOK LIKE MARKETS THAT CANNOT MAKE UP THEIR MIND AS THEY ASSESS THE OUTLOOK FOR FEDERAL RESERVE POLICY. LISA:'S FORWARD GUIDANCE DEAD AND WHAT WILL ACT AS FORWARD GUIDANCE AS WE LOOK AT A NEW INFLATIONARY ENVIRONMENT? COMING UP, UNIVERSITY OF MICHIGAN SENTIMENT DATA, AND ON WALL STREET WEEK STEPHANIE FLANDERS OF BLOOMBERG ECONOMICS ALONG WITH CHRISTINA UBER OF INVESCO, BARBARA AND BERNARD. DISCUSSING THE TUMULTUOUS WEEKS IN THE NASDAQ AND THE S & P.

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'Bloomberg Surveillance Simulcast' Full Show 1/28/2022

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