>> this is a very different fed cycle because it is a recalibration of policy. >> this is the fed rightsizing policy given the fact inflation has slowed. >> what measures are they willing to tackle without upsetting this economy? >> there is an underlying resilience that cannot be ignored. >> they want to cut rates but i do not think they will rush to do it. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: live from new york

city this morning. for our audience worldwide, this is bloomberg surveillance. equity futures on the s&p 500 up .2%. date two for chairman powell and in washington, d.c. it is the state of the union address. we will catch up with amh in washington. it was a win for wall street but not the kind of win we were thinking about. this was not monetary policy, this was about financial regulations. lisa: there are lobbyists in washington, d.c. getting massive bonuses. we saw that 19% capital requirement that the largest banks in the u.s. were going to have to hold under new proposals basically being rolled back. jay powell saying we will make a lot of changes to this after a lot of lobbying. jonathan: day one was in front of the house financial services committee.

date two was in front of the senate committee. the senator from massachusetts, elizabeth warren, i imagine elizabeth warren has follow-up questions about yesterday. lisa: i imagine she will not be particularly happy when people are looking for the potential of too big to fail. jp morgan surging when we still see this turmoil in community bank ongoing. has it become unduly punitive for these banks and how you create a scenario where there is not a gravitational force every which way at a time the smaller banks are facing a host of headwinds different from the big ones. jonathan: all-time high for jp morgan monday. record tuesday, record wednesday. nycb. new york community bank come at the lows down 47%. at the high we were up 37%. we were facing existential risk. we have a new ceo.

this time we have received an equity investment from former treasury secretary steve mnuchin. lisa: this is amazing. the fluctuations come the share price of $3.46, trading like a penny stock. steve mnuchin is trying to rises reputation. it raises a lot of questions. out is he trying to deal with rent control buildings? any investment you cannot pass along to the renters. how do you extract value after years and years of becoming having more punitive practices. jonathan: we talk about monetary policy? the doors are wide open to strike a hawkish tone. data has been strong to start 2024. data he did not have in the last fed meeting at the news

conference in january. how much signal is in that? lisa: he is not concerned about financial conditions. that is what the message is. it is signaling you can keep going. jonathan: the drip feed of labor market data continues. jobless claims in two hours and 30 minutes before payrolls friday. equity futures shipping up as follows. positive .2%. yields going nowhere on the 10 year. in the fx market, ecb decision later. the euro treading water. coming up this hour, sharon bell of goldman sachs. mohammed younis of gallup and dan ives of wedbush as tesla and apple look less magnificent. chariman powell giving a boost to stocks. sharon bell looking for the

rally to broaden out, saying after a narrow market rally the risk to the markets tend to catch up after handful of stocks that have led the rally. which sectors have been catching up? cyclicals ex technology. to discuss sharon is with us right now. it equity market that rallied even with google, tesla, apple lower at the close. what is the signal? sharon: you have all of these fantastic mid-cap tech stocks which have delivered earnings and do incredibly well. evaluations have gone up. i think you're getting a little bit of the broadening out. there is still quite a lot of cash out there. of course these stocks are already a big share of the market. lisa: i am struck by the fact that people say this rally is not hinged on rate cuts.

then when the prospect of rate cuts escalates the rally continues. the rate cuts matter to keep this rally going or don't they? sharon: honestly, i think the rally at the end of last year was to provide rate cut expectations. so far this year, clearly not. people have pushed out there view of where the fed is likely to cut rates. the activity data in the u.s. has been good in the earnings have been good. it is driven by both of those things. more recently more activity. lisa: are you saying this rally could continue if we get no rate cuts this year and we get ongoing strength we have seen in the data? i want to ask this before we get into the competition. this has fueled a lot of the optimism, this idea it can continue with no rate cuts, as torsten slok said. sharon: i do not think it would

continue if you get no rate cuts and less the economy was absolutely stellar. we were expecting to start cutting from june. the same with the ecb and the bank of england. i think it would be a big disappointment to markets if that was pushed out further. i feel ultimately interest rates are seen as relatively tight, quite restrictive, and ultimately they need to come down to justify some of this rally we have had since october. i do not think you can get a strong rally this year. there is a balance. to the extent this is good growth, perhaps you could put rates out further. jonathan: we have heard it twice already this week. no rate cuts this year. even with that a lot of people are constructive on this equity market. could we talk about where they've been more than constructive, euphoria?

bank of america say signs of euphoria have been contained to secular themes, things like ai, nvidia. do you see any signs of euphoria at all? sharon: i definitely see signs of excitement. people are happy with the growth we are seeing in those companies. evaluations of the bang deposit seven has gone up. the valuation of the stock market has gone up. what it is is the same levels you have to the previous periods where you could argue -- things like the tech bubble in the late 1990's or early 2000. then you have a much higher valuation of a particular of the larger stocks there. i think they traded 50 times pe, where the magnificent seven traded half that. absolutely high valuation versus history and that is constraint on the market.

it is one of the reasons i do not think there is a rally unless you get the rate cuts. not euphoric levels. jonathan: wall street loves an acronym. it was fang a decade ago and that it was the magnificent seven last year. the magnificent seven seems to be breaking up. we've been talking about the granola for a while and then everyone is starting to catch on with europe. have you noticed clients more engaged with what is taking place in europe? sharon: absolutely. lots of reasons for that. there is been more coverage of the granola as we see in the press and the reason is they perform really well. another reason is we were all worried about this concentrated performance in the magnificent seven in the u.s. and then worried about the risks related to that and they want to look elsewhere. are there other companies elsewhere that look interesting? they have performed very well and that is the reason. another thing to note, not only

have they performed well, they performed well with much lower volatility than the magnificent seven. lisa: the one thing about the burn dollars is there perhaps more -- about the granola is they are perhaps more exposed to the china risk. the weight loss drugs are manufactured in china. you have the tech giants in europe. how much is that in your calculus? how much has that dampened the rally? sharon: rep overall is more exposed to china than the u.s.. european economies are extremely weak. 60% of company sales outside europe. normally that is a good thing for large-cap, but they do have a lot of inter-linkages with china.

definitely the chinese authorities are trying to fix the assumption that china's travelers will pick up and that will -- those companies are in our granola. i also think the wealth of the strong u.s. stock market help some of those luxury band -- those luxury brand consumers. there is definitely exposure but it is a mixed bag as to whether it is good or a negative. jonathan: we are booking our nvidia gains and buying handbags from lvmh. lisa: all of those stock investors are cashing out. the nvidia insiders are going and buying a lot of hermes. jonathan: sharon bell of goldman. we talked a lot about granolas . lisa: basically weight loss, big

tech, and then you have your luxury players. that is in a nutshell. jonathan: a programming note. later this morning a fantastic guest, howard marks of oaktree capital will join us around 8:00 eastern time. i was going through his memo from earlier this year. there are great lines in this. "the worst of loons made at the best of times." because of the validity of the idea of making behind it in low return times investments are made that should not be made. buildings are built that cannot be built. i want to know how many buildings are built that should not be built. lisa: this raises the question about china. basically he is talking about the zombies kept alive during those times and have unsustainable business models. he talked about the six foot man who drowns in five feet of water because he unstable leverage. jonathan: will catch up with howard later on this morning.

here is your bloomberg brief with dani burger. dani: speculation is rising the bank of japan will hike rates in march. those beds are gaining traction on reports some officials favor and early move. investors are largely in agreement the central bank will scrap the last remaining negative rate this month or next month. president biden's top economic adviser has successfully pushed the upcoming budget forecast to present a rosier view. lael brainard disagreed with the forecast for 10 year yields in the budget plan, pressing for a lower rate which would have the effect of an improved overall outlook for growth and inflation. the budget forecasts are due for release on monday. shares of novo nordisk gaining after the drugmaker release promising data on experimental daily weight loss pill. treatment helped patients shed 13% of their weight. it a meeting with investors nova

said the study was small but provides a basis for further development of the pill. that is your bloomberg brief. jonathan: coming up next, joe biden gearing up for the state of the union. pres. biden: we are not going to move into defaulting on the debt. i stand here tonight after we have created 12 million new jobs. more jobs and two years than any president has created in 40 years. jonathan: catching up with amh next on the program. live from new york, this is bloomberg. ♪ j.p. morgan wealth management knows it's easy to get lost in investment research. get help with j.p morgan personal advisors. hey, david! ready to get started? work with advisors who create a plan with you, and help you find the right investments.

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jonathan: chairman powell day two coming up. equity futures on the s&p positive .2%. yields unchanged. under surveillance, biden gearing up for the state of the union. pres. biden: we will not move into being threatened to default on the debt if we do not respond. some of my republican friends want to take the economy hostage unless i agreed to their economic plans. i stand here tonight after we have created 12 million new jobs , more jobs than two years than any president has created in four. make no mistake. if china threatens our sovereignty, we will act to protect our country and we did. jonathan: president biden set to deliver his state of the union address, highlighting his success and charting a path

forward. biden hoping to convince voters he is ready and able to serve another turn on the heels of a super tuesday that solidified a rematch between him and donald trump. annmarie joins us from washington, d.c. i want to share the quote that biden needs a cure from what some advisor's call trump amnesia, the notion the chaos and unpopularity of trump presidency has receded from some voters memories four years on. will he be speaking to those people today? annmarie: but the administration and the campaign want to remind people where we were not just four years ago -- march 2020 is when we started the covid lockdowns. he wants to remind them that happened under the trump administration. they want to paint a picture they do not think the trump administration have the correct strategy when it came to covid. they are going to want to have this theme about democracy versus autocracy. they are going to remind people

what happened after biden won that election and what happened on january 6. they want to remind the imagery and the rhetoric that came from the former president. we have heard from president biden time and again. he constantly says do not judge me against the almighty, judge me by the individual i am up against. that is what he will try to relate today when he talks to the american people. lisa: how much of the dollars and cents will we hear about? the actual budget, and his projections of the deficit given the disagreement over what the benchmark will be. annmarie: this is his opportunity. greg valliere is calling it the most important speech of his presidency. yesterday showed with nikki haley dropping out, this is firmly a rematch of trump versus biden. we start to get into the nuances of the deficit. you and i might be interested but he might lose the american electorate.

the president wants to focus on, when it comes to the budget, he will want to push back on congress. he is going to say it took them this long and we still do not have those 12 appropriation bills. it will talk about the fact that it was under the former speaker he struck a deal and now this new speaker has not been able to get it over the finish line. he will categorize that is not his problem but the chaos in congress. we have an individual who can talk about all of this and where we are in the biden presidency. it is mohammed younis, editor-in-chief at gallup. this is a tough speech for the president in the sense it is hinging on his reelection campaign. where is the electorate right now when it comes to joe biden? mohammed: not integrates bache. -- not in a great place. this is the most important speech he will give. president biden is behind every president except president

carter on five or six of the metrics we use to gauge how strong a presidents position is going into reelection. annmarie: and we have one of his lowest ratings right now in terms of disapproval. what is the number one issue? mohamed: the issue that is rising in potency as immigration. we ask americans what is the most important problem facing the country. we see a sudden rise in immigration and it is steady. 28% of americans say immigration is the most important issue facing the country. over 50% of americans now describe what is happening at the southern border is a critical threat to the u.s. more americans are starting to perceive this not just as a policy issue but as a security issue. annmarie: quartering counters have risen under this administration. it was not like that under obama and biden was bp -- was bp -- was vp.

what is different? mohamed: i do not think their policies are different. it is how people are reacting based on their party. a rising number of democrats are seeing what is happening at the southern border as a threat to the united states. what president obama was not facing was a president trump who is very vocal and effective on drawing people to the issue of immigration. they know that is becoming a very potent issue, not just one that the republican base is concerned about. mohamed: mohamed: -- annmarie: now every city, every state is a border state. i was struck by it is the economy, stupid, but gallup is showing it is immigration. what does biden need to say to tell the american people he will do something. so far he has not decided to go for an executive order. mohamed: it is important to note the economy has proven to be the most important issue for voters over time.

tonight what president biden will try to do is what you said on the budget deficit. he will try to identify government dysfunction as something he's been trying to solve. whether that is immigration, whether that is the situation with the deficit or any other issue. the other issue other than immigration is poor government and poor leadership. americans are fed up and frustrated with washington for a slew of issues. president biden will try to present himself as a problem solver who has been adept at addressing some of those issues despite the dysfunction. annmarie: i get that he will deflect a lot to congress. that might be hard for the electorate. there is one area in your polling where he does well. i want to bring this up because joe biden -- jill biden will be having the swedish prime minister sit with her and her colleagues. when it comes to nato, this is something biden is able to harp

on industry was himself from trump. mohamed: what is interesting about nato's we just got our data back two years after the beginning of the war in ukraine, how americans feel about the support level the u.s. is giving nato. there is been no backing off from the american public's perspective on the importance of backing nato. there is not been an astronomical increase of people wanting to send more money, but the notion americans are losing faith in nato or it is not that important or we could have left nato, that sentiment does not seem to be gaining any traction with the american public. for president biden that is a sign of relief. he does not have a lot in the public opinion data but that is one of them. annmarie: this is one bright spot. former president trump never top 50% in your polling. what does that say about his electability? mohamed: it depends on turnout. he has won before. what we find historically is

presidents without a 50% approval rating or higher do not make it to reelection. president biden is significantly behind that mark. president trump was as well. it is interesting to note that one of the other questions we ask is whether or not the president and power deserves reelection, and what is interesting is president trump had 50% of people saying that about a year before he ran for reelection and the economy turned dramatically in the negative because of covid. that fell apart, down to 43%. on a series of issues president biden is behind but he will try to focus on his strong points. annmarie: thank you for joining us. that was mohammed younis of the gallup group. jonathan: looking forward to catching up with you a little bit later. i know this whines you up, but to frame how much the political discourse in washington has fallen away. the reaction to this later will

be like a college professor, maybe even a high school teacher to a presentation. they will be talking about the delivery, the energy behind it, the style. that is what the takeaway will be at the end of this. lisa: what he wears, how he greets jill biden, how hard he presses against donald trump, whether he enters into the fray were not. it will not be talking about yield forecast, which is really important. there was a big debate on that in the administration. jonathan: what did you take away from that? lisa: it shows how difficult it is to address this deficit and how to massage the numbers. jonathan: coming up next, simon french on the ecb decision. chairman powell later this morning. ♪ xi-chun, xi-chun, xi-chun! you've got more options than you know. book now.

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jonathan: here is the price action. yesterday stocks bouncing back on the s&p 500. equity futures this morning positive .16%. just as interesting, the fact that we bounced even with apple, tesla, google, still struggling at the close. lisa: there is a feeling those are tired and the rally is losing steam. we have had since the fed may cut rates. it is not the world is falling. it is what else can i buy that might be better. that is a different kind of risk

on feeling. jonathan: banks and jp morgan based on the price action. let's turn to the bond market. two year, 10 year, 30 year. we had a little look at 4.70. he backed away to 4.55. we have had data this week. so far ok. ism was soft, adp was ok. i think we are taking comfort away from the fact these were not massive beats like what we saw in january and that is keeping a lid on the bond market. lisa: yesterday the chilled state it was interesting. i am looking at these peripheral indicators more and more, especially the more -- ian shepherdson pantheon was pointing that the quits rate is coming down dramatically and that leads the employment cost index. to me the fact that it is coming down so significantly is giving comfort to people to buy.

this is the level people are going to and you can see the price action in the market. jonathan: that is the ultimate data point if you can believe it. maybe more so than average hourly earnings. which tom from pgim pushed back. lisa: he was like i hated. it people have the confidence to quit that means they have the confidence to get another job. if they do not have the confidence to quit they do not have the confidence to demand higher wages. it leads the inflation data. jonathan: buds talk about japan. -- let's talk about japan. dollar-yen, 1.40 780 -- 100 4780 -- 147.80. based on bloomberg reporting, let's go through two pieces. boj officials gaining more confidence in the wage growth story.

government officials ok with a near-term rate hike for the boj. lisa: i was looking at this idea we got this big move and now you have a 70% chance of rate normalization -- getting it back to zero for the first time since 2007. you're getting the sense that there is a 70% chance they will do this. is there a window? that is what people are saying. to get it done before something has to stop them. they want to get more ammunition and more credence to the yen at a time there is relative calm in the world and they can do it with data that supports them. jonathan: dollar-yen 147.78. under surveillance come our top stories, who the attacks in the red sea -- houthi attacks in the red sea turning deadly. another two crew members were injured and a ship has been abandoned.

these marked the first confirmed deaths of crewmembers since houthi attacks started in november. the state of the union, foreign policy, and our inability to contain what has happened in this part of the world is a big issue. lisa: inability or unwillingness . we are not talking about this every day and it is still happening. we have to talk about an escalation and it is not a top story. is this the u.s. way of saying europe, this is your problem? you are getting affected by this much more, we will not rescue the. if that is the case how does he talk about mending ties with nato members? jonathan: the foreign policy story will be dominant through the rest of this year. fed chair jay powell stiffing to script on day one of capitol hill testimony, saying "policy is likely at its peak," but expects to ease policy with inflation heading back towards 2%. jay powell also pushing back on banking regulations saying "i

expect there will be broader material changes to the proposal. it is more important we get this right then we do it fast." he is back on capitol hill to face the senate. i have no doubt they will be picking up on these comments on financial regulation and not just monetary policy. jonathan: it is almost as if -- lisa: is almost as if elizabeth warren is wringing her hands in excitement. there are questions about why this venue? is this something he meant to do. i wonder if this means the banks won? they are lobbying, he says we will take it out. jonathan: you say the banks won but maybe common sense did. when he got into the are committed against this decision it made sense, it was hard to poke holes in. lisa: fair, but is this the way they want to go about saying we will overhaul it? if you want to talk about messaging and enthusiasm and all

of the messaging will be talking about, what kind of messaging visits into the market to say we will overhaul the whole thing? jonathan: are you talking about the optics of joe biden? lisa: that is what will be talking about tomorrow. this is my point. why did he do it in this manner? if it is logic prevailing you quietly put something out that is completely overhauled and you hope nobody notices. jonathan: classic jay powell to do those kind of things in testimony. lisa: is not like 60 minutes. i feel your pain. not so much. jonathan: new york committee bank raising over $1 billion in equity, led by former treasury secretary steven mnuchin. the infusion coming from steven mnuchin's liberty capital and other partners. nycb lunged during yesterday's trading after reports grew the bank was seeking new investments. the bank also named the former comptroller of the currency as its new ceo after naming him ceo a week ago.

the stock ended the day positive but this was all over the place in yesterday's session. we are having a your conversation -- we were having a real conversation yesterday about whether this bank would survive the week. that is a big issue. lisa: we are talking about this bank, we are not talking about other banks, which are doing fine. this is something contained. what did you find most interesting? jonathan: the regulators coming on board to run the bank. steven mnuchin. lisa: 100%. to meet it is who is coming in, why are they coming in, is this an indication of a policy shift that could create more value in some of these rent-controlled buildings? is it because steven mnuchin wants to reprise his reputation after issues before the financial crisis? it is now a personal intrigue story. jonathan: an amazing story we will talk about through this morning. we have an ecb rate decision

later this morning. simon french expecting the ecb to be the first to cut rates in june and the fed to go later, writing "we have moved from being one of the hawkish on the street to now being comparatively dovish as the scenario comes into view. jay powell's testimony alongside yesterday's jolts data suggests ally remains the most likely for the first federal funds rate cuts." let's start with the fed and go to the ecb. why july for you? simon: july in terms of the testimony we got from jay powell in terms of loosening monetary policy in the second half of the year. you do not want to leave it too late given the obvious political cycle the u.s. economy will move into. you have an interesting conversation about the space for the boj, the policy space for the boj to go the opposite direction.

i think the start of h2 is the most policy space for the fed to get the inflection point in policy out-of-the-way. my quote reflects how the market has moved from a position of seeing uncertainty in q1 two much more where we thought it was going to be. jay powell facing down the bond market throughout the last 12 months and saying it will come later than you anticipate. it has been proved -- he has been proved right time and again. jonathan: some speculation on the side of the atlantic as to whether they might cut at all. apollo say no. the reason for that is the data so far this year has been decent in america. can you strip out the u.s. and telus how weak is the rest of the world ex u.s. right now. simon: there are two world economies. there is the u.s. and everyone else.

that is as simplistic as i can put it in that is a real challenge we have financial conditions at the global level largely made by central bank, the u.s. federal reserve, who is, i have noted over recent years, we'll take a slightly more multinational view of economic trends. overarching the dominated by u.s. economic data. that is a challenge given the two speed nature of the world economy with one pole so much longer than the others. lisa: that raises the question of what the ecb will say, particulate christine lagarde. will she push against these ideas of a rate cut in the near term, or will she get political and talk about trump again? simon: i think she will try and dampen down expectations of a rate cut from the ecb, although as i say in my notes the ecb will be the first major central bank to move to cutting rates

based on the fact that interpretation of the inflation data, this i have been quite keen to hear from christine lagarde. on one level year-over-year core h icp, inflation in the euro zone is 3.1%. away from target, 110 basis points above target. you take the way the american and u.s. economies prefer to look at inflationary trends, look at the annualized data, which with such big base effect is a much better matrix, eurozone core inflation 1.1%. a very different narrative. which data point in which interpretation of the same data is taken will be quite key for the messaging. lisa: i am also curious about some of the thresholds that would make it difficult for them to cut rates. i'm thinking about what we were talking about with the houthi attacks in the red sea.

this affects the zone much more than the u.s.. does that make it more likely -- does that make it less likely they will cut rates or is that an exogenous effect that is less relevant? simon: what you have got here is the recent history since last macro economic forecast in the ecb in december, which the backdrop is natural gas prices, which is such a driver of headline inflationary pressures, some spill over core inflationary pressures has come down 40% because of a warm european winter. that has meant, i expect when we see the macro economic forecast, the 2.7% inflation forecast the ecb had in december will go down. it is the degree to which those geopolitical events, you mentioned the attacks by the houthis and the red sea means a more forward-looking view on inflation is more hawkish. this is one of the challenges of conditional forecast.

risk always being lagged in terms of macro economic projections. if you anticipate geopolitical events will be more inflationary going forward than the spot curve is pricing. jonathan: how united is the governing council on the ecb? simon: totally split. this is not a criticism. it is a different interpretation of those data points and i have given you two ways of interpreting the same data. also, this is where i go back to the broad basket of cyclical indicators, money supply, consumer confidence, the pmi. 12 months ago it was relatively easy for the ecb governing council to set a single monetary policy stance. you had a similar speed in the major euro zone economies. if you compare the fastest-growing eurozone economy, spain, with the slowest growing, germany, that spread

has blasted out, which makes it harder to have a united governing council. jonathan: also slightly confusing because now the hawks are in germany and they are looking at week growth and typically the doves are in spain. i have to get my head around that. simon french. talk about a change in the euro zone. lisa: get raises this question of do you end up with more dovishness because the hawks are the ones who need it more than anyone else. jonathan: ecb decision one hour and 31 minutes away. let's get you an update on stories elsewhere. dani: donald trump wants to debate joe biden. the former president posted on truth social he is calling for debates anywhere, anytime. during the republican primary trump skipped five debates. abided spokesman says of the president is desperate -- if trump is desperate to see the

president he can watch the state of the union. abu dhabi is the biggest risk center -- the macro fund runs -- the u.s. government is set to invest $3.5 billion in intel. congressional aides say the money will fund chip production for military and intelligence programs. that program will run over three years. the money came from a spending bill the house passed yesterday biden is expected to sign in this week. jonathan: up next, sentiment souring for apple. >> we think if huawei comes back to where they were in 2020 there are downside expectations for apple this year. jonathan: will catch up with dan ives of wedbush and also talk about tesla. that conversation is up next. ♪

jonathan: stocks doing ok, positive .2%. doing ok even with losses on the big two come apple and tesla. sentiment souring for apple. >> huawei is coming back and apple is going through significant change. for apple we think if huawei comes back to where they were in 2020 there is downside expectations for apple this year . maybe 5% volume. there is downside and it is a headwind on stocks. jonathan: questions mounting for apple's progress on ai. iphone sales plunging in china, and renewed pressure from regulators in europe and washington. dan ives writing "we've been

through many challenging periods in the apple stories and we handheld investors through these periods just like today. brighter days will be ahead for apple. we have an outperform rating and a $250 price target." dan ives is with us. i know you're in australia. you tell us what you learn from asia and how big is the iphone slow down story in china? dan: piercing negative sentiment , -- we are seeing negative sentiment validated by the price cuts we are seeing for iphone. it is a white knuckle period apple is going through. my view is after one to two quarters they get on the others of this with an upgrade cycle and i believe it is all about ai. you do not want to be selling this stock into ai in cupertino.

this is not the time to throw in the white towel. jonathan: there is a slowdown in china as well. you have had a bye on tesla the hallway down. the stock has been cut down on the third. why is the thesis still the same for tesla? dan: they are cutting prices, they will squeeze competition. when you look over the next 6, 9, 12 months they will go to the next phase of growth. margins drop out. i would say sentiment is as awful as i've seen it in three to four years. on the others you of massive earnings power that will be driven by more and more volume, plus the ai story that comes to tesla. my point is we have been through this many times in apple, many times in tesla. the bears are piling on for good reason.

this is just the middle part of the next growth phase in both stories. lisa: when you talk about the ai story, there's a question of whether they will be late to the party. this idea they will push and artificial intelligence just a couple months before samsung is set to release their artificial intelligence infused phone. are they too late? are they still immune to true competition? dan: i do not think they are too late. there is 2.2 billion reasons they are not too late. that is the ios install base. when you look at what cupertino has been able to do again and again, it is monetizing that install base. the services business continues to be rock solid. you combine this with ai, not just the app store, but ai functionality coming to iphone 16. if we look back at this, this was more of a golden buying opportunity than the time apple becomes a short negative.

lisa: there are a lot of people who would be more sympathetic to that view than the one with tesla, especially in light of apple's own view to get out of car vehicle manufacturing. this is not necessarily the container for all ai and for all of our hopes and dreams, the travel and living room and bedroom and office a lot of people had expected. why do you think tesla can win on artificial intelligence when a lot of people are saying maybe it is just a car company in the car business is hard? dan: they have said that for a decade. we look at rivian and others you see how hard it is and what tesla has been able to accomplish. this is a group story that we are still in the second inning of where this is going. we have $30 billion in cash. it will have three or potentially four new models. has ev demand softened globally?

of course. this is just them going through a challenging period. we will yet again be on a growth frontier for tesla, even though right now it is not rose and champagne and we are getting a nerve-racking period for investors. jonathan: i want to understand where the growth is coming from. stateside you see the problems to such an extent gmr considering hybrids because the demand for eb pure play is not there. i think there is a clear and obvious risk factor in china. the white house is looking at national security issues around chinese ev's. it is not unthinkable to imagine a world where the united states makes it almost impossible for chinese brands to sell their vehicles into the u.s. market. what you think will happen to foreign automakers trying to sell into china if that is the way of travel for the u.s. administration? dan: is a tight rope. the beltway, what they're doing

on the china national security issue -- that is added to this black cloud over tesla in terms of where that could go. i think the bark will be worse than the bite. it comes down to tesla within china as well, given how they build out in shanghai. in my opinion, this is a piling on. there is a lot of negative news. we get onto the other side and we look back and it was just a bad turbulence phase and the plane was not going into the ocean. lisa: i've racked my brain for a time you were bearish on any of these names. one of them was when elon musk bought twitter and you worry about reputational risk. there has still been a lot talk about with respect to elon musk. how much can you strip out tesla and the hope story and the dreams from the volatility of

elon musk? dan: elon musk is tesla and tesla is elon musk. the genius of musk -- there is a downside with the circus show. i think investors are able to bifurcate. his understanding what tesla has accomplished. is x overhang in terms of worries about selling more stock and some of the issues they have had? no doubt. if you look going forward, elon musk will now begin tesla through the growth challenges. right now bearish on tesla and apple. jonathan: enjoy cindy, fantastic -- enjoy sydney. fantastic city. here is a headline, how apple

sank $1 billion a year into a car it never built. lisa: at what point can they use some of this insight and translated directly into ai or how far back did set them to jump on this idea that your taxi an automated vehicle would transform the way you thought of life? i think people are rethinking the narrative, but that is the zeitgeist. jonathan: tesla down 1.4% in early trading. coming up in the second hour of bloomberg surveillance, ed yardeni. equity markets on the s&p 500 shaping up as follows on date two chariman powell and capitol hill. s&p 500 is positive. yields are going nowhere. a sprinkle economic data later. jobless claims, the last date read on the labor market going

into payrolls tomorrow. payrolls friday just round the corner. from new york, this is bloomberg. ♪

>> this is a very different fed cycle because it is a recalibration of policy. >> this is the fed rightsizing policy. >> what measures are they willing to tackle without upsetting this economy, which remain strong? >> what we have discovered is there is an underlying resilience that cannot be ignored. >> they want to cut rates but

they are not in a rush to do it and i do not think the economy will give them an excuse to do it. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: we have a fantastic week of price action given what is on the schedule. live from new york city, good morning, good morning. the second hour bloomberg surveillance begins right now. estate of the union in washington, d.c. henry ordered is in the nation -- annmarie is in the nation's capital. chairman powell date two. christine lagarde coming later, and the governor of the boj. that boj meeting this month might not be boring. lisa: there is a 70% chance people are expecting them to hike rates to zero. it would be the first move of that nature back to 2007. it raises this question of

whether that will turbocharge or put a damper on the rally. does this give people more conviction this is a new investment pieces and it is no longer the forgotten decade? jonathan: giving them confidence. we have broken through 150. we are 140 782. -- 147.82. the data has been fantastic yet the message remains the same. if your message stays the same in the world around you changes than the meeting has shifted. the meaning of those comments as more dovish than a month ago. lisa: when i listened to those comments the meaning this is not a fed chair worried about financial conditions easing. this is not a fed chair concerned about the fact we are seeing soft -- strong growth in certain pockets. this is a fed chair that wants to cut rates and is looking for an opening to justify it. jonathan: credit spreads incredibly tight. jobless claims later this morning.

216 is the estimate. the employment component of the ism services came in a much softer. adp in line stop i know you have thoughts on jolts. all of this lines up to say things are decent but we are not getting the booming reports we got earlier in the year. lisa: and we are getting that disinflation that does the message. the data has been messy. it feels like we are at some sort of tipping point but we have been a tipping point for seven months. what does a fed chair do with that? basically they want to err on the side of preserving this economic cycle and that has been turbocharging this goal to broaden out with equity allocations. jonathan: new york committee bank yesterday. there was one point we were down close to 50% on the session and worried about the future of this institution and then things changed fast. lisa: worried about the future of this institution, not the

banking sector at large. timmy this has moved from macro risk to personality intrigue of who will run this. a very idiosyncratic moment of new york city rent control. this is not the same story it was a year ago. jonathan: the stock is just about positive in the premarket. equity investment from steven mnuchin. 70 dimensions to this story. -- so many dimensions to this story. lisa: you think is angling for a policy shift were reprises reputation? jonathan: if we get a trump administration we might get a policy shift but he might be on board with that policy shift anyway. there's a lot going on that gives us tail went to banks more broadly in a way people were not expecting. if rates are lower you would

think that would be negative for banks. watch this space and jp morgan will hit another record. jonathan: is why you've seen all-time highs on the nation's largest bank. futures positive .2%. yields unchanged on the 10 year, 4.1%. the euro going nowhere. that rate decision one hour 10 minutes away. coming up, ed your jenny, tobin mark just come in christina camp many looking for rate cuts later this year. stocks rebounding after chariman powell reiterated rate cuts are likely at some point this year. a growing number of economists forecasting no concentrate 24. ed your jenny running the stock market is having a significant leap positive wealth effect on the economy. as a reason to believe the

economy will remain resilient and another reason the fed might hesitate to lower the federal funds rate for a while. ed joins us for more. i wonder what camp you are in. thank you for catching up with us. apollo no rate cut this year. mizuho, no rate cut. where is ed yardeni on the same issue? ed: i am basically in that camp. at most we will get two rate cuts. three as possible. at this point those sourcing rates may not come down have the weight of the evidence on their side. the economy is doing fine, as chairman powell said. inflation is moderating. why mess with success? things are going fine. the notion you have to bring the fed funds rate down because inflation has come down and real rates will slow the economy down, that is a debatable theoretical point. jonathan: you've made the point

you think this'll be the roaring 20's. does that thesis hold? why do you think this has a much longer runway? ed: the economy is turning out to be remarkably resilient in the face of all of the challenges, particularly the surging interest rates. what we have seen is not just a tightening by the fed but also a normalization of interest rates back to normal in the economy is proving it can handle it quite well. the stock market started to discount a roaring 2020 scenario november 30, 2022 when openai introduced chatgpt and excitement about ai has been extraordinary ever since. the stock market is already discounting the technological

innovations, particularly ai will increase productivity and productivity is the ferry just of the economy -- the fairy dust the economy. it is great for profitability. lisa: even though we got an overall index gain on the equity market in the u.s., you saw the big tech giant selloff. what does that tell you about where this rally is? ed: i am actually delighted to see the market is becoming more discriminating in terms of the make a cap 8. i like movies. i want to include netflix and there. if you want to focus on the magnificent seven, so-called, they are starting to split off. apple and tesla are having issues. nvidia still looks good. on the technology front it is

hard for me to see the technology stocks getting hit hard when on march 18, nvidia is going to have a festival in san jose. an ai festival. they will have a convention for a couple of days just extolling all of these wonderful things ai can do. i think the market will get excited. lisa: i love that we are getting to the point of enthusiasm about ai. they will hold a festival that will fuel further gains. you're probably not wrong. i am wondering whether the thesis holds that the rest of the 492 stocks in the s&p 500 can get that same tailwind of productivity and those other gains if the fed does not cut rates because these are the companies that are more tied to them. ed: that is very relevant to the so-called real interest rate. maybe the inflation-adjusted

federal funds rate should be higher than the past 10 to 15 years because we are back in an environment where productivity is growing faster, and that means the economy can live with this level of interest rates. i think looking ahead, there is the potential for the economy to grow faster than expected because of productivity. i sounded like i finished, but i did not. to answer the question, the stock market has been doing well. the notion it has only been seven or eight stocks leading the way is true because they have been so spectacular. if you look at the other stocks, we have lots of industries that do not have any of these magnificent seven stocks, and they are up 20% or more.

the breadth of the market is not that stocks have not moved. there are plenty that have moved. they've not moved as fast as the big ones. jonathan: as we look back, if this is the 1990's come is a 1994 or 1999? what was the answer to your own question? ed: it is december 5, 1996, when alan greenspan gave a speech and said how do we know if we have a rational exuberance? everybody is asking that question right now. jonathan: i think we are. ed your denny -- ed yardeni. it was not the tip top of the equity market boom. lisa: wen yu not think it is rational exuberance is often when it is. i like this idea the wealth effect is what will keep this going. when you're feeling good and getting stock returns you go to gucci and her ms. -- and hermes.

jonathan: some people might go to gucci. i'm not sure everyone does. jensen and nvidia has been more important to this market than the federal reserve. lisa: the ramifications for that in the economy and the federal reserve in terms of inflation, it is telling they do not think is a significant deal, that the financial conditions aspect is not necessarily problematic in achieving the 2% price target. that is compelling and something i watched. jonathan: jay powell has said strong growth is not a problem it is not pushback against what is happened in markets. markets close to all-time highs. lisa: this is the reason person after person lining up and saying there might be no rate cuts this year is a sea change and raises the question of what is the new normal. jonathan: the list gets longer.

we have torsten slok of apollo. i think ed was on the same page. lisa: if you're looking for reasons to cut rates you are not finding them in the data. the data is showing these equities can keep rallying even with rates at these levels. jonathan: we are positive .2% on the s&p 500. here is your bloomberg brief with dani burger. dani: houthi militants claim responsibility for attack on a commercial ship off the coast of yemen. three crew members were killed. it is the first confirmed death of crewmembers since the attack started in november. indianapolis fed president says he might lower his expectations prevent cuts this year. in december he said he had projected two but now he says his forecast will show two or one when officials submit new projections in march. nycb shares higher premarket. the struggling real estate lender rally yesterday after

receiving equity investment of more than $1 billion from investors that include the former treasury secretary steven mnuchin. nycb fares have lost almost two thirds of their value since the bank/shares of its dividend. that is your bloomberg brief. jonathan:, a pivotal state of the union for president biden. pres. biden: we are better positioned than any country on earth. we have more to do. here at home inflation is coming down. jonathan: that conversation is up next with annmarie in washington, d.c. this is bloomberg. ♪ all it takes is an idea, and now becomes the future. a future where you grew a dream into a reality. it's waiting for you. mere minutes away.

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jonathan: busy morning today. equities up .2% on the s&p 500. ecb rate decision later. after that jobless claims in america. after that you hear from chariman powell a second time. later this. a pivotal state of the union for president biden. pres. biden: we are better positioned than any country on earth. we have more to do. here at home inflation is coming down. got home gas prices are down from their peak. food inflation is coming down. inflation has fallen every month for the last six months. take-home pay has gone up. jonathan: why so angry about those things? lisa: it is energetic. your anger is somebody else's energy. we will discuss it tomorrow. jonathan: bidenomics likely to

be high on the agenda. the speech is a critical moment for joe biden as he frames his pitch for the november election. a president planning to ramp up attacks on donald trump's agenda. annmarie is back in washington, d.c. i thought would we be starved of debates. based on what we heard from donald trump, he is ready to debate president biden anywhere. annmarie: that is what he says. the former president would not get on a republican debate stage , but now that nikki haley has said she is bowing out he says he is ready to take on president joe biden in a debate. what is interesting is the biden campaign basically said you can see what the president has to say, to in this evening to the state of the union but did not say whether they would accept that debate challenged and let's

see how the cycle persists. a lot of people are talking about will we see these two take a debate stage. the former president said he is ready for it. lisa: what are people in d.c. saying about how president biden faces a much higher bar with his state of the union in terms of his delivery, and terms of his policy projections, in terms of every aspect of his performance? ed: people are billing -- annmarie: people are billing this as the most important speech of his presidency and it could be his last state of the union if he is ousted in november. given the polls show americans are concerned about his age, our swing state poll shows eight in 10 are concerned about his age, the bar is for him to make sure there are no gaps. the pressure is on biden given the special counsel report that says he is a well-meaning elderly man with a poor memory. he needs to make sure he pivots to a well-meaning elderly man with a strong memory and he is

robust. for that conversation we should bring in tobin marcus from wolfe research who has been looking into this. is this the bar for this evening? to make sure he can be an influential president up for the job at 81? tobin: the thing that has gotten the most scrutiny is the question of performance. the delivery in last year state of the union, jonathan characterized it as angry, i think we will see something energetic. last year state of the union did go well from a performance perspective. he got into mixing up with house republicans on the question of entitlement cuts in the early stages of the debt ceiling debate. if they can engineer and other organic moment like that that showcases nimbleness and energy and quickness on his feet, that would be ideal for them. short of that, a crisp delivery that shows energy free of any

notable flubs. then there is the policy content of the speech. this very much will be teeing up a contrast between biden and trump. the trump folks at the republican party are shifting into an already better off than you were four years ago mode. the biden campaign will reject that frame and instead try to make this a contrast of proactive priorities and values or who is fighting for whom and positioning biden and the democratic party as fighting for the middle class and going after the rich. the raw of progressive policies we've seen in the past 44 to 48 hours. annmarie: you write that you do not think talk is cheap, a lot of this can translate to policy. the issue that comes up for policy is the extension of the trump era tax cuts. regardless of who wins we will see extension at some level, correct? tobin: absolutely. we have 3.5 trillion dollars

worth of tax cuts expiring at the end of 2025. the 2017 trump tax package made the corporate and capital gains tax cuts permanent. in any kind of divided government scenario, what we will see is the extension of the tax cuts below $400,000. that is what biden is proposing. they will reiterate their new new taxes pledge in the state of the union. that is about to join dollars of the $3.5 trillion footprint. in the republican case -- in a republican trifecta they will be trying to extend all of the tax cuts wholesale. the question is what gets cut in order to help pay for those and what revenue sources get brought in. there are a lot of questions on that front that will determine much of how next year goes from a market perspective. jonathan: we are also -- annmarie: we are also expected

to hear biden talk about raising the corporate tax rate. the democrats had control at one point early on in the biden administration, full control of washington. why couldn't they make these moves then? tobin: the two word answer is joe manchin. the original version of their fiscal package in 2021 it include a lot of those and raised multiple trillion dollars worth of revenue with a grab bag of democratic priorities for high end company individuals and corporations. that got stripped way down in terms of its content. the social spending was stripped out and the climate spending was kept in so there was less need to pay for it so they ended up with a rump set of democratic revenue proposals that joe manchin and kristin cinema were happy to get on board with. they included a 1% tax on buybacks. biden is proposing to pick that up to 4%.

lots of ideas biden is happy to go for but joe manchin was not. holding even 50 democrats together in the senate was somewhat of a surprising achievement in retrospect. not surprisingly did not manage to get their entire laundry list of tax increases done. annmarie: the president's budget will be coming out and our colleagues are reporting the budget got more optimistic after lael brainard push for and won a slightly lower interest rate when it comes to the 10 year. do you think this will resonate with the american people where they just say you are playing politics with your budget. tobin: i don't think that is something most voters will notice. it is a tried-and-true game to nip elite baselines to make the budgets look better. in the trump administration there of all these debates over long-term growth forecast and the extension which budget projections relied on unrealistic expectations about growth.

for lael brainard's case i am sure it reflects some level of sincere descriptive view about what is likely to play out in addition to the kind of obvious politics of it. i would be very surprised if any ordinary voter paid much attention to the out your deficit projections from the white house, given the independent projections from the congressional budget office intend to be more of the focus of discussion about this in washington. the president's budget is important input into that debate. not ultimately -- annmarie: tobin marcus of wolfe research. his point, they might want to have a situation where biden is having a row with republicans on the house floor. jonathan: we will catch up with amh later.

love the story on lael brainard. can we just go back to the last forecast? great write up from the team at bloomberg. 10 year treasury forecast in biden's first budget predicted a rate of 2.1% in 2024. 2.1% on the 10 year compared to where where we are now. lisa: i love the statistic. reduction of .1% equates to a savings of $300 billion in the deficit over the entire 10 year projection. it is not small math. jonathan: there is an incentive to say i think this will be lower. equities positive one third of 1%. up next, new york unity bank receiving more than $1 billion from armor treasury secretary steven mnuchin's firm. that conversation is up next. ♪

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jonathan: just a little bit of news of clarification coming in. we will break down the details. equities look like this. doing ok on the nasdaq. a lot to talk about in the bond market. yields going nowhere across those three maturities. the economic data later, jobless claims.

we got them to a new 15,000. if you want a sneak peek of payrolls, here is your sneak peek. 200,000 is the sneak peek in our survey. unemployment, looking at that to stay at 3.7%. average earnings, looking to come down. lisa: we are looking at average hours worked to come down. this, to me, might be the most interesting. if you see an increase in hours worked, does that mean that they are cutting back on the edges? jonathan: this time next week we will have a lot of data in hand.

there will be payrolls on friday. a much clearer picture of how things have developed. a decision in 44 minutes time. the forecast from president lagarde as well. you get that inflation forecast, it might be revised lower, which will open the door to go before this federal reserve. lisa: it is the most nonevent. people are saying, doing need to parse through this? they are not sure. it is fascinating how this has become a much -- people had less optimism jonathan:. what you like to talk about the boj? we are negative by 1%.

the strongest day so far this year. if you are joining us, one story from officials, that story suggesting that they are getting confident. the second story coming from government officials suggesting that they are ok with a rate hike. everything is coming together to hike rates. lisa: almost an 80% of a rate hike. key question is what does this indicate? is it kicking up to basic -- basically harold and a new era of growth, inflation and a better investment pieces? jonathan: remember i called it

operation ostrich. head in the sand in tokyo. we need to raise interest rates, maybe. lisa: people, myself included, the bottom line is that it has been working and something has been going very right that economy. jonathan: it was an absolute gift to get inflation expectations higher and then we have the story take off. they were like, bring it on and everyone else was like, no thank you. lisa: i wonder how much this is a china story as well. i am very interested in this meeting. jonathan: president biden will be announcing his state of union address. he is also looking for sure

voters to have concerns about his age and mental acuity. a lot of the reviews of the state of the union will be about how energetic he is. lisa: frankly, i'm not interested. on one hand, sure but i also want to hear about policy. what can he do, given that there are caps on how much he can spend. you heard about some of the defense spending he will be able to do. to me, from a market perspective, i want to understand the meaning. what do you want with our allies and adversaries? i want to understand about deficit. we will be talking about different things. jonathan: on capitol hill, after reiterating that the fed expects to close sometime this year, towels based the senate banking

committee. the fed chair has also faced pressure from members of that committee including elizabeth warren urging him to cut rate. she also has thoughts on yesterday on financial regulation. lisa: it was the news, considering overhauling a proposal and withholding by 19%. you enjoy these hearings? do we learn anything substantive? the fact that we broke news yesterday is interesting. we can parse through that. what are we hoping to accomplish here? not to be dismissive, but what are we hoping to accomplish? this is kabuki theater. everybody wants to get up and do their own thing. jonathan: that is coming up

later. a struggling lender led by former treasury secretary the notion and liberty capital. naming joseph as his new ceo. another was named ceo just a week ago. a bit of news last few minutes. they called it a clarification. >> they gave more details. basically, the numbers, about 41% ownership stake. it was a little lower than what we expected from yesterday. jonathan: what are they buying into? >> is a $100 billion organization, so it is in the

big leagues. the investor group, this is the same playbook they used with the takeover after the financial crisis. lisa: this was a falling knife. how quickly was the solidified when it like they were falling? >> it seems like it came through pretty quickly. it is great that the bank was able to get a lifeline and inject capital to improve the reserve. lisa: the question is an interesting one. what does even notion what this? there were rumors about predatory lending and policies with respect to their mortgages. with this transaction, where is the value creation going to come from? >> it will be a turnaround

story. they have the opportunity to improve the credit quality. but the thing comes back to is that this is a big organization. indymac was much smaller when they sold the organization. is there going to be a willing buyer down the road? jonathan: they have exposure. how do they change that? it sounds like a policy issue. >> that will be the big narrative, going forward. maybe --jonathan: -- jonathan: let's get into it. do they have the authority at the federal level to make that shift? >> that is something that is probably in their mindset, going forward.

it is the agency that is regulating them. if there is a change in presidency, there could be a change in regulatory posture and introducing more lax legislation going forward. lisa: how much is there without a shift in regulation? >> the market is telling you that it is trading at half tangible value. it is versus 1.1 to 1.2 times. it is still in a distressed situation but it does offer a lifeline for people who can afford it. lisa: i'm glad john brought up this issue. we heard from another with rent-controlled related loans. how big of an issue do you think this is from monetary and property ownership standpoint?

>> the issues are very specific to the new york community. it is less of a dire situation for a lot of the other baking tuition. we are talking 20% of their portfolio is regulated. any potential dings in credit quality will not really affect them. other regional banks are much more diversified. jonathan: lisa mentioned this a few times, the fact that jp morgan is trading at record highs, just in terms of the stock rises and being pulled down, how much progress have we actually made in the last 12 months? >> you can see by the stock reaction across the group, where it has been very much a specific

issue. we have heard a lot of encouraging comments about the current conference cycle, where everybody feels very sanguine. jonathan: thank you, sir. the premarket looks a little bit like this. just negative. last year was about rate issues. can we really go through the cycle without credit issues? lisa: that is what i want to as howard marks. where are the zombies getting blown out at this point? where do we see the people exposed? this is what everybody was warning about. this -- the -- maybe steve

mnuchin has an idea of how to change that. jonathan: do not miss that conversation. he will with us for about 30 minutes. looking forward to that. let's get your update on other stories. >> donald trump wants to debate joe biden. he says, uncomfortably anytime, anywhere, any place. he skipped the debates during the republican primary. if trump is desperate, he can watch tonight's state of the union. bets for the month are gaining traction. there was stronger wage data and comments to that effect. the yen is strengthening. more insiders unloading nvidia stock. nvidia closed at another record with a 2.2 trillion market cap. it trails only apple and

microsoft. that is you are bloomberg reef. jonathan: chair powell sticking to his script. >> believe it is at its peak to see more data that we can come more confident and so that we can take that step to reduce policy mates. jonathan: that conversation, next, live from new york city this warning. good morning. ♪

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that's a different story. i couldn't slow down. we were starting a business from the ground up. people were showing up left and right. and so did our business needs the chase ink card made it easy. when you go for something big like this, your kids see that. and they believe they can do the same. earn unlimited 1.5% cash back on every purchase with the chase ink business unlimited card. make more of what's yours. jonathan: jobless claims and a central-bank decision as well. euro-dollar, about 60 minutes away. under surveillance this morning. chair powell came to the script. >> we believe it is at its peak

for this tightening cycle. when we reach that expectation, we can then began dialing back restriction for that policy. a policy restraint this year. jonathan: 10:00 a.m. eastern time. the fed starts on rate cuts. we can only look for a few maintenance cuts this year and next year. christina, good morning. it sounds like we are on the same page.

>> we know that the next step is easier. they just seem to have this confidence issue. we just need more of it to have more confidence. we are in the camp that they ease two to three times this year. where we are growth wise. jonathan: what is the difference? >> it was what we thought was a clear signaling message around, we have reached restrictive rates. as inflation comes down, we are able to make maintenance cuts. we do not need to go through neutral. lisa: i am curious. we were going to talk about this

with howard marks coming up. we have not seen more distress. it does it mean that all these companies are just fine now? >> since the fall of 2022, they have had these rolling forecasts . it is something we have talked about a lot of times. we continue to have stronger u.s. growth and this exceptionalism story keeps coming back. these economists and policymakers are having issues. it comes back to that. we do not have a broader session. it is hard to see signs of that. markets are concerned about private credit. none of these are systemic issues.

lisa: the leverage right now, where is it? people are talking about a fiscal stimulus being pumped into the economy. is that going to be a price to pay for this? is it going to be a trust moment? >> especially in u.s., it is hard to see value we are not pricing in. we are at 4%. the only certainty that we have with whoever wins the white house is that you probably have more fiscal. should we have a higher curve? we absolutely think so.

jonathan: it will be significantly affected. what is it that is so significant to you and the monetary policy outlook? >> we are at extremes in terms of spending. the immigration numbers have been a large driver. i think we are at this precipice of what has driven the resilience of u.s. growth? are we going to close our doors even more? does that drive regionalization? jonathan: are they driving active decisions lately?

>> i think it is hard to say what the fed will do. thinking about how we invest in markets, it also looking at positioning that you need to consider. lisa: it raises the question about what you said about longer-term treasuries. where do you go for that at a time when you are seeing an terribly -- incredibly tight spreads. >> when we look at the rates market, if philip it -- it feels like you speak to investors over the site of the year. easing to this swing.

risk assets have traded exceptionally well. we have said, perpetually in the last few months, credit looks which to us. equities look rage, however the backdrop allows them, the rich to get richer. i think there is this push and pull to start the year. march is exceeding expectations, yet it has been digested with ease. is there a point where there is a breaking point? we have value in being in the front and. we are ok with having a curve bias. we would rather own than to extend and have that duration risk.

lisa: how crowded are these trade? >> the consensus trades are getting more crowded. people privacy excited about the boj going again. but we have seen this before. there is reason to believe this could be the time that they engage. but i think it is a well described view. jonathan: a big move in today's session. not monetary policy, but regulation. was that a green light? >> i think regulation is something that has been topical. there has been so much work to support that. i do not see a pull away for a reason for concern. when we look at the consumer and growth, i think there is a lot

of diligence from a risk perspective of. the banks, the financials are well supported. jonathan: when you back away from a proposal like the one that was on the table, does that do anything for the banks at all? does it make it a better proposition or not? >> i think that the financial sector as a whole is sound. i think that the regulations proposed are more stringent and then dial back. i think that leaves the market and a ok place to digest. jonathan: day two coming up a little later. the next hour is absolutely stacked. we will catch up. democratic representative of virginia. all of that to come in the next hour.

lisa: i am looking forward to that when there is so much uncertainty and confluence. with howard marks, i want to talk about what it means to be in a new regime of truly higher benchmarks. how do you calculate risk? this is sort of a new era of risk-taking. jonathan: there were many highlights in that memo, but rates are not that high. that is quite the line. lisa: also talking about the potential over the next decade. how does that reset everything? are we talking about long and variable lags or does the policy not matter? jonathan: you know when you get on those walk things that make you go quicker at airports?

lisa: it does not actually make you a better athlete. jonathan: i love that. lisa: moving walkway. jonathan: that is next. ♪

♪ >> was performing right now in

this market are companies that have been raising guidance and that there is strong fundamentals. >> we are seeing more than just tech and consumer discretionary work well. >> yes it is a bull market but we have made it more of a duck market. >> we got a market where inflation expectations are low, so why wouldn't you be happy? >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: the control room insisting it is a people-mover still. >> is a moving walkway. jonathan: the third hour of bloomberg surveillance begins right now with equity futures posited by one quarter of 1%. they 60 minutes coming up. in about 15 minutes we look at jobless claims in the united states. you will get decision, president lagarde 30 minutes after that, so it is a big hour in the next hour. lisa: the question when they cut

rates as less relevant than bigger picture questions around fiscal policy which we are going to be getting, but also his idea of the economy and whether the jobs market really is as robust as people think. jonathan: 216 if the claim, adp was a little softer. looking at payrolls friday, the estimate is 200,000. everything is still just in-line line and ok, not rooming like it was in january. lisa: it's very difficult to understand ok. that is something that i was thinking about. it is good to identify boomy or busty. but what do you do with ok? this is something i've been struggling with with the data coming in. where do you get conviction at that point? jonathan: wait for tomorrow's payroll figures. if they are weak i would be more inclined to see the strong data for january as a curveball. if strong, i expect forecasters to rethink the fed all over

again. does it dump down, does it reinforce will be heard at the start of the year? lisa: and what are the revisions like? they've got to completely reassess. in is a tough market to get right. again, it is ok. it is not boomy is not busty. jonathan: equity futures right now ok. i'm going to use that all day. posited by 0.2%. if the flavor of financial markets for you. yield a little bit lower by a single basis point. chairman powell date two on capitol hill. and little bit later this morning in front of the senate banking committee. in the bond market, yields basically unchanged, down a single basis point or so. just a slightly weaker euro, slightly stronger dollar. coming up, the brilliant, legendary oaktree's howard marks

on why we are unlikely to see a return to easy money anytime soon. looking ahead to the payrolls report and congresswoman abigail spanberger previewing the state of the union. amh down in washington, d.c.. we will catch up with annmarie in just a moment. no news is good news. stocks edging higher as chairman powell tells congress he is expecting rate cuts this year even as a strong economy keeps the fed on hold for now. howard marks writing this in his latest memo. i find it interesting that the current stockmarket rally began as a result of optimism powered by consensus ending that was generally off target. investors motivated by their belief that the fed would pivot to dovishness and start cutting rates in 2023. that was wrong. we will get into consensus in just a moment. howard, good morning to you. fantastic memo, really enjoyed the read. can you reflect on the easier times fueled by easy money, lulling investors into a false sense of superiority? i want to know and i think lisa wants to know, hadley fully

realized the pain associated with some of the loans, some of the things we did 10 years ago? howard: no, clearly not. the economy is still good. that keeps shaky rooms aloft. the maturities, any company that was not asleep pushed off its debt maturities in 2021, 2022 when rates were so close to zero. so the maturities start for real in 2025. there are not substantial maturities this year. there are three ways you can default. you can breach a covenant, specified levels. financial statements. you can fail to make an interest payment or you can fail to meet a majority. well, the eager lenders let companies exclude covenants in recent years so you can't do that. interest rates mean that the coupons are low, so it is hard

to miss one of those in a positive climate. so we're really talking about maturities which have been pushed off to next year. and if you get maturities spiking in a weak economic period or weak for certain groups, that is when you get default. lisa: a lot of people have come on the show and said that this market is discerning. it's not necessarily just buying everything with abandon. there is euphoria, there is a separation of those that are likely to default that can't survive until 2025. diva agree with that? howard: i generally do. the crazy markets are few and far between. when you get a real, soaring bull market, a bubble or a crash, those are when they stop

being discerning and as we say, throw out the baby with the bathwater. most of the time markets are saying, especially a market like this which is being buffeted by good news and bad news at the same time. so yeah, i think we are in the middle ground. i've been saying for a long time that we are in what i call the zone of reasonableness and i don't think there is anything much to do. annmarie: zone of reasonableness. there is a strong consensus, last year that was completely wrong. this year you said there is a feeling that snacks will be thinking. how do you work with that as an investor? > i don't think the consensus is necessarily not on, i just think that most people can't improve upon it. that is really the criteria. what i learned in school, markets are efficient. that doesn't mean they are right, that just means that most

people can't improve upon the market consensus judgment. so now tell me your question. annmarie: i'm wondering, where are we in the credit cycle? howard: following from jonathan's question, but it says it best. when the tide goes out, we find out who has been swimming naked. the tide hasn't gone out. we are still in generally a salutary period. economy functioning well, earnings pretty good. interest rates coming down recently. money available. so under those conditions, you don't have a test. the question is which companies and industries do ok when conditions get tougher? jonathan: can we get some more quotes in this memo as well? the worst of loans made at the best of times. i love the validity of the idea behind it. in low return times, and athens are made that should be made.

buildings are built that shouldn't be built. can we talk about buildings that are built that shouldn't have been built? is that an area of focus for you as you think about perspective weakness down the road? howard: well, i think that commercial real estate, office buildings in big cities in particular are a focus area. the post-pandemic behavior of people not going to the office so regularly calls the sector into question, as does ai and the question of how many employees you are going to have. mi talking five years to a machine over there? i don't know. lisa: maybe you are right now. howard: there you go. there are questions about real estate. but on the other hand, most people won't touch real estate with a 10 foot pole.

they may be underestimating, so jonathan, it is important that everybody understand, the question is not is everything going great in the sector or is it going terribly, the question is do prices in that sector reflect the reality overestimated or underestimated? i made a living buying things that nobody else thought was a good idea but if you buy them cheap enough, they become a good idea. if you have the right real estate in the right place, if you are differentiating and other people haven't, and that is a time for bargain-hunting. >> so you've got the story in the price of the story. can i ask if you like the price of the story? howard: there's not a lot of price discovery going on in the real estate industry. there are very few transactions. i don't see a lot of prices. where will they trade? if the quoted price for a new

york office building is down 50%, let's say, will any sellers sell there? will of the buyers by there? it a lot of people want to buy and nobody is selling it, that says to me the real price isn't and 50 so we have to have price discovery. lisa: which brings us to the fact that the tide hasn't gone out yet and we are going to get more price discovery because there will be some people left naked. you don't like to make rate projections. you do have a model roughly in your head where you say in a memo that you don't think that rates are high. howard: they are not high relative to my experience. lisa: if that is the case, you kind of game out a 3.5% and fund rate over the next five to 10 years. what does that mean for returns more generally? does that mean they are better in credit and better in your world, or are they kind of force because of the overhang that we thaad, easy money policies is going to take a lot to work

through? howard: well, it is a complex question, but we are at five and one quarter to five and one half. that is a measure determined to crimp the economy, to kill off the excess inflation. the target as two, we are above two. cool off. by the way, in his remarks on monday, he said we won't cut rates until we see we are making progress toward 2%. he didn't say until we are at 2%. i think if inflation starts going 3, 2 and three quarters, two and a half, maybe he will start cutting, i don't know. but the word toward was important.

the only thing i'm sure of is it interest rates are higher, the people who invest in credit instruments which is what we do our buying and at higher yields. invariably, we will have higher returns than they have in the recent past. so today's rates are not high historically, but they are certainly higher than we had from 2009-2000 2021 which means their return on bond investing, bone investing will be higher than those in that period which were, you know, really paltry. jonathan:jonathan: we got a central-bank decision to get you as well, the brilliant howard marks. i want to get you an update on the stories elsewhere. >> n.y.c.b is offering you details after yesterday's equity investment. a statement that liberty strategic capital and other partners are making individual investments rather than a combined investment. the bank will also sell nearly

60 million shares of stock at 192,000 shares of a new series of stock yesterday, n.y.c. be raised more than $1 billion from investors and in the former treasury secretary steve mnuchin. congress may be taking another step to crackdown on tiktok. today, the house is expected to take up a bill that forces bytedance to sell the app in 165 days. if it doesn't, the u.s. would ban tiktok from app stores. the biden administration has backed the idea but not fully supported the exact legislation yet. the latest ecb decision is due in just a few minutes. liv-ex a brown foamy that the central bank will find itself in a pickle this year if it ends up cutting rates before the fed does likewise. >> the big issue is what happens if the fed doesn't cut at all this year? that is the big issue. this will be horrible for the ecb. whatever happens has to be what

happens in europe. it is not like the ecb is all of a sudden in the lead, it cannot do that. the risks are too high. >>'s news conference to get -- christine lagarde's news conference begins at 8:45 eastern. jonathan: ecb decision just moments away. ♪

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1.9% in 2026 as they are forecasting and overshoot. they are also looking to see growth slowed significantly this year, just a 6/10 gain in gdp for 2024, and they expect growth to pick up a little bit but only to 1.5% in 2025. 1.6% in 2026. these are the kind of numbers we have been told to look for for christine lagarde when she starts talking about when they might cut rates. they may be ahead of the fed because inflation is moving down more quickly and growth is slowing. some bad news out of germany today with their industrial production manufacturing down 11.3% in the prior. jonathan: we had tons of bad news out of germany. the euro is slightly negative on the session. just a programming note. that news conference will begin at 45 minutes past the hour. we will bring the headlines in just a moment.

howard marks, i want to start with this. how relevant are these decisions? the ecb today, the federal reserve later this month. how relevant is all of that to you and the team? howard: a year ago i wrote a memo called what really matters. and they started off by listing five things which in my opinion, don't matter, the first of which was short-term events. so if i tell you there are going to be five rate cuts this year, what will you do in your portfolio? and if i say no, it's going to be three, what would you do differently to mark if i say the first rate cut will come in a, what would you do? these things don't matter. they preoccupy us because the real movie that matters runs so slow that people have to find something to do in the meantime.

what matters is the direction of interest rates over the next three years. the direction of the economy, the growth rate. for me as an investor, what matters is do i lend money to companies that pay me back? not what the profits will be next week or month or quarter. for the stock investor, are you investing in companies that will prosper over a multiyear period? that is what matters. lisa: so i will just say that we do talk about it every day because we have to talk about something. in long-term story doesn't always fly, but there is this question about when the cutting cycle matters in terms of going to europe, for example. does that affect your investment thesis if you have an ecb within to ease policy in the face of real weakness or are you just looking at strength and pockets of opportunity? howard: that ghost is the question of secularly, will the

european economy be strong or weak? and it is clear that they believe the growth over there will be white anemic. that is important to know. now, oaktree does not make in basements on the basis of macro forecast. what we care about is if we lend to a company, will they pass back, not what will gdp growth be in 2026 according to mike, according to lagarde. europe is weaker than we are here. that is the important thing. will that be realized, the expectations for the u.s. of more than two growth be realized? these are important. the other thing i know for sure is that i don't know. nobody at oaktree knows more than the consensus about these matters and that is why we don't make our investments predicated on these matters. >> when you are going in and

looking company by company in europe, do you see a lot of opportunities from companies that aren't as crowded as the u.s. where everyone is banking on the strength story? >> that is the other hand. on the one hand, we know there economy is not as good as ours. on the other, maybe investments are corresponding. nobody should invest on the basis of a single factor like the rate of economic growth. it is always the question, do you like the price, and do you like the growth rate and the price relative to the growth rate and the price someplace else? if we earn a living, that is how. jonathan: can we finish unleveraged? this great line in your memo, the mother's milk of rapid expansion speculation. if we reflect on the last 10, 14 years, youth and in a decade

long period of interest rates, there are several reasons for that. but this has been quite odd because we then have the pandemic which led to the strengthening of balance sheets for both corporate and household off the back of a monster fiscal transfer into question i think that is and i hear a lot is where is the leverage now? where is the leverage now? howard:howard: we know that the leverage is in the government. the government has taken on a lot of leverage as part of its rescue mechanism. we had two serious problems, the global financial crisis to kick off the low rate you're talking about and the pandemic to bookend it. and in both cases, the fed discovered something called quantitative easing or the buying of bonds, and it really did a great job saving the economy on both occasions, but it loaded up the balance sheet with debt. corporate balance sheets are

generally ok if you look at leveraged buyouts, which is something that is very important to us. a leverage on those is lower than it historically has been. in the 90's, it was 70, 75%. in the 80's it was 95.5. today it is more like 60-40. the companies themselves are generally less levered. jonathan: is it too simplistic to say if the increase has been on the sovereign balance sheet, is where the risk is? howard: i don't invest in sovereigns. the trouble is that in sovereigns, other things matter. when we look at companies, we ask do they make money, will they make money, will they be able to repay their debt?

governments don't make money, they are not expected to make money and they pay their debt by running the printing press. jonathan: and then they have the ability of extending the cycle at the same time. if they've absorbed the leverage that existed elsewhere and they are less exposed to the challenges of the companies that you've been investing in, are you thinking of a much longer cycle as a consequence? howard: well, i don't think governments can keep us aloft forever. and in the other question is, other currencies acceptable to the world? and at what price? in exchange rate a price. the dollar-euro exchange rate is the amount of dollars that people will pay to get a euro. and if that goes off the rails, then maybe they can't print as much or have other indigenous problems. so again, multi-factor, not one.

jonathan: which is why we talk about the euro every day. howard: thank god. jonathan: you're one of the best, we appreciate it. the euro right now negative by 0.1%. i feel terrible doing this now with howard sitting here. trade is effectively betting on more cuts from the ecb off the back of this forecast from the central bank. lisa: it matters to a lot of people and i will say this, it depends on whether they see that weakening in the economy is coming along with the nation coming down. i want to hear from her about the attacks and what that is going to do. jonathan: can a lot of questions, i imagine, on that story. that news conference starts in about 20 minutes time. treasury yields a little bit lower. we will catch up with bank of america in just a minute. michael mckee is going to break down jobless claims for you. all of coming up next. get help with j.p morgan personal advisors. hey, david! ready to get started? work with advisors who create a plan with you,

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♪ jonathan: economic data in just a moment, jobless claims. equity futures right now positive by one third of 1%. half of 1% on the nasdaq. if you look at the bond market, yields are lower now in the u.s. by three basis points. 4.07%. in germany, down six basis points. inflation lower than expected. does that open the door to rate cuts in the ecb sometime soon? the euro lower, 108.83. with those jobless claims data

and a whole lot more, here is mike mckee. mike: we've been talking about a lot of layoff announcements but it is not showing up in the numbers. only to edit 17,000 jobless claims in the last week that compares to revised 217 the week before. so no real change there. the number of people who are still getting claims up from 1,898,000, which is a revision a little bit lower. the continuing claims numbers not really telling you anything different, either. the length of time people are taking to get a job hasn't changed significantly. the other big news of the day, the trade balance comes in unexpectedly high at $67.4 million instead of $64.2 billion, so that is going to be a subtraction from first-quarter growth. this is the first to january number we have on it, so a little bit of a surprise there. productivity and unit labor

cost, unchanged at 3.2%, and the unit labor cost, and a little bit lower, 4/10 of 1% from 5/10 of 1%. the productivity numbers are interesting, not necessarily because they changed at all, but because they have been so high. it has been one reason that inflation is going down here and it is a big difference between what is happening in the u.s. and what is happening in europe where they have about 6/10 productivity. that shows you one reason why it stays a little bit higher and our economy is going to grow a little faster. jonathan: hard to get a clean read on the price action to get this economic data is in combat with what we just heard from the ecb and the forecast for inflation. equity futures positive by 0.4% on the s&p 500. the nasdaq 100 up by 0.6. fun market yields down by two basis points coming into the jobless claims figure.

the 10 year maturity on a two-year, down by three basis points. if i was to put it altogether, just in terms of the market reaction to it, this is just another one in a list of the now so far this the where in-line or down site of price is good news. and it with the same last week as well. it is the absence of blowout beats like the ones we were getting in january that i think encourages this market a little bit more. annmarie: -- lisa: it is the absence of detailed risk of the potential re-inflation and growth. if you don't get that, that is considered a very positive thing for this market. there is a real question here especially with the ecb coming out and projecting weaker growth and weaker inflation. does the u.s. stand-alone, or is it kind of together with what the ecb does and why i ask is because bond markets are very much trading in tandem still. even though we keep saying the

u.s. economy is doing a lot better and has a lot more momentum. jonathan:jonathan: the first question you ask, why haven't you just cut interest rates? is it that the question you ask in about 12 minutes time? lisa: absolutely, if you are projecting lower growth, you see recession in germany, inflation coming under control, what is holding you back right now? jonathan: what would you say? mike: it is a good question about timing because the ecb sees momentum that is perhaps stronger than the fed down toward 2%. so they could move now, and that might be something that could give them a little bit of a tailwind at a time when the u.s. is laughing them. the futures prices now pricing in basically a move in june for the ecb from july, but the fed is still out there in july. we will see what happens after tomorrow's jobs report. lisa: what happens today also,

do hear from day two, chair powell. i do think it is telling that the enthusiasm we are seeing in the equity markets and bond market hasn't shaken this feeling that there are going to because medic cuts or trimming a lot around the edges later this year. what are you looking to hear from them today? mike: what i would like to hear from them is a little bit more on the criteria that go into when they cut rates and tried to get a feel for whether they cut this year or not. but i think what we are going to get is pretty much a reiteration of what was said before. unfortunately, nothing in it for him to answer my question. jonathan: thank you, chairman powell in front of the committee yesterday, the senate banking committee in the nadir. the highlight of that might be it might be senator warren coming up. lisa: why are you taking away our gateway to protection

against largest banks? you should be increasing the capital holding. i'm curious about whether he walks back some of his proclamations from yesterday given some of this is that maybe he was front running his compatriot michael barr from the vice chair of supervision. jonathan: we are not going to talk about how happy brian might be. i want to talk about monetary policy with you. that news conference is going to start in just a moment. can you frame what they are looking at in europe and what you are looking at in the united states? >> i would just say as a policymaker is a lot easier to justify action if growth is slowing down meaningfully. if inflation is coming down and growth is weakening, it is obvious. it is about timing, not necessarily direction. in the u.s., the direction of travel has been toward firmer growth and then questioning how quickly does inflation come down? the fed says that narrative or

mother this appears to be supply-side driven, that suggests we could ease later this year. but then there is balance of risks so it wires more nuanced from the fed. jonathan: we know where there is caution because we just had this really boomy day. so far it doesn't look like february is concerning january. are you expecting that from the payrolls report tomorrow morning? >> i don't expect we added three and 50,000 jobs in january, i do think some of the seasonal has been slow to catch up. i think the labor market probably held up just fine. we are a touch stronger than where consensus is, but that is about in line with what the six month average has been, so i think that the december-january turn had a lot of noise. the february date is saying things are: on the margin, don't look for re-acceleration. that is kind of the big narrative driver. rbv accelerating were just showing resilience?

lisa:lisa: so what would it take for you to enter the camp that we can talking about, the no rate cut camp which is getting bigger and attracting more and more? >> i think you would need a number closer to january, at east above 250, maybe closer to 275 but it would have to be a company with other information like wage growth is picking up, the decline in hours worked. more context beyond just the employment number but yes, something like that would probably reduce odds in june substantially. and the trick is that there are some in the market who say if that doesn't move by june they are not going to move this year so you can see kind of a peeling off of rate expectations very quickly if you take off june. some in the market might be inclined to take off september as well. lisa: last night i was going through the data, and i was struck by the narrative we've experienced over the past year and this idea that i can't get

my head around ok data that doesn't really have a direction, that is good enough but doesn't suggest was going to happen in the church. what do you make with data like that? >> i would say from the economist point of view, and if it is a law about a supply shock, you get a reaction that looked different than you are accustomed to, meaning we usually think strong growth through overheating affects. and we are wary of that, we are concerned about that. but over the last one or two years it has been the opposite. a world where we can coexist with strong growth, low unemployment, declining inflation. we are not used to that. the data being ok, we may not have every accelerating story but one that is tricky to navigate. lisa: when you look forward what is going to be the key data point that drives your forecast? everyone seems to be planning on the goldilocks scenario. >> i would say the two most

consistent data points that the employment data and the inflation data. seasonally adjusting the $27 trillion economy through a pandemic is the heart but has got to be easier to cop people can see for and what we are paying for things. jonathan: best gas, where are we a week from now? payrolls in hand, cpi in hand, we will have just got retail sales as well. how would you describe that moment to mark >> labor market heating up but cooling on the margin just a bit. maybe alleviating some fears of reacceleration. out credit and debit card data suggested retail spending is softening. so again, probably ok, falls into leases ok description. i think that is where we will be. jonathan: probably ok is probably what is labor market wants. lisa: but as long as it is ok with look forward that it will continue to be ok. that is the key question, what

is the look forward when you have ok that it's kind of messy? jonathan: isn't that probably market data? >> that is what they want to see, he says he doesn't have to be better, it just has to be continually good. interesting when we say 215 is not that rate. two months ago, were talking about 180 as a strong number, so ok has a different definition these days. jonathan: a few months ago we thought we would get rate cuts in march and here we are, it is march. good to see you. and the effects market, just want to bring your attention to what is happening with the euro at the moment, negative by 0.2%. there is a bid in the bond market down four basis point on a 10 year treasury over germany a little bit you -- larger, yield i down by seven basis points. it a focus on the ecb, may be coming sooner off the back of those forecasts. lisa: and a little bit more, which raises this question, but

effective for the euro trade given the fact that we are talking about the potential for the federal reserve pushing back all of those rate cuts, all of the people who came on a that the consensus was ecb would rate first is looking more and more like they are right. jonathan: this is the market he would be excited about. depends how any cuts begin from the ecb, reduce them from the fed. lisa: think, and i would think that would be quite a bit of dollar strength incinerate you are having a stronger-than-expected economy in the u.s. so it is surprising to me there isn't more of a response. jonathan: that news conference with president regarding start in about three minutes time. here is your bloomberg brief. >> urging all that reconsider selling to the red the after yesterday's the attack on militant. not with international which represents 20,000 workers so the utmost early should be safeguarding lives of seafarers. the death marked the first loss of life since the attacks began

last september. november, rather. donald trump wants to debate joe biden. he posted on calling for debate anytime, anywhere, any place. trent stepped in debates during the republican primary. he says if he is desperate to see the president prime time he can watch the state of the union tonight. shares gaining after the dutch drugmaker release missing data on an experimental daily --. the treatment helped patient shed 30% of their weight over 12 weeks use. needing with investors, a set to study the smaller provide a basis for further development of the pill. donovan: up next, president biden charting a path forward. >> americans are the fed up and frustrated with washington for a whole slew of issues. president biden is going to try to present himself as a problem solver who has been adept at addressing some of those issues spite jonathan: that. we will catch up with anne-marie in just a moment. equity he just posited by 0.4%.

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the all new godaddy airo. put your business online in minutes with the power of ai. ♪ jonathan: frankfurt, germany, the interesting news conference just beginning with christine lagarde. some open comments, q&a when that begins. we will go over to that in a moment. right now, the euro as negative by 1/10 of 1% against the dollar. off the back of these inflation forecasts from the ecb, teeing up a rate cut pretty soon based on this. they are telling you to percent, 2025 near term. by that forecast for inflation lower. lisa: elastically good question why aren't they cutting rates today if this is their fork at the time and a lot of people have been talking about recession in germany? jonathan: yields are lower by four or five basis.

under surveillance this morning, president biden charting it have forward. >> this is probably the most important species going to give the american people. president biden right now is historically behind every single present except president carter on five to six of the most critical metrics. americans are very fed up and frustrated washington or a whole slew of issues. president biden is going to try to present himself as a problem solver who has been adept at addressing some of those issues despite the dysfunction. jonathan: the president delivering estate state of the union address tonight, biden expected to defend his foreign agent for policies and handling of the economy voters watching not only for what he says, but how he says it has concerns about his age and mentally mountain the polls. anne-marie back with us in washington. just how big is this present -- moment for the president? annmarie: everyone in washington is calling this the most important features presidency but not just it is because the state of the union in the sense

of constitutionally, but also this is a campaign speech. he is obviously going to be trying to differentiate himself from former president donald trump and why he thinks the american people should give him four more years. he was saying that his approval rating right now is slow. a line that i keep hearing from both democrats and republicans is what reagan said about carter. are you better now than you were four years ago? how biden is going to talk about that today is going to be trying to remind the american people of where they were four years ago, when the world shut down in covid. and now we actually are joined by congresswoman abigail spanberger of regina, a democrat representing a swing district, not just a swing state and also a tendency for virginia governor. thank you so much. i want to start in virginia. some obviously won the primary that nikki haley had a pretty strong showing.

and what we know from the biden campaign is that they want to welcome these voters. how does he speak to these voters today, more moderate- leaning republicans or independents? >> it wasn't just northern virginia, it was williamsburg, charlottesville. there are pockets throughout the commonwealth of virginia where we did see that nikki haley did well. and i think that the weight of the president speaks to all voters, all americans by talking about what our vision, our shared goals are. i want to give the president talked about the issues that her friend of mine for so many american and certainly, that begins with our fundamental freedoms, specifically abortion rights and reproductive rights after what we saw the supreme court in alabama. that is front of mine for so many voters certainly across virginia. i want to hear him talk about the concerns that so many people have across virginia about fentanyl and the immigration challenges, the need for border security and immigration reforms , certainly front of mind is the

issue of national security and whether we will be able to move forward with ukraine and the national security supplemental. and then ultimately, the day-to-day challenges facing so many american cost, mortgages, home rental prices, cost at the grocery store. these are the things that are top of mine for 70 people across virginia and i think if the president speaking to those things, not only will that potentially be a positive and inviting message for those who already rejected donald trump at the ballot box by voting for nikki haley, but also an important message for all americans. lisa:: after paul continues to show that voters actually think trump would be better when it comes to handling some of those issues you just outlined in 2021, the new york times, you give us a quote that nobody elected him to be fdr, they elected him to be normal and stop the chaos. do you think he has become more normal over the course of his

presidency? >> absolutely. i have three school-aged children, one in elementary, one middle, one high school. and what i know is that now we are back to putting our kids on the bus, we are not worried about a global pandemic, we are not worried about the shutdowns that we saw in early 2020 and into 2021. in fact, we are back to some level of normalcy that so many americans felt. there is so much room to make continued improvements and continued progress, but yes, i do think that actually the present settled into what i do continue to believe was his and state which was to settle things in the aftermath of the pandemic and back to governing. the fact that congress isn't always a willing partner in the republican majority in the house is not always able to partner, that is an entirely separate issue. but in terms of being a steady hand, in terms of demonstrating the level of normalcy and the

calm from the chaos that the entirety of donald trump's your presidency, i think that president biden has done a very strong job and follow the mandate that i think he was sent to washington with. lisa: you mentioned immigration is a tough issue. the gallup poll and shows now, since 2019, is the top issue for american voters. your former -- you are a former intel officer, if this problem worse than ever before you seen, given your background? >> i think there's multiple factors here. certainly there at the issue of drug trafficking, -- the strength of drug and transnational criminal organizations and as you mentioned i armor cia officer and before that i worked narcotics and money laundering at the federal law enforcement officer. so there are elements of the challenges that we faced, the larger international issues, but then the reality that we as a

nation have an immigration system that is not working, it is outdated, it has not been reformed in a generation and we see that day by day when people are coming to the united states rightfully, trying to apply for asylum of the backlog and the weight is years and years. i have farmers and producers and industry across my district that want to hire workers from abroad, hospital systems that want to bring in nurses and doctors, farmers that want to hire folks under the h2 a program and they cannot because there simply are not enough pieces to meet demand that they have. the challenges in the system are comprehensive, which is why we need real, real reforms. lisa: but barring that reform, should biden uses executive authority to shut the border? >> i think at this point in time, the president should be looking at pursuing any and all

authorities that are within the realm of possibility for the president, we have to be clear about why we are talking about the resident taking executive action. there is a need potentially for the president to use every tool in his toolbox because when democrats and republicans and the white house engaged and worked for months to full together a bipartisan policy-focused vale that would reform our immigration system and make substantial and comprehensive immigration updates to our border security protocols and policies, that was brought to the united states senate and initially viewed as a tremendous success and my hat is off to the republican senators who worked on that with democratic partners and the white house, immediately, former president trump signaled that he didn't report it, eager johnson said it would be dead on arrival in the u.s. house, and they

crashed any and all hopes of what would have been a monumental step forward in policymaking. and so it is within that construct that we are now talking about potentially what sort of scratches at the surface exist within the president's toolbox because the folks in this building and the republican majority and speaker johnson refused to take meaningful action. we are here to govern and legislate, and they are refusing to do it. >> congresswoman, thank you for your time, we really appreciate it. and jonathan, she represents a swing district and also if she was able to win, she would be representing a purple state, so she has been one of those individuals within the democratic party who have been very vocal. that 2022 new york time quote standout to me. nobody elected you to be fdr, they elected you to be normal. jonathan: i remember that piece

and i thank you, ralph work. that state of the union coming later this morning coming up, caroline pham, former fed governor betsy duke in libby cancel of pimco will be speaking on payrolls friday. we can now head over to germany. ecb president christine lagarde fighting through her opening statement, the q&a about to begin in a moment. let's take a listen. >> and the tragic conflict in the middle east, our major sources of geopolitical risk. this may result in firms and households becoming less confident about the church and global trade being disrupted. both could be higher if inflation comes down more quickly than expected and rising real incomes mean that spending increases by more than anticipated. or, if the world economy grows more strongly than expected.

upside risks to inflation include the heightened geopolitical tensions, especially in the middle east, which could push energy prices and costs higher in the near term and disrupt global trade. inflation can also turn out higher than anticipated if wages increased by more than expected for profit margins prove more resilient. if monetary policy dampens demand more than expected, worth the economic environment and the rest of the world worsens unexpectedly. financial monetary conditions now. market interest rates have risen since our january meeting and our monetary policy has cap a broader financing conditions restrictive.

lending rates on business loans have broadly stabilized while mortgage rates declined in december and january. nevertheless, lending rates remain elevated at 5.2% for business loans and 3.9% for mortgages. thank lending to firms had turned positive in december, growing at an annual rate of 0.5%. but in january, it edged lower to 0.2%, owing to a negative flow in the month. the growth in loans to households continued to weaken, only to 0.3% on an annual basis in january. broad money as measured through at a subdued rate of 0.1%. so in conclusion, the governing council today decided to keep the ecb interest rates unchanged.

we are determined to ensure that inflation returns to our 2% medium-term target in a timely manner. based on our current assessment we considered the key ecb interest rates are at a level maintain for asus -- sufficiently long-duration will make a substantial contribution to this goal. our future decisions will ensure that our policy rates will be set at sufficiently restrictive we will continue to follow a data-dependent approach to determine the appropriate level and duration of restriction. in any case we stand ready to adjust all of our instruments within our mandate to ensure that inflation returns to medium-term target and to preserve the smooth functioning of mullet -- of monetary policy transmission. we are now ready to take your questions. >> thank you. the first question goes to

annetta, please. >> thank you for answering my question. the first question would be on the prompt revision of inflation than in the -- than expected. how does that translate in the rate outlook? in the second question is more on the discussions that you have been having inside the governing council. have you discussed perhaps doing too much? and by that the risk of inflation will undershooting the target at some point in time? thank you. pres. lagarde: thank you and allow me to preface with something that is a little bit unrelated to monetary policy this morning which has to do with the topic of concern to