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00:00> > DISINFLATION WILL BE PERSISTENT. WAY ABOVE WHERE THE FED WANTS IT TO BE. > > I THINK THE MARKET HAS RACED AHEAD OF THE FED ANTICIPATING THE FED TO BE AGGRESSIVE IN THEIR ACTIONS. > > THE FED WILL NOT BACK AWAY BECAUSE THE MARKET IS TOUGH. > > RAISING INTEREST RATES WILL NOT SOLVE THE PROBLEM OF INFLATION. > > THIS IS "BLOOMBERG SURVEILLANCE" WITH TOM KEENE, JONATHAN FERRO COME IN LISA ABRAMOWICZ. TOM: JON FERRO, LISA ABRAMOWICZ, AND TOM KEENE FROM DAVOS. JON IS ON ASSIGNMENT, LISA AND I ARE HERE IN A CHANGED DAVOS. THE SHOCK OF MAY INSTEAD OF JANUARY AND OTHER IDEAS. YOU KNOW HOW THERE IS A TOKEN DRIVER. I AM THE TOKEN REST ARE. I WENT TO BED. YOU ARE UP PARTYING ALL NIGHT. LISA: THE DAVOS MOOD IS A LOT MORE QUIET SENT. THIS IS MY FIRST YEAR HERE. EVERYONE TALKS ABOUT THE WEATHER BEING FORMER AND FEWER PEOPLE ARE HERE. THERE IS ALSO A MORE SERIOUS TONE. NOT ONLY WITH THE BACKDROP OF UKRAINE, BUT ALSO MARKETS. YESTERDAY WE SAW A POP. TODAY WE ARE GIVING IT UP. PEOPLE ARE CONCERNED WHAT THEY'RE NOT SEEING AROUND CORNERS WITH THE CHINA SLOW DOWN. TOM: THE WAY WE ARE IN THIS BEAR MARKET -- JAMIE DIMON SALVAGED THE MARKET YESTERDAY. I THINK THAT IS TRUE. WE NEED SOMEBODY ELSE TO COME OUT AND GET GROWTHY ON US. LISA: THE FACT THAT ONE COMPANY OR ONE CO CAN MOVE THE MARKET SO MUCH -- TODAY PEOPLE WILL BLAME SNAP -- THEY CAME OUT WITH A LETTER SAYING THE BACKDROP IS DETERIORATING FASTER THAN EXPECTED. THE FACT THAT THINGS ARE MOVING SO QUICKLY ON ONE NAME AT A TIME SHOWS THE LACK OF CERTAINTY THAT IS DRIVING. TOM: I WILL TALK T -- I WILL CALL IT TWO GCALMER DAYS IN THE MARKET. TO MEET THE RECESSION WATCH IS STILL PART OF THE CONVERSATION. I FIND THE RECESSION WATCH BULLISH. -- THE RECESSION WATCH FOOLISH. LISA: WHY? MICHAEL: WE ARE ALL DOING THEM -- TOM: WE ARE ALL DOING THE MATH BUT RECESSION IS MORE COMPLICATED THAN THAT. LISA: CHRISTINE LAGARDE SAYING IT IS NOT INEVITABLE, OTHERS SAYING IT IS, INCLUDING THE CITIGROUP CEO. THESE ARE THE CROSS WINDS UNDERPINNING THE DISCUSSION. TOM: CAN WE SAY -- IN THE SKY? THERE WAS A WINDSTORM. THIS IS WHAT SAVED US YESTERDAY. LASTING FREEZE SPRAY. WE THANK THE SCHWARZKOPF PEOPLE. LISA: IT DID NOT SAVE US YESTERDAY BECAUSE OUR HAIR WAS WILD. LET'S TAKE A LOOK AT THE MARKET. YOU ARE SEEING THE NASDAQ IS GIVING UP THE GAINS FROM YESTERDAY, AT LEAST IN EARLY TRADING. YOU CAN SEE IT DOWN ALMOST 2%. THE S & P DOWN 1.3%. 39.22. THE EURO CONTINUING TO MAKE GAINS. THE REASON THAT IS INTERESTING, CHRISTINE LAGARDE SAYING SHE WILL NOT ACCELERATE THIS AND DRAWING A NUANCE BETWEEN SUPPLY-SIDE AND DEMAND-SIDE INFLATION SAYING THIS IS SUPPLY-SIDE DRIVEN AND DEMAND DOES NOT HAVE TO BE WHAT THEY ADDRESS. 10 YEAR YIELDS DOWN, BONDS UP. YOU'RE SEEING THAT 2.8%, NOT A HUGE MOVE. TODAY WE HAVE AMAZING GUESTS. TOM: AMAZING GUESTS. TWO DAYS IN A ROW. WHAT I'M LOOKING FOR FOR GLOBAL WALL STREET IS BOB PRINCE. LISA: WILL BE SPEAKING WITH BOB PRINCE OF BRIDGEWATER RIGHT NOW. WILL BE SPEAKING WITH GITA GOPINATH IN A MINUTE. ALSO THE CHIEF EXECUTIVE OFFICER OF MARRIOTT INTERNATIONAL. TOM: THIS IS VERY IMPORTANT AND WONDERFUL DAY FOR US TO START IN DAVOS WITH GITA GOPINATH OF THE INTERNATIONAL MONETARY FUND. SHE HAS LINKED ECONOMICS INTO THIS ONCE-IN-A-LIFETIME EVENT. WE ARE THRILLED SHE COULD JOIN US. YOU WILL BE WITH ME ON A PANEL TOMORROW ON GROWTH WHICH IS HUGELY ANTICIPATED BECAUSE OF YOUR ATTENDANCE. I LOVE WHAT YOU SAID TO THE INDIAN MEDIA, WHERE YOU JUST PUSHED BACK AGAINST THE RECESSION GLOOM. HOW DO YOU RESPOND TO MARKET PONDERINGS WHO WANTS READ A PAPER AND SAY A RECESSION IS COMING? HOW DO YOU RESPOND TO THAT? GITA: ON A GLOBAL RECESSION, WE ARE GETTING THAT QUESTION A LOT. OUR APRIL NUMBERS FOR GLOBAL GROWTH WERE 3.6%. AT THAT LEVEL, THAT IS A HEALTHY NUMBER FOR THE GLOBAL ECONOMY. THERE ARE HEADWINDS, THERE ARE MANY DOWNSIDE RISKS. TO SAY THAT THE GLOBAL ECONOMY, THERE IS A RECESSION, THAT IS PREMATURE. THAT SAID I THINK THE REGIONS OF THE WORLD THAT ARE GETTING HIT HARD, ESPECIALLY MORE RECENTLY. EUROPE IS SUCH A REGION. YOU COULD SEE COUNTRIES GOING TO TECHNICAL RECESSIONS. LISA: HERE'S THE PROBLEM FOR A LOT OF PEOPLE SEEING A GLOOMIER SIDE OF THINGS. SNAP CAME OUT AND SAID THE MACRO ECONOMIC BACKDROP IS DETERIORATING MUCH FACTOR -- MUCH FASTER THAN THEY HAD PREVIOUSLY EXPECTED. THIS IS SIMILAR TO OTHER THINGS WE HAVE SEEN. DOES THAT DRAW YOUR CONCERN, PARTICULAR WITH THE SLOWDOWN IN CHINA AND HOW MUCH THAT IS BLEEDING OVER? GITA: WE ARE GETTING NEWS THAT SHOWS MORE WEAKENING IN THE GLOBAL ECONOMY. ONE DATA POINT IS WHAT CAME OUT OF CHINA IN APRIL. APRIL NUMBERS WERE SIGNIFICANTLY WORSE THAN WE WERE EXPECTING. WE WERE SEEING INTEREST RATES GOING UP IN ALL OF THE MAJOR ECONOMIES IT IT IS CHANGING QUITE RAPIDLY, HOW MUCH OF AN INTEREST RATE WE WILL HAVE AND HOW QUICKLY. THERE ARE SIGNIFICANT DOWNSIDE RISKS. WE WILL ALWAYS BE FLAGGING THE FACT THERE WOULD LIKELY BE STOCKMARKET CORRECTIONS, VOLATILITY IN MARKETS, AND WE ARE SEEING THAT. LISA: ARE YOU COUNTING ON THE FED TO PAUSE IN SEPTEMBER WITH RATE HIKES TO ACHIEVE A MORE OPTIMISTIC SCENARIO? GITA: INFLATION IN THE U.S. IS BROAD-BASED. IT IS NOT ALL SUPPLY STORY. THERE IS AN IMPORTANT DEMAND COMPONENT. IT IS IMPORTANT FOR THE FED TO REIN IN INFLATION AS SOON AS POSSIBLE. EVEN WITH THE RATES IT IS TARGETING RIGHT NOW, FOR SOME TIME WE WILL BE IN NEGATIVE REAL INTEREST RATE TERRITORIES. THAT IS ACCOMMODATIVE FOR THE ECONOMY. I THINK THEY SHOULD NOT TAKE THE EYE OFF THE BALL IN TERMS OF BRINGING DOWN INFLATION. TOM: I NEED TO LINK IN THE IMF WORK. THE IMF DOES PRODIGIOUS WORK ON THIS. OUR ERIC MARTIN MAKES CLEAR HE IS STUDYING EGYPT AS ONE OF THE TEST TUBES OF THIS RIVET PRICE CHANGE WE ARE IN IN TERMS OF RICE AND WHEAT. INDIA HAS LED THE WAY WITH THE FIRST FEARS OF BLOCKAGE OF EXPORTS. WHAT IS THE IMF DOING TO GIVE CONFIDENCE TO NATIONS THAT ARE STRUGGLING WITH WHEAT AND RICE? GITA: THIS IS A MAJOR CONCERN FOR US. NOT JUST INDIA, BUT IF YOU LOOK AT FOOD EXPORTS, SINCE THE START OF THE WAR ABOUT 20 COUNTRIES HAVE PUT RESTRICTIONS ON FOOD EXPORTS, BE IT WHEAT OR PALM OIL OR OTHER PRODUCTS. WE WORRY A LOT ABOUT WHAT IS GOING TO HAPPEN WITH FOOD PRICES. IT IS ONE OF THOSE PRICES WHERE THERE IS MORE THAT WILL GO UP IN THE FUTURE THEN WE HAVE ALREADY SEEN, AND IT IS A MAJOR CONCERN. TOM: THE HISTORY IS THE DOMESTIC GOVERNMENT WILL COME TO THE RESCUE, FLATTEN PRICES. THE COST OF BREAD IN EGYPT HAS BEEN FLAT, AND SUBSIDIZE WHATEVER THE COMMODITY IS UNTIL IT BREAKS. HOW CLOSE ARE WE TO A BREAKING POINT OF THAT DOMESTIC SUBSIDY TO FEED PEOPLE? GITA: AFTER TWO YEARS OF A PANDEMIC, GOVERNMENTS AROUND THE WORLD, ESPECIALLY IN COUNTRIES LIKE EGYPT, DO NOT HAVE THE PHYSICAL SPACE TO PROVIDE WIDESPREAD REPORT -- WIDESPREAD SUPPORT. HOW MANY COUNTRIES ARE FACING A RAPID INCREASE IN IMPORT PRICES? THIS IS ONE OF THE TRACKERS WE HAVE. THIS IS A MAJOR CONCERN. LISA: HOW MUCH OF THIS IS A FAILING OF THE DEVELOPED WORLD FROM SUPPORTING UKRAINE MORE, FROM ACTUALLY PROVIDING MORE FINANCIAL AID IN ORDER TO GET SOME OF THOSE SUPPLIES TO THE REST OF THE WORLD? GITA: THIS IS A CHALLENGING ISSUE ABOUT HOW TO GET UKRAINE SUPPLY OUT OF UKRAINE. YOU CANNOT GET THE SHIPS TO TAKE WHEAT OUT. THINKING OF CREATIVE SOLUTIONS IN TERMS OF PUTTING THEM ON TRAINS AND SENDING THEM OUT, BUT THAT IS GOING TO TAKE A LOT MORE TIME. WE ARE ALSO SEEING THE EFFECTS OF CLIMATE CHANGE AROUND THE WORLD. ONE OF THE REASONS WHY INDIA HAS PUT ITS EXPORT RESTRICTIONS ON WHEAT IS BECAUSE OF POOR YIELDS AND BAD WEATHER. THAT IS ANOTHER BIG NEGATIVE. WE NEED TO TRY VERY HARD TO GET SUPPLY OUT AS MUCH AS POSSIBLE AROUND THE WORLD. LISA: GIVEN ALL OF THESE PRESSURES, HOW LONG WILL IT BE UNTIL WE GET INFLATION BACK TO A LEVEL THAT IS FAMILIAR PRE-PANDEMIC? GITA: IT IS DEPENDENT ON THE PART OF THE WORLD YOU ARE SPEAKING OUT, BUT IF YOU'RE TALKING ABOUT THE U.S. OUR PROJECTIONS IN APRIL HAD INFLATION STAYING ABOVE 2% INTO 2024. IT IS COMING DOWN WITH ALL THE INTEREST RATE INCREASES THEIR PROJECTED, INFLATION IS EXPECTED TO DECLINE. THE BIGGER HEADLINE IS IT REMAINS WELL ABOVE TARGET FOR QUITE A WHILE. TOM: I WANT TO GET OUT FRONT OF THIS WONDERFUL PANEL I AM DOING TOMORROW WITH YOU. GROWTH ECONOMICS IS TAKEN FOR GRANTED UNTIL YOU TAKE A COURSE IN GROWTH ECONOMICS AND YOU REALIZE WHAT ROBERT SOLOW DID IN 1957 BORDERS ON RELIGION. WE TAKE FOR GRANTED GROWTH. THE IMF DOES NOT. WHAT WE NEED TO DO TO SUSTAIN GROWTH GIVEN THREE ONCE-IN-A-LIFETIME EVENT? THE GLOBAL FINANCIAL CRISIS, THE MEDICAL PANDEMIC, AND THE WAR IN UKRAINE. HOW DO WE SUSTAIN GROWTH? GITA: IT IS A FACT THAT NOT MANY PEOPLE ARE AWARE OF THAT POST THE PANDEMIC, WHILE WE HAVE ADVANCED ECONOMIES PRETTY MUCH RETURNING TO PRE-PANDEMIC TREND, TO WHERE THEY WOULD HAVE BEEN IN THE ABSENCE OF THE PANDEMIC, THAT WAS A PROJECTION LIKELY TO HAPPEN IN 20232024, WE HAVE MANY DEVELOPING ECONOMIES THAT HAVE LARGE AMOUNTS OF SPARRING. FOR THAT INCOME GROUP THEY HAVE GDP ABOUT 5% BELOW WHAT THEY WOULD'VE HAD IN THE ABSENCE OF THE PANDEMIC. THIS DIVERGENCE IS SOMETHING WE PAY VERY CLOSE ATTENTION TO. WE HAD MUCH LESS FISCAL WHEREWITHAL TO PROVIDE THE KIND OF SUPPORT THAT WAS PROVIDED IN THE ADVANCED WORLD. VACCINATIONS CAME LATE TO THEM AND THEY ARE STILL NOT VACCINATED. MAJOR DEMAND PROBLEMS OVER THERE. ALL OF THESE AREAS NEED TO BE FIXED. LISA: WHAT JUST 3% GDP GROWTH IN CHINA MEAN FOR GLOBAL GROWTH? GITA: THAT WOULD BE A VERY DRAMATIC SLOWING DOWN. LISA: THAT IS THE UBS PROJECTION. GITA: TYPE C NUMBERS LIKE THAT COME OUT. WE HAD -- I HAVE SEEN NUMBERS LIKE THAT COME OUT. THE MOST RECENT NUMBER, THERE IS A LIKELY HOOD OF A DOWNRIGHT. 3% WOULD REDUCE THE GLOBAL GROWTH. A LOT TO PENCE UPON THE U.S. ECONOMY AND HOW GROWTH THERE STAYS. WE HAVE GROWTH PROJECTED AROUND 3.3% FOR THE U.S. ECONOMY, WHICH IS A VERY HEALTHY NUMBER COMPARED TO NORMAL YEARS. TOM: WE HAVE TO LEAVE. YOU BEEN VERY SUCCESSFUL. THE SUN HAS COME OUT IN DAVOS. WE HAVE SURVEILLANCE GOATS ON THE MOUNTAINSIDE. GITA GOPINATH OF THE INTERNATIONAL MONETARY FUND. STAY WITH US. > > WE HAVE THE NEGATIVE, THE ADVERSE, VARIOUS ALTERNATIVES ON THE BASIS OF HYPOTHETICALS SUCH AS A BOYCOTT OF OIL, INTERRUPTION OF GAS SUPPLY. THAT CLEARLY WOULD HAVE A SIGNIFICANT IMPACT ON THE ECONOMY. FOR THE MOMENT WE ARE NOT SENIOR RECESSION IN THE EURO AREA. TOM: CHRISTINE LAGARDE, THE FORMER TRADE MINISTER OF FRANCE AND NOW ECB PRESIDENT SPEAKING TO FRANCINE LACQUA. I REMEMBER THE DAY CHRISTINE LAGARDE LECTURED ME ON DO NOT MAKE JOKES ABOUT FRENCH BREAD. I WAS AT A FRENCH GOVERNMENT GATHERING AND THEY FLEW IN A BOOK -- A BUNCH OF FANCY BREAD PEOPLE FROM PARIS AND I MADE SOME KIND OF JOKE AND SHE LOOKED AT ME. LISA: WHAT DID YOU SAY TO GET THAT MORNING? IT WAS NOT UNWARRANTED. TOM: CHRISTINE LAGARDE HOLDING COURT IN DAVOS. WE WELCOME ALL OF YOU ON RADIO AND TELEVISION. TO GIVE YOU ONE MOMENT 15 YEARS AGO, I REMEMBER LOOKING DOWN THE LONG CORRIDOR WORK OF THE CONGRESS CENTER AT THE RICH AND THE FANCY WITH THE STRANGE THINGS IN THEIR HANDS. THEY WERE CELL PHONES. IT WAS BEFORE TWITTER, IT WAS BEFORE THIS, AND IT WAS BEFORE SNAP. SNAP IS HAVING A BAD DAY. LISA: SHARES DOWN ALMOST 30%. THE REASON I FIND THIS SO INTERESTING IS IT IS NOT JUST ONE COMPANY, THERE IS A LARGER STORY. THE CEO CAME OUT AND SAID THE MACRO ECONOMIC BACKDROP IS DETERIORATING MUCH FASTER THAN PREVIOUSLY EXPECTED, AND THIS ECHOES WHAT WE ARE HEARING FROM OTHER EXECUTIVES. HOW MUCH DOES THIS BE TO A SLOW DOWN THAT HAS NOT BEEN PICKED UP? MATTHEW BLOXHAM JOINING US NOW. WE ARE SEEING SHARES OF ALL SOCIAL MEDIA COMPANIES DROP ABOUT $100 MILLION IN MARKET VALUE. AT WHAT POINT IS THIS A BIGGER STORY? MATTHEW: I THINK IT ALREADY IS A BIGGER STORY. WE'VE BEEN HEARING ABOUT A SLOW DOWN IN THE ECONOMY FOR SOME TIME. THAT WILL AFFECT ALL OF THE BIG ADVERTISERS. YOU'RE SEEING MARGIN SQUEEZE ACROSS THE CPG UNIVERSE AND THAT WILL FLOW THROUGH TO PEOPLE LIKE SNAP WHO MAKE THEIR MONEY IN ADVERTISING. WHAT IS SURPRISING IS ADVERTISERS GET THEIR BUDGETS MORE TOWARDS SALES ACTIVATION. THEY WANT TO SELL AS MUCH AS THEY CAN. THAT IS THE KIND OF PLATFORM SNAP IS. THEY ARE FACING HEADWINDS FROM THIS TREND WITH APPLE. TOM: YOU OWN THE HIGH GROUND ON MAKING FINANCE AND REVENUE IN THE BUSINESS INTO THE ACTUAL SOCIAL MEDIA. DO WE LOOK AT ADS ON SOCIAL MEDIA? IS PART OF THIS THEY ARE LEARNING AND DISCOVERING THAT MAYBE ADS DO NOT WORK OR MAYBE WE DO NOT LOOK AT THEM LIKE I DO NOT LOOK AT THEM? MATTHEW: IS A BIG QUESTION. IT IS A QUESTION THAT HAS ALWAYS BEEN ABOUT ADVERTISING, WHAT IS THE 50% AFFECTED? I THINK THE INDUSTRY IS STILL STRUGGLING, EVEN THOUGH YOU GET A HUGE AMOUNT OF DATA WITH DIGITAL ADVERTISING. I THINK DIGITAL IS GENERALLY MORE EFFECTIVE THAN TV. TV IS A LOT MORE ABOUT BRAND BUILDING AND THE DIGITAL SPACE IS MUCH MORE ABOUT SALES ACTIVATION THE DOWNTURN. THAT WOULD BE HELPFUL TO A PLATFORM LIKE SNAP. THEY ARE CALLING OUT SUPPLY ISSUES. THERE ADVERTISERS DO NOT HAVE ENOUGH PRODUCTS. EVEN IF THERE IS DEMAND THE ADVERTISER IS PULLING BACK. TOM: I THINK WE HAVE AN AUDIO CHALLENGE THERE. THAT IS LIKE THE HELICOPTER YESTERDAY. LISA: I WONDER IF THAT WAS ONE OF THE GOATS EATING THE WIRES? THIS IS AN IMPORTANT POINT, THIS GOES TO SUPPLY CHAIN ISSUES. IF COMPANIES DO NOT HAVE WHAT TO SELL -- TOM: THAT IS TOO MACRO. LISA: I THINK THAT IS A BIG PART OF THIS. WILL BE SPEAKING WITH THIS GOES CHIEF EXECUTIVE OFFICER AND CISCO SAID THEY WOULD SELL MORE, THE DEMAND IS THERE, THE SUPPLY IS NOT. THEY WERE TALKING ABOUT THE CHINA BUSINESS. HOW MUCH IS THIS A BIGGER STORY CONSTRAINING ISSUES. TOM: IS ELON MUSK HAVING A GOOD DAY? LISA: I DON'T THINK SO. TOM: DO HAVE MATTHEW BLOXHAM BACK? HE IS BACK WITH US IN LONDON. WE WILL GO TO HIM BECAUSE HE KNOWS MORE. LISA: THAN US? TOM: THAT IS NOT SAYING MUCH. I LOOK FOR THE NEXT STEP FOR ALL OF THESE SOCIAL MEDIA EFFORTS. ARE THEY GOING TO COMBINE, ARE THEY GOING TO FIND BIG CAPITAL, WHAT IS YOUR CRYSTAL BALL ON WHAT THEY DO ONE YEAR OUT FOR YEARS OUT? MATTHEW: MERGING IS VERY DIFFICULT. LISA: WE ARE HAVING TECHNICAL DIFFICULTIES. TOM: WE NEED A GOOAT SHOT. LISA: THIS IS SOCIAL MEDIA TECHNICAL DIFFICULTIES. TOM: IF YOU'RE UNDERWATER, WE HAVE TABLES, WE ARE HARDWIRED TO GIVE US A MORE STABLE PRODUCT. PART OF THE HEART AND SOUL ARE THE SURVEILLANCE GOATS WHICH ARE RIGHT BEHIND US FEEDING. IT IS TYPICAL IN THE WINTER. THE CABLES WORKED IN THE WINTER. LISA: THERE ARE SOME SURVEILLANCE GOATS. TOM: WE CAN HEAR THEM. IT IS VERY FUNNY. THREE OF THEM CLOSED THE PIANO BAR LAST NIGHT. THERE THEY ARE. LET'S TALK ABOUT THE DOLLAR. DOLLAR RESILIENCY AND HOW THE PLUMBING OF THE SYSTEM FALLS APART. THEY ARE BEGGING FOR A WEAK DOLLAR. LISA: HOW MUCH IS WHAT WE HAVE SEEN OVER THE PAST COUPLE OF TRADING SESSIONS A PEAK? THIS IS WHAT JOHN AUTHERS IS SAYING THAT CHRISTINE LAGARDE GAVE UP EAT TO THE DOLLAR BECAUSE THE MORE SHE TALKED THE MORE THE EURO STRENGTHENED. SHE IS TALKING ABOUT BEING PATIENT, NOT GOING .5% THE WAY SOME ON THE ECB WERE CALLING FOR AND SHE DID REITERATE THE SENSE THEY ARE GOING TO GET TO ZERO, BUT THEY ARE NOT GOING TO GO AT AN ACCELERATED SPEED AND THEY DO NOT SEE THE SAME IMPATIENCE THE FED FEELS. TOM: THIS IS THE BACK STORY AND MAYBE THIS BE FRONT AND CENTER TOMORROW. MORE THAN ANY OTHER DAVOS EVERYONE IS LOOKING AT THE TIME CONTINUUM OF A WAR AND I HEAR NOBODY TALKING ABOUT A QUICK END TO THE WAR IN UKRAINE. THE IDEA OF STRETCHING OUT THE CENTRAL BANK CHAT WE HAVE. MAYBE THE PARLOR GAME YOU AND JON PLAY EVERY DAY IN NEW YORK WILL GET STRETCHED OUT. LISA: HOW DO YOU FEEL ABOUT THAT PARLOR GAME? TOM: I THINK THERE'S A LOT OF DYNAMICS AND A HUGE AMOUNT OF UNCERTAINTY LIKE GITA GOPINATH SAID. SHE DID MENTION THE FOOD CRISIS. LISA: THAT IS VERY DIFFICULT TO PARSE AND THAT IS VERY UNREAL THAT WILL LEAD TO SOCIAL UNREST WE'VE NOT SEEN FOR MORE THAN A DECADE. WITH RESPECT TO THE FED PARLOR GAME, IT IS NOT JUST THE FED. IT IS IMPORTANT BECAUSE THIS IS WHAT DIFFERENTIATES THE BULLS ADND BEARS. TOM: PLEASE STAY WITH US. WE WILL HAVE A DIFFERENT CONVERSATION WITH THE FORMER PRIME MINISTER OF IRELAND THAN WE EXPECTED WEEKS AGO. ONE OF OUR ALWAYS GREAT VISITS IN DAVOS WITH THE IRISH TRADE MINISTER. AN IMPORTANT CONVERSATION. TOM: GOOD MORNING EVERYONE. FROM THE WORLD ECONOMIC FORUM IN DAVOS. LISA ABRAMOWICZ AND TOM KEENE. JON FERRO ON ASSIGNMENT. SOMEONE JUST EMAILED IN AND SAID CAN WE USE THE GOATS IN THE NIELSEN SURVEY. WE WILL SEE. RIGHT NOW A DATA CHECK. TWO DAYS OF QUIESCENT MARKETS. LISA: YESTERDAY WE SAW A BIT OF A REPRIEVE. TOM: OIL BACK A LITTLE BIT. TURKISH LIRA TO 16. HUGE SYMBOLISM FOR MR. ERDOGAN. THAT'S A NICE BREAK THROUGH IT'S BEEN MANAGED AT A 16 LEVEL. WE HAVE WEAKER TURKISH LIRA TODAY IN THE JUMBLE KNOWN AS TURKISH POLITICS. WHICH IS NOTHING LIKE THE JUMBLE OF IRISH POLITICS. HERE'S HOW BAD IT IS FOR YOU. I'M GOING TO CALL YOU PRIME MINISTER BECAUSE MY MOTHER WOULD INSIST I DO. > > DEPUTY PRIME MINISTER. TOM: HERE'S HOW BAD IT IS FOR YOU ON TWITTER. WHY WERE YOU CORRECTED ON TWITTER SO ABRUPTLY? YOU WERE OUT ON TWITTER SAYING I WAS NOT AWARE OF THAT, I STAND CORRECTED, BECAUSE THEY WERE COUNTING PROTESTANTS AND CATHOLICS. YOUR NATIONS POLITICS RIGHT NOW IS AN ABSOLUTE TURMOIL. > > I DON'T THINK THAT'S THE CASE. WE HAVE A VERY STABLE GOVERNMENT THAT HAS BEEN IN OFFICE FOR OVER TWO YEARS AND WILL BE FOR ANOTHER TWO YEARS. THE ECONOMIC PICTURE IS QUITE STRONG. WE WILL PROBABLY HAVE RECORD LEVELS OF EMPLOYMENT BY THE END OF THE YEAR IF NOT NEXT YEAR. OUR TRADE FIGURES ARE BREAKING ALL RECORDS AND WE MAY EVEN BALANCE THE BOOKS. TOM: THE FEAR OF THE UNION OF NORTHERN IRELAND IN IRELAND IS YOU HAVE TO TAKE ON THE BURDEN THAT THE UNITED KINGDOM PAYS. THE BOTTOM LINE IS THE ANGST OF A TRAGEDIAN OF IRELAND. ARE YOU ANY CLOSER NOW TO A TRUE UNION OF IRELAND? > > IF THAT WERE TO HAPPEN, THAT WOULDN'T BE A FEAR. THAT WOULD BE AN ASPIRATION THAT WE HAVE. IT'S ENSHRINED IN THE CONSTITUTION. IT'S AN ASPIRATION I HAVE AS LEADER OF MY PARTY AND IT'S ALSO IN THE GOOD FRIDAY AGREEMENT IS SOMETHING THAT COULD HAPPEN. THE GOOD FRIDAY AGREEMENT IS THAT A BORDER POLE CAN ONLY HAPPEN IN NORTHERN IRELAND. IT CAN ONLY HAPPEN IN NORTHERN IRELAND IF THE ESTATE FEELS IT'S LIKELY TO PASS. DESPITE THE VERY GOOD RESULT THAT SINN FEIN SCORED IN THE ELECTION -- THERE'S BEEN A BIG GROWTH OF THE MIDDLE GROUND MADE UP OF CATHOLICS AND PROTESTANTS WHO JUST WANT NORTHERN IRELAND TO WORK. SO THERE'S A LOT OF TALK OF THINGS LIKE A BORDER POLE BUT THE TESTS ARE VERY CLEAR IN THE GOOD FRIDAY AGREEMENT AND THERE'S NOT A MAJORITY IN ANY OPINION POLL FOR UNIFICATION. THAT'S NOT TO SAY THAT IT'S NOT OUR ASPIRATION. IT IS SOMETHING WE NEED TO THINK THROUGH AND WORK OUT. AND TRY TO THINK THROUGH THOSE QUESTIONS, WHAT WOULD IT ACTUALLY LOOK LIKE. LISA: TALK ABOUT TRADE AND HOW IT'S HITTING RECORD LEVELS. > > I DON'T THINK WE HAVE BENEFITED FROM BREXIT. IT DEPENDS ON WHAT SECTOR YOU ARE IN. IT HAS BEEN VERY DIFFICULT FOR SOME SMALL BUSINESSES. WE HAVE ATTRACTED SOME FINANCIAL SERVICES FROM LONDON AND BECAUSE WE ARE IN THE SINGLE MARKET AND THEY ARE NOT IT'S BEEN GOOD FOR OTHER INVESTMENT LIKE THE TECH COMPANIES AND PHARMA COMPANIES FOR EXAMPLE. WE'VE HAD AN EXTRAORDINARY ECONOMIC PERFORMANCE DESPITE BREXIT AND THE PRINT -- THE PANDEMIC. IT REALLY IS DOWN TO OUR MODEL. REALLY TALENTED PEOPLE, POLITICAL STABILITY, TAX OFFERING THAT IS FAVORABLE AND NOW A BIT MORE CERTAIN THAN IT WAS IN THE PAST. IT'S THE WHOLE PACKAGE AND ECOSYSTEM. IT IS GOING WELL AND DOES GIVE US OUR ECONOMIC STRENGTH. LISA: HOW MUCH ARE YOU WILLING TO KICK UP YOUR NOTORIOUSLY LOW TAX RATE FOR CORPORATIONS IN RESPONSE TO SOME OF THE PUSHBACK YOU HAVE GOTTEN FROM THE U.S. AND OTHER NATIONS? > > THE REAL STRENGTH OF OUR TAX POLICY FOR INVESTORS AND BUSINESSES IS CERTAINTY. WITH THIS LOW TAX RATE, IT DOESN'T GO UP AND DOWN AS PART OF ECONOMIC CYCLES. WE KEPT AT THE SAME. IF YOU ARE MAKING THE 30 YEAR INVESTMENT IN IRELAND. LISA: HOLD ON A SECOND. THAT IS NOT WHAT COMPANIES SAY. THEY SAY THEY LIKE IT BECAUSE IT'S A LOT LOWER THAN IN OTHER COUNTRIES. DO THINK IT'S JUST THE STABILITY? > > IT'S BOTH. IT'S LOW AND CERTAIN. IF IT WAS HIGH AND CERTAIN, THAT WOULDN'T BE A GOOD THING. THE AGREEMENT THAT WE'VE MADE AND WE HOPE IT GETS THROUGH THE U.S. CONGRESS AND EUROPEAN GOVERNMENT AS WELL IS THAT WE WILL GO UP TO 15% FOR LARGE COMPANIES AND WE WILL AGREE TO HAVING THE BASE RECALCULATED. THAT WILL PROBABLY LEAD TO LOSS OF REVENUE FOR US. IF YOU ARE MAKING THE 20 OR 30 YEAR INVESTMENT, YOU KNOW AND I AND IT'S NOT GOING TO GO UP. TOM: YOU MENTION SOMETHING THAT'S PERCOLATING HERE IN DAVOS AND THAT IS TRADE AND INTERNATIONAL RECOVERY OR THE GAINS WILL GO TO THE ELITES. HE MENTIONED -- AND YOU MENTIONED THE CRUSHING HOUSING CRISIS. I AM AN EXPERT ON SAYING EVERY COUNTRY HAS THIS DISTRUST. HOW DO THE ELITES SPEAK TO THE BROAD MIDDLE CLASS ABOUT A RE-GLOBALIZATION WHERE THEY ARE NOT GETTING THE BENEFITS OF THE GAME? DO YOU DO IT THROUGH THE CHANNEL OF HOUSING? > > I THINK IT'S A RATHER POPULIST CONSTRUCT, THIS IDEA OF ELITES AND MASSES. SO IT'S NOT ONE THAT I WOULD PANDER TO VERY MUCH. BUT I DO THINK WE HAVE A PROBLEM IN THE WORLD AND IT'S NOT JUST IN IRELAND AS YOU POINT OUT. I THINK THE AVERAGE HOUSE PRICE IN NEW ZEALAND IS $800,000. THE PROBLEMS PEOPLE FACE IN SAN FRANCISCO AND SEATTLE. THERE IS A GLOBAL ELEMENT TO OUR HOUSING CRISIS. THERE ARE TWO THINGS WE CAN DO AND IT'S QUITE URGENT. ONE IS TO BRING WAGES UP. TO BRING WAGES MORE INTO LINE WITH WHAT PEOPLE NEED TO LIVE, WITHIN REASON OF COURSE. THAT'S WHY AN ISLAND WE ARE BRINGING IN A LIVING WAGE. WE HAVE A HIGH MINIMUM WAGE ALREADY, BUT WE ARE BRINGING IN NEW PROTECTIONS AROUND SICK PAY FOR EXAMPLE. BUT A HUGE DIFFICULTY THAT PEOPLE HAVE AND I CAN UNDERSTAND THE ANGER AND FRUSTRATION AROUND IT, PEOPLE IN THEIR 20'S AND 30'S AND EVEN 40'S WITH GOOD JOBS WHO CAN'T BECOME HOMEOWNERS. THAT'S A REAL PROBLEM FOR SOCIETY. IT'S AN INTERGENERATIONAL INJUSTICE. IT IS CAUSING PEOPLE TO TURN TO POPULISM. WE ARE DOING EVERY THING WE CAN TO INCREASE HOUSING SUPPLY. TOM: MY GRANDFATHER OF WALES AFTER THE THIRD SCOTCH WOULD TURN TO ME AND SAY TOMMY, NEVER FORGET THAT DUBLIN IS CLOSER THAN LONDON. WE ARE AT THE TURNING POINT OF THE QUEEN'S JUBILEE IN LONDON. THE CHALLENGES OF SCULLIN. THE SHOCKING ELECTION FOR WHATEVER REASON IN NORTHERN IRELAND AND SUCH. WHAT'S THE VIEW OF THE DISUNITED KINGDOM FROM DUBLIN? WHEN YOU LOOK AT BREXIT, WE LOOK IN SHOCK. JON FERRO REALLY IS UPSET. HE IS BRITISH. I DON'T KNOW IF YOU KNEW THAT AND HE'S VISCERALLY UPSET. GIVE US THE VIEW OF THIS DISUNITED KINGDOM FROM DUBLIN. > > THERE'S ONE THING THAT WILL NEVER CHANGE. IT'S NOT UNUSUAL FOR IRISH AND ENGLISH PEOPLE TO HAVE FAMILY IN EACH OTHER'S COUNTRIES. MY SISTER LIVES IN LONDON. MY NEPHEW AND NIECE ARE ENGLISH. IT'S NOT A FOREIGN COUNTRY AND WE HAVE BEEN VERY CLOSE FOR A LONG TIME. I WANT TO SEE A STABLE SUCCESSFUL UNITED KINGDOM THAT IS SURE ABOUT ITS PLACE IN THE WORLD. ONE OF THE REASON SO MANY PEOPLE ARGUED AGAINST BREXIT. WAS THAT POTENTIALLY IT WOULD WEAKEN THE UNION WITH SCOTLAND AND NORTHERN IRELAND. I THINK THAT'S SOMETHING THAT THOSE SUPPORT AND BELIEVE BREXIT WAS THE RIGHT DECISION NEED TO HAVE REGARD TO. THIS IS THE PROTOCOL THAT MEANS THERE'S NO HARD BORDER BETWEEN NORTH AND SOUTH. 59 OUT OF THE 90 PEOPLE ELECTED TO THE NORTHERN IRELAND ASSEMBLY A FEW WEEKS AGO DON'T WANT A REVOTE AND LONDON AND WESTMINSTER NEEDS TO THINK ABOUT THE CONSEQUENCES OF IMPOSING THINGS THAT PEOPLE DON'T WANT. LISA: THE THEME OF THIS PARTICULAR DAVOS IS RECESSION. WHERE ARE YOU IN TERMS OF SEEING THAT FOR EUROPE? > > ECONOMIC FORECASTS ARE AS ACCURATE AS WEATHER FORECASTS. PROBABLY LESS SO. CERTAINLY TALKING TO PEOPLE HERE IS THAT THE EUROPEAN UNION WILL NOT GO INTO RECESSION. THERE WILL BE A SLOWDOWN. WE HAVE FISCAL LEVERS. I DON'T THINK WE ARE FACING INTO RECESSION. BUT WHO KNOWS. WE CAN'T TAKE THAT FOR GRANTED. TOM: ALL I'M BEGGING YOU IS GET MORE FLIGHTS INTO DUBLIN, BECAUSE THE TAXES AT HEATHROW ARE OUTRAGEOUS. WE NEED MORE FLIGHTS. > > WE HAVE NO TRAVEL TAX. TOM: THERE IT IS, FOLKS. YOUR MESSAGE. THE FORMER PRIME MINISTER OF IRELAND AND IRISH TRADE MINISTER. PLEASE STAY WITH US. MARKETS TURNING SNAP DOWN NEAR 30%. WHAT IS SNAP? LISA: IT'S A SOCIAL MEDIA COMPANY. > > KEEPING YOU UP-TO-DATE WITH NEWS FROM AROUND THE WORLD. CHRISTINE LAGARDE SAYS THE CENTRAL BANK WON'T BE RUSHED INTO WITHDRAWING MONETARY STIMULUS WHILE IT FIGHTS INFLATION. SHE SPOKE TO BLOOMBERG IN DAVOS. SHE SAID THERE'S NO NEED TO PANIC THE BANK OF FRANCE GOVERNOR INSISTED THERE IS NO CONSENSUS FOR A HALF-POINT INTEREST RATE HIKE. KANSAS CITY FED PRESIDENT EXPECTS THE BANK TO RAISE INTEREST RATES TO 2% BY AUGUST. AFTER THAT MORE TIGHTENING WILL BE GUIDED BY HOW FAST INFLATION COOLS OFF. J.P. MORGAN CHASE AND UBS HAVE DOWNGRADED THEIR FORECAST FOR CHINA'S ECONOMIC GROWTH THIS YEAR. BOTH CITING THE IMPACT OF BEIJING'S COVID RESTRICTIONS. J.P. MORGAN REDUCES ITS ESTIMATE FOR CHINA'S GROWTH FROM 4.3% TO 3.7%. RUSSIA'S WAR AGAINST UKRAINE HAS MADE A GLOBAL FOOD CRISIS WORK BUT MOSCOW IS AMONGST THE BIGGEST WINNERS OF THE NEST. HELPING SEND WEIGHT PRICES TO NEAR RECORD HIGHS. RUSSIA KEEPS SHIPPING IT'S WHEAT A HIGHER PRICE. -- AN AGREEMENT COULD BE REACHED IN THE COMING WEEKS. GLOBAL NEWS 24 HOURS A DAY ON AIR AND ON BLOOMBERG QUICKTAKE POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN OVER 120 COUNTRIES. > > OUR APPROACH AS WITH EVERYTHING IN THIS RELATIONSHIP IS TO BE STRATEGIC. WE HAVE TO KEEP OUR EYE ON THE BALL IN TERMS OF HOW TO AFFECT THE REAL LINE THE U.S. CHINA TRADE AND ECONOMIC RELATIONSHIP. TOM: REPUBLICANS AND DEMOCRATS, THE ACCLAIMED KATHERINE TAI. SHE'S DOING A GREAT JOB WITH A REALLY INTERESTING POLITICAL SOUP AND TO BE HONEST, THIS IS IMPORTANT. AT THIS MEETING THERE IS AN UNDERSTANDING OF DAVOS, THE ELITE, GLOBALIZATION. AND THE REPUBLICANS AND THE DEMOCRATS DON'T AGREE WITH TRADE REPRESENTATIVE. LISA: RIGHT NOW THE TRADE REPRESENTATIVE IS SOUNDING A DIFFERENT NOTE THAT EVEN PRESIDENT BIDEN WHEN IT COMES TO LIFTING SOME OF THE TARIFFS ON CHINA, THERE IS SO MUCH CONCERN ABOUT HOW TO CATER TO THE GLOBALIZED ELITE, A LOT OF IT IS MAINSTREAM ECONOMICS AND THE POPULIST UPSWING OF BOTH PARTIES. BOTH DEMOCRATS AND REPUBLICANS THAT POLITICIANS ARE TRYING TO CATER TO. TOM: THE HELICOPTER IS FILMING. THEY ARE DOING DAILY SHOOTING. LISA: TELL ME ABOUT THAT STORY. TOM: THAT WAS LAST NIGHT WELCOME TO THE MEETINGS OF THE WORLD ECONOMIC FORUM. BUT WE ARE PAYING ATTENTION TO THE MARKETS. ANTHONY DWYER, CHIEF MARKET STRATEGIST. HE MORE THAN ANYONE WE SPEAK TO HAS LINKED A BULL'S TONE TO THE MARKET AND OPTIMISM WITH RECESSION AS SIGNAL. WONDERFUL TO CATCH UP WITH YOU TODAY. ARE WE FINALLY AT A POINT WHERE DWYER GOES BEARISH? > > COMING INTO THIS YEAR I WAS NEUTRAL. IT'S BEEN A WHILE SINCE I HAVE BEEN THE BIGGEST BULL AND THE REASON IS IT'S ALL ABOUT THE MONEY. YOU HAD A CRAZY MOVE HIGHER LAST YEAR. ULTIMATELY WE CAME INTO THE YEAR EXPECTING A TUMULTUOUS YEAR. WE CAME INTO THE YEAR LOOKING FOR A TUMULTUOUS YEAR BECAUSE OF THIS MONETARY TRANSITION. THEY MADE A CASE THAT THEY WERE GOING TO RAISE RATES AND THEY KEEP MAKING THAT CASE. UNTIL THEY STOP MAKING THE CASE WHICH MEANS INFLATION HAS TO COME DOWN, IT'S GOING TO BE A PRETTY DIFFICULT ENVIRONMENT. YOU CAN HAVE A BOTTOM. CONTINUING ON WITH WHAT'S HAPPENED OVER THE THE LAST COUPLE OF DAYS. MAYBE INTO EARLY SUMMER. LISA: YOU SAY WE ARE CLOSE TO A BOTTOM OF SORTS. TO FIND THAT BOTTOM AT A TIME WHEN MOST PEOPLE DO NOT SEE CAPITULATION YET. > > IN 1994, ALAN GREENSPAN WAS A LOT TOUGHER THAN ANYBODY THOUGHT HE WOULD BE IN THAT CAPITULATION DIDN'T COME UNTIL THE END OF THE YEAR. YOU HAD THE EARLY YEAR WASH ON A FED THAT WAS MORE AGGRESSIVE THAN ANYBODY THOUGHT. YOU COULD HAVE MADE THE SAME CASE IN 2000 OR 2018. IT BECOMES EXTREME. YOU HAVE EXTREME PESSIMISM AND OVERSOLD INDICATORS. WHAT YOU GET IS A SUMMERTIME BALANCE. WE ARE EMBARKING ON THAT BOUNCE BACK THAT CAN RECOUP SOME OF THE LOSSES. THEN YOU GET THE ECONOMIC REALITY OF WHAT HAPPENS WHEN THE FED IS SUPER AGGRESSIVE. THAT MEANS WE SHOULD HAVE THE FALL ALL. FROM THERE IT'S GOING TO DEPEND ON MONETARY POLICY. LISA: IT'S JUST ONE STOCK. THIS IS INDICATIVE OF THE ECONOMY MOVING FASTER THAN EVEN THE CEOS UNDERSTAND. HOW DO THIS? > > YOU ASKED THE PERFECT QUESTION. SORRY TOM. HERE'S THE SITUATION. TWO WEEKS AGO NEEL KASHKARI SAID BASED ON THE WAY MORTGAGE RATES HAVE GONE, WE HAVE MOVED ACCOMMODATION FASTER THAN WE GAVE IT IN 2020. THINK ABOUT THAT STATEMENT. TRILLIONS OF DOLLARS. SO YOU ADD TO THAT THE MOST RECENT CONSUMER CONFIDENCE CEO SURVEY. IT GOT HIT ON A YEAR-OVER-YEAR BASIS. IN THE UNIVERSITY OF MICHIGAN IS AS PESSIMISTIC AS IT'S EVER BEEN. SO SOMEBODY BETTER TELL EVERYBODY THAT'S TALKING ABOUT A GOOD ECONOMY, SOLID EMPLOYMENT, GOOD FUNDS IN THE BANK. SOMEBODY BETTER TELL THE CEOS AND THE INDIVIDUAL INVESTORS BECAUSE THEY ARE NOT SEEN IT. TOM: HERE'S A GUY THAT CAME OUT OF THE DORM ROOM. THAT'S PART OF THE OPTIMISM OF TECHNOLOGY. ARE YOU OPTIMISTIC THE ACCLAIMED FAANG STOCKS CAN ADAPT AND ADJUST TO THE NEW MONETARY SYSTEM THAT'S BEEN GIVEN TO US? > > ARE USED TUMULTUOUS. MULTI-SYLLABLES. HERE'S ANOTHER ONE. DIFFERENTIATION. IT'S GOING TO BE HELP COMPANIES MANAGE THROUGH A SLOWER MACRO BACKDROP. I THOUGHT THE INTERESTING COMMENT WAS HOW THE MACRO BACKDROP WAS WORSE. THAT'S WHAT THE CEOS ARE GOING TO HAVE TO DEAL WITH. WE ARE IN A LEVERAGE SYSTEM WITH EXCESSIVE DEBT AND TECHNOLOGICAL ADVANCEMENT. TECHNOLOGY ONLY IMPROVES ITSELF EXPONENTIALLY WITH SPEED. IT'S NOT LIKE THE INDUSTRIAL REVOLUTION. WE HAPPEN TO BE IN A VERY BAD INFLATION SITUATION PUTS THE FED IN A BOX WHERE THEY HAVE TO MAINTAIN THIS HIGHER INTEREST RATE ENVIRONMENT EVEN AS THE ECONOMY SLOWS. TOM: THANK YOU SO MUCH. GREATLY APPRECIATE IT. HERE ON THE OUTLOOK OF THE MARKET. AMY SAVED ME HERE. I DON'T SNAP A SNAP ON TOOLS. LISA: WHEN HAVE YOU EVER LOOKED -- USED SNAP ON TOOLS? TOM: HE PUT A HAMMER IN MY HAND, PEOPLE RUN. LISA: IT IS A SOCIAL MEDIA COMPANY SNAPCHAT. YOUR DAUGHTER DOESN'T USE SNAP CHAT? THE BIG TAKE FOR ME IS THE DIFFERENTIATION WITHIN BIG TECH. YOU HAVE THE HARDWARE PROVIDERS OF THE WORLD AND THEN YOU HAVE THE VERY ECONOMICALLY SENSITIVE ADVERTISING DRIVEN TYPES OF MODELS AND YOU START HEARING ABOUT NOT ONLY IS IT DEMAND AFFECTED, WHAT IF COMPANIES DON'T HAVE THE GOODS TO SELL WHY ARE THEY GOING TO ADVERTISE ALL THAT MUCH WITH IT. TOM: WHAT I THINK MR. MOYNIHAN WOULD SUGGEST IS THE REAL TECHNOLOGY FORWARDED FOR TECHNOLOGY COMPANIES IS FREE CASH FLOW. A LOT OF THEM DON'T HAVE FREE CASH FLOW. LISA: THEY ARE GIVING BONUSES TO EMPLOYEES BECAUSE RIGHT NOW OTHER THAN ACQUISITIONS, WHERE DO YOU INVEST AND HOW DO YOU INVEST. MORGAN STANLEY DID A SURVEY. MORE THAN HALF WERE VERY CONCERNED ABOUT INFLATION AND MORE THAN HALF WERE PLANNING ON CUTTING BACK DISCRETIONARY PURCHASES. TOM: FOR THOSE OF YOU ON THE RADIO, THE FOG HAS SET IN. WHAT DID HE SAY? YOU HAD A PERFECT QUESTION. LISA: I DON'T KNOW. > > WE ARE IN THIS NEW NORMAL WEAR INFLATION IS MUCH HIGHER THAN ANYONE EXPECT IT. > > THIS INFLATION IS GOING TO BE A PERSISTENT. WAY ABOVE WHERE THE FED WANTS IT TO BE. > > THE MARKET HAS RACED AHEAD OF THE FED. > > THE FED IS NOT GOING TO BACK AWAY BECAUSE THE MARKET IS TOUGH. THE FED IS GOING TO BACK AWAY BECAUSE INFLATION STARTS TO SLOW LATER IN THE YEAR. > > THIS IS BLOOMBERG SURVEILLANCE WITH TOM KEENE, JONATHAN FERRO AND LISA ABRAMOWICZ. TOM: GOOD MORNING EVERYONE. JON FERRO, LISA ABRAMOWICZ AND DOM -- TOM KEENE. THEY TWO IN DAVOS. INTERESTING MEETINGS MORE DIFFERENT THAN ANYTHING I'VE SEEN IN 18 OR 19 YEARS IN MAY. I WAS SPEAKING TO W EF OFFICIALS TODAY AND THEY DON'T WANT TO SAY YES FORMALLY WE ARE ON FOR JANUARY. LISA: THERE'S A DIFFERENCE BETWEEN VERY NICE WEATHER THAT PEOPLE DON'T WANT TO MISS AND THE FACT THAT PEOPLE ARE ENJOYING THE FACT THAT IT'S NOT SNOWING AND ICY TO THE FACT THAT IN JANUARY PEOPLE ARE GETTING THE AGENDA DONE. PEOPLE ARE COMING TOGETHER AMID A SEA OF UNCERTAINTY FOR OFF THE RECORD CONVERSATIONS ABOUT HOW THINGS REALLY ARE BECAUSE THEY CANNOT SAY IT IN PUBLIC. TOM: MARKETS STABLE UP AND DOWN FRACTIONALLY. CAN YOU IMAGINE WHAT THESE MEETINGS WOULD BE LIKE IF WHAT WE HAVE SEEN THE LAST FEW WEEKS HAD CONTINUED? LISA: A LOT OF PEOPLE LOOK AT THIS AS A SHORT-TERM REPRIEVE. THAT'S WHAT WE WERE HEARING FROM TONY DWYER WE HAVE BAKED IN A LOT OF FED TIGHTENING. SUDDENLY PEOPLE ARE REASSESSING TO FIGURE OUT WHERE WE GO FROM HERE. TOM: THERE IS SOME ADJUSTMENT HERE. LISA: CHRISTINE LAGARDE HAS ASSERTED THEY ARE GOING TO AVOID THE NEGATIVE RATE POLICY BY THE END OF SEPTEMBER. BUT IT'S PAIRED WITH RAPHAEL BOSTIC OF THE ATLANTIC FED COMING OUT AND SAYING HE VIEWS SEPTEMBER AS A GOOD TIME TO PAUSE WITH RATE HIKES. SO HOW MUCH ARE WE REALLY PRICING IN A PAUSE FOR THE FEDERAL RESERVE. TOM: I MISSED THIS FROM MR. BOSTIC WHO IS VERY MEASURED IN HIS LANGUAGE. THAT GOES TO THE SEQUENTIAL MEETING OF LAWN -- NONLINEAR. LISA: IT FEEDS INTO THE BULL CASE THAT THIS FED WILL NOT BE AS AGGRESSIVE AS THE MARKET IS CURRENTLY PRICING IN. WE ARE SEEING A TURN, BUT YESTERDAY WE SAW A BIT OF A REPRIEVE. TODAY NOT SO MUCH. WE ARE SEEING BACK TO WHAT WE SAW OVER THE PAST SEVEN WEEKS. TOM: TELL US WHAT WE'VE GOT GOING ON. LISA: THE DOLLAR STRENGTH DOES CONTINUE. YIELDS DOWN 2.8 PERCENT. WHAT I REALLY WANT TO KNOW IS THE INCREDIBLE GUESTS WE HAVE COMING UP INCLUDING BOB PRINCE AT BRIDGEWATER WHO WAS GOING TO BE WITH US IN JUST A COUPLE OF MINUTES. PEDRO SANCHEZ, PRIME MINISTER OF SPAIN AND THE CHIEF EXECUTIVE OFFICER OF MARRIOTT INTERNATIONAL. THEY HAVE GOTTEN SOME OF THE BIGGEST BENEFITS FROM ALL OF THE CONSUMER SPENDING. HOW LONG CAN THAT LAST GIVEN SOME OF THE CONCERN PEOPLE HAVE ABOUT INFLATION? TOM: MR. ERDOGAN IS NOT AT DAVOS TODAY, BUT WE DID SEE TURKISH LIRA BREAK THROUGH. IT HAS BEEN SUSTAINING RELATIVELY STRONGER HOLDING 16. DOLLAR LIRE JUST A BIT AGO BROKE THROUGH DECISIVELY. IT'S OFF THE RADAR, BUT IT'S SOMETHING I'M LOOKING AT. SOME OF THEM HAVE THE MEANS TO INVEST IN A HAPPY VALLEY AND WE ARE THRILLED TO SHOW YOU SOMETHING THAT RAY DALIO OF BRIDGEWATER HAS DONE. SOMETHING WHEN YOU ARE AS LARGE AS RAY DALIO AND YOU CAN GET A COUPLE ACRES GOING AND YOU'VE GOT THE DALIO GOAT FARM. WHO OWNS THE GOATS? THEY SAID WE ARE GOING TO GET A SHOT YOU NOW. ON RADIO IT IS THE HILLS ARE ALIVE WITH THE SOUND OF MUSIC. IT'S THE GOATS. ONE OF THEM SAID CASH IS TRASH. I DON'T KNOW IF THEY ARE LAMBS OR GOATS. THEY CAN BE BOTH. THIS IS THE HELP WE GET FROM NEW YORK. ARE THEY GOATS OR LAMBS. RIGHT NOW TO SAVE US IS ROBERT PRINCE. YOU DON'T OWN ANY GOATS, DO YOU? > > NO GOOD BUT MY GRANDCHILDREN HAVE TWO LITTLE SHAPE. -- SHEEP. TOM: BRIDGEWATER HAVING A MUCH BETTER YEAR WITH SOME SOLID RETURNS. THE BACKDROP IS A BOND MARKET THAT ONLY PEOPLE WITH THE GRAY HAIR HAVE EXPERIENCED. IT IS EXTRAORDINARY PRICE DOWN YIELD UP. WHAT ARE THE RAMIFICATIONS IF THIS BOND BEAR MARKET CONTINUES? > > THE WAY YOU HAVE TO LOOK AT THE BOND MARKET IS THAT THERE ARE REALLY TWO BOND MARKETS ACCORDING TO WHAT'S PRICED IN. THERE THE FRONT-END OF THE BOND MARKET WHICH HAS PRICED IN A TIGHTENING AND THERE'S THE BACKEND THAT HAS PRICED IN THAT EVERYTHING'S GOING TO BE FINE IN THE INFLATION RATE IS GOING TO GO BACK TO 2.7. SO THE NEAR-TERM HAS BEEN PRICED IN. THAT HAS PASSED THROUGH TO EQUITIES AND OTHER ASSETS. THE SECOND ROUND OF TIGHTENING HASN'T BEEN PRICED IN. IT HASN'T BEEN PRICED TO BREAKEVEN INFLATION. WHETHER THAT'S ACTUALLY GOING TO HAPPEN REALLY DEPENDS ON THE UNDERLYING DRIVERS OF THE INFLATION WHICH I THINK WOULD BE GOOD TO GO INTO. THERE'S MORE TO GO. MAYBE IN THE NEAR TERM WE GET A LITTLE PAUSE BECAUSE THE FED WILL FOLLOW THE FORWARD CURVE UP. EVEN AS THEY FOLLOW THE FORWARD CURVE, YOU ARE LOOKING AT A BOND MARKET THAT HAS NOT DISCOUNTED. TOM: HOW DO WE RECOVER FROM BOND LOSSES LIKE THAT? > > YOU'VE GOT TO HOLD SOMETHING BESIDES BONDS. OR STOCKS FOR THAT MATTER. YOU'VE GOT TO GO TO INFLATION ASSETS. INFLATION INDEX BONDS WOULD BE BETTER THAN NOMINAL BONDS. LISA: BEFORE WE GET INTO THE ISSUES YOU TALKED ABOUT, I WANT TO PICK UP ON SOMETHING YOU ARE POINTING OUT DATED THE SECOND ROUND OF TIGHTENING. YOU CAN FIGURE OUT WHAT'S GOING TO HAPPEN WITH THE FED BUT PERHAPS PEOPLE ARE NOT GETTING THE RESPONSE IN MARKETS CORRECTLY. IF THE BULL CASE IS THAT THE FED PULLS BACK, IS THAT ACTUALLY A BULLISH INDICATOR FOR EQUITIES OR WILL THAT ACTUALLY BE NEGATIVE BECAUSE IT WILL ONLY SEND TREASURY YIELDS THAT MUCH HIGHER PRICED DOWN? > > THE KEY DETERMINANT OF THIS IS THE NATURE OF THE INFLATION THAT WE HAVE RIGHT NOW. WE FIGURED THIS IS A MONETARY INFLATION. WE THINK WE ARE IN A MONETARY INFLATION WHICH IS A VERY DIFFERENT ANIMAL THAN THE LAST COUPLE OF DECADES. A CYCLICAL INFLATION IS WHEN YOU GET A POP IN THE ECONOMY AND INFLATION GOES UP. BUT MONEY AND CREDIT ARE UNDER CONTROL. THIS IS A MONETARY INFLATION MORE LIKE THE 70'S. IT WAS TRIGGERED BY THE MASSIVE INJECTION OF MONEY AND CREDIT BY POLICY WHICH HAS NOW CREATED A SELF REINFORCING PROCESS. VERY HIGH LEVELS OF NOMINAL SPENDING. 10% NOMINAL GDP GROWTH. IT'S A LONG TIME SINCE WE HAVE SEEN HIGH NOMINAL GDP GROWTH. THERE'S THINGS HAPPENING THAT PEOPLE ARE NOT USED TOO. WE HAVEN'T SEEN THESE DYNAMICS FOR A LONG TIME. THE RESULT OF A MONETARY INFLATION IS HIGH NOMINAL GDP GROWTH AND THAT GETS ABSORBED BY PRICES SO YOU GET LOW REAL GROWTH. THAT PRODUCES STAGFLATION. LISA: DO YOU THINK THE U.S. IS FACING STAGFLATION? > > WE ARE HEADED TOWARD IT. LISA: IN THE NEXT 12 MONTHS? > > WE ARE HEADED TOWARD IT. WE ARE ON THE CUSP OF IT HOW DO YOU DEFINE STAGFLATION, THERE ARE DIFFERENT WAYS. THE WAY WE LOOK AT STAGFLATION IS IN TERMS OF HOW IT AFFECTS MARKETS. THE WAY EFFECT MARKETS IS IT THE INFLATION RATE IS HIGHER THAN DISCOUNTED AND THE GROWTH RATE IS LOWER THAN DISCOUNTED. WE ARE IN A SITUATION WHERE THERE'S A VERY LOW INFLATION RATE DISCOUNTED. AND WE HAVE A HIGH GROWTH RATE DISCOUNTED. RELATIVE TO WHAT'S DISCOUNTED, WE COULD VERY EASILY BE INTO THIS VERY QUICKLY. TOM: TALK ABOUT THE VOLATILITY OF HEDGE FUNDS. SOMEBODY GETS POUNDED ONE YEAR AND COMES BACK THE VOLATILITY IN ALTERNATIVE INVESTMENTS EXCEPT OR DOES IT HAVE TO BE A NEW PARADIGM TO SOMETHING INVOLVING MORE STABLE RETURNS YEAR TO YEAR? > > A LOT OF THAT COMES FROM HAVING A LONG BIAS. SO IT REALLY PAID TO BE LONG FOR A LONG TIME. SO THAT GETS EMBEDDED INTO THE PSYCHE. THE MONEY FLOWS IN THAT DIRECTION. AND LONGWOOD LEVERAGE IS EVEN WORSE. YOU SEE THAT KIND OF WASHOUT. TOM: HOW DO YOU DO MACRO IN THE ALGEBRAIC EQUATION OF DAVOS? > > MACRO IS FINALLY INTERESTING AGAIN. LAST TIME WE TALKED IT WAS WELLSVILLE IN 2020. TOM: I'VE GOT TO BUY A GOAT FARM. > > THIS IS INTERESTING STUFF. TOM: DOES THE MACRO CALL RIGHT NOW FOR YOU AND MR. DALIO? > > OUR WHOLE TEAM. TOM: PATTERSON AS WELL. WHAT'S THE CALL? > > THAT THE MARKETS ARE UNDER DISCOUNTING THE INFLATION PICTURE. THE SUSTAINABILITY, THE SELF REINFORCING OF THE INFLATION IS NOT DISCOUNTED. THE DEGREE OF TIGHTENING OVERTIME IS NOT DISCOUNTED. AND WITHIN THE STOCK MARKET, EVEN DIFFERENT TYPES OF COMPANIES AND HOW THEY BENEFIT OR HURT BY A HIGH NOMINAL GDP RISING INTEREST RATE ENVIRONMENT. IT'S A UNIQUE ENVIRONMENT. YOU CAN'T JUST TAKE THE AVERAGE OF THE STOCK MARKET. HAVE TO GO INSIDE IT. LISA: HOW MUCH HAS LEVERAGE BEEN BEATEN OUT OF THE SYSTEM AND HOW MUCH MORE IS THERE TO BE UNWOUND? > > I WOULD IMAGINE THERE IS A LOT MORE. LISA: TRADITIONAL FINANCIAL LEVERAGE. > > I DON'T REALLY KNOW. I WOULD RAISE THE OPPOSITE CASE AS SOMETHING THAT'S IMPORTANT TO REGISTER, WHICH IS NOT LEVERAGE IN THE BANKING SYSTEM. AS WE THINK ABOUT THE ECONOMIC ENVIRONMENT AND THE IMPACT THE TIGHTENING GOING FORWARD, THE BANKING SYSTEM HAS NOT LEVERAGED HIGH CAPITAL. THEY HAVE THE MOST LOW RISK ASSET FOLIO IN AGES BECAUSE ALL THAT PRINTED MONEY AND THEY PUT TREASURY BONDS AND CASH. THE LOAN TO DEPOSIT RATIO IS MULTITECH LOW. EVEN IF THE FED TIGHTENS, THE BANKING SYSTEM CAN SUSTAIN THE FLOW OF THE ECONOMY. TOM: IS THERE A MACRO CALL IN THE PRIMARIES? THAT'S NOT AN INSIDE JOKE. THE POLITICS OF BRIDGEWATER OVER TO THE POLITICS OF THE GREAT STATE OF PENNSYLVANIA. WHY DON'T YOU TO USE THE NEXT GUEST BECAUSE HE IS SO DAMN GLOOMY. LISA: MIKE WILSON IS GLOOMY BUT HE'S BEEN RIGHT. AND TALK ABOUT HOW THERE IS MORE RELATING TO GO. TOM: WELCOME ALL OF YOU HERE TO THE WORLD ECONOMIC MEETING IN DAVOS. FUTURES NEGATIVE. GOOD MORNING. > > AS MUCH MORE ABOUT RATES BECAUSE THERE IS MORE RESILIENCY IN THE ECONOMY, THE LABOR MARKET AND THE CONSUMER. THE CONSUMER IS SITTING ON $3.4 TRILLION OF DEPOSITS. COMING INTO COVID THEY WERE SITTING ON A TRILLION. SO THERE IS SOME BUFFER THERE. TOM: THE NEWLY MINTED CHIEF EXECUTIVE AT CITI SPEAKING TO DAVOS. WHAT I NOTICED OVERNIGHT WAS THE 2 TRILLION FIGURE TOPS IN THE REPO MARKET. SHE SAID THERE'S A LOT OF CASH LAYING AROUND. LISA: THIS IS ONE REASON WHY THERE STILL HASN'T BEEN CAPITULATION. AS BEARISH AS SOME PEOPLE ARE, THERE STILL ARE A LOT OF BULLS OUT THERE THAT SEE THE POTENTIAL UPSIDE. TOM: WELCOME TO THE MEETINGS. IT'S THEIR 51ST YEAR. WE ARE LOOKING TOWARDS JANUARY. NOT OFFICIAL YET BUT GETTING THERE ACCORDING TO THE PEOPLE I HAVE TALKED TO THIS MORNING. LISA WILL BE FREEZING HERE IN SEVEN MONTHS. MARKETS A BIT NEGATIVE HERE. THIS IS AN IMPORTANT DISCUSSION. LISA IS GOING TO DIVE INTO THIS. I'M GOING TO GREET MS. MARTIN FOR EVERY PARENT NATIONWIDE AND WORLDWIDE WATCHING. BECAUSE THERE ARE THOSE THAT TALK AND THERE'S OTHERS THAT DO AND LYNN MARTIN ALONG WITH SALLIE KRAWCHECK AND A FEW OTHERS IS WHAT WE ARE ALL WISHING AND HOPING FOR. WHAT WAS THE PIXIE DUST IN YOUR HOUSEHOLD AS A CHILD THAT GOT YOU INTO COMPUTER SCIENCE AND MATHEMATICS? WHAT WAS THE MAGIC THAT I'M A GIRL DIDN'T HAPPEN? > > GREAT QUESTION. THRILLED TO BE DOING THIS IN PERSON WITH YOU. IT REALLY CAME FROM MY PARENTS. MY DAD WAS AN ENGINEER. HE ACTUALLY DESIGNED FUEL GAUGES AND COMPANY INTO COMPUTERS AS A CHILD. MY FIRST COMPUTER WAS A COMMODORE 64. I'M DATING MYSELF. TOM: THE REALITY THAT WE FACE IN SO MANY LISTENERS AND VIEWERS IS THE IDEA THAT YOU DO MATH, GEOMETRY. THAT'S THE STEREOTYPE. HOW DO WE GET BEYOND THAT? > > I JUST HAPPENED TO BE GOOD AT IT AND IT WAS SOMETHING THAT I ABSOLUTELY LOVED DOING. THAT'S WHY WHEN I WENT TO UNDERGRAD I MAJORED IN COMPUTER SCIENCE, MINORED IN MATH. I PURSUED MY MASTERS IN MATH. TO ME IT WAS SOMETHING THAT EMPLOYED A LOT OF QUANTITATIVE REASONING. LISA: THE METHOD OF GOING PUBLIC AT A MOMENT THAT IS SO TENUOUS FOR MARKETS. HOW MUCH ARE COMPANIES RETHINKING THIS IDEA AS THE PUBLIC MARKETS GET OVERLY PUMMELED? > > THE GOOD NEWS IS THE DEMAND TO GO PUBLIC HAS NEVER BEEN STRONGER. BUT WE ARE WAITING NOT AT THE MOMENT IS WHAT'S THE RIGHT TIME. GIVEN ALL THE VOLATILITY IN THE MARKET, A LOT OF COMPANIES ARE TRYING TO FIGURE OUT AT THAT MOMENT IN TIME IS. OUR PIPELINE IS INCREDIBLY STRONG ACROSS ALL SECTORS. ENERGY COMPANIES COME TO MARKET IN THE LAST COUPLE OF MONTHS ON THE NEW YORK STOCK EXCHANGE. IT'S REALLY A QUESTION OF WHEN AS OPPOSED TO IF BECAUSE THEY VERY MUCH SEE THE VALUE IN BECOMING A PUBLIC COMPANY. LISA: THERE IS A FEELING OF SPEED WHICH IS BENEFICIAL WHEN IT'S ONE WAY UP AND REALLY PROBLEMATIC WHEN IT'S ONE WAY DOWN. WE WERE SPEAKING WITH A NUMBER OF PRIVATE EQUITY EXECUTIVES THAT SAID WE HAVEN'T SEEN THE SELLOFF. HAS THE SPEED HAMPERED THE REPUTATION OF THE PUBLIC MARKET GIVEN THERE IS STILL SO MUCH IN THE PRIVATE SPHERE? > > I DON'T THINK IT HAS REALLY TEMPERED THE REPUTATION OF THE PUBLIC MARKET. PUBLIC COMPANY GIVES YOU ACCESS TO A DEEP LIQUID POOL OF CAPITAL. IT ALLOWS YOU TO REWARD YOUR EMPLOYEES IN A VERY DIFFERENT WAY. IT ALLOWS YOU TO FIND THE CAPITAL TO DO MERGERS AND ACQUISITIONS AND INVESTING YOUR BUSINESS IN A MUCH MORE MEANINGFUL FASHION. TOM: THE DIFFERENCE IS IN THE OLD DAYS, YOU BOUGHT ONE SHARE OF GENEROUS ELECTRIC AND LOOKED AT THE DOW JONES INDUSTRIAL AVERAGE AND IT WAS VERY STODGY LIKE THE BOARDROOM OF THE NEW YORK STOCK EXCHANGE UP TOP OF THE BUILDING. THINGS HAVE CHANGED. WE HAVE SPAC'S. WE HAVE THE WHOLE GAMESTOP THING. I WAS PILLORIED LAST WEEK ABOUT ROBINHOOD AND ALL THIS. WHAT IS THE SOCIAL MANDATE OF THE NEW YORK'S DOC EXCHANGE -- NEW YORK STOCK EXCHANGE? > > THAT'S A GOOD QUESTION. THE NEW YORK STOCK EXCHANGE IS VERY FOCUSED ON PROVIDING TRANSPARENT LIQUID EFFICIENT MARKETS. TOM: IS ROBINHOOD A RESPONSIBLE MARKET? > > WE ARE FOCUSED ON THE INFRASTRUCTURE THAT HAS BEEN TRIED AND TRUE WITH MULTIPLE FINANCIAL CRISES. TOM: YOU'RE GETTING MAXIMUM TRANSPARENCY WITH YOU. WHAT ARE YOU SUGGESTING YOU'RE GETTING THE MODERN ROUTE? > > THE RIGHT WAY TO ADDRESS THIS IS WITH STANDARDIZATION ACROSS TRADES. TOM: WHO IS THE ADULT IN THE ROOM ON THIS? WHO IS THE ADULT IN THE ROOM TO COMBINE THE MODERN DARKROOM WITH A BUY TICKET YEAR AND SELL TICKET YEAR? > > I WOULDN'T SAY WE ARE THE ANCIENT NEW YORK STOCK EXCHANGE. PARTICULARLY SINCE WE ARE PROCESSING HAVE A TRILLION MESSAGES. IT'S REALLY AROUND THE SEC TO HARMONIZE THE RULES BETWEEN THE MARKETS. THAT'S REALLY WHAT WE ARE ASKING FOR. LISA: WHERE DOES CRYPTO FALL INTO THIS? > > CRYPTO IS A MARKET THAT IN MY OPINION NEEDS GUARDRAILS. IT NEEDS A PROPER REGULATORY STRUCTURE. LISA: AND THAT WOULD BE APPROPRIATE FOR YOUR PLATFORM? > > WE ALWAYS LOOK AND TALK TO OUR CUSTOMERS ABOUT WHAT THEY WANT TO SEE. TOM: YOU HAVE A BUNCH OF CLOWNS UP HAPPY VALLEY TELLING ME THAT BITCOIN IS A CURRENCY. WHAT DOES GENSLER NEED TO DO WITH CRYPTO? > > HE IS THINKING ABOUT HOW TO REGULATE THIS. MY UNDERSTANDING IS THAT HE IS WORKING WITH HIS TEAM TO ROLL OUT APPROPRIATE REGULATION. HE'S GOT TO ALSO BALANCE THE FUTURE SITE OF THE BUSINESS AND OTHER AGENCIES BECAUSE IT IS A UNIQUE ANIMAL HOW TO REGULATE THAT. TOM: ARE PEOPLE SPENDING TOO MUCH TIME ON COMPUTERS TODAY? > > TECHNOLOGY IS AMAZING AND HAS ENABLED US TO GO TO A WORK FROM HOME ENVIRONMENT AND TO A HYBRID ENVIRONMENT AND IT HAS REALLY ENABLED VERY EFFICIENT COMMUNICATION. LISA: WHEN SHE WAS TALKING ABOUT THE OLD COMPUTER, I WAS JUST THINKING ABOUT THAT DIAL UP UNIT SHE BOUGHT IT USED. SHE'S TOO YOUNG TO HAVE A COMMODORE 64. GET US OUT. LISA: TOM: GOOD MORNING, EVERYONE. ON RADIO, ON TELEVISION, LISA ABRAMOWICZ AND TOM KEENE WITH "SURVEILLANCE." GREAT CONVERSATIONS COMING UP. A REALLY IMPORTANT CONVERSATION FOR ANYBODY FOR THE HISTORY OF EUROPE AND AMERICA. WE WILL DO THAT IN A MOMENT. THE DATA FRONT, WE GO DOWN YESTERDAY. THE TURKISH LIRA PRICKING THROUGH TO NEW WEAKNESS TODAY IS IDIOSYNCRATIC. TOM: WE ARE SEEING -- LISA: WE ARE SEEING EURO STRENGTH VERSUS THE DOLLAR. CHRISTINE LAGARDE DOUBLES DOWN ON RAISING INTEREST RATES, BUT NOT TOO FAST. TENURE YIELDS A LITTLE BIT LOWER, BUT QUIESCENT. CRUDE BOUNCING AROUND, BUT REALLY IT IS THE RETRACEMENT IN SOME OF THE SOCIAL MEDIA STOCKS. I KNOW YOU ARE WONDERING WHAT THE SIGNIFICANCE IS OF THAT, BUT I THINK THAT IS AT THE FOREFRONT OF TODAY. TOM: IT WAS A VERY CAREFULLY PHRASED CONVERSATION WITH PRESSURES TO THE ECB MEETING. IT IS ALWAYS PRESSURE WHEN WE GO TO ROMAINE BOSTICK IN NEW YORK, LOOKING AT INDIVIDUAL SECURITIES. ROMAINE: SECURITIES TIED TO THE MACROECONOMIC CONDITIONS. YESTERDAY THE RALLY WAS ALL ABOUT THAT COMMENTARY WE GOT OUT OF JP MORGAN AND JAMIE DIMON, THAT BIRDSEYE VIEW THAT MAYBE WHILE THINGS AREN'T COMPLETELY ALL CAPS SET, THEY WEREN'T NECESSARILY CAUSE FOR COMPLETE CONCERN THAT WE WOULD BE HEADING TOWARDS A RECESSION OR EVEN ECONOMIC DOLDRUMS. THAT HAS NOW A FLIPPED ON ITS -- THAT HAS NOW ALL FLIPPED ON ITS HEAD. SNAP SHARES DOWN AFTER IT REVISED IT'S GOTTEN SLOWER. THIS IS A COMPANY THAT JUST REPORTED EARNINGS FOUR WEEKS AGO, AND THERE'S A BIG QUESTION AS TO WHAT HAS CHANGED TO CAUSE EVAN SPIEGEL TO PUT OUT THIS MORNING TO INVESTORS, TO LET THEM KNOW THAT YES, AD SPENDING USER GROWTH MAY BE SOFTER THAN MONTH AGO THOUGHT A MONTH AGO. -- MAY BE SOFTER THAN WHAT PEOPLE THOUGHT A MONTH AGO. I WILL BET SHARES DOWN ABOUT 4% ON THE PREMARKET. AMAZON LOWER, ROKU LOWER AS WELL. THEN YOU HAVE SOME OF THE PURE PLAY ADVERTISING COMPANIES OUT THERE. TRADE DESK CHAIRS DOWN 7.5%. I'M THE ECONOMY -- ON THE CON MOVING LOWER HERE. IT REALLY GOES TO THE HEART OF WHAT IS GOING ON WITH THE CONSUMER RIGHT NOW AND WHETHER THAT RESILIENCY IS GOING TO BE AS RESILIENT HAS SOME INVESTORS HAD PRICED IN. IT IS NOT ALL GLOOM AND DOOM OUT THERE. WE DID GET EARNINGS OUT OF BEST BUY. THEY WERE ACTUALLY PRETTY GOOD. THERE WERE A LOT OF CATEGORIES WITH BEST BUY THAT WERE NEGATIVE IN TERMS OF YEAR-OVER-YEAR GROWTH, BUT APPLIANCE SALES WERE STILL STRONG, AND SOME OF THE APPLIANCE SALES WHEN IT COMES TO COMPUTERS WERE ALSO STRONG. THOSE SHARES UP 5.5%. IN WE HAVE ZOOM, ONE OF THE PANDEMIC DARLINGS THAT HAD FALLEN OUT OF FAVOR. THEY ARE HIGHER BY ABOUT 4% IN THE PREMARKET AFTER REPORTING EARNINGS SHALL AND THAT THEIR ENTERPRISE BUSINESS, THE BUSINESS THEY USED TO SELL TO CORPORATIONS, THAT IS ACTUALLY DOING WELL AND THERE MAY BE ENOUGH GROWTH THERE TO SUSTAIN THIS COMPANY FOR A LITTLE LONGER. ALBEMARLE SHARES UP 1% IN THE PREMARKET. BIG MAKER OF LITHIUM, AND THAT COMPANY ACTUALLY CAME UP WITH A FORECAST THAT SEEMED TO SUGGEST THE PRICING POWER THEY HAVE RIGHT NOW, AS WELL AS THE DEMAND, THAT THAT IS GOING TO PERSIST FOR THE NEAR FUTURE. TOM: ROMAINE BOSTICK, THANK YOU SO MUCH. PERHAPS I AM THE UGLY AMERICAN, WHEN I READ ALL OF PATRICK O'BRIEN ABOUT THE NAPOLEONIC WARS. IT WAS ALWAYS A SHOCK THERE WAS POLITICS, BATTLES, AND WARS UP THERE. AT THE SAME THING HAPPENED IN 1939. OH YEAH, THERE'S THE BALTIC SEA, WARS, ALEX AND BATTLES UP THERE. IT IS NOW THE SAME, AND A GREAT MYSTERY TO AMERICANS THAT WE DON'T STUDY IN SCHOOL IS THREE MONTHS, ONE WEEK, AND SIX DAYS OF THE WINTER WAR OF FINLAND AND THE SOVIET UNION. 25,000 MISSING AND DEAD FOR FINLAND IN THREE MONTHS. LISA: JUST A TRAGIC, AND WHAT DOES THAT MEAN GOING FORWARD GIVEN THE PROXIMITY OF THAT REGION? TOM: AND AS ANY OF THAT WAS IN THE HISTORY OF WHAT AMERICA KNOWS NOW, AS WE LOOK AT A NEW NATO? THE FORMER PRIME MINISTER OF FINLAND, HONORED TO SPEAK WITH HIM THIS MORNING. WE ARE IGNORANT OF THE MOMENT, AND I WOULD SUGGEST, OTHER THAN MR. STOLTENBERG HERE AT DAVOS, YOU ARE BY FAR THE MOST IMPORTANT PART IN -- IMPORTANT PERSON IN THE NATO COMMUNITY. HOW CLOSE ARE YOU TO JOINING NATO? > > WE ARE VERY CLOSE, AND THINGS HAVE GONE VERY FAST. I THINK THE DECISION WAS TAKEN IN THE MORNING ON THE 24TH OF FEBRUARY WHEN PUTIN ATTACKED UKRAINE. THAT IS WHEN OUR OPINION POLLS CHANGED, AND THE LATEST ONE IS NOW 80% IN FAVOR. ON TOP OF THAT, WE HAVE 188 IN THE PARLIAMENT. TOM: WITHIN THE POLITICS THERE'S THIS COLLECTIVE MEMORY OF THE WINTER WAR. WITH AN 800 MILE BORDER, HOW FEASIBLE COULD THERE BE A WINTER WAR IF RUSSIA ATTACKS? ALEXANDER: FOR THE FINNISH CASE, NOT VERY FEASIBLE. WE EXPECT SOME CYBER AND INFORMATION WARS, BUT THE WINTER WAR LASTED A LONG TIME, AND NO WE ARE PRETTY MUCH IN TODAY 90 IN THE WAR IN UKRAINE. I JUST SPOKE TO SOME UKRAINIAN MPS AND WE DID SOME COMPARING AND CONTRASTING OF THE SITUATION. OF COURSE, HISTORY NEVER REPEATS ITSELF, BUT IN THIS PARTICULAR CASE, IT RHYMES. LISA: HOW IS FINLAND ABLE TO BE SO BOLD WITH THE CONSEQUENCE OF THE RETRACEMENT OF GAS SUPPLIES FROM RUSSIA? HOW DID FINLAND GET AWAY FROM THE RESISTANCE THAT MANY STILL HAS? ALEXANDER: WE ARE PRETTY COOL, CALM AND COLLECTED IN THESE CASES. ON TOP OF THAT, WE ARE STRATEGIC. WE HAVE SEEN ENERGY BEING WEAPONIZED. 100% OF OUR GAS USED TO COME FROM RUSSIA, BUT IT WAS ONLY 5% OF OUR OVERALL ENERGY CONSUMPTION, SO WE WERE ABLE TO SWITCH GRADES LIKE THAT, AND IT ONLY WENT TO INDUSTRY. SO WE ARE VERY SELF SUFFICIENT ON THIS. WE ARE NOT DEPENDENT ON RUSSIAN ENERGY. LISA: SO I WAS THIS DECISION NOT MADE EARLIER? WHY IS THIS AN IMPORTANT MOMENT IF THE CONCERN IS NOT THAT VLADIMIR PUTIN WILL LOVE A NUKE OVER TORT -- WILL LOB A NUKE OVER TOWARDS FINLAND? ALEXANDER: WE EXPECTED THAT WHEN WE JOINED OR APPLIED TO JOIN NATO, WE WILL GET THESE SITUATIONS. WE DID NOT NEED TO DO IT BEFORE, TO BE VERY FRANK. IF I RECALL FROM MY TIMES IN OFFICE FROM 2008, 2016, RUSSIAN GAS WAS PRETTY CHEAP, SO IT WAS AN ECONOMICAL DECISION AT THE TIME. TOM: THIS IS A COLLECTIVE EMORY, AND HOW ESSENTIALLY NO ONE'S ON 39 COMING. THAT IS THE ARCHING PLOT. THE FEAR THAT WE HAVE NOW, ALONG WITH THE FEARS, THE MEMORIES OF WORLD WAR II, IS THE REALITY THAT WE COULD HAVE A WORLD WAR III. IN EVERY GUEST WE HAVE TALKED TO, THEY SAID IT IS OVERDONE. DO YOU, AS THE LEADER OF YOUR NATION OR THE SCANDINAVIAN STATES, ARE YOU WORRIED ABOUT A WORLD WAR III? ALEXANDER: NO WE ARE NOT. TOM: WHY? ALEXANDER: I THINK WE HUMAN BEINGS HAVE A TENDENCY TO OVER RATIONALIZE THE PAST, OVER DRAMATIZE THE PRESENT. TOM: THAT IS THE AMERICANS. WHAT DOES EVERYONE ELSE FEEL? [LAUGHTER] ALEXANDER: THE STARTING POINT IS THAT THE WAR IN UKRAINE, WE DID NOT THINK THAT CONVENTIONAL WARFARE WOULD COME BACK TO THE EUROPEAN BORDERS BECAUSE THE COST IS SO HIGH. BUT THE REASON WE DON'T SEE THIS HAPPENING AS A WORLD WAR IS THAT WE WILL SEE A SPLIT EUROPE. ON ONE SIDE YOU HAVE RUSSIA WHICH IS AGGRESSIVE, IMPERIALIST, AND REVISIONIST. ON THE OTHER SIDE, YOU HAVE 40 EUROPEAN DEMOCRACIES. I THINK UKRAINE WILL GRIND THIS OUT AND THIS WILL NOT SPILL OVER TO HER WORLD WAR III. LISA: HOW MUCH CAN THE U.S. BE A LEADER IF THERE IS SUCH A FISHER WITHIN THE NATION -- A FISHER WITHIN THE NATION -- A FISSURE WITHIN THE NATION? ALEXANDER: THE U.S. HAS DONE VERY WELL. THE U.S. IS ABLE TO BRING NATO TOGETHER, BUT U.S. SOCIETY AS SUCH IS QUITE SPLIT. DID MY UNDERGRADUATE WORK IN GREENVILLE, SOUTH CAROLINA. [LAUGHTER] LISA: THAT WAS AN AMAZING ACCENT. JONATHAN: SO I FOLLOW AMERICAN EVENTS -- ALEXANDER: SO I FOLLOW AMERICAN EVENTS VERY CLOSELY. WE DON'T KNOW WHETHER JOE BIDEN OR DONALD TRUMP IS GOING TO BE THE FOOTNOTE OF HISTORY, AND THIS IS WHAT A LOT OF EUROPEANS ARE PREPARING FOR. TOM: RESPOND TO MR. ERDOGAN'S COMMENTS ON SWEDEN COME ON FINLAND, AND SUPPORT OF THE KURDS. ALEXANDER: I THINK WHAT ERDOGAN IS ASKING FOR HIS THREE THINGS. ONE IS LINKED TO THE KURDS AND ESPECIALLY PKK. THE FINNISH PRESIDENT HAS TAKEN A VERY STRONG STANCE DEFENDING TURKEY ON THIS. THE SECOND IS THE ARMS EMBARGO IN 2013, AND THE OTHER IS ABOUT AMERICAN F 13'S. I BELIEVE IN CLEMENCY. FINLAND AND TURKEY HAVE ALWAYS HAD VERY GOOD RELATIONS, AND I HOPE THAT WILL SOLVE IT. TOM: THIS IS CRITICAL. ELLIOTT COHEN IN FOREIGN AFFAIRS TALKS ABOUT A RETURN OF STATECRAFT. YOU HAVE PRACTICED STATECRAFT. PEOPLE WATCHING GOING, HOW CAN THIS YOUNG GUY FROM FINLAND -- WHY ARE ALL POLITICIANS AND FINLAND YOUNG? WHAT IS THIS ABOUT? WHAT IS IN THE WATER? ALEXANDER: IF I COMPARE MYSELF TO THE CURRENT PRIME MINISTER, I FEEL OLD AND DECREPIT. [LAUGHTER] SHE'S 35. TOM: IN AMERICA, THEY ARE 95. THAT'S WHERE WE ARE. SERIOUSLY, WHEN YOU LOOK AT WHERE WE ARE RIGHT NOW, THE SPAN FROM HELSINKI TO ISTANBUL IS UNIMAGINABLE TO MOST PEOPLE. HOW WILL WE BRING THAT SPAN TOGETHER ACROSS THE EASTERN FRONT? ALEXANDER: I HAVE A FEW EXPERIENCES WITH TURKEY. THE FIRST WAS AS A YOUNG CIVIL SERVANT IN 1999. WE OPENED THE DOOR TO TURKISH EU MEMBERSHIP NEGOTIATIONS. SO THAT WAS POINT NUMBER ONE. POINT NUMBER TWO, ACTUALLY ESTABLISHED AS FOREIGN MINISTER MINISTER IN 2008, 2009 THE FRIENDS OF PEACE MEDIATION WITH THE THEN PRESIDENT WHO BECAME PRIME MINISTER, AND I AM SURE THIS WILL CARRY OVER, AND I HOPE THAT THE PRESIDENT OF TURKEY WILL HAVE A POSITIVE VIEW. LISA: THAT SOUNDS SO FINNISH, THE FRIENDS OF PEACE MEDIATION. WHICH IS NOT PERHAPS OF SOME OTHER NATIONS. HERE IN DAVOS, PEOPLE ARE DEFENDING GLOBALIZATION AMID A SURGE IN POPULISM AND ANGER AT THE GLOBALIZED SYSTEM. HOW HAVE YOU HEARD THAT TALKED ABOUT NEAR MEETINGS WITH SONY PEOPLE, GIVEN THAT THIS IS -- WITH SO MANY PEOPLE, GIVEN THAT THIS IS A CELEBRATION OF WHAT SO MANY ARE BASIC HE TRYING TO FIGHT? ALEXANDER: I THINK IT IS SORT OF AN END OF AN ERA. IN 1989 WE BELIEVED IN THE END OF GLOBAL DEMOCRACY, BUT THAT HAS TURNED TOPSY-TURVY. THE REASON I SAY THIS IS A LOT OF THE VALUE CHAINS ARE NOW BEING BROUGHT BACK HOME. WHY? BECAUSE OF TRUMP, BECAUSE OF COVID, AND BECAUSE OF THE WAR IN UKRAINE. TOM: I WAS WATCHING DENMARK AND CANADA ICE HOCKEY LAST NIGHT. YOU HAVE A HERITAGE IN ICE HOCKEY THAT IS TRULY GLOBAL, FAR BEYOND THE EXCELLENCE OF FINLAND. IS THE GOAL OF HOCKEY TO BE MADE BIGGER SO WE CAN GET BACK TO THE GAMES? ALEXANDER: YOU ASKED ME THIS QUESTION LAST TIME AROUND. TOM: BUT NO IT MATTERS BECAUSE HOCKEY IS A MESS. WE NEED A BIGGER GOAL? ALEXANDER: THEY VISITED MY HOME IN 1981, 19 82 DURING THE WORLD CHAMPIONSHIPS, AND I WAS VERY SAD TO SEE HIM PASS AWAY. I'M ACTUALLY GOING TO MONTREAL FOR THE DRAFT BECAUSE IT WILL BE MY DAD'S 40TH DRAFT. HE'S BEEN A CHIEF SCOUT OF THE NHL FOR THE PAST 40 YEARS HERE IN EUROPE. TOM: THAT WAS A POLITICAL ANSWER IF I'VE EVER HEARD FROM THE FORMER PRIME MINISTER OF FINLAND. THANK YOU FOR THE IMPORTANT CONVERSATION, THE HISTORIC MOMENT FOR FINLAND AND THE COUNTRY TO THE WEST. WHAT IS IT CALLED? SWEDEN. I GOT IT. [LAUGHTER] LISA: GOOD JOB. THAT WAS ACE. DID REALLY WELL. REALLY INTERESTING, ESPECIALLY GIVEN THE FORESIGHT TO REMOVE THE RELIANCE ON GAS, ALLOWING THEM TO HAVE THE FLEX ABILITY -- THE FLEXIBILITY. TOM: DID NOT SCREW UP LIKE THE GERMANS. LISA: THAT WAS THE SUBTEXT THERE. YOU SAID IT. BASICALLY IT WAS AN ECONOMIC DECISION THAT TURNED OUT TO BE A NATIONAL SECURITY DISASTER. TOM: DATA CHECK FUTURES AT -40, THE DOW A COUPLE HUNDRED DOWN AS WELL. IN DAVOS, THE IDEA OF YIELDS UP NICELY YESTERDAY, COMING RIGHT BACK DOWN, 2.81%. ON THE DOLLAR IN DAVOS, IT IS A POINT IN THE -- A POINT OF DISCUSSION. LISA: WILL IT REMAIN STRONG, OR WILL THIS BE THE TIPPING POINT OVER THE NEXT FEW TRADING SESSIONS? TOM: THE WORD IS RESILIENT. EVERYTHING IS RESILIENT. LISA: I WILL MAKE SURE TO USE IT AS MUCH AS POSSIBLE. TOM: COMING UP, AND ANNUAL VISIT. THE LEADERSHIP OF MARRIOTT INTERNATIONAL, ANTHONY CAPUANO. THIS IS BLOOMBERG. > > RATES GETTING INTO BETTER POSITIVE TERRITORY IS A GOOD THING IN MY VIEW. WE CAN MAKE BIGGER STEPS THERE. REAL RATES ARE STILL NEGATIVE, SO THEREFORE I THINK FROM A POLICY PERSPECTIVE, IT MAY NOT BE AS BAD TO MAKE THOSE MOVES, AND IT BUILDS AMMUNITION FOR WHEN YOU NEED IT AGAIN. TOM: UBS' CEO SPEAKING TO BLOOMBERG HERE AT DAVOS IN SWITZERLAND. LISA ABRAMOWICZ AND TOM KEENE. JOHN -- JON FERRO IS OFF THIS WEEK. THE FOG HAS SAID IN, WHICH IS DIFFICULT BECAUSE EVERY PHOTO ON THE MARRIOTT WEBSITE IS OF CLEAR, SUNNY SKIES. LISA: IT'S TRUE. TOM: THERE CHIEF EXECUTIVE OFFICER. HOW MANY HOTELS IS IT? ANTHONY: A LITTLE OVER 8000. TOM: TONY CAPUANO WITH US THIS MORNING. THE WAGE WAR. EIGHT DOLLARS AN HOUR, $10 AN HOUR, $22 AN HOUR. WE WILL SPEAK TO BRIAN MOYNIHAN, A COUPLE OF HOURS OUT. WHAT ARE YOU AND YOUR FRANCHISE IS DOING ABOUT THE WAGE WAR? ANTHONY: OUR TOTAL VACANT POSITIONS OF ABOUT 8000 IS ALMOST EXACTLY WHAT OUR STEADY RUN RATE WAS RE-PANDEMIC. THE DIFFERENCE IS PRE-PANDEMIC, THEY WERE RELATIVELY EVENLY DISTRIBUTED. NOW THEY ARE CONCENTRATED IN THE MARKETS THAT HAVE RECOVERED MOST QUICKLY. OBVIOUSLY WE NEED TO BE COMPETITIVE ON WAGE. WE'VE GOT TO IDENTIFY FOLKS THAT WANT HOSPITALITY AS A CAREER. ONE IN FIVE JOBS THAT WERE LOST CAME OUT OF TRAVEL AND TOURISM. LISA: DO YOU GET THE SENSE THAT THERE IS A BIGGER POOL OF APPLICANTS FOR EACH JOB? THAT THE LABOR MARKET IS STARTING TO GET A LITTLE EASIER? ANTHONY: IT IS, BUT THE CHALLENGE FOR US IS MANY OF THOSE APPLICANTS HAVE NO EXPERIENCE IN TRAVEL AND TOURISM , SO WE ARE GETTING INCREASED APPLICANT FLOW, BUT THE TRAINING CURVE IS A LOT STEEPER THAN WE HAVE BEEN ACCUSTOMED TO. LISA: WHEN IT COMES TO THE DEMAND SIDE, THERE'S AN ISSUE NOW WHERE WE HAVE SEEN AN INCREDIBLE BOOM IN TRAVEL AND EXPERIENCES. EVERYONE WANTS TO GET BACK OUT THERE. BUT WE ARE STARTING TO HEAR ON THE MARGINS PEOPLE ARE GETTING CONCERNED THAT THE ABILITY TO PASS ALONG COSTS IS STARTING TO GET MORE DIFFICULT. WHERE ARE YOU ON THAT? ANTHONY: YOU HEAR THOSE RUMBLINGS, BUT WE DO NOT SEE IT IN OUR DATA. WE HAD A LITTLE STEP BACK BECAUSE OF THE OMICRON VARIANT, BUT MARCH GLOBAL REVENUE PER AVAILABLE ROOM WAS ONLY DOWN 9% VERSUS WHERE WE WERE IN 2019. IN APRIL IN THE U.S., WE WERE BACK TO 2019 LEVELS. SO WE ARE JUST NOT SEEING IT YET. TOM: IN VENICE, ITALY THERE IS A MARRIOTT THAT IS AN IMAGE THAT IS SHOCKING. YOU HAVE YOUR WONDERFUL, ALMOST SEPARATE ISLAND PROPERTY, AND THEN YOU GO BY THE HOTEL WHICH IS, LIKE IN EVERY OTHER MOVIE. I THINK CARY GRANT, LIKE 12 OF HIS MOVIES WERE SHOT IN FRONT OF THE PLACE. HOW DO YOU GET THE ROMANCE OF YOUR VENICE, ITALY INTO THE REST OF THE MARRIOTT SYSTEM? ANTHONY: WELL, I THINK WE EXPOSE OUR CUSTOMERS TO THE PROGRAM, SHARE THAT IMAGERY, AND ENCOURAGE THEM TO EXPORT THOSE DESTINATIONS. TOM: WHICH PRICE POINT DO YOU WANT TO BE IN? ANTHONY: ALL OF THEM. THAT IS ONE OF THE BENEFITS. TOM: YOU THINK YOU CAN SUCCEED ON A PROFIT MARGIN BASIS BY MEETING EVERY CATEGORY OF PROPERTY? ANTHONY: WE DO. DURING THE PANDEMIC, OR LIMITED SERVICE HOTELS WITH THE ONES THAT RECOVERED MOST QUICKLY. LISA: HOW ARE YOU ABLE TO RAISE PRICES? ANTHONY: PRICING POWER HAS BEEN EXTORTING EVERY. WHEN WE LOOK BACK AT THE PACE AND TRAJECTORY OF THIS RECOVERY, THE SPEED WITH WHICH PRICING POWER RETURNED TO BE THE MOST NOTABLE ISSUE. IF YOU LOOK THAT POST 9/11, POST-GREAT RECESSION, IT TOOK THE INDUSTRY FOR FIVE YEARS TO GET ITS PRICING POWER BACK. IT TOOK LESS THAN TWO THIS TIME. LISA: HAS IT DECELERATED AT ALL OR HAVE YOU SEEN ANY RESISTANCE? ANTHONY: REALLY NOT. TOM ASKED ACROSS THE PRICE TEARS. IN THE FIRST QUARTER, LUXURY AVERAGE RATE WAS 27% AHEAD OF WHERE WE WERE IN 2019. LISA: WHAT ABOUT BELOW THAT? ANTHONY: WE CONTINUE TO SEE PRICING POWER ACROSS ALL SEGMENTS. TOM: YOU MENTIONED LIMITED SERVICE. MICHAEL MCKEE LIVED ON YOUR CONCIERGE SYSTEM, WHICH I GUESS WENT AWAY WITH THE PANDEMIC. MCKEY ONES -- MCKEE WANTS FULL-SERVICE. HE'S VERY DEMANDING. THE BOTTOM LINE IS A LOT OF PEOPLE WANT SERVICES, AND WHAT YOU'RE TELLING ME IS THAT PEOPLE WANT LIMITED SERVICE. COMMENT ON THAT. ANTHONY: CERTAIN CUSTOMERS AT CERTAIN PRICE POINTS FOR CERTAIN TRICK PURPOSES. TOM: THEY DON'T WANT ROOM SERVICES? ANTHONY: IF YOU ARRIVE AT THE CLOCK P.M. AND YOU ARE OUT THE NEXT MORNING, YOU WANT A CLEAN BED, A HOT SHOWER, AND GREAT WI-FI. THAT SAME TRAVELER NICE BEEN 100 NIGHTS A YEAR AND THAT SELECT SERVICE HOTEL AND THEN TAKE THEIR FAMILY TO A LUXURY RESORT WHERE THEY WANT SPA, FULL CAPACITY, ALL THE RESTAURANTS OPEN, ROOM SERVICE. LISA: THAT IS TOM KEENE AND HIS FAMILY. GOING FORWARD, WHERE DO YOU SEE THE GREATEST GROWTH? IS IT IN SOME OF THOSE URBAN CENTERS LET NEW YORK CITY AND SAN FRANCISCO, OR WILL IT CONTINUE TO BE IN SOME OF THE TERTIARY CITIES? ANTHONY: I THINK BOTH. CERTAINLY IN PACE OF RECOVERY, WE HAVE SEEN LEISURE DESTINATIONS AND SECONDARY MARKETS RECOVER MOST QUICKLY. SOME OF THE URBAN MARKETS HAVE BEEN A BIT SLOWER TO RECOVER. SO WE SEE LOTS OF OPPORTUNITY FOR CONTINUED GROWTH THERE. BUT WE WILL CONTINUE TO GROW OUR BRANDS LOCALLY. ONE OF THE THINGS THAT WAS MOST NOTABLE TO ME, WE TALKED ABOUT THIS ON THE EARNINGS CALL, WE APPROVED AND SIGNED MORE DEALS FOR NEW HOTELS IN THE FIRST QUARTER THAN IN ANY FIRST QUARTER IN OUR HISTORY. LISA: WE TALKED ABOUT THIS THE LAST TIME YOU WERE ON, TALKING ABOUT HOW THE DEMAND HAS COME FROM VACATION AND NOT AS MUCH FROM TRAVEL FOR WORK. HAS THAT SHIFTED? ANTHONY: WHAT WE ARE REALLY SEEING A SHIFT TOWARDS IS BLENDED TRIP PURPOSE. IT HAS BEEN INTERESTING THE LAST COUPLE OF DAYS IN DOLLARS, I THINK EVERYBODY SPOKE TO SPENT A COUPLE OF DAYS IN DAVOS -- IN DAVOS, I THINK EVERYBODY I SPOKE TO SPENT A COUPLE OF DAYS IN PARIS FIRST. THIS DESIRE TO PAIR BUSINESS AND LEISURE TRAVEL WE THINK WILL ENDURE BEYOND THE END OF THE PANDEMIC. TOM: SO MANY PEOPLE HAVE TO MORTGAGE THE MIDDLE CHILD TO PAY FOR THE AIRFARES TO PARIS NOW. WHEN YOU LOOK AT THE SURGE WE HAVE SEEN IN AIRFARES TO PARIS, HUGELY POPULAR, WHAT DOES THAT DO TO YOUR RESERVATIONS IN PARIS? ANTHONY: OUR FORWARD BOOKINGS INTO THE SUMMER SEASON INTO EUROPE ARE AS STRONG AS THEY HAVE EVER BEEN, SO I THINK WHAT THAT SUGGESTS IS THE BREADTH OF OUR PORTFOLIO ALLOWS THOSE THAT HAVE MORE DISPOSABLE INCOME TO TAKE ON THOSE COSTS, AND AT THE OTHER END OF THE INCOME SPECTRUM, WE EXPECT TO SEE DRIVE TO DESTINATIONS, PARTICULARLY DOMESTIC DESTINATIONS, CONTINUE TO THRIVE. TOM: WHAT DO YOU DO WITH USE OF CASH 12 MONTHS FORWARD? ANTHONY: YOU MAY HAVE SEEN IN THE FIRST QUARTER EARNINGS CALL, WE REINSTATED OUR DIVIDEND. I THINK WE TALK A LITTLE BIT IN THE EARNINGS CALL ABOUT CONSIDERING SHARE REPURCHASE. TOM: I'VE GOT TO MAKE SOME NEWS HERE. I AM MAKING NO NEWS WITH POLITICIANS. ARE WE GOING TO SEE SOME REPURCHASE? ANTHONY: I THINK YOU LIKELY WILL. WE HAVE SET SOME TARGETS AROUND WHERE WE WANT TO GET IN TERMS OF OUR DEBT RATIOS, BUT WE WILL CONTINUE TO LOOK. AND IF YOU LOOK AT THE WAY WE HAVE COME OUT OF OTHER DOWNTURNS, WE STARTED WITH THE DIVIDEND AND THEN PIVOTED TO SHARE REPURCHASE. TOM: WHAT YOU HAVE DONE IN MEMORY OF --, FABULOUS. YOU HAVE KILLED IT. ANTHONY: THANK YOU. TOM: TAKE US OUT OF HERE. ARNE SORENSON DIED TRAGICALLY OF CANCER, AND YOU PICKED UP THE PIECES LIKE NO ONE. LISA: TONY, THANK YOU SO MUCH FOR BEING WITH US. AND I'VE GOT TO SAY, THE PRICING POWER, JUST AMAZING. TOM: YOU CALL IT PRICING POWER. I CALL IT SAY WHAT? [LAUGHTER] LISA: COMING UP, MIKE WILSON, CHIEF U.S. EQUITY STRATEGIST AT MORGAN STANLEY. PERHAPS DOES NOT HAVE THE SAME OPTIMISM, I THINK IS IMPORTANT. TOM: YOU SAID AT THE ATLANTA AIRPORT FOR 15 HOURS. LISA: I DON'T WANT TO DEAL WITH THAT AGAIN. [LAUGHTER] FROM DAVOS, THIS IS BLOOMBERG. > > YOU ARE STILL SEEING PEOPLE THAT ARE VERY APPREHENSIVE TO INVEST. > > IF THE FED CONTINUES TO TIGHTEN, TO TRY TO REDUCE DEMAND , TO GET INFLATION UNDER CONTROL, I WOULD EXPECT TO SEE THAT FLOW THROUGH INTO DISCOUNTED GROWTH. > > THERE'S A LOT OF NEGATIVE THINGS GOING AROUND AWAY FROM THE U.S. THAT COULD REALLY DRAG THE U.S. MARKET DOWN. > > DISCONTENT HAS BECOME GLOBAL. WE HAVE HAD GLOBALIZATION OF GLOBAL DISCONTENT. > > THIS IS "BLOOMBERG SURVEILLANCE" WITH TOM KEENE, JONATHAN FERRO, AND LISA ABRAMOWICZ. LISA: FROM A LESS WINDY BUT MORE FOGGY DAVOS, SWITZERLAND AT THE WORLD ECONOMIC FORUM, THIS IS "BLOOMBERG SURVEILLANCE." GOOD MORNING. TOM: SHH. LISA: IS THAT THE EFFORT OF WIND? WE HAVE A WINDSTORM FROM TOM KEENE. LISA ABRAMOWICZ. JONATHAN FERRO ON ASSIGNMENT. THIS FOG REALLY SETS THE MOMENT FOR THE MOM -- EARLY SETS THE MOOD FOR THE MOMENT WE ARE IN. TOM: IT REALLY WORKS THIS YEAR. THERE'S A SOME FURNACE. I WILL -- THERE'S A SOMBERNESS. CHARLES SCHWAB WROTE A NOTE THIS YEAR THAT I HAVE NEVER SEEN IN 51 YEARS. THERE WAS A SOMBER TONE OF THIS WAR IN UKRAINE. LISA: NOT ONLY THAT, BUT THE SUPPLY-CHAIN DISRUPTIONS AND HOW YOU RE-CREATE THE SPIRIT OF GLOBALIZATION THAT IS BEING REJECTED BY SO MANY DIFFERENT POPULATIONS. I'VE GOT TO SAY, THE BACKDROP OF MARKETS YESTERDAY, QUIESCENT. BUT TODAY A LITTLE LESS SO. THERE'S ANOTHER DOWNWARD TILT, AND IT COMES AFTER SNAP, AND I KNOW YOU WONDER WHAT KIND OF COMPANY IT IS, A LOT OF PEOPLE CALL IT SOCIAL MEDIA, BUT ABERCROMBIE AND FITCH ALSO COMING OUT WITH SOME POTENTIALLY NEGATIVE HEADWINDS, BASICALLY TALKING ABOUT SOME OF THE SUPPLY CHAIN DISRUPTIONS THAT HAVE BEEN GREATER THAN EXPECTED. TOM: I HAD A CONVERSATION YESTERDAY, AND I DON'T THINK IT HAS BEEN PLAYED ENOUGH HERE. IF CHINA OPENS AND SHANGHAI UNLOADS, WHERE DO THE BOATS GO TO? HOW DO YOU UNLOAD THEM? LISA: THAT IS A GOOD QUESTION. YOU GET SO ME TO DISRUPTIONS. HOW DO YOU DEAL WITH VOLUME YOU ARE NOT ACCUSTOMED TO? ALSO COMING OUT WHILE DAVOS IS TAKING PLACE WERE A NUMBER OF DOWNGRADES TO THE POTENTIAL CHINESE GROWTH OUTLOOK. HOW DOES A WORLD ECONOMY DEAL WITH 3% GDP GROWTH IN CHINA? TOM: I AM MORE OPTIMISTIC. I THINK TECHNOLOGY WILL SLIP IN HERE. I THINK THERE WILL BE ADAPTING AND ADJUSTING THE EMOTION OF COMING OFF THE BOTTOM. LET'S DO A DATA CHECK REAL QUICKLY. LISA IS GOING TO TELL YOU ABOUT THE VIEW FORWARD AS WELL, AND THEN IT IS ONLY APPROPRIATE THAT SHE BRING IN OUR NEXT GUEST. THE DATA FRONT IS REAL SIMPLE. UP WE WENT YESTERDAY, DOWN WE GO TODAY. DOW FUTURES NEGATIVE 100 POINTS. LISA HAS NOTED THE STRENGTH OF THE EURO. PART OF THAT, LAGARDE COMMENTS TO OUR FRANCINE LACQUA. 10 YEAR YIELD ROUND-TRIP OVER 48 HOURS. I DO WANT TO NOTE, IDIOSYNCRATIC TURKISH LIRA POUNDING THROUGH 16 THIS MORNING. THAT IS A LARGE DEAL FOR A POLITICALLY CHALLENGED MR. ERDOGAN. LISA: IT SEEMS LIKE YOU HAVE BEEN HANGING OUT WITH POLITICIANS. CHALLENGED. TOM: I WILL TELL YOU, ONE OF THE SYMBOLS HERE IS ISLA ZENDER STUB -- IS ALEXANDER STUBB COMING IN WITH THE UKRAINIAN HANDKERCHIEF IN HIS SUIT. LISA: RIGHT NOW, I AM SO THRILLED TO HAVE MIKE WILSON ON BECOME A CHIEF U.S. EQUITY STRATEGIST AT MORGAN STANLEY, WHO REFLECTS SOME OF THE PESSIMISM REPRESENTED BY THE SILLY METAPHORS, YOU CALL THEM, OF FOG. YOU RECENTLY PUT OUT A NOTE FOR YOU TALK ABOUT 3200 AS A REALISTIC POSSIBILITY FOR THE S & P. WHAT COULD GET US THERE? MIKE: IT WAS ACTUALLY 3400, BUT WHAT IS 200 POINTS IN A BEAR MARKET? IT IS VALUATION DRIVEN, AS WELL AS DRIVEN BY TECHNICAL SUPPORT. I THINK OUR OUT OF CONSENSUS YOU THIS YEAR WHICH HAS COME TRUE IS THAT MULTIPLES HAD TO COME DOWN. THAT WAS A FUNCTION OF THE FED AND RATES GOING UP WITH SLOWING GROWTH. THAT COMBINATION IS PRETTY DEADLY. OF COURSE, THE WAR UNFORTUNATELY MADE BOTH SIDES OF THAT ARGUMENT WORSE. SO WE HAVE GOTTEN TO OUR PRICE TARGETS ON MULTIPLES OF 16.5 TIMES MORE QUICKLY, BUT NOW WE THINK THAT MULTIPLE TARGET IS LOWER BECAUSE OF THE WAR AND OTHER ISSUES THAT ARE OUT THERE THAT MEAN THE EARNINGS PROBABLY COME DOWN EVEN FURTHER. THE RISK OF RECESSION HAS GONE UP NEXT YEAR, SO IT IS 14, 14 POINT FIVE TIMES, WHICH IS A 1400 BASIS POINTS RISK MEME. FROM A TECHNICAL STANDPOINT, 3400 REALLY JIVES WITH OUR OVERALL VIEW, THE DUE HUNDRED DAY MOVING AVERAGE, APPROXIMATELY PRECODE LEVELS GET THERE'S A LOT OF REASONS FOR THE 3400, AND WE JUST DON'T THINK IT IS FINISHED YET. LISA: DO YOU THINK THE STABILITY WE ARE SEEING RIGHT NOW IN BOND YIELDS WITH TEPID MOVES AFTER SOME PRETTY VIOLENT MOVES UPWARD IN YIELDS PRICED DOWN, DO YOU THINK WE HAVE REACHED SOME STASIS STABILITY THAT WILL GIVE US A FLOOR AT LEAST FOR THE NEAR-TERM? MIKE: WE HAVE PROBABLY BEEN MORE NEUTRAL-ISH ON LONG DURATION. WE FEEL LIKE THERE WAS AN OVERSHOOT TO THAT 3.20% LEVEL OVER A COUPLE OF DAYS. THE REASON WHY WE THINK BONDS HAVE OVERSHOT IS TWOFOLD. NUMBER ONE, WE THINK THERE'S A LOT PRICED IN FOR THE FED NOW. IT IS A VERY AGGRESSIVE PATH, PARTICULARLY GIVEN THE SLOWDOWN IN GROWTH WE ARE SEEING NOW. SECONDARILY, THE SECOND PART OF THAT QUESTION, GROWTH IS STARTING TO DISAPPOINT, SO BONDS ARE STARTING TO LOOK RELATIVELY ATTRACTIVE TO STOCKS, AND I SET OUT LOCATORS ARE STARTING TO MOVE. THAT IS ONE OF THE REASONS WHY WE HAVE SEEN THIS RECENT MOVE AND BONDS THAT HAVE OUTPERFORM STOCKS BY ABOUT 7% OR 8% THIS MONTH. THAT IS THE ASSET ALLOCATORS MOVING. THAT STABILIZATION, TO YOUR POINT, COULD LEAD TO PERHAPS SOME OF THE LONGER DURATION GROWTH STOCKS DOING A BIT BETTER. THEY HAVE TAKEN MOST OF THE PAIN HERE. THAT DOES NOT MEAN THEY ARE GOING STRAIGHT UP. IT MEANS THEY MAY BE ON A RELATIVE BASIS CAN DO A BIT BETTER. TOM: YOU HAVING YOUR RESEARCH NOTE A PHRASE WHICH I HEAR TOO OFTEN IN DAVOS. IT IS A FANCY ACADEMIC PHRASE FROM ECONOMICS AND FINANCE. IT IS "NECESSARY AND SUFFICIENT." YOU CAN HAVE A NECESSARY AND SUFFICIENT DAVOS. WE'VE GOT SOME GLOOM OUT THERE. YOU SAY IT IS NECESSARY, BUT IT IS NOT SUFFICIENT. WHAT DO WE NEED TO GO UP? MIKE: EXACTLY RIGHT, I DID PULL THAT PHRASE OUT, FOR THE RIGHT REASONS I THINK. PEOPLE ARE BEARISH NOW, AND THAT IS A BIG CHANGE FROM SIX MONTHS AGO, WHEN I THINK EVERYBODY WAS OVERLY OPTIMISTIC ABOUT MARKETS. FORGET ABOUT THE ECONOMY AND EARNINGS, BUT MARKETS HAD OVERSHOT. SO THAT IS GOOD. THAT IS SENTIMENT. HOWEVER, POSITIONING IS STILL PRETTY EBULLIENT. WHEN WE LOOK AT THE ASSET OWNER COMMUNITY AS OPPOSED TO THE ASSET MANAGER COMMUNITY, THE ASSET OWNER COMMUNITY IS WAY MORE IMPORTANT AND SIGNIFICANT FOR DIRECTION OF MARKETS. IF THEY DECIDE TO GO RIGHT OR LEFT, THEY WERE OVERWHELMED -- THEY WILL OVERWHELM ANY SHORT-TERM'S TRADING TRAGEDIES. WE ARE SEEING GOING BACK FROM STOCKS TO THE BOND. TOM: IF WE USE THE VIX AS A METAPHOR FOR THIS, DO YOU HAVE SUFFICIENCY WITH A STOCHASTIC VIX FROM 30 OUT TO 40, OR IS IT MORE OF A TREND OR MOVING AVERAGE STUDY WHERE I NEED TO SEE SOME PERSISTENCY AT A 40 LEVEL? MIKE: ALL BOTTOMS ARE DIFFERENT. IN A BEAR MARKET, THE QUESTION IS WHAT IS GOING TO FORM THE BOTTOM. SOME BOTTOMS ARE VERY SHARP, LIKE IN MARCH 2020. WE THOUGHT THAT WAS PRETTY VISIBLE AND EASY TO SEE WITH THE STIMULUS. THIS IS NOT GOING TO BE MORE UP THAT, AND OUR VIEW. THIS IS GOING TO BE OR OF A GRIND BECAUSE EVERYBODY HAS KINDA BEEN INVOLVED, AND THE VIX MAY NOT BE. IT IS JUST GOING TO STAY AT A MORE ELEVATED LEVEL. ONE OF THE MISSING INGREDIENTS IS WE ARE NOT SEEING THAT SPIKE BECAUSE WE DON'T THINK WE ARE GOING TO GET FULL ON CAPITULATION. THIS IS MORE OF A DRIFT LOWER AS THESE ASSET OWNER ACCOUNTS ARE SMALLER -- ARE SLOWER TO MOVE. IT IS AN OVERHANG ON THE OVERALL MARKET AS OPPOSED TO CAPITULATION. LISA: DO YOU THINK PEOPLE ARE OVERESTIMATING THE STRENGTH OF THE CONSUMER? MIKE: THAT IS PROBABLY ONE OF OUR BIG OUT OF CONSENSUS CALLS THAT WE ARGUE WITH CLIENTS. CLIENTS HAVE BEEN MUCH MORE BULLISH ON THE SUSTAINABILITY OF THESE TRENDS. WE ARE NOT CALLING FOR THE CONSUMER TO SHRINK THIS YEAR. OUR VIEW, WITH ABOUT MARKETS, NOT NECESSARILY THE CONSUMER, AND THE CONSUMER IS GOING FROM AN EXTREME LEVEL OF SPENDING, 7%, 8% GROWTH IN PCE, TO SOMETHING LIKE 2%. WHILE THAT IS NOT NEGATIVE GROWTH, IT IS GOING TO FEEL LIKE NEGATIVE GROWTH TO A LOT OF THESE COMPANIES THAT BEEN BUILDING IN TORIES, BUILDING FOR BUSINESS AT A HIGHER LEVEL. THAT IS THE RATE OF CHANGE AND I THINK THAT IS THE DIFFERENCE BETWEEN OUR VIEW AND OTHERS. TOM: MIKE WILSON, THANK YOU SO MUCH, WITH MORGAN STANLEY HERE THIS MORNING. HE HAS BEEN JUST STUNNING, DEAD ON. LISA: HE SEES THAT 3400 MARK AS BEING POSSIBLE FOR THE S & P, AND I GOT TO SAY, HOW MUCH CAPITULATION IF THERE'S NOT GOING TO BE WHOLESALE CAPITULATION DO YOU HAVE TO GET IF THERE IS A DRIFT LOWER? BY THE WAY, SOMEONE ON TWITTER ASKING YOU FOR A FRIEND IF YOU CAN INVEST IN THE TRIPLE LEVERAGED GOAT FUND FROM SWITZERLAND. TOM: WE'VE GOT THE GOAT FUND HERE. I DON'T KNOW IF YOU CAN HEAR IT, BUT WERE LISA AND I ARE SITTING, THE GOATS WILL BE LIKE SIX FEET AWAY. LISA: THEY ARE LITERALLY HAGGLING US. TOM: THIS IS THE ELLEN'S AND THEIR GOAT FARM -- ELLEN ZENTNER GOAT FARM, ACTUALLY, BROUGHT TO YOU BY MORGAN STANLEY. ELLEN'S AND HER -- ELLEN ZENTNER WAS OVER FLYFISHING IN SWITZERLAND ONCE AND PICKED UP 40 ACRES OF A GOAT FARM. ON RADIO, THIS IS IMPORTANT. WE'VE GOT TO DESCRIBE THIS. IT'S ONLY FAIR. IT IS LIKE AVALANCHE TERRITORY HERE AT DAVOS. THERE'S LITERALLY THOSE SAFETY GATES UP PROTECTING FROM AVALANCHE. AND IT IS THE FRUGALITY OF THE SWISS. THEY'VE GOT DIFFERENT STRAINS OF LAMBS AND GOATS, AND THEY HAVE BEEN VERY VOCAL DURING THE SHOW. LISA: THEY ALSO HAVE BELLS AROUND THEIR NECKS. TOM: THEY HAVE THEIR BELLS TOO? LISA: WE HAVE A LOT MORE SERIOUS CONVERSATIONS. TOM: ABOUT 11:00 P.M. LAST NIGHT, I WAS RUNNING AROUND WITH THE GOATS. LISA: THAT EXPLAINS A LOT. COMING UP, WE HAVE A REALLY IMPORTANT CONVERSATION ON THE STRENGTH OF EUROPE AT THIS REALLY TENUOUS MOMENT, ESPECIALLY GIVEN SOME OF THE INFLATIONARY PRESSURES. TOM: PEDRO SANCHEZ, THE PRIME MINISTER OF SPAIN. LOOKING FORWARD TO THAT CONVERSATION. AGAIN, THE MEETINGS OF THE WORLD A COMIC FORUM IN DOLLARS. STAY WITH US ON RADIO AND ON TELEVISION. WE WILL BE HERE WEDNESDAY AND THURSDAY AS WELL, AND I AM TOLD IN JANUARY. THAT IS A GOOD THING. THIS IS BLOOMBERG. ♪ RITIKA: KEEPING YOU UP TO DATE WITH NEWS FROM AROUND THE WORLD, WITH THE FIRST WORD, I'M RITIKA GUPTA. SHARES OF SNAP ARE PLUNGING IN PREMARKET TRADING AND PUSHING OTHER SOCIAL MEDIA STOCKS DOWN, TOO SNAP. CUT ITS REVENUE AND GROWTH FORECAST. THE COMPANY SAID IT WILL ALSO SLOW HIRING. SNAP BENEFIT FROM A SURGE IN USES OF ITS SNAPCHAT APP DURING THE PANDEMIC, BUT BUSINESS IS SLOWING AS PEOPLE RETURN TO OFFICES AND SCHOOLS. CHRISTINE LAGARDE SAYS THE CURRENCY BLOC HAS REACHED A TURNING POINT IN MONETARY POLICY. IN AN EXCLUSIVE INTERVIEW WITH BLOOMBERG IN DOLLARS, LAGARDE SAID THE ECB IS NOT IN PANIC MODE, BUT SAID IT WILL MOVE AT NEGATIVE INTEREST RATES BY THE END OF THE YEAR. EUROPE'S TWO LARGEST ECONOMIES KEPT GROWING IN MAY. GERMANY AND FRANCE BENEFITED FROM A SUSTAINED REBOUND AND SERVICES THAT OFFSET LOSSES FROM ROSS'S INVASION AND YOU COULD -- FROM RUSSIA'S INVASION IN UKRAINE. THE BIDEN ADMINISTRATION'S TRADE REPRESENTATIVE SAYS THE U.S. MUST BE STRATEGIC WHEN IT COMES TO DECIDING WHETHER TO LIFT TARIFFS ON CHINESE GOODS. IT HAS TO BE DONE IN TERMS OF HOW TO EFFECTIVELY REALIGN THE U.S. AND CHINA TRADE ECONOMIC RELATIONSHIP. PRESIDENT BIDEN SAID HE WOULD CONSIDER REMOVING TRUMP ERA TARIFFS. MORE AMERICANS ARE QUITTING THEIR JOBS THAN EVER, AND FEW ARE STICKING AROUND A NEW POSITIONS. AMONGST WORKERS WHO TOOK A NEW JOB AND 22 ANYONE, THE SHARE WHO HAD BEEN IN THEIR PREVIOUS POSITION FOR LESS THAN 12 MONTHS ROSE BY 6.5%, COMPARED WITH A YEAR EARLIER. THAT IS ACCORDING TO LINKEDIN. 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 RESULT OF A MONETARY INFLATION IS HIGH NOMINAL GDP GROWTH, AND THEN THAT GETS ABSORBED BY PRICES, SO YOU GET LOW REAL GROWTH, AND THAT PRODUCES STAGFLATION. WE ARE ON THE CUSP OF IT. HOW DO YOU DEFINE STAGFLATION? THERE ARE DIFFERENT WAYS, BUT BASICALLY, THE WAY WE LOOK AT STAGFLATION IS IN TERMS OF HOW IT AFFECTS MARKETS. TOM: THE ECONOMICS OF BOB PRINCE OF BRIDGEWATER ASSOCIATES COME ORIGINAL WITH REBECCA PATTERSON AND OTHERS. SOME REALLY INTERESTING TALK THERE ABOUT NOMINAL GDP AND HOW IT HOLDS INTO RATES. LISA: PERHAPS IT WAS THE GOATS IN THE BACKGROUND. AL FROM NEW JERSEY ROAD AND, THEY ARE NOT GOATS, THEY ARE SHEEP. -- NEW JERSEY ROAD IN -- NEW JERSEY WROTE IN, THEY ARE NOT GOATS, THEY ARE SHEEP. TOM: IT HAS BECOME A REALLY INTERESTING AND DIFFERENT CONVERSATION OF EUROPE. WE NOW SPEAK WITH THE PRIME MINISTER OF SPAIN, PEDRO SANCHEZ JOINS US THIS MORNING. LISA IS GOING TO START WITH THE OBLIGATORY QUESTIONS ON EUROPE AT THE MOMENT, THE WAR IN UKRAINE. I WANT TO TALK TO YOU ABOUT HOW THUNDERSTRUCK I WAS IS AN UNINFORMED AMERICAN ON THIS STUNNING DP PULLING -- STUNNING DE-PEOPLEING OF SPAIN. THE ARCH AMERICAN FEAR IS THE DE-PEOPLING OF THE PLANES, THE MIDWEST. HOW DO YOU PUSH AGAINST THE DE -PEOPLING OF RURAL SPAIN? PM SANCHEZ: THIS IS ONE OF OUR MAJOR CHALLENGES, AND THAT IS WHY AND THAT IS WHY NR NEXT GENERATION EUROPEAN UNION FUNDS WE ARE MORE OR LESS ALLOCATING 70 BILLION EUROS FOR THE NEXT YEAR'S. ONE OF THE TRANSVERSAL POLITICAL GOALS, APART FROM THE ECOLOGICAL TRANSITION, THE DIGITAL TRANSFORMATION, WILL BE THE SOCIAL. AT THE END OF THE DAY IT IS IMPORTANT NOT ODDLY -- NOT ONLY TO HAVE SOCIAL COHESION COME BUT ALL THE TERRITORIES FROM SPAIN HAVE OPPORTUNITIES. TOM: HOW IS THAT SOCIAL COHESION AND THE GEOGRAPHIC COHESION AND INTO THE MODERN SPANISH CAPITALISM, WITH THE POLITICS OF SPAIN, THE FRACTIOUS NATURE OF THE POLITICS OF SPAIN? WHAT WILL BE THE FORM OF CAPITALISM THAT WILL ADVANCE THAT TECHNOLOGY TO ALL OF THE PEOPLE OF SPAIN? PM SANCHEZ: IF WE COMPARE THE RESPONSE THE EUROPEAN UNION IS GIVING FIRST TO THE PANDEMIC AND AFTERWARDS TO THE CONSEQUENCES OF THE WAR, COMPARED TO THE FINANCIAL CRISIS IN THE YEAR 2008, IT IS COMPLETELY THE OPPOSITE. SO WE ARE NOW HAVING A LOOK FUNDS FOR PUBLIC INVESTMENTS IN ORDER TO MODERNIZE OUR ECONOMY CREATE ON DIGITAL AND ECOLOGICAL TRANSITION, AT THE END OF THE DAY, ALSO TO INVEST IN PEOPLE, AND HUMAN CAPITAL. THAT IS WHY WE ARE NOT ONLY ALLOCATING PUBLIC AND IN FOR THIS ORGANIZATION. ALSO WE ARE TRANSFORMING OUR REGULATION. FOR INSTANCE, A HUGE REVOLUTION IN OUR SYSTEM, AND THE LABOR MARKET, PENSION REFORM. SO WE ARE ACTUALLY TRANSFORMING SPAIN IN A VERY POSITIVE WAY. LISA: HOW MUCH OF A CHALLENGE HAS ENERGY PRICES BEEN, AND HAVE YOU DONE EVERYTHING YOU CAN DO TO BRING THAT PRICE DOWN? PM SANCHEZ: ABSOLUTELY. LISA: ARE YOU LOOKING AT ADDITIONAL MEASURES? PM SANCHEZ: WE ARE ALLOCATING 16 BILLION EUROS IN ORDER TO HELP OUR POPULATION, BUT ALSO SPECIFIC SECTORS ARE VERY TOUCHED BY THE INCREASE OF PRICES, ESPECIALLY THE ENERGY PRICES. BUT WE HAVE DONE THE TWO THINGS WHICH ARE VERY IMPORTANT. THE FIRST IS TO AGREE WITH THE EUROPEAN COMMISSION AND THE EUROPEAN COUNCIL THAT WE ARE AN ISLAND BECAUSE THE CONNECTIONS WE HAVE THROUGH THE PEER AND EASE WITH THE REST OF THE EUROPEAN -- THROUGH THE PYRENEES WITH THE REST OF THE EUROPEAN UNION, WE ARE AN ISLAND. WE ALSO HAVE 57% OF OUR CAPACITY COMES FROM RENEWAL. SO AN ENERGY MIX IS DIFFERENT TO OTHER PLACES IN EUROPE. NOT ONLY SPAIN, BUT ALSO PORTUGAL. THAT IS WHY WE AGREED WITH THE COMMISSION TO FIX A PRICE CAP, A TEMPORARY PRICE CAP FOR GAS FOR ELECTRICITY GENERATION, AND I THINK THAT WITH THIS WE ARE ALSO GOING TO REDUCE THE ON SALE MARKETS. LISA: THERE ARE OTHER NATIONS STRUGGLING A BIT MORE AND COULD POTENTIALLY STRUGGLE ALL THE MORE SO IF GAS SUPPLIES ARE CUT OFF FROM RUSSIA. ARE YOU PREPARED FOR SOME SIGN OF RECESSION IN EUROPE THAT COULD HAMPER THE SPANISH ECONOMY? PM SANCHEZ: I THINK THAT OF COURSE, THE ECONOMIC CONSEQUENCES OF THE WAR ARE HARMING THE SITUATION OF THE ECONOMY IN EUROPE AND OF COURSE IN SPAIN. IT IS ALSO TRUE THAT WE HAVE GOOD FUNDAMENTALS OF THE SPANISH ECONOMY, FIRST BECAUSE LESS THAN 8% OF OUR GAS IMPORTS COME FROM RUSSIA. LESS THAN 5% OF THE IMPORTS COME FROM RUSSIA. AS I MENTIONED BEFORE, 57% OF OUR CAPACITY IS WOODEN OVALS, SO WE ARE MUCH BETTER PREPARED, AND NOT MANY PEOPLE KNOWS, BUT 1/3 OF THE TOTAL RETRANSFER CAPACITY OF THE EUROPEAN UNION IS IN SPAIN. 50% OF THE LNG IS STORED IN THE IBERIAN PENINSULA, WHICH IS THE PROBLEM WE ARE FACING. THE LACK OF INTERCONNECTIVITY. THAT IS WHY I THINK IT IS REALLY IMPORTANT TO INVEST IN THOSE INTERCONNECTIONS TO PROVIDE ALSO FROM THE SOUTH OF EUROPE ALTERNATIVES TO THE CENTRAL AND NORTH OF EUROPE. TOM: WE CARRY THIS FORWARD, AND I COULD SAY WHAT DID SPAIN GET RIGHT AND GERMANY GET WRONG ON NATURAL GAS, BUT I DON'T WANT TO GO THERE. LISA: WE WANT TO GO THERE. [LAUGHTER] TOM: THANK YOU FOR JOINING US TODAY, PEDRO SANCHEZ, THE PRIME MINISTER OF SPAIN. MUCH TO TALK ABOUT THERE. REALLY WHAT IS INTERESTING AFTER SPAIN AND FINLAND IS THE UNEVENNESS OF THE HYDROCARBON SWEAT. LISA: AND THE LACK OF CONNECTIVITY, AS THE PRIME AND THERE WAS JUST SAYING. HOW DO YOU BUILD THAT OUT AT A TIME OF STRESS, ESPECIALLY WHEN THERE IS SOME SPENDING CAPACITY AND MORE BEING BROUGHT ONLINE IN TERMS OF FISCAL SPENDING, BUT THE PRESSURES OF INFLATION FROM EUROPE TO THE U.S. TOM: ONE OF THE THINGS THAT HAS HUNG OVER ME IS THE 100 PAGE JP MORGAN DOCUMENT ABOUT SIX WEEKS AGO COME WHERE CHRISTYAN MALEK AND HIS TEAM FRAME OUT 130, $130 BRENT. ARE WE PREPARED FOR THAT? PM SANCHEZ: AND -- LISA: AND IS THAT EVEN RELEVANT WHEN THE REFINERIES ARE BECOMING THE PROBLEM, THAT YOU DON'T HAVE ENOUGH REFINED GOODS TO SUSTAIN A STEADY DECLINE IN THE END PRODUCT FOR CONSUMERS. TOM: WE HAD AN UP MARKET YESTERDAY AFTER THE COMMENTS OF MR. DIMON AFTER THEIR INVESTOR DAY. SNAP TOOLS REALLY NOT DOING WELL AT ALL. SO WE COME THAT DOWN A LITTLE BIT. DOW FUTURES, -226. THE YIELD COMES RIGHT BACK, UP FIVE, DOWN FIVE. IT IS LIKE THE WINDS YESTERDAY. LISA: HAS TO BE GLUED DOWN. TOM: IT IS THIS KIND OF THING FROM YESTERDAY. THIS IS BLOOMBERG. TOM: "BLOOMBERG SURVEILLANCE." THE MEETINGS AT THE WORLD ECONOMIC FORUM IN DAVOS, INTO THIS EVENING, INTO THE PARTIES TONIGHT AND TOMORROW. LISA ABRAMOWICZ AND TOM KEENE, WE WELCOME ALL OF YOU. SORT OF HALFWAY THROUGH. LISA: HALFWAY THROUGH DAVOS. I THINK THERE'S THIS FEELING THAT PEOPLE ARE WILLING TO SAY THINGS OFF THE RECORD ABOUT THE OUTLOOK, AND THERE IS A GREAT DEGREE OF CONCERN ABOUT HOW THINGS ARE GOING TO PROCEED GOING FORWARD. TOM: EVERYONE IS LOOKING AT THEIR CELL PHONES, BUT THEY ARE NOT LOOKING AT THE MARKETS. THE MARKETS ARE PRETTY QUIESCENT. TO ME WHAT THEY ARE LOOKING AT IS THE NEWS FLOW, INCLUDING GOING TO CHINESE-RUSSIAN EXERCISES SOMEWHERE NEAR JAPAN AS THE PRESIDENT IS ON HIS ASIAN TRIP. LISA:LISA: A LOT OF PEOPLE HAVE BEEN TALKING ABOUT THE NEED TO SPEAK WITH POLICYMAKERS. EXECUTIVES HAVE BEEN TALKING ABOUT HOW THEY ARE SO HAPPY TO HAVE THE CHANCE TO GET SOME VISIBILITY. OUR TARIFFS GOING TO GET LIFTED? ARE THEY GOING TO BE IMPOSED? ONE OF THE POTENTIAL EMBARGOES? I THINK THE FOCUS IS IMPORTANT HERE. TOM: THE DATA CHECKS HAVE REALLY BEEN SUSPECT. GO FEED THE GOATS AND THE LAMBS. SO WE WILL GO TO A DATA CHECK IN NEW YORK WITH KAILEY LEINZ. KAILEY: GOOD MORNING. I'M OTHER A GOAT NOR A SHEEP, BUT I AM WATCHING THESE MARKETS. AFTER THE GAINS OF YESTERDAY, WE ARE SEEING LOSSES IN THE FUTURES SESSION. MY PRODUCER POINTED OUT TO ME EARLIER TODAY THAT IN THE LAST 10 DAYS WE HAVE SEEN A GAIN OF AT LEAST 1% ON THE S & P 500. NINE OF THOSE TIMES HAVE BEEN FOLLOWED BY A LOSS FOR THE INDEX. ON AVERAGE BY ABOUT ONE POINT 4%. LO AND BEHOLD, FUTURES ARE DOWN ABOUT 1.2% AT THIS POINT IN THE SESSION. OF COURSE, IT IS A LITTLE BIT WORSE FOR THE NASDAQ 100 COMING DOWN ABOUT 1.8%. THAT IS LARGELY A SNAP STORY, WHICH I WILL COME BACK TO. AS YOU ARE SEEING SELLING INEQUITIES, THERE IS SOME BUYING IN THE BOND MARKET. DOWN ABOUT FOUR BASIS POINTS ON THE 10-YEAR GILTS, 2.8 1 -- THE 10 YEAR YIELD, 2.81%. IT IS PERHAPS A STRONGER EURO, BACK OUT TO AROUND 107 ON EURO DOLLAR. CHRISTINE LAGARDE SAYING NEGATIVE RATES WILL BE IS IN OF THE PAST BY THE THIRD QUARTER. SHE REINFORCE THAT VIEW IN AN INTERVIEW HERE ON BLOOMBERG AND DOWNPLAYED THE RISK OF EUROPEAN RECESSION. AS FOR WHAT IS WEIGHING ON THE EQUITY MARKET AND AN INDIVIDUAL LEVEL, SNAP REALLY CREATING A DRAG ACROSS TECH. IT ALREADY HAD EXPECTATIONS FOR PROFIT AND REVENUE THAT WERE BELOW WHAT THE STREET EXPECTED. THE COMPANY CUTTING EVEN BELOW ZONE GUIDANCE CAUSING THAT THE MACROECONOMIC ENVIRONMENT IS DETERIORATING FOR YOUR TALKING ABOUT INFLATION, SUPPLY CHAIN ISSUES, THE WAR IN UKRAINE, ALL OF THAT AFFECTING THE WAY ADVERTISERS WANT TO SPEND ON THE PLATFORM. SNAP SHARES ARE DOWN 33% IN EARLY HOURS. PINTEREST AND META PLATFORMS ALSO LOWER BY ABOUT 15% AND 8% RESPECTIVELY. I THOUGHT THE COMMENTARY OUT OF ABERCROMBIE & FITCH WAS SUPER INTERESTING. THEY REPORTED A $.27 PER SHARE LOSS IN THE QUARTER, FAR BELOW ANALYST EXPECTATIONS WHO SAW A SIX CENT PER SHARE PROFIT. BUT THE COMPANY TALKING ABOUT HIGHER COSTS ON FREIGHT, AND THEY ARE PULLING BACK ON PROMOTIONAL ACTIVITY. OF COURSE, THAT PROMOTIONAL ACTIVITY PULLBACK NOT OFFSETTING ALL OF THOSE HIGHER COSTS. THAT STOCK IS DOWN 28%. BUT THAT SOUNDS TO ME LIKE EXACTLY WHAT SNAP WAS TALKING ABOUT. LISA: THANK YOU SO MUCH FOR THAT. RIGHT NOW, JUST TO FOCUS ON THE MARKETS, ONE OF THE BIG QUESTIONS THAT I THINK A LOT OF PEOPLE HAVE BEEN WONDERING IS HOW MUCH WE HAVE FOUND BOND STABILITY. WE HAD THIS MASSIVE SELLOFF. YOU TALK ABOUT TRYING TO RECOUP SOME OF THE GAINS. WE'RE GETTING AN INCREASING NUMBER OF WALL STREET STRATEGISTS POINTING TO NEW STABILITY AS DURATION BECOMES MORE -- UNCLE ROURKE JOINS US NOW. -- MICHAEL O'ROURKE JOINS US NOW. DO YOU BUY THIS STABILITY? MICHAEL: WITH THE VOLATILITY WE HAVE SEEN IN THE EQUITY MARKET, INVESTORS ARE GOING BACK TO BONDS. IT DOES NOT MEAN THAT THEY WON'T RESUME THEIR SELF AT SOME POINT, BUT OBVIOUSLY THEY ARE LOOKING FOR SOMETHING A LITTLE MORE COMFORTING AMIDST WHAT HAS BEEN A REALLY ROCKY 2022 FOR THE EQUITY MARKET. LISA: THIS IS ACTUALLY SOMETHING BOB PRINCE WAS SAYING AS WELL, AND WE WERE HEARING ABOUT THIS ROTATION AWAY FROM STOCKS AND INTO BONDS, AND YET SOME PEOPLE ARE SAYING THAT BOND STABILITY WILL LEAD TO STOCK STABILITY, THAT THAT HAS ACTUALLY BEEN THE BIG FACTOR HERE THAT HAS BEEN DRIVING SOME OF THE VOLATILITY. DO YOU THINK THERE ARE MORE LOSSES TO COME ON THE EQUITY SPACE? MICHAEL: I THINK SHORT TERM YOU SEE BOND STABILITY AND HELP STOCK STABILITY, BUT LONGER TERM YOU ARE SEEING A REPRICING AND REWRITING -- AND REWRITING -- AND RERATING, BUT OBVIOUSLY THERE IS STILL MUCH SO UNCERTAINTY UNFOLDING IN 2020 THERE IS MORE TO COME. TOM: THE EQUITY WE COMES FROM A LACK OF BID -- THE EQUITY WEAKNESS COMES FROM A LACK OF BID. WHAT ARE THE TECHNICAL INDICATORS THAT SHOW A DEARTH OF BID, WHICH IS WHERE YOU GO DOWN FURTHER? I'M THINKING ABOUT AGENT STUFF -- ABOUT ANCIENT STUFF LIKE PUT CALL RATIO AND STUFF. WHAT DO THEY SAY ABOUT THE SPIRIT OF THE BID? MICHAEL: ONE THING I AM FOCUS ON ON HERE IS VOLUME. WE HAVE SEEN IT DRIVE UP, ESPECIALLY DURING THE RALLIES. BLOOMBERG HAD AN INTERESTING STORY THUSLY -- STORY LAST WEEK TALKING ABOUT THE PUT CALL DROPPING VERY LOW. YOU HAD HEAD FUNDS -- YOU HAD HEDGE FUNDS NOT COMPETENT TO OWN THE MARKET ITSELF. TOM: MICHAEL, THE HEADLINE THING IN TERMS OF LIQUIDITY IS TO TRILLION DOLLARS AND THE OVERNIGHT TRUST MARKET. THE REPO MARKET. OUR ANIMALS LIKE YOU SUGGESTING THAT MONEY NEEDS TO MOVE OVER TO EQUITIES, TO ESTABLISH A BID? MICHAEL: IT WON'T MOVE TO EQUITIES. PEOPLE SHOULD BE PUSHING FOR THAT SAFE MONEY. PEOPLE HAVE NOT PARKED AT THE FED BECAUSE THEY NEEDED IN A SAFE SPOT. WHEN THE FED STARTS ITS BALANCE SHEET NORMALIZATION PROCESS, THAT IS WHERE I SUSPECT THAT MONEY WILL GO. IT IS JUST THE TREASURY INSTRUMENTS THAT COME BACK ON THE MARKET, BUT NOT TO THE EQUITY MARKET. LISA: WE ARE WATCHING SNAP SHARES DOWN MORE THAN 30% AFTER A DOWNSIDE PROJECTION FOR WHAT IS TO COME AND AN UNEXPECTEDLY DETERIORATING MACROECONOMIC BACKDROP. IS THIS PART OF A BUBBLE BURSTING IN TECH, AND POCKETS OF TECH, OR DO YOU THINK THIS IS AN IDIOSYNCRATIC STORY HAVING TO DO WITH A NUMBER OF SOCIAL MEDIA COMPANIES THAT HAVE BEEN OVERPRICED? MICHAEL: I DO THINK IT IS A BUBBLE BUSTING. I THINK THIS IS VERY SOMEWHERE TO THE 2000-2002 ENVIRONMENT. THERE'S A NUMBER OF GROWTH NAMES ALREADY DOWN 60% TO 75%. WE ARE COMING OUT OF AN ENVIRONMENT WHERE 2021 IS PROBABLY GOING TO PROVE TO BE A PEAK YEAR AND EARNINGS, AND THAT WAS A VERY STIMULUS DRIVEN YEAR, SO NOW WE WILL LOOK AT THE SECOND HALF OF 2022. OBVIOUSLY WE ARE GOING INTO MORE TIGHTENING AS THE MORTGAGE UNFOLDS. I THINK THAT'S WITH THE VOLATILITY IS AND THAT IS WHY THESE PRICES ARE SO DRAMATIC IS PEOPLE DON'T KNOW WHERE THE REAL TREND OF ORGANIC BUSINESS IS. WHEN THESE GROWTH STOCKS STOP GROWING, IT IS A BIG PROBLEM. LISA: SO WHEN DO YOU GET THE COURAGE TO BUY? WOULD YOU GET THE SENSE THAT WE HAD A BOTTOM? MICHAEL: THERE'S TWO MAJOR INDICATORS THAT I THINK ARE REALLY IMPORTANT HERE. ONE IS FINANCIAL CONDITIONS. OBVIOUSLY CHAIRMAN POWELL HAS TALKED ABOUT FINANCIAL CONDITIONS NEED TO TIGHTEN, BILL DUDLEY, THE FORMER EUROPE FED PRESIDENT AND VICE CHAIR OF THE FOMC, HE IS SAYING CONDITIONS NEED TO TIGHTEN. STOCKS AND BONDS NEED TO REPRICE. I WOULD KEEP THE INDEX BACK AT 2000 LEVELS SO WE ARE NOT TIED IT ALL, WHICH IS TIGHTER THAN THE PAST TWO YEARS, AND THE S & P 500 WOULD HAVE TO CHANGE. IT STARTED THE YEAR AT 175% OF GDP, DOWN TO 140% OF GDP. BUT THE 2000 BUBBLE PEAK WE WERE AT 120% OF GDP, SO THERE IS STILL A LONG WAY TO GO BEFORE WE FIND STABILITY. WITH ALL OF THE UNCERTAINTY JUST IN THE HEADLINE RISK OUT THERE, I WOULD NOT TAKE THE CHANCE RIGHT NOW. I WOULD BE MORE CAUTIOUS AND FOCUS ON VALUE NEEDS HAVE MORE ATTRACTIVE VALUATIONS AT THIS TIME. TOM: ARE YOU GOING TO BE IN CASH OR SOMETHING WICKED DEFENSIVE? MICHAEL: BECAUSE I TEND TO BE MORE CAUTIOUS, I WOULD DEFINITELY HAVE MORE CASH ON HAND. FOR INVESTORS WHO HAVE TO BE INVESTED, I SEE THIS AS 2000 AND 2002. THE PAST 15 YEARS, THE RUSSELL 1000 HAS OUTPERFORMED. VALUE HAS OUTPERFORMED BY ABOUT 18% THIS YEAR. THAT'S HOW I WOULD LOOK AT IT. IF YOU NEED TO BE INVESTED, BE INVESTED IN VALUE. TOM: MICHAEL ROURKE, THANK YOU SO MUCH FOR JOINING TODAY. WHAT I FOUND REALLY IMPORTANT THERE, AND THIS IS AWAY FROM WHAT I DO OR WHAT I FEEL ABOUT, IS THE LIQUIDITY STUDY AND THE VOLUME STUDY. I'M GUILTY OF THIS, I DON'T DO ENOUGH CHAT ON THE VOLUME BELIEF OF THE STREET. I JUST DON'T BUY IT. MICHAEL ROURKE DOES, AND IT IS IMPORTANT HE BRINGS THAT UP COME OF THE DEARTH OF VOLUME RIGHT NOW. LISA: THIN VOLUMES TYPICALLY LEAD TO LOW CONVICTION TRADING, AND THAT IS WHEN YOU GET SOME INCREDIBLE SWINGS. WHETHER YOU GET PEOPLE LOOKING TO STOCKS OR BONDS, YOU SEE THAT ACTIVITY. I FIND IT INTERESTING YOU ASK ABOUT CASH AND THAT YOU HAVE A TRIPLE LEVERAGED ALL-CASH CONSIDERING YOUR OPTIMISM ON CORPORATIONS. TOM: THIS IS MY STORY. I LOOK AT THE CHOICES I'VE HAD TO OVER THE YEARS, AND WHEN YOU LOSE MONEY 10 YEARS IN A ROUT, YOU END UP WITH THE TRIPLE LEVERAGED ALL-CASH FUND. THERE'S FOUR WAYS TO GO HERE. I GO TO STOCKS, I GO TO CASH. I'M SHORT, I GO TO CASH. I'M IN CASH, I GO ALONG. I'M IN CASH, I GO SHORT. THIS IS NOT AS EASY AS PEOPLE THINK IT LISA: -- PEOPLE THINK. LISA: HE'S IN TRIPLE LEVERAGED ALL PRODUCT SNEAKERS, I THINK. CLAWING BACK SOME OF THE LOSSES A LITTLE BIT, S & P FUTURES DOWN 1% WITH THAT EURO STRONGER VERSUS THE DOLLAR, BUT LOSING A LITTLE BIT OF MOMENTUM. THIS IS BLOOMBERG. RITIKA: KEEPING YOU UP TO DATE WITH NEWS FROM AROUND THE WORLD, WITH THE FIRST WORD, I'M RITIKA GUPTA. ECB PRESIDENT STRONG FISCAL STIMULUS WHILE IT FIGHTS INFLATION. THE GUARD SPOKE TO BLOOMBERG IN AN EXCLUSIVE INTERVIEW. SHE SAID THERE'S NO NEED TO PANIC. SHE ECHOED THAT THERE ARE NO CONCERNS FOR A 50 BASIS POINT HIKE. ALEXEI NAVALNY HAS LOST HIS APPEAL AGAINST A NEW DRIVEN -- ANY PRISON SENTENCE. HE WILL BE TAKEN TO A PRISON AIMED AT ISOLATING PUTIN'S TOP CRITIC FURTHER. QUARANTINING THOUSANDS OF WORKERS IN CHINA TO MAKE SURE THEY ARE FREE OF CORONAVIRUS'S PART IS THE LOGIC -- THE WORKERS ARE BEING HOUSED IN AN OLD MILITARY CAMP. BLOOMBERG HAS LEARNED -- IS IN TALK TO BUY INTEL TO CREATE A GIANT IN DIABETES DEVICES. AN AGREEMENT COULD BE WORKED -- COULD BE REACHED IN THE COMING WEEKS. WALMART AND ITS PARTNER PLAN TO EXPAND THEIR DRUM DELIVERY HUBS TO 16 STATES BY THE END OF THE YEAR. DELIVERIES WILL COST $3.99 AND ORDERS CAN WEIGH UP TO 10 POUNDS. STILL, THERE ARE BIG REGULATORY HURDLES. SO FOR THE FEA HAS NOT WRITTEN RULES ABOUT AROUND DRONE FLIGHTS BE ON THE SIDE OF -- BEYOND THE SITE OF HUMAN OPERATORS ON THE GROUND. I'M RITIKA GUPTA. THIS IS BLOOMBERG. ♪ > > THERE ARE HEADWINDS ABSOLUTELY. THERE ARE MANY DOWNSIDE RISKS. BUT I THINK TO SAY AT THIS POINT GLOBALLY THAT THERE IS THERE IS HASHEM, I THINK THAT IT ASKED THAT THERE IS A RECESSION, I THINK THAT IS PREMATURE -- THAT THERE IS A RECESSION, I THINK THAT IS PREMATURE. IT IS CHANGING RAPIDLY, WHAT EFFECT A LOWER INTEREST RATE WILL HAVE AND HOW QUICKLY. TOM: TWO THE ECONOMICS OF GITA GOPINATH, WORLDWIDE NEWS A NUMBER OF MONTHS AGO, THE FIRST MANAGING DIRECTOR OF EASY DEPUTY ASH DIRECTOR OF THE IMF -- OF THE IMF. THE PANELS ARE A BIG DEAL AND THEY ARE ALMOST CALMER AND THEY SEEM MORE NORMAL THIS YEAR BECAUSE EUROPE IS NOT THE -- BECAUSE IT IS NOT THE SUPER CRUSH OF PEOPLE TRYING TO GET IN. LISA: A LOT OF PEOPLE READ LESS CROWDED AS BEING A BIT PRODUCTIVE BECAUSE YOU HOPE PEOPLE WHO ARE ACTUALLY HERE CAN WORK. TOM: A PANEL THAT WOULD BE WIDELY ATTENDED IF THEY HAD IT, I AM MAKING IT UP, THE MEETINGS OF THE WORLD ECONOMIC FORUM, IT WOULD BE ATTENDED. IS THIS 1998? JOINING US, DAMIAN SASSOWER, CHIEF STRATEGIST FOR BLOOMBERG. THIS IS A HUGELY INTERNATIONAL DAVOS BECAUSE THE AMERICANS, MAYBE THE PEOPLE FROM THE UNITED KINGDOM IN LESS ATTENDANCE. WHAT IS THE STATE OF EM FINANCE AS THEY COME TO DAVOS? DAMIAN: I THINK THE STATE OF EM FINANCE IS THAT YOU HAVE A TALE OF TWO STORIES. COUNTRIES LIKE BRAZIL WERE EARLY ON IN THE CYCLE THAT TIGHTENED AGGRESSIVELY, AND YOU ARE STARTING TO SEE ENVISION ROLLOVER. THE MARKETS ARE REWARDING BRAZIL , THE FRONT END OF THE CURVE, FOR BEING THERE FOR GETTING INFLATION UNDER CONTROL. INDONESIA FAILED TO MOVE THIS MORNING, YOU'VE KNOW YOU SAW THE PHILIPPINES COME OFF THE RESERVATION LAST WEEK. YOU SAW INDIA AND MALAYSIAN AS WELL, AND THE INFLATION IMPULSE IS NOT NEARLY AS STRONG. WHILE YOU CAN FINANCE LESS EXPENSIVELY IN ASIA, IS DEMAND REALLY THERE IN AN INFLATIONARY ENVIRONMENT. THAT REMAINS TO BE SEEN. TOM: WHAT A GREAT HONOR TO SPEAK WITH RICARDO HAUSMAN. YOU READ EVERYTHING, I READ EVERYTHING I COULD ON ORIGINAL SIN. CAN YOU GET BUSINESS DONE IN YOUR OWN CURRENCY OR DO YOU HAVE TO GO TO A MORE DOMINANT CURRENCIES LIKE THE DOLLAR? DAMIAN: THE FACT OF THE MATTER IS I THINK YOU HAVE NO CHOICE BUT TO FUND IN YOUR LOCAL CURRENCY BECAUSE YOU REALLY CAN'T FUND IN DOLLARS, ESPECIALLY THE LOW-QUALITY EMERGING-MARKET CREDITS. BB'S, EVEN SEEING COLOMBIA AND SERBIA, LEVELS ARE SURGING THROUGH THE ROOF. SPREADS ARE INCREDIBLY WIDE. THE PROBLEM IS THEY COULD STILL GO WIDER. WE ARE ONLY BACK TO TAPER TANTRUM 2013 LEVELS. THAT IS A RISK. YOU'RE NOT SEEING A LOT OF PEOPLE ACCESSING THE U.S. CAPITAL MARKETS, AT LEAST NOT IN THE EM SPACE, AND I THINK THE SAME GOES FOR HIGH-YIELD HONESTY WANT TO PAY COUPONS TO YOUR CREDITORS. LISA: WE HAVE SEEN THE LOCKDOWNS REALLY HAMPER GROWTH PROSPECTS FOR A LOT OF SOUTHEAST ASIAN NATIONS, BUT PARTICULARLY BECAUSE CHINA IS SUCH A BIG COMPONENT. HOW DO YOU VIEW THE RECENT EASING AND FISCAL SUPPORT THAT CHINA IS TALKING ABOUT? OVERNIGHT WE GOT MORE OF THAT. HOW MUCH CAN THAT SUPPORT THEM ECONOMY FLAT ON ITS BACK BECAUSE PEOPLE CAN'T GET OUT TO SPEND? DAMIAN: THAT IS TO QUESTION -- THAT IS THE QUESTION. IT DOES NOT REALLY EVEN MATTER BECAUSE THE DEMAND FOR HOUSING, FOR EQUITIES LOCALLY FROM LOCALS, IS INCURABLE WEEK. WE HAVE NOT SEEN ANYTHING LIKE IT. SO WHAT IS GOING TO TAKE TO GET CHINESE DEMAND BACK ON TRACK. IT'S GOING TO TAKE MASSIVE FISCAL STIMULUS. IT IS GOING TO TAKE SOME MONETARY CUTS ON THE BACK OF THAT AS WELL. WE ARE REALLY JUST NOT THERE YET. SO LONG AS CHINA REMAINS OFF-LINE, EMERGING MARKETS I THINK WILL AS WELL. LISA: IT DELICATE QUESTION FOR YOU, BUT ONE OF THE DISCUSSIONS UNDERPINNING A LOT OF THE TALKS OF EMERGING-MARKET CREDIT AND THE POTENTIAL RISK OF DEFAULTS IS THAT A LOT OF THE OBLIGATIONS STEM FROM CHINA. CHINA IS ONE OF THE BIGGEST LENDERS TO THE EMERGING MARKETS COMPLEX, ALTHOUGH IT IS NOT TRANSPARENT. HOW MUCH OF A RISK IS IT THAT RISK IN CHINA WILL LEAD TO A LESS BENEVOLENT MOOD IN TERMS OF DEBT FORGIVENESS? DAMIAN: THAT IS AN INTERESTING ONE. THE FACT OF THE MATTER IS CHINA HAS BEEN BILLING TO WORK WITH OTHER COUNTRIES ON THAT FRONT. MORE SO CERTAINLY THEN U.S. CREDITORS, QUITE FRANKLY. BUT YOU ARE ABSOLUTE RIGHT, WE ARE SMELLING THE SEA OF CHANGE THERE. THEY HAVE A VERY WEAK RETURN ON INVESTMENT. LOOK AT SRI LANKA. MY POINT IS EXACT WAY THAT WITH ANGOLA. HOW MUCH LONGER WILL CHINA FLOAT THE BOAT THERE REMAINS TO BE SEEN, BUT MY GUESS IS THEY HAVE BIGGER PROBLEMS TO WORRY ABOUT DOMESTICALLY AND THAT WILL TAKE THEM AWAY FROM THE BERLIN -- THAT WILL TAKE THEM AWAY FROM THE FURTHER LANDSCAPE. TOM: WITH ALL OF THE DEVELOPMENT WE SEE PEOPLE THAT TRADE AS YOU DO IN THE INTERNATIONAL SPACE, AND THEY GOT TO BURY THE MONEY IN SWITZERLAND. IN THE OLD DAYS I KNOW YOU DID ALL THE PRIVATE BANKS, BUT THE IDEA THAT YOU PICKED UP 40 ACRES IN DOLLARS, SWITZERLAND FOR THE SASSOWER LAMBS AND GOAT FARM, I THINK IT IS GREAT THAT YOU DID THAT. DAMIAN: IT IS BEAUTIFUL. I AM MORE OF A CARIBBEAN TAX HAVEN KIND OF GUY. MAYBE MAURITIUS. BUT I HEAR YOU, THINGS ARE GETTING A LITTLE BIT TOUGH. SURE. TOM: THE GOATS AND THE LAMBS ARE FLEXIBLE. [LAUGHTER] LISA: WHAT IS THE DIFFERENCE BETWEEN GOATS AND SHEEP? SHEEP OR GRAZERS GOING AROUND EATING THE GRASS. SO IT IS THE WAY YOU FORAGE IS REALLY THE DIFFERENCE. TOM: FORAGE IS GRAZING? LISA: THAT'S RIGHT, YES. TOM: SHE NEVER CEASES TO AMAZE . . ME [LAUGHTER] LISA: I THING I -- TO AMAZE ME. [LAUGHTER] LISA: I THING I RENDERED HIM SPEECHLESS. TOM: THEY BE IN SAAS HOUR OF THE GOATS AND LAMB -- DAMIAN SASSOWER OF THE GOATS AND LAMB LTD. SERIOUSLY, THERE ARE SOME REALLY IMPORTANT THINGS GOING ON IN EM. DAMIAN MENTIONS THE PHILIPPINES WITH THEIR ELECTION. MR. ORB ON MAKING SERIOUS -- MR. ORBAN -- MR. ORBAN

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'Bloomberg Surveillance Simulcast' Full Show 5/24/2022 6-9am

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