‘Bloomberg Surveillance Simulcast’ (02/10/2023)

>> SIX TO NINE MONTHS FROM NOW
WE WILL PUT THE TERM DISINFLATION ON THE SHELF WITH
THE TERMS TRANSITORY. >> A LOT OF PEOPLE ARE LOOKING
AT 2023 AS A TRANSITION YEAR. >> WE HAVE A 50-50 CHANCE OF A
SOFT LANDING VERSUS A MILD RECESSION. >> IF WE HAVE A RECESSION I DO
NOT THINK IT WILL BE VERY BAD OR VERY LONG BUT MY BASE CASE
IS WE DODGE IT ALTOGETHER.

>> THIS IS BLOOMBERG
SURVEILLANCE WITH TOM KEENE, JONATHAN FERRO, AND LISA
ABRAMOWICZ. JONATHAN: I ALMOST STAYED IN BED THIS
MORNING. TOM: IS A SNOOZE FEST BUT WE NEED TO
MAKE IT PRODUCTIVE. THERE IS A LOT GOING ON BENEATH
THE SURFACE. OUR JOB — STAY WITH US ON THIS
EXCITING FRIDAY. JONATHAN: USUALLY SAVE THAT PEPTALK FOR
THE MOMENT BEFORE WE, THE AIR. I AM JONATHAN FERRO.
IF YOU WANT TO MOVE THIS MORNING , LOOK TO THE COMMODITY
MARKET. CRUDE IS UP 8.5%. THE RUSSIANS ARE PREPARING TO
CUT OUTPUT AND AS WE UNDERSTAND IT, ACCORDING TO DELEGATES OF
OPEC-PLUS THEY WILL NOT BOOST SUPPLY IN REACTION TO THAT
RUSSIAN CUT. A DECENT RALLY IN CRUDE. TOM:
IT HAS BEEN A STORY ALL WEEK. BRENT CRUDE UP TO $86.23.
IT WILL NOT GIVE WAY. WE ARE ON OUR WAY TO $90.
JONATHAN: YOU HAVE TO REFRAME THE
INFLATION REPORT NEXT WEEK. LISA: THIS IS ONE OF THE BIG
QUESTIONS, ESPECIALLY IF THAT WILL TORPEDO EQUITY MOMENTUM.
ON THIS MOVE IN OIL, WHAT STRIKES ME IS HOW MUCH THE
BARRELS HAVE NOT BEEN TAKEN OFF THE MARKET FROM RUSSIA.
ALL THEY ARE DOING IS LOSING SOME OF THE PROFITS BUT NOT
NECESSARILY SELLING LESS.

IF THAT GETS TAKEN OFF TO A GET
A CHANGED NARRATIVE AROUND THE OIL AND GAS? JONATHAN: JEFF CURRIE PUSHING OUT THE
TRIPLE DIGIT CRUDE CALL TO YEAR END. LISA:
YES AND A LOT OF PEOPLE ARE GETTING BURNT OR GET IT AGAIN
BY THAT SHIFT NARRATIVE IN OIL PRICES. JONATHAN:
CAN YOU BRING UP THE CHART OF THE LIFT IN THE PREMARKET.
BRUTAL. THE LIFT IS DOWN 33%. — LYFT IS DOWN 33%.
WE WILL DO A FULL ROUND TRIP THE TIME WE OPENED.
IF WE HOLD THESE LEVELS WE WILL BE BACK TO THE 10. TOM:
IT IS SCALE, SCALE. THIS IS ONE OF THE PLACES WHERE
THERE IS A DUOPOLY. WE SAW THIS WITH THE UBER
SUCCESS AND LIFT CODE NOT. BY ONE PUBLICATION IT IS 70%
UBER. I THINK IT IS MORE THAN THAT.
JONATHAN: IS IT A WINNER TAKE ALL
SITUATION? WE USED TO TALK ABOUT NETFLIX
THAT WAY. IS THAT WHERE WE ARE WITH THIS
INDUSTRY? LISA: THIS IS MORE EXTREME THAN A
NETFLIX SCENARIO. TO BREAK IN THEY HAVE TO CUT
SOME OF THE PEAS WHICH MEANS THEIR MARGINS WILL GET
CANNIBALIZED WHICH MEANS THEY CANNOT INVEST IN INNOVATION
THAT IS NECESSARY TO KEEP TAKING MARKET SHARE AND THIS IS
THE REASON THE SHARES ARE DROPPING THE MOST.

TOM:
IT WILL NOT BE THEORY FRIDAY. WE WILL DIVE INTO THINKING
ABOUT THIS OVER THE WEEKEND AND WEDNESDAYS INFLATION REPORT.
I WILL MAKE IT AS SIMPLE AS I CAN. ON THE INTERNET AND YOUR QUESTION ABOUT IS IT A SURVIVOR
OF ONE IS THE LANDMARK ESSAYS PUSHING BACK 12 OR 13 YEARS AGO
IT SAYS IN TECHNOLOGY USING ETHERNET MATHEMATICS IT IS A
SURVIVOR OF ONE LIKE AMAZON WOULD BE ONE EXAMPLE. JONATHAN:
EQUITY FUTURES DOWN .5% ON THE S&P. NO REAL DRAMA HERE. THE 10 YEAR CLOSE TO 3.70.
THE TWO YEAR THROUGH 4.50. IT IS LIKE OIL NUDGING UP,
BRENT CRUDE ON ITS WAY TO 87. THERE YOU ARE AT 4.51%.
IT IS BORING AS WE WAIT FOR INFLATION BUT MARKETS ARE
MOVING. JONATHAN: THE SPREAD BETWEEN THE TWO YEAR
VERSUS THE 10 YEAR, THE INVERSION OF THE CURVE, RIGHT
NOW -81. WHAT WERE WE YESTERDAY? LISA: -85.
THE DEEPEST INVERSION WE HAVE SEEN SINCE THE EARLY 1980'S.
WHEN YOU SAY THERE IS NO DRAMA THERE IS THE UNIVERSITY OF
MICHIGAN SENTIMENT SURVEY.

I AM FOCUSED ON THE READING.
HOW MUCH DOES IT REBOUND OR NOT IN TANDEM WITH LOWER GASOLINE
PRICES? I AM ALSO CURIOUS BECAUSE WE
ARE EXPECTING A HIGHER YEAR AHEAD OUTLOOK FOR INFLATION.
THIS WILL BE INTERESTING, HAVE WE REACH THIS FEELING, PEAK
IMMACULATE DISINFLATION NARRATIVE IN MARKETS.
TODAY WE ALSO HAVE THE EUROPEAN COUNCIL MEETING IN BRUSSELS.
THEY ARE DISCUSSING UKRAINE AND THE EUROPEAN RESPONSE.
THERE WAS DRAMA OVERNIGHT. THEY ARE ALSO TALKING ABOUT THE
RESPONSE TO THE U.S. INFLATION REDUCTION ACT.
I MINTED DID TO SEE WHETHER THERE IS — I AM INTERESTED TO
SEE WHETHER THERE IS ANY COHESION ON THEIR SIDE OR THIS
WILL END UP BEING A POINT OF TENSION.
TODAY THERE IS A BUNCH OF FED SPEAK.
FED GOVERNOR CHRIS WALLER AND PHILADELPHIA FED PRESIDENT
PATRICK WALLER. DO THEY DOUBLE DOWN ON THE
GROUPTHINK? DO THEY PUSH BACK? WHAT KIND OF NARRATIVE TO THEY
GIVE GOING INTO THE TUESDAY REPORT WHICH WILL BE A
BLOCKBUSTER ONE, NOT ONLY FOR CPI, BUT WE GET A READ ON WHO
THE POTENTIAL NEXT LEADER IS FOR THE BANK OF JAPAN.

JONATHAN:
LET'S TALK ABOUT THAT POTENTIAL NEXT LEADER, PROFESSOR AND
FORMER BANK OF JAPAN LEADER. I WENT TO MIZUHO.
THEY SAY HE IS A CAUTIOUS PERSON SO HE WILL NOT TAKE AWAY
YIELD CURVE CONTROL ALL AT ONCE. DROPPING WHY SISI WILL LIKELY
BE HIS — DROPPING YCC WILL LIKELY BE HIS FIRST — TOM:
THEY ARE DATA DEPENDENT BUT DIFFERENT DATA-DEPENDENT THAN
WE ARE. I'VE BEEN IN THE OFFICES OF THE
BANK OF JAPAN. THERE IS NOT BLOOMBERG SITTING
ON THE DESK. THERE IS A QUIET, AND THE QUIET
IS THE SLOW-MOTION MOVEMENT THEY WORK AT.
THAT IS A CULTURAL ISSUE. JONATHAN:
THE GOVERNMENT IS HEAVILY INVOLVED. TOM:
SOME FORM OF THEORETICAL COMMUNISM WE LEARNED IN SCHOOL
WITHOUT MARXIST THEORY.

IT IS A COMMUNAL APPROACH TO
ECONOMICS. JONATHAN: WE LEARNED RECENTLY THAT WHEN
THEY WERE PULLING BACK ON YCC, APPARENTLY THAT MEETING WAS
STOPPED SO THE GOVERNMENT COULD HAVE UPON HER STATION.
THE GOVERNMENT OFFICIAL ABOUT WHAT WAS GOING ON.
IT MAKES YOU WONDER, THE KIND OF PROCESS THEY WENT THROUGH TO
CHOOSE WHO WOULD LEAD THE BOJ AND WHAT IT MEANS FOR POLICY
GOING FORWARD. LISA: ARE COLLINS AT BLOOMBERG
OPINION PUT IT WELL. WE ARE TALKING ABOUT THE
POTENTIAL HAWKISH NEST — THE POTENTIAL HAWKISHNESS OF THE
NEW GOVERNOR. ANY HAWK IN JAPAN IS UBER
DOVISH ANYWHERE ELSE. JONATHAN: WE HAVE SOME YEN STRENGTH. LET'S GET TO ELSA, CAN WE GET
YOUR THOUGHTS ON THE BOJ REPORTS THAT HAVE COME THROUGH
THIS MORNING? ELSA: IT HAS BEEN INTERESTING TRADE
FOR MANY SINCE THE BAND WAS WHITED IN DECEMBER.
IT FEELS LIKE PEOPLE HAVE OVER TRADED A LITTLE BIT AND KEEP
GETTING EXCITED ABOUT WHO IT MIGHT BE, WHAT THAT MIGHT LEAD
TO IN TERMS OF MOVEMENT. THE BANK OF JAPAN MOVE SLOWLY
AND I THINK TRADERS ARE WEIGHING ON THEIR OPTIONS.
WE STILL HAVE THE OVER BANKING OF THE MOVE.

NOW PRETTY MUCH CLOSE TO FLAT.
TOM: YOUR ACADEMICS AND BIND IS SIMPLE. THERE IS DISINFLATION, THERE IS
DEFLATION, AND THEN THERE IS COSMIC UNDEFINED ABILITY OF
REFLATION. MR. KURODA IS DOING THE
ULTIMATE REFLATION EXPERIMENT. HOW IS IT GOING? ELSA: HONESTLY SPEAKING, IT HAS BEEN
A LONG TIME AND IT IS HARD TO SEE TANGIBLE EFFECTS.
THERE IS INFLATION IN JAPAN BUT WE HAVE SEEN ACROSS THE WORLD
GLOBAL SUPPLY CHAIN ISSUES AND COMMODITY PRICE EFFECTS AND
WHAT WE SEE WHEN THAT FADES AWAY IS THE UNDERLYING CORE
INFLATIONARY DYNAMIC WHICH IS STRONGER IN SOME COUNTRIES THAN
IT IS IN OTHER. I FIND IT HARD TO IMAGINE A
WORLD WHERE THE U.S. IS IN DISINFLATION AND JAPAN IS
SEEING AGGRESSIVE INFLATION THAT WOULD REQUIRE MUCH HIGHER
RATES. LISA: YOU ARE PUSHING BACK AGAINST
THE IDEA THAT NEXT TUESDAY WILL BE EXPLOSIVE BECAUSE WE GET CPI
AND WE GET THE BANK OF JAPAN NOMINATE AND NOTES OVERNIGHT
ARE SAYING THIS IS GOING TO BE EXPLOSIVE, ESPECIALLY FOR THE
PAIN TRADE PEOPLE POSITIONED IN DIFFERENT WAYS.
YOU DISAGREE WITH THAT? ELSA: CPI WILL BE INTERESTING.
A HUGE FOCUS ON CPI IN THE U.S.

AT THE MOMENT.
THE BANK OF JAPAN GOVERNOR LESS SO. FOR ME THE BIG CHANGE IS NOT
WHAT IS HAPPENING IN JAPAN BUT THE REST OF THE WORLD.
THE INCREASE IN HEDGING COSTS FOR JAPANESE INVESTORS, THAT
HAS NOT GONE AWAY. IF THE FED WILL BE CUTTING THE
BACK HALF OF THE YEAR IT WILL STILL BE VERY EXPENSIVE.
THAT IS THE SEA CHANGE, NOT THE YCC. TOM:
HOW DOES YOUR WORLD CHANGE IF WE NOW HAVE A WORLD WHERE MONEY
COSTS SOMETHING? HOW DOES THAT CHANGE THE
FOREIGN-EXCHANGE WORLD WHERE YOU CAN PROFIT FROM IT? ELSA:
I THINK THAT IS A GREAT QUESTION.
WE ARE IN AN ENVIRONMENT WHERE IT SEEMS TO BE FALLING ACROSS
THE BOARD, YOU SEE IT IN EQUITY MARKET AND FIXED INCOME MARKETS.
MORE MIXED IN AFFECTS. IT IS AN ENVIRONMENT CONDUCIVE
TO CONSIDERING NOT JUST RATE DYNAMICS BUT ALSO THE LEVEL OF
RATES. IN THAT CONTEXT IT IS DIFFICULT
TO IMAGINE WE WILL SEE THE DOLLAR COLLAPSE LIKE A LOT OF
PEOPLE ARE FORECASTING IF IT REMAINS THE HIGHEST IN G10.
IT DOES NOT MATTER WHEN CASH COSTS SOMETHING.
YOU EARN SOMETHING BY HOLDING ONTO IT.
IT DOES MEAN THAT BY HOLDING ONTO A SHORT DOLLAR POSITION IS
NOT GOING TO PAY OFF.

JONATHAN: I WANT TO FINISH ON THE EURO
AND WHAT IS TAKING PLACE IN ENERGY TODAY WITH CRUDE
RALLYING. THERE IS A PIECE IN THE
FINANCIAL TIMES. "PUTIN HAS LOST THE ENERGY WAR."
IS THAT YOUR WORKING ASSUMPTION FOR 2023? ELSA:
THAT IS INTERESTING BECAUSE YOU MENTIONED THE INFLATION
REDUCTION ACT IN ONE OF THE DISCUSSIONS THEY ARE HAVING AT
THE COUNCIL TODAY IS WHAT THE RESPONSE WILL BE.
STRUCTURALLY CHEAP GAS EUROPE USED TO GET IS NO LONGER THERE.
THAT MIGHT NOT BENEFIT VLADIMIR PUTIN BUT IT WILL CERTAINLY
BENEFIT THE U.S. IN RELATIVE TERMS. GOING
FORWARD, THIS IS NOT A THREE MONTH A SIX-MONTH TRADE BUT ON
A TWO TO THREE YEAR HORIZON THERE ARE BIG INCENTIVES FOR
EUROPEAN COMPANIES TO BE INVESTING IN THE U.S..

JONATHAN:
THANK YOU. ELSA LIGNOS OF RBC.
EQUITY FUTURES A LITTLE BIT SOFTER. THE CURVE, TWO VERSUS 10, THE
DEEPEST INVERSION GOING BACK TO 1981.
AS LISA POINTED OUT EARLIER, THE TWO YEAR VERSUS THE 10 YEAR
JUST OFF THE LEVELS OF YESTERDAY. FROM -85 TO 81. TOM:
AN INTERESTING TAKE TO SAY THE LEAST. I WILL GO TO OIL. JULIAN
LEE COMING UP. JONATHAN: VERY CLOSE TO $80 ON WTI.
THAT CONVERSATION IS UP NEXT. LEIGH-ANN:
A SURPRISE FROM THE BANK OF JAPAN.
THERE ARE REPORTS THAT THE PRIME MINISTER — IN APRIL THAT
LED TO A JUMP IN THE YEN. HE IS A PROFESSOR AND FORMER
BOJ BOARD MEMBER. UEDA HAS EXPRESSED CAUTION ON
RAISING INTEREST RATES PREMATURELY.

IN TURKEY, THREE SURVIVORS WERE
PULLED FROM THE RUBBLE TODAY MORE THAN 100 HOURS AFTER THEY
WERE TRAPPED BY KILLER EARTHQUAKES.
RESCUERS HAD WORKED FOR MORE THAN THREE STRAIGHT DAYS.
THE DEATH TOLL IN TURKEY AND SYRIA HAS CLIMBED TO 22,000.
RUSSIA HAS LAUNCHED A NUMBER OF CRUISE MISSILE ATTACKS ON
UKRAINE. UKRAINE SAYS THE TARGETS WERE
CRITICAL INFRASTRUCTURE IN SEVERAL CITIES. MEANWHILE OLAF SCHOLZ HAS ASKED
LEADERS TO DELIVER GERMAN TANKS TO UKRAINE AS PROMISED.
THE GOAL IS TO HAVE 80 TANKS BY THE END OF MARCH.
MORE REVELATIONS ABOUT THE CHINESE BALLOON SHOT DOWN OVER
THE COAST OF SOUTH CAROLINA. THE BIDEN ADMINISTRATION IS
PRESENTING EVIDENCE THE BALLOON WAS CAPABLE OF COLLECTED
COMMUNICATION SIGNALS AND CARRIED AN ARRAY OF
SURVEILLANCE EQUIPMENT. BLOOMBERG HAS LEARNED CONGRESS
HAS BEEN TOLD SOME OF THE COMPONENTS HAD ENGLISH LANGUAGE
WRITTEN ON THEM. GLOBAL NEWS POWERED BY MORE
THAN 2700 JOURNALISTS AND ANALYSTS IN OVER 120 COUNTRIES.
I AM LEIGH-ANN GERRANS AND THIS IS BLOOMBERG. >> MILLION BARRELS FROM CHINA,
MILLION PERILS LESS FROM THE SPR. I THINK THE MARKET IS TOO
FOCUSED ON RUSSIA. THE OTHER DOES COPE AND TAKE US.
JONATHAN: CRUDE RALLYING MORE THAN 2% ON
BRENT. $86 A BARREL. THE LATEST NEWS THAT RUSSIA
SAID WE WILL CUT OR YOUR OUTPUT BY 500,000 BARRELS A DAY.
THIS IS THE FOLLOW-THROUGH WE EXPECTED.
THE THREAT TO RETALIATE AGAINST WESTERN SANCTIONS.

HERE IT IS. OPEC-PLUS, HOW WILL THE REST OF
OPEC-PLUS RESPOND TO THE OUTPUT CUT ACCORDING TO DELEGATES —
ACCORDING TO DELEGATES, THEY WILL NOT BOOST SUPPLY IN
REACTION TO THAT RUSSIAN CUT. LISA:
WHICH IS WHAT RUSSIA WANTS. THE POINT IS IF WE ARE NOT
MAKING AS MUCH MONEY FROM WHAT WE ARE EXPORTING, IF WE CUT OUR
PRODUCTION WE WILL MAKE THE SAME AMOUNT BY EXPORTING LAST
BECAUSE THE PRICES WILL RISE. JONATHAN:
CRUDE HAS BEEN RALLYING MOST OF THIS WEEK. UP 8.8%. I THINK WE ARE ON COURSE FOR
THE BIGGEST WEEKLY GAIN OF THE WEEK SO FAR. TOM:
PRE-PANDEMIC $60 A BARREL. THEN LISA HAD TWO DRUMS IN HER
LIVING ROOM. THE IMPORTANT POINT IS THE
PERSISTENCY FROM $20 A BARREL TO 120 WAS TANGIBLE, THERE WAS
A TREND. WE GO BACK TO $70 A BARREL, AND
NOW WHAT? JONATHAN: WE ARE HAVING A SUPPLY-SIDE
CONVERSATION AND I THOUGHT WE WOULD BE HAVING A DEMAND-SIDE
CONVERSATION.

THIS IS UNHELPFUL WITH CHINA
COMING BACK ONLINE AND WE'RE ALL WAITING FOR THE DEMAND TO
SHOW UP. TOM: A NICE PRECURSOR TO JULIAN LEE
IN LONDON. TRULY AN EXPERT ON THE
GEOPOLITICS AND THE MATHEMATICS AND THE MICROECONOMICS OF OIL.
JOHN SAYS THERE IS A SUPPLY-SIDE DYNAMIC AND AMRITA
SEN SET A DEMAND-SIDE DYNAMIC. WHICH IS MORE PREDOMINANT RIGHT
NOW INTO 2023? JULIAN: THE IMMEDIATE IMPACT IS FROM
THE SUPPLY-SIDE. WE HAVE A NUMBER OF THINGS THAT
HAVE HAPPENED IN THE LAST FEW DAYS THAT HAVE HELPED SUPPORT
THIS RALLY THIS WEEK. THE TERRIBLE EARTHQUAKES IN
TURKEY HAVE HAD AN IMPACT.

THEY HAVE EFFECTIVELY KNOCKED
OUT THE EXPORTS FROM AZERBAIJAN, ABOUT 600,000
BARRELS A DAY. WE DO NOT KNOW HOW LONG THOSE
WILL BE OFF THE MARKET FOR INVESTIGATIONS GOING ON ABOUT
POTENTIAL DAMAGE TO THE EXPORT TERMINAL. WE HAVE HAD WHAT LOOKS TO BE A
BRIEF OUTAGE OF PRODUCTION FROM KAZAKHSTAN THAT ALSO FEEDS INTO
THE MEDITERRANEAN MARKETS. THAT HAS TIGHTENED THAT A
LITTLE BIT. WE HAVE HAD A PRODUCTION OUTAGE
IN THE NORTH SEA, THE BIGGEST FIELD THERE IS UNDERPERFORMING. AS AMRITA SAID WE ARE SEEING
THE END OF SALES FROM THE STRATEGIC PETROLEUM RESERVE AND
IT IS NOTICEABLE THAT IF YOU LOOK AT THE U.S.
WEEKLY FIGURES THAT THE U.S. HAS GONE FROM BEING A NET
EXPORTER OF OIL AS IT WAS FOR MOST OF LAST YEAR TO BEING A
NET IMPORTER IF YOU COMBINE CRUDE AND REFINED PRODUCTS
TOGETHER.

THEN WE HAVE THE OPENING UP OF
CHINA, THE BOOST TO AVIATION DEMAND I WAS TALKING ABOUT IN
THE NEWSLETTER. YOU HAVE TO ACCOUNT FOR SOME OF
THE DEMAND FORECASTS THAT HAVE BEEN MADE ELSEWHERE ON THE BACK
OF FUEL SWITCHING FROM NATURAL GAS TO OIL.
WARM WEATHER IN EUROPE MEANS THAT HAS NOT HAPPENED IN QUITE
THE SAME EXTENT. THAT IS OFFSETTING THAT. TOM: HOW DOES OPEC-PLUS BEHAVE
DIFFERENTLY IF WE LEAP OVER $90? HOW DOES THEIR BEHAVIOR CHANGE?
JULIAN: I AM NOT SURE IT DOES CHANGE
VERY MUCH.

THEY HAVE CLEARLY — OVER THE
LAST FEW MONTHS THEY HAVE BEEN WORRIED ABOUT THE DOWNSIDE.
THEY HAVE BEEN WORRIED ABOUT BRENT AROUND 80 AND POTENTIALLY
BELOW. THEY HAVE BEEN VERY CAUTIOUS TO
PROTECT THEMSELVES AGAINST THE DOWNSIDE.
IF YOU LOOK AT WHEN OIL GOT UP TO $120 LAST YEAR, THIS WAS A
PERIOD OF TIME WHERE THEY HAD BEEN LAGGING BEHIND DEMAND
GROWTH WITH THEIR OUTPUT INCREASES.
THE GROUP AS A WHOLE — AS IT STILL IS — WAS FAILING TO PUMP
AS MUCH AS THEIR TARGETS ALLOWED BECAUSE MANY COUNTRIES
COULD NOT. EVEN THEN THEY WERE RELUCTANT
TO ALLOW THOSE COUNTRIES, SAUDI ARABIA, THE EMIRATES, TO MAKE
UP THE SHORTFALL FROM OTHERS. THEY WERE CLEARLY MUCH MORE
WORRIED ABOUT PRICES SLIPPING BELOW $80 THAN THEY WERE ABOUT
THEM GOING ABOVE $100.

THAT MINDSET CONTINUES. LISA:
WHICH RAISES THIS ISSUE. WHY HAVE NONE OF THE WARNINGS
COME TO PASS. WHY HASN'T CHINA COMING BACK
ONLINE, AND ECONOMY NOT AS BAD AS PEOPLE EXPECTED, HAS NOT
CONTRACTED THE WAY PEOPLE THOUGHT, THEN YOU ARE ALSO
GETTING SUPPLY REDUCTIONS. WIRED PRICES HIGHER? — WHY AREN'T PRICES HIGHER?
JULIAN: PARTLY IT IS THE MARKET IS
BETTER SUPPLIED THAN IT WAS. WE HAVE NOT HAD THE DIRE
ECONOMIC FORECASTS COME TO PASS BUT THERE HAS BEEN A
SIGNIFICANT REDUCTION IN DEMAND, PARTICULARLY IN EUROPE.
WE HAVE HAD A RELATIVELY MILD WINTER IN EUROPE SO FAR, WHICH
MEANS THE PULL ON NATURAL GAS HAS NOT BEEN AS BIG AS PEOPLE
FEARED IT WOULD BE AND THEREFORE THE NEED TO SWITCH
AWAY FROM NATURAL GAS AND INTO BURNING OIL HAS NOT
MATERIALIZED IN THE WEIGHT MANY PEOPLE FEARED IT WOULD THIS
WINTER. THAT HAS HELPED TO KEEP DEMAND
IN CHECK TO SOME EXTENT, AND PLUS IN CHINA, WE HAVE HAD THE
OPENING. IN MANY WAYS THE CHINESE
ECONOMY OR CHINESE OIL DEMAND IS STRUCTURALLY QUITE DIFFERENT
TO OIL DEMAND IN THE U.S. OR IN EUROPE, WHICH IS VERY
FOCUSED ON THE TRANSPORT SECTOR.

IN CHINA IT IS MUCH LESS SO.
TRANSPORT ACCOUNTS FOR A SMALLER PROPORTION OF THE
COUNTRY'S OIL DEMAND. AS YOU OPEN CITIES UP AND ALLOW
PEOPLE TO TRAVEL, THAT DOES NOT HAVE QUITE THE IMPACT THE SAME
MOVES WOULD HAVE HAD IF IT HAPPENED IN THE UNITED STATES.
CHINESE INDUSTRIAL DEMAND FOR ENERGY AND FOR OIL WITHIN THAT
DID NOT TAKE THE SAME HIT THAT TRANSPORTATION COMMAND DID.
JONATHAN: JULIAN, ALWAYS A CLINIC WITH
YOU. THANK YOU. BRENT UP 2.5%.

WTI AS WELL.
CHECK OUT THE BOND MARKET IN EUROPE.
THE GERMAN TWO YEAR THE HIGHEST SINCE 2008.
COMPARE IT TO WHERE WE WERE LAST YEAR. FEBRUARY 10. -33 BASIS POINTS.
THAT IS A 300 BASIS POINT MOVE ON A GERMAN TWO YEAR IT
ATTRACTS WHAT IS HAPPENING WITH THE DEPOT RATE, WHICH HAS ALSO
SEEN A 300 BASIS POINT MOVE. THIS IS JUST TRACKING THE ECB.
TOM: WHY IS IT BREAKING OUT? IT WENT UP A COUPLE OF DAYS AGO
AND PULLED BACK AND NOW WE ARE UP. JONATHAN:
YOU CAN FOCUS ON THE CHANGE IN INFLATION OR YOU CAN FOCUS ON
THE NUMBER. IT IS A PROBLEM. LISA:
HOW MUCH IS THIS STEMMING FROM OIL PRICES?
IF OIL PRICES GO UP AND YOU HAVE RESILIENCE IN THE ECONOMY
YOU HAVE A DOUBLE WHAMMY. YOU HAVE AN ECB THAT IS FORCED
TO COMBAT INFLATION, BUT YOU ALSO HAVE THE STRENGTH OF OTHER
COMPONENTS ASIDE FROM OIL THAT WILL BE DRIVING SOME OF THE
PRICE INCREASES. IT IS SORT OF A TOXIC —
JONATHAN: TORSTEN SLOK STARTED THE WEEK
WELL WITH THIS. HE SAYS ARE WE REINTRODUCING
THE RISKS OF LAST YEAR? WE HAVE A BETTER GROWTH PROFILE
IN UNITED STATES AND THE REOPENING OF CHINA AND MAYBE
THE CRUDE ISSUES COME BACK AND YOU GET A SCARE OFF OF THE
HEADLINES OUT OF RUSSIA.

LISA: WHICH IS THE REASON WHY SOME
PEOPLE ARE TALKING ABOUT A DOUBLE-DIP RECESSION.
THIS QUESTION AROUND, WE HAVE GOTTEN THE RALLY.
WHAT HAPPENS IF PEOPLE HAVE TO RESET? JONATHAN:
ARE NUMBER THE SUMMER OF 2014, I THINK I WAS EVER HERE WITH
YOU. MARIO DRAGHI TOOK RATES INTO
NEGATIVE TERRITORY FOR THE ECB FOR THE FIRST TIME EVER.
SINCE THEN THE TWO YEAR HAS BEEN BELOW ZERO.
LAST YEAR, A POP. JONATHAN:
THE DISTINCTION WITH THE ECB — TOM:
THE DISTINCTION WITH THE ECB IS THEY SET OUT A CALENDAR.
THE FED DOES NOT DO THAT. JONATHAN:
A SLOW START FOR THE EQUITY MARKET.
EQUITIES HEADING SOUTH ON THE S&P 500, NEGATIVE .5% .6%.
THROUGH THURSDAY THE S&P -1.3%.

THE NASDAQ DOWN 1.2% AS YIELDS
PICKUP WORLDWIDE. IN THE U.S., YIELDS HIGHER FROM
FOUR TO FIVE BASIS POINTS. THROUGH 4.50.
IN GERMANY, A SIMILAR STORY. THE HIGHEST YIELDS ON THE TWO
YEAR BACK TO 2008, AND MAYBE YOU CAN BLAME CRUDE.
CRUDE RALLYING PART THIS WEEK, JUST SHORT OF 80.
UP MORE THAN 2%. RUSSIA PLEDGING TO CUT OUTPUT
BY 500,000 BARRELS NEXT MONTH AND ACCORDING TO DELICATES WE
HAVE SPOKEN TO AT BLOOMBERG, OPEC-PLUS NOT READY TO OFFSET
THE CUTS.

TOM: I WILL GO OUT TO BRENT CRUDE.
$87 A BARREL. JONATHAN:
IMPORTANT FOR THE INFLATION STORY NEXT WEEK.
EARLIER THIS MORNING WE HAD INFLATION OUT OF CHINA RISING
2.1% JUST AS CHINA REOPENS. WILLIAM LEE SAYS THIS ABOUT
CHINA. "CHINA'S POST-COVID RECOVERY IS
THE HEART OF UPSIDE RISK TO CONSENSUS FORECAST OF GLOBAL
INFLATION AND GROWTH. HOWEVER, CHINA'S RECOVERY MAY
NOT SPUR OF GLOBAL GROWTH REBOUND BY AS ITS PAST
EXPANSIONS." TOM: IT IS FRIDAY AND WE ARE FRAMING
ON FINANCE AND ECONOMICS OUT TO THE INFLATION REPORT ON
WEDNESDAY. THIS IS A REALLY IMPORTANT
CONVERSATION TO GET YOU READY FOR THINKING ON THE WEEKEND OF
WHERE WE ARE GOING IN 2023. WILLIAM LEE'S CHIEF ECONOMIST
AT THE MILKEN INSTITUTE. A TOUR OF DUTY AT CITIGROUP AS
WELL. WE ARE THRILLED HE COULD JOIN
US THIS MORNING. YOUR OPINION IS COURAGEOUS,
NARROW, AND CONTROVERSIAL. YOU THINK WALL STREET IS NOT
ABOUT THE CHINA GROUP THREE THEY WILL COME BACK AND WE WILL
— THE CHINA GROUPTHINK THEY WILL COME BACK AND WE WILL BOOM.
YOU DOUBT THE CHINA GDP OF 5% OR 6%? WILLIAM:
A LOT OF THE WESTERN CONSENSUS IS LOOKING TOWARDS HIGH NUMBERS
OF CHINA GROWTH RATE.

PEOPLE ARE OVERESTIMATING HOW
HARD IT IS TO GET SUPPLY-SIDE BACK ONLINE AND THE FACT THE
POLICY IN CHINA IS TO EMPHASIZE DOMESTIC DEMAND AND DOMESTIC
CONSUMPTION. IF PEOPLE ARE EXPECTING THE
EXPORT ENGINE OF CHINA TO BE REVIVING AGAIN AND PUSHING UP
THE COMMODITY PRICES, I THINK THAT IS THE WRONG PLACE TO LOOK.
LOOK TO TOURISTS FROM CHINA GOING OUT.
WE TALKED ABOUT THE TWO AMERICA'S.
RIGHT NOW THERE ARE THREE CHINA'S.
THE RISING MIDDLE CLASS WILL BE IN BAIT — WILL BE ENGAGING IN
SOME OF THE BEHAVIOR.

THE BULK OF THE POPULATION IS
CAUGHT UP IN THEIR WEALTH BEING — AND THEIR HOUSEHOLD INCOME
IS IN THE DOLDRUMS BECAUSE THE YOUTH UNEMPLOYMENT RATE IS SO
HIGH. TOM: WHEN I GO TO CHINA I GO DEEP
INTO CHINA. I WANT TO GO INTO THE WAY YOU
THINK ABOUT THE DOMESTIC POLITICS AND THAT THE WALL
STREET GROUPTHINK AROUND CHINA IS WRAPPED AROUND SHANGHAI AND
HONG KONG AND BEIJING AND YOU HAVE THE COURAGE TO GO ACROSS
THE COUNTRY. WHAT IS THE DISTINCTION OF
CENTRAL AND WESTERN CHINA? BILL: ONE OF THE THINGS PEOPLE MISS
IS THE EMPHASIS BY XI JINPING ON WANTING TO SPREAD GROWTH. A STUDY OF CITIES IN CHINA HAS
POINTED TO A BUDDING INNOVATION CENTER OUT WEST. AND ORIGINAL
GROWTH CENTER THAT WAS SUPPOSED TO BE AT THE HEART OF THE BELT
AND WROTE STRATEGY. THE STRATEGY TO PUT GROWTH OUT
WEST IS STILL THERE BUT WESTERN INVESTORS ARE IGNORING THAT.
SOMETHING WENT TO KEEP IN MIND IS CHINA IS MORE THAN THE
HOTELS IN HONG KONG AND BEIJING. JONATHAN: YOU TELL HIM. LISA:
PUBLIC SERVICE ANNOUNCEMENT. [LAUGHTER] TOM:
BILL HAS BEEN TELLING ME THAT FOR YEARS. JONATHAN: YOU KNOW THE FUNCTION ON THE
BLOOMBERG, TYPE IN A COUNTRY, PUT IN CHINA.
THE CONSENSUS FORECAST IS 5.1%.

LOOKING UP TO 2024 THE MESSAGE
SEEMS TO BE GET COMFORTABLE WITH 5%.
CAN YOU PUT NUMBERS ON YOUR OWN FORECAST AS YOU PUSH BACK
AGAINST THAT CONSENSUS 5%? BILL: I THINK THE AUDIENCE WILL SAY
WHO CARES ABOUT BILL LEE'S FORECAST SO LET ME GO TO THE
IMF. THE FACT THAT THE IMF IS LOOKING AT TWO HANDLES AND
THREE HANDLES OUT FIVE YEARS ON CHINA'S GROWTH TELLS YOU
SOMETHING ABOUT THE REALITY OF CHINA.
THE IMF NEVER DEVIATES FROM CONSENSUS.
THAT IS GOOD EVIDENCE TO STATE WE ARE NOT GOING TO HAVE THE
KIND OF HIGH GROWTH RATES WE HAD BEFORE BECAUSE CHINA'S
PRODUCTIVITY AND LABOR GROWTH RATES ARE NOT THERE TO SUPPORT
THE 5% OR 6% GROWTH RATES WE SEE.

LISA: THERE ARE TWO POINTS.
THERE IS THE HEADLINE NUMBER THAT MIGHT BE JUICED BY
STIMULUS OR THE CHINESE GOVERNMENT AS WELL AS DIFFERENT
TYPES OF REGULATORY POLICIES. THEN THERE IS THE STIMULATIVE
EFFECT ON THE REST OF THE GLOBAL ECONOMY.
CAN IT BE POSSIBLE FOR CHINA TO GET HEADLINE NUMBERS THEY
PUBLISH AT 5% WHILE NOT HAVING A STIMULATIVE EFFECT ON OTHER
ECONOMIES BECAUSE OF THE DOMESTIC FOCUS OF ALL OF THESE
PROGRAMS. LISA: BINGO — BILL: BINGO.
I CAN GUARANTEE IT THE NEXT SET OF NUMBERS OUT OF THE CHINA GDP
WILL HAVE SPECTACULAR NUMBERS, POSSIBLY EVEN SEVENS BECAUSE
THE REBOUND EFFECT BE AMPLIFIED BY THE WAY THE NUMBERS HAVE
BEEN POKED BY FORECASTERS. THE REALITY IS CHINA'S POLICY
IS ONE OF EMPHASIZING DOMESTIC DEMAND, EMPHASIZING INVESTMENT
TOWARDS BUILDING DOMESTIC CHAMPIONS, COMPANIES THAT WILL
BE HELPING CHINA'S DOMESTIC ECONOMY.
THE FOCUS ON CONSUMPTION MEANS WE WILL NOT SEE SPIKES IN
COMMODITY PRICES, WE'LL BE SEEING SPIKES IN AIRLINE
TICKETS AND TRAVEL DESTINATIONS AND HOTELS AND THAT SERVICE
SECTOR CONSTRAINT IS SOMETHING THAT IS STILL SEVERE IN CHINA
BECAUSE IT HAS NOT BEEN BUILT UP AS MUCH AS IT HAS IN THE
WEST.

GOING FORWARD WE SHOULD SEE INFLATION NUMBERS RISE BUT
IN DIFFERENT AREAS. EVEN THE CURRENT NUMBERS WE ARE
CITING NOW, TO PRESENT INFLATION, MOST OF THAT WAS
FOOD. IF WE LOOK AT THE CORE INFLATION, IT IS STILL 1%.
WHERE IS THE SPIKE WE ARE SUPPOSED TO SEE FROM THE
REBOUND? NOT HERE YET. LISA: IN TERMS OF RAMIFICATIONS FOR
EUROPE WHEN IT COMES TO CRUDE PRICES — IT HAS A NEGATIVE
IMPLICATION IN TERMS OF SOME OF THE GROWTH PRICED INTO GERMANY
ON THE HEELS OF CHINA'S REOPENING.
HOW MISPLACED OR SOME OF THOSE HOPES? BILL:
I THINK A LOT ARE VERY MISPLACED BECAUSE THE POLICY OF
CHINA XI JINPING ANNOUNCED WAS WE WANT TO BUILD DOMESTIC
DEMAND AND DOMESTIC CONSUMPTION.

THAT IS NOT THE KIND OF STUFF
THAT MAKES FOR A LOT OF IMPORTS OF BMW'S, EXCEPT FOR THE TRY
CHINA NOTION, AND I HAVE TALKED ABOUT THAT THE VERY RITUAL
ALWAYS BE IMPORTING LUXURY GOODS AND BMW'S AND MERCEDES
WILL BE PART OF THAT STORY. THE BULK OF THE CHINESE
POPULATION IS STRUGGLING POST-COVID AND POST THE
PROPERTY MARKET COLLAPSE. UNLESS REFORMS ARE PUT IN PLACE
TO RESTORE CONFIDENCE CHINESE PEOPLE HAVE, WE ARE NOT GOING
TO SEE THE CONSUMPTION BURST SUSTAINED WE SAW IN THE PAST.
THAT IS SOMETHING THAT THE WESTERN FORECASTERS HAVE NOT
PUT IN PLACE YET. JONATHAN:
CHINA'S LEADERSHIP DOES NOT LIKE BEING EMBARRASSED.
THIS WEEK A LOT OF PEOPLE FEEL LIKE THEY HAVE BEEN EMBARRASSED.
WHAT ARE THE CONSEQUENCES? BILL:
THE BALLOON INDUSTRY WILL GET A DEFLATING STORY.
ONE OF THE THINGS XI JINPING HAS TO DEMONSTRATE HIS HE HAS
CONTROL OVER THE GOVERNMENT.

IF YOU HAVE A COUPLE OF STRAY
RENEGADES PUTTING OUT FOREIGN POLICY AFFECTING MOVES LIKE
NETTING BALLOONS GO ALL OVER THE WORLD AND GETTING CAUGHT
DOING IT, THERE WILL BE SOME HEADS TO ROLL. JONATHAN:
THE TAKEAWAY OVER THE WEEKEND IS NONE OF THIS HAPPENS WITHOUT
THE SIGNOFF OF THE LEADER OF THE COMMUNIST PARTY.
ARE YOU SUGGESTING SOMEONE WITHIN THE PARTY DID SOMETHING
ON A ROGUE BASIS, WENT AND DID THEIR OWN THING WITHOUT A
SIGNOFF? BILL: I THINK YOU OVERESTIMATE THE
ABILITY OF THE CENTER TO CONTROL THE REST OF THE
GOVERNMENT. THERE IS ALWAYS SOME FOOL WHO
HAS DECIDED TO BE INNOVATIVE OR EMBARRASS THE LEADERSHIP
BECAUSE THEY ARE AT THE LEADING EDGE OF THE REVOLT AGAINST THE
PARTY LEADERSHIP.

EITHER WAY, I THINK ONE OF
THOSE STORIES WILL BE ACTED UPON. WE HAVE HAD SCENARIOS WHERE THE
CENTRAL LEADERSHIP HAS BEEN CHALLENGED BY LEADERS, LIKE ONE
WHO WAS ARRESTED FOR CORRUPTION AND TAKEN OUT OF THE PICTURE.
WHAT WE WILL SEE IS A STORY THAT WILL EVOLVE WHERE THE
PERSON OR PERSONS BEHIND THE BALLOON STORY , WE WILL NEVER
KNOW AND WILL NEVER HEAR OF THEM AGAIN. JONATHAN:
IT WAS THE ROGUE WEATHERMAN WHO DID THIS. TOM:
THIS IS SERIOUS STUFF. WE TALKED TO THE ADMIRAL ABOUT
THIS.

TO BILL LEE'S POINT — THERE IS
THIS JUVENILE IDEA THAT EVERYTHING STARTS BEHIND THE
RED DOORS IN BEIJING. TO A PERSON, WILLIAM LEE,
ELIZABETH ECONOMY, JONATHAN SPENCE SAYS THAT IS NOT THE WAY
IT WORKS. JONATHAN: BILL, WONDERFUL AS ALWAYS.
BILL LEE OF THE MILKEN INSTITUTE.
THERE IS THE TAKEAWAY OVER THE WEEKEND THAT NOTHING HAPPENS
WITHOUT XI'S SIGNOFF. IS THAT THE CASE THIS TIME?
LISA: IT IS DAMP IF YOU DO, DAMP IF
YOU DO NOT. — DAMNED IF YOU DO, DAMNED IF
YOU DO NOT. IF YOU DID SIGN OFF ON IT, WHAT
WAS THE PURPOSE RIGHT BEFORE A TONY BLINKEN MEETING THAT WAS
SUPPOSED TO BE CONCILIATORY? IT IS AWKWARD FROM — TOM:
THE BOOK OF THE YEAR OR THE BOOK OF TWO SUMMERS AGO, IS A
PHENOMENAL BOOK COME AND THE HEART OF IT IS THAT THESE
PEOPLE JUST DISAPPEAR. THE FICTION OF 2034 IN THE BACK
END OF THE BOOK, PEOPLE DISAPPEAR AND THEY DO NOT LOOK
LIKE LEONARDO DICAPRIO. COMING TO NETFLIX 2034.
JONATHAN: I AM LOOKING FORWARD TO THAT
WITH YOUR OTHER BOOK OF THE SUMMER. TOM:
I HAVE THREE OR FOUR OF THEM.

JONATHAN:
WHAT WAS BOOK OF THE YEAR LAST YEAR? TOM:
LINEAR ALGEBRA FOURTH EDITION. THIS IS NOT FUNNY.
PEOPLE DISAPPEAR. JONATHAN: IT IS DREADFUL.
THAT IS WHAT HAPPENS UNDER DICTATORSHIPS. IT IS NO JOKE. GREG STAPLES IS COMING UP AT
7:30 EASTERN TIME. YIELDS ARE CLIMBING BEEN
EQUITIES LOOK CHALLENGED IN THE FACE OF THAT.
EQUITIES DOWN ON THE S&P. ON THE NASDAQ EVEN LOWER.
YIELDS UP ON THE 10 YEAR. LISA: 4.2%. JONATHAN:
4.20 ON THE TENURE. — ON THE 10 YEAR.
ARE YOU LOOKING AT THE SUPPLY? TOM:
TOOK A NAP AND WOKE ME UP WITH A 30 YEAR. JONATHAN:
FROM NEW YORK THIS IS BLOOMBERG. LEIGH-ANN:
KEEPING UP-TO-DATE WITH NEWS FROM AROUND THE WORLD WITH THE
FIRST WORD NEWS, I AM LEIGH-ANN GERRANS.
UKRAINE HAS STEPPED UP ITS CAMPAIGN FOR MORE WEAPONS FROM
THE WEST. PLEASANTON VOLODYMYR ZELENSKYY TRAVEL TO LONDON,
PARIS, AND BRUSSELS. THE COUNTRY'S DEPUTY PRIME
MINISTER HAS TOLD BLOOMBERG TIME IS RUNNING OUT.

>> MORE MILITARY ASSISTANCE IS
NEEDED BY THE MAJOR THING IS WE NEED IT NOW.
WE DO NOT HAVE TWO MONTHS TIME LEFT BECAUSE IT WILL BE CRUCIAL
FOR UKRAINE'S VICTORY. LEIGH-ANN:
SHE ALSO CALLED ON THE EU TO BEGIN THE PROCESS FOR UKRAINE
TO BECOME A MEMBER. THE DEATH TOLL FROM THE
EARTHQUAKES IN TURKEY AND SYRIA HAS NOW RISEN TO MORE THAN
22,000. EXPERTS FEAR TENS OF THOUSANDS
OF MORE PEOPLE ARE BURIED UNDER THE RUBBLE. TURKISH PRESIDENT ERDOGAN IS
FACING MOUNTING CRITICISM OVER THE COUNTRY'S POOR CONSTRUCTION
RECORD AND BEING CRITICIZED FOR THE GOVERNMENT'S RESPONSE TO
THOSE COMPLAINTS.

APPLE IS UNDER LESS PRESSURE
THAN ITS TECH APPEARS TO/JOBS. THAT IS BECAUSE IT DID HIRE
MORE EFFICIENTLY IN THE FIRST PLACE DURING THE HIRING BRIDGE.
IT ADDED FULL IT — FEWER EMPLOYEES AND TOP OF THAT THE
COMPANY GENERATED FAR MORE REVENUE PER NEW HIGHER THAN ITS
PEERS. GLOBAL NEWS 24 HOURS A DAY, ON
AIR AND ON QUICKTAKE BY BLOOMBERG, POWERED BY MORE THAN
2700 JOURNALISTS AND ANALYSTS IN MORE THAN 120 COUNTRIES.
I AM LEIGH-ANN GERRANS. THIS IS BLOOMBERG. ♪ >> CASH LEVELS ARE 5% OR 6%
DEPENDING ON WHERE YOU LOOK. SHORT POSITIONS ARE VERY HIGH
AND THAT HAS BEEN THE GASOLINE ON THE FIRE OF LESS BAD
FUNDAMENTALS. JONATHAN: IT HAS BEEN A HUGE PAIN TRADE.
THAT WAS BEEN LATE MARK WEIGHING IN ON SOME OF THAT —
THAT WAS BEN LAIDLER WEIGHING IN ON SOME OF THIS.
THE S&P STILL HIGHER ON THE YEAR. LET'S CHECK OUT FUTURES
TOGETHER. DOWN .6% OR .7%.
TAKE A LOOK AT TREASURIES. MAYBE YIELDS UP BY FIVE BASIS
POINTS. BLAME CRUDE RALLYING 2%, JUST
SHORT OF 80 AS RUSSIA PLEDGES TO CUT OUTPUT BY 500,000
BARRELS A DAY AND OPEC IS NOT READY TO STEP IN AND OFFSET
THAT.

I WOULD SAY EARNINGS SEASON IS
NOT GREAT IN THIS MARKET WAS PRETTY REWARDING.
REWARDING FOR THE BEATS AND THE MISSES.
WE HAVE NUMBERS FROM EVERCORE FROM JULIAN EMANUEL.
HE SAYS THE AVERAGE STOCK PRICE ROSE POST RESULTS, COMPANIES
BEATING ON THE TOP AND BOTTOM LINE. HIGHER BY 1.4% ON AVERAGE
VERSUS 1% OVER THE FIVE YEARS AVERAGE.
THE DOUBLE MISSES ON THE BOTTOM AND TOP LINE WERE LOWER BY 1.4%
ON AVERAGE OVER THE LAST — OVER THE LAST FIVE YEARS THAT
NUMBER HAS BEEN 2.9%. NOT PUNISHED FOR THE MISSES AND
REWARDED FOR THE BEATS. TOM: JULIAN WEIGHING IN AS MORE
NUMBERS COME IN. THE IDEA IS THERE HAS BEEN A
MULTIPLE EXPANSION. NOBODY GUESSED THAT. LISA:
I WAS ALSO REALLY ENTRANCED BY THIS NOTE.
HE TALKED ABOUT AT THE SAME TIME YOU HAVE EARNINGS THAT ARE
DOWNGRADES YOU HAVE RISING MULTIPLES THAT HAVE RESULTED IN
THE LOWEST EQUITY RISK PREMIUMS IN MORE THAN 10 YEARS TO GIVE
YOU THAT POINT.

JONATHAN: GINA MARTIN — TOM:
GINA MARTIN ADAMS WILL JOIN US. AS WE DID WITH BILL LEE ON
CHINA WILL PREPARE YOU FOR A WEEKEND OF THINKING ABOUT THE
FRACTIOUS PATH FORWARD. I WILL GO TO THE EQUALLY
STRATEGIST — TO THE EQUITY STRATEGIST STEPHEN COLBERT AND
LOOK AT THE GROWTHINESS THAT IS OUT THERE.
YOU ARE VALUE-BASED BUT THE GROWTH IS WINNING.
GIVE US THE FUTURE GROWTHINESS WE CAN FIND IN A VALUE APPROACH.
GINA: IT HAS BEEN A CONFUSING MARKET
SO FAR THIS YEAR. IN JANUARY WE SAW THE
UNPROFITABLE COMPANIES OUTPERFORM PROFITABLE COMPANIES.
THE SINGLE STRONGEST MONTH, ONE OF THE STRONGEST BONDS IN THE
LAST 20 YEARS.

WE ARE IN A CONFUSING MARKET.
THAT IS ALREADY STARTING TO UNWIND.
THROUGH THE MONTH OF FEBRUARY WE ARE STARTING TO SEE VALUE
PICK UP STEAM. SOME OF THE STOCKS ARE HANGING
ON AND THAT IS A REFLECTION OF THE EARNINGS SEASON WHERE THEY
HAVE BEEN VERY GOOD AT MANAGING INVESTOR EXPECTATIONS AND ALSO
VERY GOOD AT HITTING ON THE NERVE OF INVESTORS WHICH IS
MARGINS. THAT EXPLAINS APPLIES
PERFORMANCE — THAT EXPLAINS THE PRICE-PERFORMANCE YOU HAVE
BEEN NOTED. WE WILL SEE MARKET RATIONALIZE
OVER THE COURSE OF FEBRUARY AND INTO THE SPRING MONTHS AND WE
WILL SEE SOME OF THE FROTH COME OUT OF THE MARKET.
LET'S NOT BE TOO ATTENTIVE TO WHAT HAPPENED IN JANUARY.
IT IS A ONE-MONTH TREND.

UNPROFITABLE COMPANIES WILL NOT
OUTPERFORM PROFITABLE OVER THE LONGER RUN AND WE WANT TO BE
MORE RATIONAL IN OUR APPROACH GOING INTO THE REST OF 2023
BECAUSE THERE IS STILL UNCERTAINTY. JONATHAN:
LET'S CHALLENGE THAT CONCLUSION. IS THAT THE BOND MARKET? GINA:
I THINK IT IS MOSTLY THE BOND MARKET.
WHEN WE LOOK AT THE EQUITY MARKET WHAT IS CLEAR IS WHAT
TOOK THE WIND OUT OF THE SALES WAS CLEARLY THE FED MEETING.
WHILE RIGHT AFTER THE FED MEETING THE MARKET HAS BEEN
CHOPPY, IT IS CLEAR THAT WAS A PEAK POINT FOR OPTIMISM IN THE
EQUITY MARKET. IT IS CLEAR THAT HAS RESULTED
IN SOME RATIONAL MOVEMENT IN YIELDS AS WELL.
THE EQUITY MARKET AND THE BOND MARKET HAVE MOVED IN CLOSE
TANDEM SINCE THE EQUITY MARKET LOW IN OCTOBER.
THE EQUITY MARKET DOES TAKE SOLACE FROM THE BOND MARKET
TREND.

IF THE BOND MARKET IS FOLLOWING
THE EQUITY MARKET WILL CELEBRATE THAT AS A SIGNAL THE
FED WILL EASE POLICY. AS MUCH AS WE CRITICIZE THE FED
THEY HAVE BEEN RELATIVELY SUCCESSFUL IN NAVIGATING THE
OVERALL CLIMATE THIS YEAR, ESPECIALLY SINCE THIS MEETING
— WE CRITICIZE THE FED NOT DOING AS MUCH, BUT THE REALITY
IS THEY ARE DOING SOMETHING TO TAKE THE FROTH OUT OF THE
EQUITY MARKET AND THE BOND MARKET ALIKE.
THEY ARE VERY CLEAR. POLICY IS NOT GOING TO TAKE ANY
KIND OF REPRIEVE UNTIL INFLATION IS CLEARLY UNDER SOME
DEGREE OF CONTROL. LISA: THERE IS A LOT TO UNPACK.
TO BUILD ON THIS IDEA OF TAKING A SIGNAL FROM THE BOND MARKET,
YOU THINK EQUITIES HAVE REPRICED THE HIGHER
EXPECTATIONS SINCE LABOR MARKET REPORT LAST FRIDAY.
YOU'VE SEEN A MARKET SHIFT IN FED FUND RATES.
HAVE MARKETS FULLY REFLECTED THAT? GINA: I DON'T THINK SO. WHEN YOU LOOK AT THE EQUITY
MARKET THERE A LOT OF UNDERLYING CURRENTS IN THE
EQUITY MARKET AND IT IS IMPORTANT TO TALK ABOUT THE
MARKET AND ITS UNDERLYING CONSTITUENTS.
THE ENTIRE MARKET, WHEN YOU LOOK AT THE EQUAL WEIGHTED S&P
500, IT IS TRENDING AT JUST 16 TIMES FORWARD EARNINGS.
THAT IS NOT UNREASONABLE.

IT SHOULD BE CLOSER TO 15
TIMES, BUT THIS IS GETTING NITPICKY FOR THE EQUITY MARKET.
THE PROBLEM FOR THE EQUITY MARKET ARE THE HYDRATION STOCKS.
WHEN YOU LOOK AT THE ENTIRE EQUITY MARKET ON A MARKET CAP
ADJUSTED BASIS IT IS TRADING MORE LIKE 18 TIMES FORWARD
EARNINGS. THIS IS STILL A CONCENTRATION
OF RISK IN THE TECH AND TELECOM SPACE THAT IS VERY VULNERABLE
TO INTEREST RATE RISES. WE HAVE BEEN IN A PERIOD OF
TIME OVER THE LAST YEAR AND A HALF IN WHICH THE SPACE HAS
BEEN DERATED RELATIVE TO THE REST OF THE MARKET.
WE SEE A LOT OF THAT BUBBLE THAT DEVELOPED IN THE PANDEMIC
REFLATE WITH RISING INTEREST RATES. IT IS NOT OVER.
IT TAKES A LONG TIME. WE HAVE BEEN IN THIS PERIOD FOR
A VERY SHORT TERM WHERE COMPANIES HAVE BEEN EXTREMELY
GOOD AT MANAGING INVESTOR EXPECTATIONS.
THEY HAVE BEEN ABLE TO CREATE A DEGREE OF OPTIMISM THROUGH
ANNOUNCED BUYBACKS, CASH DEPLOYMENT STRATEGIES, ALSO
COST CUTTING AND LAYOFFS TO HELP ENABLE INVESTOR CONFIDENCE
ONCE AGAIN.

WE WILL HAVE A LOT OF GIVE IN
THE SPACE AS WE SEE INVESTOR EXPECTATIONS COME OUT OF THIS
MARKET. INVESTORS NEED TO GET MORE
OPTIMISTIC OR MORE EXCITED ABOUT OTHER OPPORTUNITIES IN
THE S&P 500. THIS HAS BEEN A 10 YEAR PROCESS
OF GETTING TOO OVERLY EXUBERANT ON ONE SEGMENT OF THE MARKET
AND WE ARE DEFLATING THAT. IT WILL JUST TAKE TIME.
JONATHAN: THIS WAS GREAT. AS ALWAYS.
GINA MARTIN ADAMS OF BLOOMBERG INTELLIGENCE.
THIS EQUITY MARKET IN SESSION BLOWS, DOWN .7%.
FUTURES A BIT SOFTER. TREASURIES SOFTER.
YIELDS ARE HIGHER. WE TALKED ABOUT THE 4.20 CALL
FROM DEUTSCHE BANK. THE CHIEF INVESTMENT OFFICER
OVER THERE LOOKING FOR 4.20 ON THE 10 YEAR.
IF YOU LOOK AT WHERE WE ARE IN THE 10 YEAR AND THE TWO YEAR IN
AMERICA, YOUR 10 YEAR NOW UP FIVE BASIS POINTS TO 3.70.
ON THE TWO YEAR, 3.51.

WE ARE PICKING UP AGAIN.
A CHALLENGE TO THE LOWS WE SAW IN THE LAST MONTH. LISA:
IT FEELS LIKE THERE IS NOT THE SAME KIND OF CONVICTION IN
TERMS OF BUYING WHEN THINGS GET TO A CERTAIN LEVEL.
THERE IS A BIGGER QUESTION AROUND THE BUSINESS
CONSEQUENCES OF MONEY THAT COST SOMETHING.
IPO BACK TO LYFT AND I WONDER HOW MUCH YOU SEE MORE
RATIONALIZATION AT A TIME WHEN MONEY DOES COST SOMETHING IN
THE RISK OF NOT INVESTING ENOUGH IS THAT MUCH GREATER.
JONATHAN: GONE ARE THE DAYS OF CHASING
STREAMING SUBSCRIBERS. WASN'T THAT PART OF THE STORY?
TOM: WHAT A MESS. LISA: THEN YOU GO TO THE PAIR BACKS
AND THIS IS A DIFFERENT ENVIRONMENT. TOM:
JEAN IT WAS BRILLIANT MENTIONING 16 TIMES EARNING. APPLE MODELS OUT CONSISTENTLY
AT THE 25 EARNINGS BELIEF AND I JUST DID THE MATH ON THE S&P
500.

I DO NOT USE THE DOW JONES INDUSTRIAL AVERAGE.
ON THE STANDARD & POOR'S IT IS 16.6%. ROUNDED UP. AMAZON, ROUND IT UP.
70% OF THE STOCKS ARE FOUR STOCKS. IT IS THE WEIRDEST TIME.
LISA: AND HOW MUCH DOES THAT CONTINUE
TO GET CONSOLIDATED BECAUSE OF THE LACK OF FREE MONEY?
THERE ALSO THESE POTHOLES AND I WONDER HOW MUCH WE WOULD BE
TALKING ABOUT THESE EVEN IF MONEY WERE NOT FREE.
I'M THINKING ABOUT ADIDAS.

TOM: — JONATHAN:
THAT WAS NOT LOST ON ME. LISA: DO YOU SAY ADIDAS? TOM:
ONE OF OUR STAFF CAME IN WITH THE 1970'S ADIDAS JACKET ON.
JONATHAN: SO THEY PUT A PRICE ON YOUTH?
LISA: WEEKDAYS ON BLOOMBERG >> 6-9 MONTHS FROM NOW, WE ARE
GOING TO PUT THE TERM DISINFLATION ON THE SHELF OF
TRANSITORY. >> A LOT OF PEOPLE ARE LOOKING
AT 23 AS A TRANSITION YEAR. >> YOU ARE LOOKING AT THE DATA
AND SAYING PUZZLE PIECES DO NOT FIT TOGETHER. >> WE HAVE A 50-50 CHANCE OF A
SOFT LANDING VERSUS A MILD RECESSION.
ASK IF WE HAVE A RECESSION, I DO NOT THINK IT WILL VERY BAD
OR VERY LONG.

ANNOUNCER: THIS IS "BLOOMBERG SURVEILLANCE"
WITH JONATHAN FERRO, TOM KEENE AND LISA ABRAMOWICZ. JONATHAN: THANK YOU FOR BEING WITH US
TODAY. WE APPRECIATE IT. LISA A: HE STARTED 6:00 A.M.
BISON WAS TRY TO MAKE THIS BETTER. JONATHAN:
WE APPRECIATE IT. FROM NEW YORK CITY.
LISA ABRAMOWICZ, JONATHAN FERRO, TOM KEENE.
WE HAVE A RALLY IN THE COMMODITY MARKET. TOM, THE TWO-YEAR IS OF THREE
BASIS POINTS AND THE 10 YEAR IS UP FOR. TOM: WE HAVE A HIGH OFF, HUGE
NEGATIVE INTEREST RATE FROM ON SOME MONTHS AGO BUT THERE IS A
SUGGESTION WITH THE VIX WOULD SHOW SOME TENSION THERE.
I AM GOING TO MENTION, I DO NOT THINK WE HAVE BROUGHT THIS UP,
INFLATION IS ON WEDNESDAY. VALENTINE'S DAY.
THE NEXT DAY IS RETAIL SALES.

EQUAL WEIGHT? JONATHAN:
THIS IS IMPORTANT. TUESDAY. TOM: TUESDAY. I MADE THE RESERVATION —
JONATHAN: JUST IN CASE SO YOU DON'T MISS
IT. TOM: THEY SEND ME EMAILS THE RT'S BY — ARE TEASED BY MS. KEENE.
JONATHAN: EQUITY FUTURES NEGATIVE.
YIELDS ARE HIGHER. OIL IS RUSHING TO PUT OUT ABOUT
500,000 BARRELS A DAY. THAT STILL IS ON THE CREW DIED
OF THINGS. RIGHT NOW, CRUDE IS $79.74, UP
BY 2%.

JONATHAN: WHICH GOES BACK TO WHAT JP
MORGAN SAID AT — LISA A: WHICH GOES BACK TO WHAT JP
MORGAN SET IN THE INTRO. HOW MUCH DOES OIL SHIFTY THE
NARRATIVE OF DISINFLATION? IF OIL PRICES PUSH HIGHER AND
YOU DO NOT GET THIS PUSH IN ECONOMIC MOMENTUM FROM CHINA
INTO EUROPE. JONATHAN: GOING TO KEEP PUSHING THE
RECESSION CALL OR BRING IT FORWARD OFF THE BACK OF THAT?
LISA A: I DO NOT KNOW BECAUSE IT IS A
MISHMASH OF FS THAT I KNEW, I WOULD BE LYING.
10:00 A.M., WE ARE GOING TO HEAR FROM THE 500 PEOPLE PULLED
FROM THE U.S. MICHIGAN SURVEY FOR FEBRUARY.
IT REALLY DOES REFLECT VERY DIRECTLY WHERE GASOLINE PRICES
ARE IN THEY HAVE BEEN ABLE ICING.
YOU HAVE SEEN THE POTENTIAL FOR A TICK UP IN THE YEAR AHEAD FOR
INFLATION BECAUSE THEY TEND TO GET VERY ACCURATE, TO THE 10TH
OF A PERCENT OF PROJECTION. JONATHAN:
YOU ARE LOOKING AT ME FOR A COMMENT. TOM:
I HAVE ALWAYS BEEN SUSPECT OF THIS BUT YOU LOOK AT 5-10 YEARS
TO INFLATION EXPECTATIONS ARE GETTING AND ANCHORED AND EXPERT
ARE SAYING NO.

JONATHAN: BASED ON 600 PEOPLE THEY CALLED.
TOM: MAY BE 522. LISA A:
WE ARE ALSO LOOKING AT THE EUROPEAN COUNCIL MEETING IN
BRUSSELS. THEY ARE GOING TO TALK ABOUT
UKRAINE AND THERE HAVE BEEN A NUMBER OF DEVELOPMENTS ON THAT
FRONT. WE ARE ALSO WATCHING THEIR
RESPONSE IN THE COLLECTIVE EFFORT THEY CAN MAKE TO COUNTER
THE U.S. INFLATION REDUCTION ACT. JON:,
YOU HAVE BROUGHT THAT UP A LOT. THIS COULD BE A POINT OF
CONTENTION BETWEEN ALLIES AND WHAT THAT MEANS.
WE ALSO GET SPEAKING FROM CHRIS WALLER AND PATRICK.
ARE WE GOING TO LEARN ANYTHING FROM THEM? TOM:
THEY ARE ACTUALLY BOTH VERY GOOD.
THESE ARE NOT ACADEMIC MONKS BUT GUYS IN THE TRENCHES DOING
LEGIT RESEARCH AND BUSINESS STUFF. JONATHAN:
THEY HAVE A CONFERENCE IN MIAMI? LISA A:
THERE IS ONE AT 12:30 AND 2:00.

I WILL CHECK. TOM:
I WONDER WHAT THEY WILL TALK ABOUT.
TUESDAY, THE INFLATION REPORT. I WANT YOU TO START LARGER.
THE GOLD ROSALIE ROSES. LISA, TOP TICKS $499.
IT COMES IN A FANCY, GOLD RATE — VASE AND THEY ARE PRESERVED.
JONATHAN: $500. HOW MANY DO YOU GET? TOM:
IT IS AN AMPLE AMOUNT. MORE THAN A DOZEN. LISA A:
IT IS LIKE INTERIOR DECORATING. TOM: IT IS FOR SOMEONE WHO WANTS
LENGTHIER LOVE. JONATHAN SPENT HUNDRED $89 AND
THAT THEY DIED. JONATHAN: IF THEY COULD LAST ANOTHER
YEAR, THAT WOULD BE GREAT.

I CAN PUT THEM AWAY AND BRING
BACK. BARBARA'S JOINING US RIGHT NOW.
WE APPRECIATE IT. ARE WE PUSHING OUT THE
RECESSION CALL? BARBARA CO. WE ARE.
WE THINK THE FALLEN INTEREST RATES YOU HAVE SEEN SINCE
OCTOBER LAST YEAR OF 58 THIS POINT IN THE 10 YEAR TREASURY
EASING POSITIONS AND PUSHING THE RECESSION CALL.
WE THINK IT IS LIKELY TO BE SOMEWHERE AROUND 2024 RATHER
THAN THE SECOND HALF OF 2023. WHEN A LIFE PEOPLE ARE LOOKING
FOR RECESSION, THEY DO NOT TEND TO MATERIALIZE. TOM: WHAT IS SO IMPORTANT HERE IS
YOU HAVE A CALL THAT OUR LISTENERS AND VIEWERS IN
AMERICA'S OPERABLE WITH WHICH IS STAY IN — ARE COMFORTABLE
WITH WHICH IS STAY IN AMERICA.

WHY DO YOU PUSH AGAINST THE
INTERNATIONAL ANGLE? AND MANY U.S.
INVESTORS USE CHINA AS A PROXY LIKE APPLE.
HOW ARE THEY GOING TO REINVENT OVER THE COMING YEARS? BARBARA: INTERNATIONAL DEVELOPED
EQUITIES TEND TO RALLY AGAINST THE U.S..
IF YOU TAKE A LOOK OVER THE PAST FEW YEARS THERE HAS BEEN
FOUR TIMES IN SUBSTANTIAL OUTPERFORMANCE AT INTERNATIONAL
VERSUS THE U.S.. THEY TEND TO LAST ANYWHERE
BETWEEN 3-6 MONTHS AND THE RALLY TENDS TO BE ABOUT 20% AND
THEN GIVE IT BACK. IT IS NOT TO SAY THE TRENDLINE
CANNOT BE BROKEN AT SOME POINT BUT LOOKS LIKE IT IS STARTING
TO STALL OUT.

SINCE JANUARY 20 19, THE U.S.
HAS BEEN OUTPERFORMING INTERNATIONAL MARKETS AND WE
THINK THIS IS A BEGINNING OF A REASSERTION OF THE U.S. MARKETS.
HAS BEEN LOTS OF OUTFLOWS GOING OUT TO EUROPEAN EQUITIES IN
DEVELOPED INTERNATIONAL. WE DO BELIEVE THE U.S.
PROBABLY HAS A BETTER GROWTH DYNAMIC BECAUSE THE FED HAS
BEEN ONE OF THE EARLIER CENTRAL BANKS TO START WHICH MEANS IT
IS ALSO LIKELY TO BE ONE OF THE EARLIER CENTRAL BANKS OF
EXITING THE RIGHT MONETARY POLICY AS WELL. LISA A:
ARE YOU PUSHING BACK AGAINST THE IDEA THAT THE RALLY IN
JANUARY WAS A FLUKE AND USED TO BE FIRST?
ARE YOU ACTUALLY SEEING ANY SELLOFFS AS AN OPPORTUNITY TO
BUY MORE? BARBARA: THE RALLY STARTED IN OCTOBER SO
THE U.S. IS UP ABOUT 50% OFF ITS LOW.
INTERNATIONAL MARKETS ARE UP ABOUT 27%.
IT WAS VERY OVERSOLD SENTIMENT. WE HAVE SENT AND AS WE LIKE TO
WATCH ON THE BASIS THAT WERE OVERSOLD FOR A HUNDRED DAYS IN
THE HAS ONLY HAPPENED THREE OTHER TIMES IN OUR DATA SERIES
THAT WE GO BACK TO. YOU HAVE TO APPRECIATE THAT
THERE WAS SO MUCH PESSIMISM IN NEWS PRICED IN, SO MUCH
CONCERN, THAT IT DID NOT TAKE MUCH IN TERMS OF FUNDAMENTAL
CHANGE OF THE MARKET FOR EQUITIES TO BE ABLE TO RALLY
VIOLENTLY OFF THAT.

IT CANNOT CONTINUE FOREVER.
THE EASING OF FINANCIAL CONDITIONS IN THE EASING WE
HAVE SEEN IN BOND YIELDS HELPS FOR A WHILE BUT YOU DO HAVE
SOMEONE AT THE TOP IN TERMS OF MULTIPLES. WE ARE USING THESE
OPPORTUNITIES THAT WE HAVE REALLOCATED BACK INTO THE U.S.
AND SOLD BOND POSITIONS AFTER THEY HAD DONE EXTREMELY WELL,
KNOWING THAT HE WILL BE A TOUGH SLOG FROM HERE.
YOU CAN EASILY GO UP UNTIL HALFWAY THROUGH THIS YEAR.
PART OF IT IS BECAUSE THE INFLATION COMPARABLES,
YEAR-OVER-YEAR, ARE VERY EASY. WE SEE THAT STARTING TO TERM
POSSIBLY AFTER THE JUNE DATA RELEASED IN JULY WITH THE
YEAR-OVER-YEAR COMPS ON INFLATION ARE WHAT EVERYBODY IS
WORRIED ABOUT THIS YEAR AND BECOME MORE DIFFICULT.

TOM:
THAT IS WAY TOO OPTIMISTIC. [APPLAUSE] JONATHAN: YOU ARE NOT ONE OF BRAMO'S
FRIENDS. LISA A: I ENJOY THIS GREATLY. AS SOMEONE WHO IS SKEPTICAL OF
GROUPTHINK, THERE IS SO MUCH GROUPTHINK NOW, OTHERWISE SHALL HE BE A GOOD — MCFALL, — THAT
THERE WILL BE A BIG FALL, I APPRECIATE THAT. JONATHAN:
YOU'RE GOING TO LOVE THIS TOM. THE CEO OF BANK OF AMERICA SAID
THEY MOVED TO LONDON AND THE WIFE SO WAS THE BEST THING
ABOUT MOVING TO LONDON ECHO THE WIFE REPLIED PARIS. THE BEST THING ABOUT 2023 ABOUT
STOCKS IS BONDS. HE PUTS THAT ON THIS CHART.
I THINK MICHAEL HANH'S TREMENDOUS.
WHY DON'T YOU COME ON THE SHOW? BEST START SINCE A PORTFOLIO —
BEST START TO A PORTFOLIO SINCE 1991.

WILL THAT CONTINUE?
BARBARA: IT IS COMING OFF THE BACK OF A
HORRIBLE YEAR SO THERE IS LIKELY TO BE DONE BEEN
REVERSION. YOU STILL HAVE THE FED ACTING
SOMEWHAT AGGRESSIVELY. EVEN THOUGH THEY HAVE HAD
SOMEWHAT OF MORE DATA DEPENDENCE, IT SEEMS THEY ARE
CONVINCED TO RAISE RATES TO MORE TIMES OVER THE WORST OF
THIS YEAR. THE BOND MARKET IS PRICING IN A
BIG SLOWDOWN IN BOTH BY WILL SAY THE INVERSION ON THE
TREASURY CURVE, WHILE IT IS A FANTASTIC PREDICTOR FOR
RECESSIONS, IT HAS A VERY LONG TIME ON DOING SO.
ANYWHERE BETWEEN EIGHT MONTHS AND 24 MONTHS.
YOU CAN INVERT ON THE TREASURY CURVE FOR ABOUT EIGHT MONTHS AT
THIS POINT. I DO NOT THINK YOU WILL HAVE A
BIG BUYING OPPORTUNITY FOR BONDS UNTIL YOU SEE THE PASSING
OF THE UNFAVORABLE COMPARABLES WAS COMES AROUND OCTOBER.
JONATHAN: SO YOU THINK IT GETS TRICKY
AROUND THE SUMMER, AROUND JULY TIME.
THEY BELIEVE WAS IN THE HIGHLY PUT OUT SAID DISINFLATION WOULD
GO ON THE SHELF WITH TRANSITORY.

LISA A: CORRECT.
DISINFLATION IS THE NEED TRANSITORY. JONATHAN:
DO YOU AGREE? BARBARA: I THINK THERE IS A CASE THAT A
LOT OF THE INFLATION WE HAD WAS TRANSITORY BUT CHAIRMAN POWELL
DID NOT TELL US HOW LONG THAT MEANT. BUT WHEN YOU HAVE 15 MONTH LONG
INFLATION, IT IS HARD TO BE SUSTAINABLE AT THIS HIGH AS
GROWTH CONTINUES TO SLOW. TOM: WE LOVE YOUR THOUGHTS BUT THE REASON WE HAD TO ON HIS BECAUSE
VOYA IS IN THE NETHERLANDS. CAN YOU GET US TICKETS? BARBARA:
NO. [LAUGHTER] TOM:
THEY HAVE SOLD — TICKETS TO THIS FREE SALE SHOW IN THE
NETHERLANDS. JONATHAN: HOW MUCH ARE THEY? TOM:
I THINK THEY ARE REASONABLE. LISA A: IT IS SOMETHING LIKE 38.
TOM: THREE SOMETHING THOUSAND TICKETS TO A ART SHOW. BARBARA:
TALK ABOUT SOMETHING THAT IS RARE. THERE IS ONLY LESS THAN 40
PREMIERES IN THE WORLD. JONATHAN: IS THAT RIGHT?
[LAUGHTER] TOM: REINHARDT, VISIT CHELSEA.
BARBARA: THANK YOU FOR HAVING ME.
JONATHAN: BARBARA REINHARD OF VOYA
INVESTMENT MANAGEMENT. FUTURES LOWER.
THIS IS BLOOMBERG. >> KEEP YOU UP-TO-DATE WITH
NEWS FROM AROUND THE WORLD. WITH THE FIRST WORD NEWS, I AM
LEIGH-ANN GERRANS. THE PRIME MINISTER IS SHADE I
WILL NOMINATE SOMEONE TO TAKE OVER THE CENTRAL BANK OF JAPAN.
IN APRIL.

THAT LED TO A JUMP IN THE YEN.
UEDA HAS EXPRESSED CONCERNS OVER RAISING INTEREST RATES
PREMATURELY. THE GOVERNOR REFUSED TO TAKE
THE JOB. IN TURKIYE, WHERE REBELS WERE
PULLED FROM THE RUBBLE MORE THAN 100 HOURS AFTER THEY WERE
TRAPPED BY THE KILLER WAY. RESCUERS HAVE WORKED FOR MORE
THAN THREE STRAIGHT DAYS AND THE DEATH TOLL IN TURKIYE IN
SYRIA CLIMBED TO 22,000. RUSSIA LAUNCHED MORE MISSILE
ATTACKS ON UKRAINE TODAY. UKRAINE SAYS THE TARGETS WERE
NICKEL INFRASTRUCTURE IN SEVERAL CITIES.
THE GERMAN CHANCELLOR OLAF SCHOLZ HAS ASKED TO DELIVER
TANKS TO UKRAINE. THEY SHOULD BE THERE BY THE END
OF MARCH. RUSSIA IS RETALIATING. THEY PLAN TO CUT OIL BY MARCH
BY 100 BARRELS A DAY AND THAT IS IN RESPONSE TO PRICE CAPS
OPPOSED — IMPOSED BY THE WEST.

THAT IS EQUIVALENT TO 5% OF
JANUARY'S OUTPUT. GLOBAL NEWS, 24 HOURS A DAY,
ON-AIR AND ON "BLOOMBERG QUICKTAKE", POWERED BY MORE
THAN 2700 DIFFERENT JOURNALISTS AND ANALYSTS IN OVER 120
COUNTRIES. >> WE ARE BENEFITING FROM A
SHIFT OF CONSUMER SPEND FROM RETAIL, BUYING STUFF FOR YOUR
HOME, TO SPEND ON SERVICES. WE LOOK AT INFLATION, 70% OF
OUR DRIVERS ARE SEEING INFLATION PLAY A FACTOR IN
TERMS OF COMING TO EARN MONEY ON OUR PLATFORM.
IN SOME WAYS, INFLATION MAY BE A TAILWIND.
OUR PERFORMANCE HAS BEEN ROBUST AND WE THINK IT WILL CONTINUE. JONATHAN: THAT WAS THE UBER CEO.
IT IS THE WINNER THIS WEEK. LET'S BANK IS DOWN.
YIELDS ARE HIGHER. THE TWO-YEAR YIELD IS UP THREE
BASIS POINTS IN THE 10 YEAR IS UP FOUR.
LOOKING AT CRUDE TO RALLY BY MORE THAN TO PERCENT. JUST SHORT OF $80, $.79 67 —
$79.67. THEY WANT TO CUT A HUNDRED 7000
BARRELS A DAY NEXT MONTH.

ACCORDING TO BLOOMBERG,
DELEGATES ASSOCIATED WITH THE CARTEL SAY THEY WILL NOT OFFSET
THE CUTS. THAT IS ULTIMATELY BEHIND THIS
MOVE. MOHAMED EL-ERIAN AND A LOT OF
PEOPLE HAVE WRITTEN IN SAYING THANK YOU FOR REMINDING AS TOM
THAT IT WAS TUESDAY AND NOT WEDNESDAY FOR VALENTINE'S DAY.
HE LED WITH THAT AND THEN TOLD US TO LOOK AT THIS. JUST PUBLISHED THIS WEEK, IN
PROJECT SYNDICATES, THERE IS MORE COMPLEXITY TO BE HAD.
AS INFLATION GRADUALLY EASES, THE CLAIM THAT INFLATION IS A
RESULT OF A SUPPLY SHOP HAS REEMERGED.
HE GOES ONTO SAY THAT WHILE THE PIECES MAY BE COMFORTING, IT
CAN ENCOURAGE DANGEROUS COMPLACENCY, MAKING AN ALREADY
SERIOUS PROBLEM HARDER TO SOLVE. TOM:
DR. MOHAMED EL-ERIAN RIGHT ON TOP OF THE SYNDICATE ARTICLE
REALLY MENTIONS TRANSITORY IS BACK IN SOME WAY.
IT IS NOT THE SAME AS THE WE HAVE HIM PUT FIVE YOUR SICKO
BUT MICHAEL DARTER WAS ELIAN THE — WE HAD A 1.5 YEARS AGO
BUT MICHAEL DARTER WAS ELEGANT ON THIS.

— TO GET DOWN TO THE
TRANSITORY OUTCOME. JONATHAN:
HIS SLED WITH THIS IDEA THAT IT IS NOT A HARLEY DILLY OR SOFT
LANDING NO LANDING AT ALL. HE SAID INFLATION IS GOING TO
BE STICKY AND THE FED HAS MORE WORK TO DO AND MORE DEMAND
DESTRUCTION IF NEEDED. THAT IS THE BASE CASE WHERE THE
SLOG AT APOLLO. LISA A: THIS IS WHAT I WAS THINKING
ABOUT LAST NIGHT. IT IS NO LANDING WONDERFUL FOR
RISK ASSETS OR NOT? OR IS IT A TRANSFER OF SOME
ASSET PRICE INFLATION TO AN ECONOMY THAT IS REALLY
TRANSFERRING THE STRENGTH OF THE ECONOMY RATHER THAN THE
ASSET PRICE INFLATION BECAUSE YOU WILL SEE MARGIN
COMPRESSIONS AND ALSO IN THE CORPORATE COMMUNITY THAT MIGHT
NOT LIFT TO THE SAME DEGREE. TOM:
WE DO NOT HAVE THE TIME NOW TO GO INTO THAT BUT IT IS A REALLY
IMPORTANT. WHY I WOULD SUGGEST IS THIS TOXIC BREW AND STEW OF FRIDAY
— IT IS TOXIC BREW FRIDAY. NOMINAL GDP KEEPS THESE ANSWERS
GOING. JONATHAN: CAN I GIVE YOU THE CHEAT ANSWER?
I DO NOT KNOW WHAT HAPPENS BUT WE HAVE TO THINK IN RELATIVE
TERMS OF FACING THE HIGHER INTEREST RATES HERE.

LISA A:
THAT IS IT. A LOT OF COMPANIES THAT DID THE
BEST TO START THE YEAR WILL STRUGGLE AGAIN.
IT MAY NOT BE SUCH A CLEAN, DIRECT LINK FROM ONE TO THE
OTHER. JONATHAN: AND NEEDS A LIFT.
LET'S PUT IT THAT WAY. THAT STOCK THIS MORNING. TOM:
MANDEEP SINGH JOINS US NOW. HE HAS BEEN SO GENEROUS TO JOIN
US AS HE WRITES ABOUT THE UBER LIFT VEIN — THE UBER/LYFT
DIVIDE. WHAT THE TIMELINE TO SURVIVE IF
THEY ARE GOING TO CAN AGAINST THE SUCCESSFUL WERE — UBER?
MANDEEP: LAST NIGHT, IT WAS OBVIOUS THAT
INSURANCE IS BECOMING A BIG PROBLEM FROM THEM.
WE DID HEAR THAT FROM UBER AND THAT GOES TO SHOW THAT BEING A
SMALLER PLAYER IN THIS MARKET, WHENEVER YOU ARE RUNNING A
MARKETPLACE, IS A BIG DISADVANTAGE.
WE HEARD FROM LYFT THAT THEY ARE HAVING ISSUES WITH SUPPLY,
INSURANCE SPREADING OVER THERE SUBSCRIBER BASE WHICH IS 20
MILLION COMPARED TO UBER WHICH IS NORTH OF 130 MILLION.
THOSE ARE THE SORT OF THINGS THAT COME INTO PLAY IN TERMS OF
HOW LONG DOES THIS GO ON.

TIME WILL TELL IN TERMS OF JUST
HOW MUCH GROWTH HEADWINDS THEY ARE GOING TO SEE. TOM:
A QUESTION CAME UP THREE TIMES THIS MORNING.
CAN LIFT BANK TAKEN OUT BY UBER OR IS THERE A REGULATORY ISSUES
ARE OR DO WE NEED A DUOPOLY? MANDEEP:
I THINK IT IS UNLIKELY THAT UBER WILL BUY LIFT — LIFT BANK
— LIFT BANK — LYFT. UBER DIVERSITY WOULD HAVE BEEN
MUCH HIGHER IF THEY DID NOT HAVE A FRAME WITH THEIR CORE
RIDESHARING BUT I THINK IN THE CASE OF LYFT THEY NEED
SOMETHING TO BE PARTNERING OR ON THE DELIVERY SIDE WHERE IT
INCREASES THE TRIP FREQUENCY AND VOLUME BECAUSE THEY CANNOT
MAINTAIN SOME FIVE-DAY DO NOT HAVE THE FREE.
RIGHT NOW THERE FREQUENCY IS GOING WAY BELOW IN TERMS OF THE
NETWORK HE SAYS.

LISA A: SO THAT IS BASICALLY THE TAKE
AWAY THEIR. WHAT ABOUT INVESTMENT
OPPORTUNITIES FOR LIFT BANK — LYFT? MANDEEP:
THEY CANNOT EVEN THINK ABOUT EXPANDING OUTSIDE OF LYFT OR
THE GEOGRAPHY. THAT TIME HAS PASSED AND NOW IT
IS ABOUT SHOWING HOW THE BUSINESS AND GENERATE FREE CASH
FLOW. YOU ARE SEEING THEM STRUGGLE
BECAUSE THE INSURANCE ELEMENT CAME OUT OF NOWHERE AND NOW I
LIKE 350 CHANGE ON THE PRE-CASH FLOW LAST QUARTER.
THAT WILL CONTINUE TO BE THE CASE SO CLEARLY THERE IS AN
ASPECT OF VARIABLE BECAUSE GOING HIGHER FOR THESE KINDS OF
BUSINESSES WHEN YOU DO NOT HAVE A LARGE SUBSCRIBER BASE FOR
ABILITY TO MANAGE THAT.

OVER TIME, I THINK THEY WILL
START DOING A LOT THEMSELVES WHICH COULD HELP BRING DOWN THE
COST BUT IF YOU ARE A SMALL PLAYER, IT BECOMES A BIG
CHALLENGE TO MAINTAIN THESE ASPECTS WHEN YOU ARE RUNNING A
MARKETPLACE. JONATHAN: THAT WAS GREAT AND HAVE BEEN
PHENOMENAL ON THESE COMPANIES THIS MONTH.
WE BRING UP THE NUMBERS FOR LIFT BANK — LYFT.
IT IS WORTH 11 IN THE PREMARKET. WE ENDED 2022 AT 11.
YOU HAD A MASSIVE RALLY, UP BY 47%, AND THAT HAS JUST TAKEN
OUT ALL THE GAINS IN THE PREMARKET THIS MORNING. LISA A:
IT GIVES YOU A SENSE OF HOW LIMITED A POTENTIAL BOUNCE THAT
COULD BE.

LYFT SHARES WERE DOWN BY 74% IN
2022. THIS MIGHT HAVE BEEN THAT MAYBE
WE OVERESTIMATED HOW MUCH THE DECLINE WAS BUT NOT NECESSARILY.
JONATHAN: WE HAVE HAD A MASSIVE PAIN
TRADE, HAVEN'T WE? WE HAVE SEEN MASSIVE RALLIES
AND INDEX LEVELS LIKE THE NASDAQ WITHIN YOU GET A
PUSHBACK FROM THE EARNINGS STORY.
THIS IS WHAT — WAS TALKING ABOUT AT J.P. MORGAN.
HE SAID THIS IS ALL ABOUT POSITIONING, FLOWS AND
SHORTCOMING. ARE WE GOING TO GET THE
FUNDAMENTAL CLARIFICATION FOR THE NEXT HIGHER VALIDATION?
HE DOES NOT THINK WE ARE GOING TO GET IT MORE BROADLY. LISA A: WHICH YOU EXPLAIN VERY WELL
ABOUT OPTIONS THAT KEPT BEING THROWN OFF.
BUT TO ME, YOU WONDER HOW MUCH THE FROST GETS PERPETUATED BY
HIGHER RATE, NOT NECESSARILY DIFFERENT ON THE MARGINS BEFORE
A BIG ECONOMIC CONSEQUENCE.

TOM: WITHIN ALL THAT IS THE
CORPORATE BATTLE HERE OF COOPERATION — CORPORATIONS
ADJUSTING. I THINK WE WAY UNDER FOR THE
SIZE OF THE BIG BANK OF AMERICA. THESE THINGS ARE GIANT THAT WE
TALK ABOUT EVERYDAY AND I DO NOT THINK WE TALK ENOUGH ABOUT
THE SEPARATION OF BREATH AND LYFT — OF UBER AND LYFT. YOU HAVE A RUN RATE FOR UBER OF
31 MILLION AND FOUR LYFT, IT IS 4 MILLION.
AND YET WE TALK ABOUT THEM WITH BOTH. JONATHAN:
THAT IS BECAUSE UBER IS INTERNATIONAL. BUT IN THE U.S.
WE HAVE BOTH. TOM:
THE VISCERAL HATRED OF UBER IN PARIS IS TANGIBLE. LISA A:
LET ME GUESS. WE SHOULD DO SOME GROUND
RESEARCH IN PARIS. TOM: I DO NOT KNOW HOW THEY DO THAT
IN LONDON BECAUSE THEY HAVE CABDRIVERS. JONATHAN: FOR THOSE THAT HAVE WRITTEN IN
THE LAST 20 MINUTES OR SO, I DID NOT SAY THE BEST THING
ABOUT LONDON WAS PARIS.

I WAS QUOTING SOMEONE ELSE.
THE BEST THING ABOUT PARIS IS LONDON. AS PUT IT THAT WAY.
LISA A: DO YOU THINK THAT WILL GET YOU
OUT THE HOT SEAT? JONATHAN: JONATHAN:
EQUITIES DOWN IN RESPONSE TO HIGHER YIELD.
THIS IS THE PICTURE OF THE S&P. THIS IS "BLOOMBERG SURVEILLANCE"
AND WE ARE DOWN 0.5 PERCENT ON THE S&P, DOWN ALMOST ZERO POINT
AND READ. FOR THE BOND MARKET, YIELDS
HIGHER. THE TWO-YEAR UP AND BACK TO
4.51. THINK ABOUT WHERE WE WERE LAST
FRIDAY MORNING AT AROUND 40 BASIS POINTS LOWER.
IT HAS BEEN QUITE A MOVE. AND MOVING CRUDE AS WELL.
VERY CLOSE TO $80. BRENT CRUDE THROUGH 86 ON THE
BACK OF THIS ANNOUNCEMENT FROM RUSSIA THAT THEY ARE READY TO
CUT OUTPUT BY 500,000 BARRELS A DAY FROM NEXT MONTH.
THE IMPORTANT RESPONSE WE HAVE SEEN THIS MORNING WHICH SPEAKS
TO THE RALLY, NOT JUST TODAY BUT THROUGH THIS WEEK, IS THE
OPEC-PLUS WILL OFFICE — WILL NOT OFFSET IT.

LISA A: THEY MAY ACTUALLY ENCOURAGE THE
LACK OF SUPPLY ADDED BECAUSE THEY SEE THE DEARTH OF DEMAND
OR BECAUSE THEY LIKE PRICES TO BE HIGHER.
IT WILL REALLY AFFECT THE MARKET AND WHERE IT PLACES THIS.
JONATHAN: A LOT HIGHER THIS WEEK.
MORE THAN 8% OFF THE WEEK SO FAR.
HE ALSO POINTED TO THE TRAGIC EVENTS IN TURKIYE THAT MAY BE
DISRUPTING THE SUPPLY AS WELL. LISA A:
IT HAS BEEN A HORRIBLE STORY. YOU JUST WONDER WHY THE
BUILDINGS WERE NOT BETTER STRUCTURED REAGAN I DO NOT
UNDERSTAND. TOM: I LOOK AT THE AFTERSHOCKS EVERY
MORNING AND THIS IS THE FIRST TIME I CAN SAY IT WAS ALMOST A
QUIET EVENING FROM THE NORTHEASTERN MEDITERRANEAN AND
UP THE BROADER VALLEY. THERE WAS LIKE FIVE AFTERSHOCKS.
JONATHAN: IT HAS BEEN A SHOCK FOR
EVERYONE AND THERE WERE THOUGHTS ARE THAT THE PEOPLE
TURKIYE AND EVERYONE AFFECTED BY IT.