WEBVTT - Bloomberg Daybreak: January 27, 2022 - Hour 1 (Radio) 0:00:02.800 --> 0:00:06.080 Live from the Bloomberg Interactive Broker Studios. This is Bloomberg 0:00:06.120 --> 0:00:10.160 day Break for Thursday, January two. Coming up this hour, 0:00:10.480 --> 0:00:14.080 markets react after the Fed takes a hawkish tone that's 0:00:14.120 --> 0:00:17.440 on red. Hikes climb, with traders now predicting five increases. 0:00:17.720 --> 0:00:22.040 Earnings also hit sentiment as outlooks from Intel and Tesla disappoints, 0:00:22.079 --> 0:00:25.360 and Chuck Schumer promises quick action to fill justice Stephen 0:00:25.400 --> 0:00:28.720 Briers spot on the Supreme Court, a winter storm bears 0:00:28.720 --> 0:00:31.240 down on the city, and President Biden will visit New 0:00:31.320 --> 0:00:34.440 York to focus on gun violence. I'm John Tucker. Those 0:00:34.479 --> 0:00:37.080 stories straight ahead, I'm John stash Ower. And sports, the 0:00:37.120 --> 0:00:39.400 Heat beat, the Knicks, the Nuggets, beat the Nets, and 0:00:39.440 --> 0:00:44.320 they're playing the women's semifinals at the Australian Open. That's 0:00:44.320 --> 0:00:48.640 all straight ahead on Bloomberg day Break on Bloomberg elim Trio, 0:00:48.760 --> 0:00:54.080 New York, Bloomberg Washington, d C, Bloomberg one six one, Boston, 0:00:54.240 --> 0:00:58.760 Bloomberg nine sixties, San Francisco, Sirius x M one nineteen 0:00:59.120 --> 0:01:01.920 and around the world Old on Bloomberg Radio dot Com 0:01:01.960 --> 0:01:09.480 and via The Bloomberg Business. Good Morning. I'm Nathan and 0:01:09.520 --> 0:01:11.920 I'm Karen most now. US Future is looking at stage 0:01:11.920 --> 0:01:14.240 to come back. They're rebounding off the worst levels this 0:01:14.360 --> 0:01:16.440 morning and moving higher. We're coming up to five o 0:01:16.560 --> 0:01:18.280 one on Wall Street, and we check the markets every 0:01:18.280 --> 0:01:21.839 fifteen minutes throughout the trading day. On Bloomberg, SNP Future 0:01:21.920 --> 0:01:24.440 is up five points, death Future is up six Nasdack 0:01:24.520 --> 0:01:27.560 Futures up fifty four. The decks in Germany's down four 0:01:27.640 --> 0:01:30.600 tenths of upper cent, and your Treasury up six thirties 0:01:30.600 --> 0:01:33.640 seconds ye at one point eight four per cent. Nathan 0:01:34.000 --> 0:01:36.960 Karen stocks did sell off overnight after yesterday's hawk is 0:01:37.080 --> 0:01:40.000 chilled from the Fed, but US futures are bouncing back. 0:01:40.000 --> 0:01:43.279 From session, Low's chair J Powell signal to March interest 0:01:43.360 --> 0:01:46.840 rate hike but also stoked speculation about more aggressive policy 0:01:46.959 --> 0:01:49.240 in the months ahead. I think there's quite a bit 0:01:49.280 --> 0:01:53.559 of room to raise interest rates without threatening the labor market. 0:01:53.600 --> 0:01:58.279 This is, by so many measures, a historically tight labor market, 0:01:58.400 --> 0:02:00.640 with the yield curve flattened. On the heels of those 0:02:00.640 --> 0:02:03.200 comments from J Powell this morning, two year yields are 0:02:03.320 --> 0:02:06.760 rising while tens and thirties fall. Former Fed Vice chair 0:02:06.800 --> 0:02:09.840 Alan Blinder expects a rate hike at every meeting this year. 0:02:10.280 --> 0:02:13.440 Think about where we are now. We're almost as zero rate. 0:02:14.120 --> 0:02:17.400 Four rate hike is puts you just above one percent. 0:02:17.919 --> 0:02:20.840 That's hardly a central bank that's trying to clamp down 0:02:21.320 --> 0:02:24.280 on its economy. Former vice chair Allen Blinder says the 0:02:24.320 --> 0:02:26.880 FED will continue to be data dependent, and this morning 0:02:26.880 --> 0:02:29.400 money markets are now pricing five rate hikes from the 0:02:29.440 --> 0:02:33.079 Fed this year. Nathan Us stock sank after the Fed decision, 0:02:33.120 --> 0:02:35.880 and that trend continued overnight with heavy selling. In Asia. 0:02:36.000 --> 0:02:38.960 We get the recap from Bloomberg's Juliette Sally and Singapore. 0:02:39.000 --> 0:02:41.359 Good morning, Juliette, Good morning Karen. The m c I 0:02:41.400 --> 0:02:44.160 Asia Pacific INEX posted its biggest drop since February to 0:02:44.240 --> 0:02:47.120 hold at fourteen month lows, as a number of indexes 0:02:47.160 --> 0:02:50.119 in the region tatd Ono entered bar market in correction. 0:02:50.240 --> 0:02:53.600 Territory China's cs I three D twenty percent from its 0:02:53.600 --> 0:02:56.720 February peak to enter a bear market. South Korea's Costly 0:02:56.840 --> 0:03:00.160 also entering a band market. Australia's ASSEX two hundred was 0:03:00.200 --> 0:03:02.880 down tenpa cent from its ogus peak to enter correction. 0:03:03.320 --> 0:03:07.000 In Singapore, juliet Sale Bloomberg Daybreak. All right, Juliet, thank you. 0:03:07.080 --> 0:03:09.520 So how much further is the Federal Reserve willing to 0:03:09.600 --> 0:03:12.160 let stocks slide? We have a prediction from the world's 0:03:12.160 --> 0:03:15.160 biggest hedge fund. Bloomberg's rannitda Young joins us Live with 0:03:15.200 --> 0:03:17.640 the details. Good morning, Ranita, Good morning Nathan. It's the 0:03:17.680 --> 0:03:21.320 burning question of the moment for market watchers, and Bridgewater 0:03:21.360 --> 0:03:24.799 Associates co Chief investment officer Gregg Jensen says the fit 0:03:24.919 --> 0:03:28.799 could let stocks drop as much as more that will 0:03:28.840 --> 0:03:33.400 put the spire below thirty, near its pre pandemic level. 0:03:33.760 --> 0:03:36.320 Ja says so far, the decline over the past few 0:03:36.320 --> 0:03:39.680 weeks has been mostly healthy because it's deflated some of 0:03:39.760 --> 0:03:43.760 the bubbles like cryptocurrencies. Live in New York. I'm Ranita Young, 0:03:43.800 --> 0:03:47.080 Bloomberg Daybreak, Ranita, thank you. Stocks are also under pressure 0:03:47.120 --> 0:03:50.280 this morning from earnings, including disappointing results from Intel. The 0:03:50.280 --> 0:03:53.240 shipmakers out with a weak profit forecast for the current quarter, 0:03:53.280 --> 0:03:55.880 and we get the story from Bloomberg's Charlie Pellett. The 0:03:56.000 --> 0:03:59.080 report is fueling concerned that the cost of CEO Pat 0:03:59.160 --> 0:04:03.880 Gelsinger's turnaround plan will weigh heavily on the chipmaker's financial performance, 0:04:04.160 --> 0:04:07.440 though demand for server chips is helping bolster sales. The 0:04:07.520 --> 0:04:10.960 forecast dad's evidence that profit is suffering from an Intel 0:04:11.040 --> 0:04:14.680 spending spree. Galsinger, who took the home last year, has 0:04:14.720 --> 0:04:19.120 embarked on an ambitious plan to overhaul Intel's manufacturing that 0:04:19.240 --> 0:04:22.000 includes a new factory hub and Ohio announced last week 0:04:22.200 --> 0:04:25.800 but could cost twenty billion dollars in New York, Charlie 0:04:25.839 --> 0:04:29.160 Pellet Bloomberg Daybreak, All right, Charlie, thanks. Shares of Tesla 0:04:29.240 --> 0:04:32.880 are also dropping this morning. The company posted profit above estimates, 0:04:32.880 --> 0:04:36.840 but warrant supply chain problems will persist. Ed Ludlow has 0:04:36.880 --> 0:04:39.760 details from our Bloomberg nine sixty newsroom in San Francisco. 0:04:40.120 --> 0:04:44.120 Executives said that production volumes at the plant in Fremont, California, 0:04:44.200 --> 0:04:48.080 and in Shanghai have been depressed for several quarters due 0:04:48.120 --> 0:04:50.960 to the ongoing supply chain crunch that includes, of course, 0:04:50.960 --> 0:04:54.960 a shortage of semiconductors, and that meant one big thing 0:04:55.120 --> 0:04:59.440 this year two Tesla will not be launching any new products. 0:04:59.480 --> 0:05:02.359 That means no cyber truck, no semi truck. And the 0:05:02.440 --> 0:05:05.360 logic that Elon must put behind that was that if 0:05:05.400 --> 0:05:08.000 they don't have the parts to build or rampart production 0:05:08.040 --> 0:05:11.480 off their existing products, then they shouldn't move quickly onto 0:05:11.560 --> 0:05:15.520 new products going forward ed Lovelow, Bloomberg News, San Francisco, 0:05:15.839 --> 0:05:18.320 and thank you the tech earnings continue to roll in today. 0:05:18.400 --> 0:05:20.760 Up next to Apple reports this afternoon, and we get 0:05:20.760 --> 0:05:23.799 a preview from Bloomberg's Tom Busby. Well. The big question 0:05:23.839 --> 0:05:27.039 for Apple's first quarter results how big were holiday sales 0:05:27.160 --> 0:05:30.120 of its new iPhone thirteens, as well as the iPad Mini, 0:05:30.240 --> 0:05:33.600 the MacBook Pro, the Apple Watch Series seven, and it's 0:05:33.680 --> 0:05:38.200 updated air podier phones. Also whether that global computer chip 0:05:38.240 --> 0:05:42.520 crunch and supply chain bottlenecks impacted sales and production. Bloomberg 0:05:42.520 --> 0:05:45.800 economists forecast revenue during the all important holiday quarter topped 0:05:45.839 --> 0:05:49.400 one nineteen billion dollars, more than half of that from 0:05:49.400 --> 0:05:52.520 sales of iPhones on non adjusted earnings of a dollar 0:05:52.640 --> 0:05:56.440 nineties share Tom Busby Bloomberg Daybreak and tom Earnings In 0:05:56.440 --> 0:05:59.080 Europe and Focus as well. Shares of Deutsche Bank are 0:05:59.160 --> 0:06:02.040 up five per sen. Germany's largest lender, says it will 0:06:02.080 --> 0:06:05.159 quote significantly exceed its revenue guidance for the coming year. 0:06:05.360 --> 0:06:08.359 Deutsch saw gains in debt trading and its merger advisory 0:06:08.400 --> 0:06:11.160 business in the fourth quarter. And turning to politics now, 0:06:11.240 --> 0:06:14.159 Nathan President Biden looks poised a mega mark on the 0:06:14.160 --> 0:06:17.840 Supreme Court. We're told Justice Stephen Bryer plans to retire 0:06:17.880 --> 0:06:20.279 at the end of this term. Senate Majority Leader Chuck 0:06:20.320 --> 0:06:23.600 Schumer is leading tributes to the High Court's most senior liberal. 0:06:24.000 --> 0:06:27.039 He was a model jurist. He had huge impact on 0:06:27.160 --> 0:06:31.839 people's lives in terms of voting rights, women, women's rights, 0:06:31.839 --> 0:06:35.120 and reproductive rights, in terms of the environment, and maybe 0:06:35.160 --> 0:06:37.640 most of all, on the a C a UH, the 0:06:37.720 --> 0:06:41.320 Affordable Care Act, making sure its state. Senator Schumer is 0:06:41.320 --> 0:06:45.200 promising a quick timetable to confirm Brier's successor. President Biden 0:06:45.240 --> 0:06:47.479 has promised to name a black woman to the High Court, 0:06:47.760 --> 0:06:50.200 and futures Karen are moving higher at the moment. SMP 0:06:50.320 --> 0:06:52.760 futures are up twelve point, staff futures up forty six, 0:06:52.800 --> 0:06:56.279 Nastact futures higher by seventy seven points. The tenure treasury 0:06:56.360 --> 0:06:59.200 is up five thirty seconds, The yield one point eight 0:06:59.360 --> 0:07:02.760 four sent two year yields are moving higher. They're up 0:07:02.760 --> 0:07:06.239 to one point one eight percent now, and NIMEX crude 0:07:06.279 --> 0:07:08.960 little changed. Up about a ten percent at eighty seven 0:07:08.960 --> 0:07:12.520 dollars forty two cents of barrel bitcoin thirty six thousand, 0:07:12.600 --> 0:07:15.840 six hundred dollars. Straight ahead, your latest local headlines and 0:07:15.840 --> 0:07:23.760 a check of sports. This is Bloomberg. It's south five 0:07:23.800 --> 0:07:26.480 oh seven on Wall Street, eighteen degrees in Central Park. 0:07:26.600 --> 0:07:29.000 We gotta crash on the southbound Garden State Parkway by 0:07:29.000 --> 0:07:32.520 Eggs and one details coming up in traffic. First, John 0:07:32.520 --> 0:07:34.920 Tucker with more on what's going on in New York 0:07:35.000 --> 0:07:38.720 and around the world. Brason for some snow, John, Yeah, 0:07:38.760 --> 0:07:41.560 we're watching a powerful snow storm that's just set to 0:07:41.600 --> 0:07:45.560 sweep up the East Coast starting tomorrow. Davan Bloomberg. Meteorologist 0:07:45.720 --> 0:07:49.480 Rob Carolin joins US Now with the very latest. Good morning, Rob, John. 0:07:49.560 --> 0:07:51.440 The computer model is still not an agreement on the 0:07:51.440 --> 0:07:54.200 storm coming up for Saturday. The US model takes it 0:07:54.200 --> 0:07:56.480 out to see while most of the international models have 0:07:56.520 --> 0:07:59.320 a fairly significant storm for the Triston area. I think 0:07:59.360 --> 0:08:01.600 that's why Then and Weather Services put a winter storm 0:08:01.640 --> 0:08:04.760 watch up for Friday evening through Saturday evening for the coast, 0:08:04.800 --> 0:08:07.520 including the city in Long Island and Westchester County. New York. 0:08:07.920 --> 0:08:10.240 Looks like the snow will arrive by mid to late 0:08:10.280 --> 0:08:12.600 afternoon tomorrow in the Tri state area, should be done 0:08:12.600 --> 0:08:15.280 by Saturday evening. Right now, two to six inches looks likely. 0:08:15.640 --> 0:08:19.880 John Bloomberg, meteorologist Rob Caroline, Well, check your flight this morning. 0:08:20.040 --> 0:08:22.080 It's not because of the weather. In the United Airline 0:08:22.080 --> 0:08:25.480 says it's experiencing an I T outage and teams are 0:08:25.480 --> 0:08:28.760 working to get it resolved. President Biden will promote his 0:08:28.800 --> 0:08:31.840 administration's efforts to fight gun crime in New York next 0:08:31.880 --> 0:08:35.600 week with Mayor Eric Adams is confronting a spate of violence, 0:08:35.640 --> 0:08:39.000 including the shooting deaths of two police officers. The President 0:08:39.000 --> 0:08:42.760 will highlight increased federal funding for state and city law enforcement. 0:08:43.320 --> 0:08:46.160 A Floria meetings regarding Russia and Ukraine appear to have 0:08:46.200 --> 0:08:49.080 made a bit of progress. Let's get more from Bloomberg's 0:08:49.080 --> 0:08:53.120 and Baxter. NATO Secretary General John Staltenberg is urging a 0:08:53.200 --> 0:08:56.360 direct meeting with Russia. We are prepared to listen to 0:08:56.600 --> 0:09:00.760 Russia's concerns. We need a conversation on how to uphold 0:09:00.840 --> 0:09:04.640 and strengthen the fun amount of principles all European security 0:09:04.800 --> 0:09:08.880 that we have old as well. In Paris, direct meetings 0:09:08.880 --> 0:09:11.839 with high level diplomats from Ukraine and Russia, both saying 0:09:12.240 --> 0:09:15.000 marginal improvement, have set up another meeting in two weeks 0:09:15.000 --> 0:09:17.880 in Berlin, and the US has delivered a letter to 0:09:17.960 --> 0:09:21.719 Russia with proposals to end the standoff. In San Francisco, 0:09:21.760 --> 0:09:24.600 I'm at Baxter Bloomberg Daybreak, New York's mt A looking 0:09:24.600 --> 0:09:27.400 at ways to prevent people from falling or jumping out 0:09:27.400 --> 0:09:30.679 of subway tracks and MTA task Force plans to explore 0:09:30.760 --> 0:09:34.720 sensors and platform doors. Homeless person this month killed a 0:09:34.720 --> 0:09:37.560 woman by pushing around too subway tracks in front of 0:09:37.559 --> 0:09:41.560 an oncoming train at the Times Square station. And Amazon 0:09:41.600 --> 0:09:44.200 dot Com unable to escape a lawsuit filed by a 0:09:44.240 --> 0:09:47.640 convicted murderer in New York who claims the company's refused 0:09:47.679 --> 0:09:51.880 to hire him as a delivery driver was discrimination. Global 0:09:51.880 --> 0:09:54.280 News twenty four hours a day on air Anna Bloomberg 0:09:54.320 --> 0:09:57.360 Quicktake were powered by more than twenty seven hundred journalists 0:09:57.360 --> 0:10:00.160 and analysts in more than one hundred twenty countries. I'm 0:10:00.240 --> 0:10:03.000 John Tucker. This is Bloomberg. Nathan all Right. John, Thanks 0:10:07.600 --> 0:10:09.720 almost five ten on Wall Street time for the Bloomberg 0:10:09.720 --> 0:10:11.840 Sports up today. Good morning, John, Stown show. Alright, good morning, 0:10:11.920 --> 0:10:14.720 Nathan Nick's unable to beat the Heat, trailed by fourteen 0:10:14.720 --> 0:10:16.880 in the first quarter, by twenty eight and the third. 0:10:16.960 --> 0:10:19.600 The final a little more respectable, but Miami, who leads 0:10:19.600 --> 0:10:22.120 the East, won one ten to nineties six. That Heat 0:10:22.160 --> 0:10:25.280 had four players scored twenty or more, Duncan Robinson at 0:10:25.320 --> 0:10:27.840 twenty five. He made seven three pointers. The Knicks leading 0:10:27.880 --> 0:10:31.000 score was Obi Toppin with eighteen. Nick fans would like 0:10:31.040 --> 0:10:32.920 to see him play more. Another loss for the Necks 0:10:32.960 --> 0:10:35.000 in Brooklyn, whe there just twelve and thirteen. They were 0:10:35.040 --> 0:10:38.079 without the entire Big Three as James Harden sat out 0:10:38.120 --> 0:10:40.680 with a minor hamstring injury and Denver scored forty two 0:10:40.720 --> 0:10:44.240 points of the third quarter the Nuggets one one eighteen, 0:10:44.360 --> 0:10:47.120 Kola Yokas twenty six points to assist Shy of a 0:10:47.160 --> 0:10:49.800 triple double. Ranger skate tonight at Columbus, then come home 0:10:49.840 --> 0:10:53.199 tomorrow on Henry Lundquist Night. Seaton Hall lost at home 0:10:53.200 --> 0:10:56.040 to Marquette seventy three sixty three, the Pirates just three 0:10:56.040 --> 0:10:59.000 and six in the Big East. Ash Party continues to 0:10:59.160 --> 0:11:01.679 steam roll at the Australian Open six one six three 0:11:01.679 --> 0:11:04.959 in the semifinals over American Madison Keys Barty has won 0:11:05.000 --> 0:11:09.040 all twelve sets, has only lost twenty one games. Introductory 0:11:09.040 --> 0:11:12.040 news conference of MetLife Stadium for new Giants, gentlemanager Joe 0:11:12.080 --> 0:11:15.960 Shane and owner John Mara, when asked about quarterback Daniel Jones, said, 0:11:16.000 --> 0:11:19.280 we've done everything possible to screw this kid up. Shane 0:11:19.640 --> 0:11:22.360 seems happy with the incumbent QUB. I know he's a 0:11:22.360 --> 0:11:24.840 great kid. He's been in this building the last two days. 0:11:25.200 --> 0:11:27.880 I've talked to him. There's not anybody in this building 0:11:27.880 --> 0:11:30.240 that said a bad word about his work, ethic, passion, 0:11:30.679 --> 0:11:33.040 you know, desire to win, and I think you got 0:11:33.040 --> 0:11:34.680 to have those traits as a quarterback. And the kid 0:11:34.679 --> 0:11:37.520 has physical ability. You know, he's got arm strength, he's athletic, 0:11:37.559 --> 0:11:39.800 he can run. So I'm really getting I'm really excited 0:11:39.840 --> 0:11:41.800 to work with Daniels. A lot of other key decisions, 0:11:41.840 --> 0:11:44.559 including hired a new coach. Shane will interview former Miami 0:11:44.600 --> 0:11:48.880 coach Brian Flores today, John Dash, owner Bloomberg Sports Okay, 0:11:48.960 --> 0:11:51.080 John thanks s. SMP future is now up eight point, 0:11:51.120 --> 0:11:54.720 staff futures up thirty three, nastack futures up sixty three points. 0:11:55.120 --> 0:11:57.880 Yield curve flattening this morning, with the ten year up 0:11:57.920 --> 0:12:01.360 six thirty seconds, the yield one point four percent, yield 0:12:01.400 --> 0:12:03.400 on the two year rising to one point one eight. 0:12:03.600 --> 0:12:08.679 This is Bloomberg Bloomberg eleven three oh weather mix of 0:12:08.720 --> 0:12:11.520 sun and clouds today in your thirty degrees winter storm 0:12:11.559 --> 0:12:14.319 watch kicks in tomorrow night into Saturday night. Two to 0:12:14.520 --> 0:12:17.920 six inches possible from this northeaster, with highest accumulations over 0:12:18.000 --> 0:12:24.320 Long Island currently eighteen degrees. Markets, headlines and breaking news 0:12:24.400 --> 0:12:27.000 twenty four hours a day at Bloomberg dot Com, the 0:12:27.080 --> 0:12:30.559 Bloomberg Business at and at Bloomberg Quicktake. This is a 0:12:30.600 --> 0:12:40.320 Bloomberg business flash, and I'm Karen Moscow. US stock index 0:12:40.440 --> 0:12:44.480 futures are racing their losses, mostly with dip buyers back 0:12:44.520 --> 0:12:46.920 in action after a sell off sparked by a hawkish 0:12:46.960 --> 0:12:50.160 federal reserve. In Europe. Retail and travel stocks are putting 0:12:50.160 --> 0:12:53.000 a drag on benchmark in tex This Well Bank shares 0:12:53.120 --> 0:12:55.760 rally after Deutsche Bank raised its outlook and we checked 0:12:55.760 --> 0:12:58.720 the markets every fifteen minutes throughout the trading day on Bloomberg. 0:12:58.840 --> 0:13:01.680 Right now, msn't P futures are a little changed down. 0:13:01.720 --> 0:13:04.439 Futures that will changed as well, and NASDACK futures are 0:13:04.520 --> 0:13:07.559 up forty one the decks in Germany's down four tenths 0:13:07.600 --> 0:13:10.240 of upper cent. The ten year treasury up seven thirty seconds. 0:13:10.240 --> 0:13:12.839 You have one three percent yield on the two year 0:13:12.960 --> 0:13:16.040 one point one seven percent. Nim X screwed oils up 0:13:16.080 --> 0:13:18.280 two tenths per cent or seventeen cents at eighty seven 0:13:18.320 --> 0:13:20.920 dollars fifty two cents a barrel. Comex s go down 0:13:20.920 --> 0:13:23.040 eight tenths per cent or fourteen dollars ten cents at 0:13:23.080 --> 0:13:27.200 eighteen eighteen announced the euro one point one four against 0:13:27.200 --> 0:13:29.600 the dollar, British found one point three four three one, 0:13:29.920 --> 0:13:32.120 the yin is at one fifteen point oh six, and 0:13:32.120 --> 0:13:35.920 Bitcoin this morning moving higher at thirty six thousand, six 0:13:36.040 --> 0:13:38.920 hundred dollars. And as a Bloomberg Business Flash now Here's 0:13:38.960 --> 0:13:41.800 John Tucker went more on what's going on around the world. John, 0:13:41.840 --> 0:13:44.400 Good morning, and good morning, Karen sent A. Democrats planned 0:13:44.400 --> 0:13:48.240 the most swiftly to replace retiring Supreme Court Justice Stephen Bryer. 0:13:48.800 --> 0:13:52.040 Dozens of United flights delayed after the airline reported a 0:13:52.160 --> 0:13:56.240 company wide technology outage this morning, and South Korea's military 0:13:56.240 --> 0:14:00.080 says North Korea fire two suspected ballistic missiles into the 0:14:00.320 --> 0:14:03.840 in its six round of weapons launches this month, sports, 0:14:03.920 --> 0:14:06.360 the Nix and Nats both lose on the ice of 0:14:06.400 --> 0:14:09.559 the Capitals lose and the Bruins fault to Colorado in overtime. 0:14:09.960 --> 0:14:14.520 After the Australian Open Women's semifinals, Ashley Barty defeats American 0:14:14.559 --> 0:14:18.040 Madison Keys and straight sets Global News twenty four hours 0:14:18.040 --> 0:14:20.800 a day on Irana Bloomberg Quicktick. We're powered by more 0:14:20.840 --> 0:14:23.840 than twenty seven hundred journalists and analysts in more than 0:14:23.880 --> 0:14:28.400 one D twenty countries. I'm John Suckern. This is Bloomberg. Nathan, Okay, John, 0:14:28.440 --> 0:14:30.600 thank you. It's five nineteen on Wall Street, Live from 0:14:30.600 --> 0:14:33.840 the Bloomberg Interactive Broker Studios. This is Bloomberg Daybreak as 0:14:33.880 --> 0:14:37.000 we watch markets just really in real time here. Now 0:14:37.040 --> 0:14:40.560 that the FETE has taken a decidedly hawkish turn, let's 0:14:40.640 --> 0:14:43.680 bring in Sarah House now, senior economists at Wells Fargo, 0:14:43.960 --> 0:14:45.920 as we continue to assess what we heard from the 0:14:45.960 --> 0:14:49.720 Fed and Chairman J Powell yesterday. Sarah, good morning. Money. 0:14:49.760 --> 0:14:53.760 Markets are now fully pricing in five rate hikes this year. 0:14:54.000 --> 0:14:58.080 Are you adjusting your forecast over Wells Fargo. Well, I 0:14:58.080 --> 0:15:01.160 think we saw that the risks the outlook are certainly 0:15:01.200 --> 0:15:05.720 skewed towards earlier and or faster tightening than what we 0:15:05.800 --> 0:15:08.680 had going into this meeting, given that not only did 0:15:08.760 --> 0:15:11.440 we get a pretty clear signal about March, but I 0:15:11.440 --> 0:15:13.640 think one of the most interesting points was that when 0:15:13.800 --> 0:15:17.320 asked about the pace multiple times in the press conference, 0:15:17.720 --> 0:15:21.640 each time Pal was very pointed in making the distinction 0:15:21.680 --> 0:15:25.320 between this cycle and this economy versus what we saw 0:15:25.520 --> 0:15:29.320 in So I think that certainly does point to the 0:15:29.320 --> 0:15:34.280 potential for more than more than just quarterly quarterly rate 0:15:34.320 --> 0:15:37.680 hikes of basis points. I mean, there's been some talk 0:15:37.760 --> 0:15:41.560 that we could see rate hikes at every meeting after 0:15:41.760 --> 0:15:44.880 the asset taper ends. Is that what you're thinking here? 0:15:46.480 --> 0:15:49.640 So that's not our expectation. I think once we get 0:15:49.680 --> 0:15:51.680 to the second half of the year and we see 0:15:51.760 --> 0:15:55.280 that activity is slowing apart from the rate hikes that 0:15:55.400 --> 0:15:57.240 I think you you will get earlier in the year, 0:15:57.280 --> 0:15:58.840 but also when you step back and you have to 0:15:58.840 --> 0:16:02.840 remember that consumer spending, given the lack of fiscal support 0:16:02.880 --> 0:16:06.760 this year, relative one is is spt for a fairly 0:16:06.880 --> 0:16:09.360 market slowdown, and so I think that that might take 0:16:09.400 --> 0:16:12.520 some of the pressure off of inflation and therefore how 0:16:12.600 --> 0:16:15.440 much the SAID might have to rise. Do you think that? 0:16:15.720 --> 0:16:17.880 Do you think the Fed's moving quickly enough to go 0:16:17.960 --> 0:16:22.040 after inflation? Do you think Powell is almost tacitly admitting 0:16:22.080 --> 0:16:27.280 that the FED made a mistake in calling inflation transitory earlier. Well, 0:16:27.280 --> 0:16:29.480 they're certainly pivoted from their stance. I mean, if you 0:16:29.520 --> 0:16:33.000 go back, it was only in November they were still 0:16:33.080 --> 0:16:35.680 using the word transitory in the statement. So I think 0:16:35.680 --> 0:16:39.920 they've certainly switched their view on inflation and are rapidly 0:16:39.920 --> 0:16:41.800 trying to catch up for the fact that it does 0:16:41.880 --> 0:16:45.720 look like inflation is going to be persistent longer than 0:16:45.840 --> 0:16:48.480 they had expected, and we're going to be looking at 0:16:49.240 --> 0:16:53.320 inflation still well above the Fed's target we expect through 0:16:53.360 --> 0:16:55.880 our forecasters in three but even at the end of 0:16:55.920 --> 0:16:58.400 this year, we're still looking at core PC we think 0:16:58.400 --> 0:17:00.800 probably somewhere between three three and a half percent. So 0:17:00.840 --> 0:17:02.080 I think it's still going to put a lot of 0:17:02.080 --> 0:17:05.320 pressure on the SAID to act. So when do you 0:17:05.600 --> 0:17:08.560 think the FED will start unwinding the balance sheet? Based 0:17:08.600 --> 0:17:12.440 on what Powell said yesterday, So going into the meeting, 0:17:12.480 --> 0:17:15.359 our expectation was that we'd get an announcement in September, 0:17:15.800 --> 0:17:18.640 but I think, like said funds to hikes, I think 0:17:18.680 --> 0:17:21.240 that risk is skewed towards earlier. So we saw, of 0:17:21.280 --> 0:17:25.960 course the release of the principles will get around the unwind. Now, 0:17:26.080 --> 0:17:28.520 these were less detailed than the principles we saw released 0:17:28.520 --> 0:17:32.119 back in June, but I think it's one thing that 0:17:32.200 --> 0:17:35.720 we are getting close. We saw in the press conference 0:17:35.800 --> 0:17:39.200 Jay uh chare Pala so that they would be talking 0:17:39.240 --> 0:17:41.640 about it at a couple more meetings. So I think 0:17:41.840 --> 0:17:44.480 it's very likely we'll get an announcement sometime this summer. 0:17:45.600 --> 0:17:47.879 We've seen the yield curve flattened on the back of 0:17:47.960 --> 0:17:52.840 Powell's comments, is there recession risk from the from the 0:17:52.880 --> 0:17:57.160 policy path going forward? I think it's still a little 0:17:57.200 --> 0:18:01.600 too early to to be putting that into to expectations. Um, 0:18:01.640 --> 0:18:04.679 but I think the Fed is in a pretty tight spot. 0:18:04.760 --> 0:18:07.920 So we've seen inflation go well above their target, and 0:18:07.960 --> 0:18:10.159 I think there's a lot of questions about how much 0:18:10.240 --> 0:18:12.840 policy tightening is going to be needed to rein that 0:18:12.920 --> 0:18:16.359 in and if the Fed we'll we'll get that balance right, 0:18:16.440 --> 0:18:20.120 And so I think, um, while that's not our baseline expectation. 0:18:20.280 --> 0:18:23.879 I think this is a very sticky situation. Do you 0:18:23.880 --> 0:18:26.119 think the FED will continue to sort of look past 0:18:26.520 --> 0:18:29.880 the market action of gyrations that we've certainly seen this 0:18:29.960 --> 0:18:32.679 week and and stay on course. What kind of market 0:18:32.680 --> 0:18:34.480 action do you think it would take for the FED 0:18:34.520 --> 0:18:38.359 to alter its path? I think right now, given that 0:18:38.480 --> 0:18:42.520 inflation is so far above the fence target, that they 0:18:42.560 --> 0:18:45.840 are are much more likely to look through market volatility 0:18:45.840 --> 0:18:48.879 than they were back in in ten and the twenty 0:18:49.160 --> 0:18:53.840 through tightening cycle. I think just given that, um, that 0:18:54.320 --> 0:18:57.520 you also have a very strong labor market right now, 0:18:57.720 --> 0:19:01.040 I think that um, you know, they're they're quickly reposition 0:19:01.520 --> 0:19:03.639 and with that's probably going to come from volatility, and 0:19:04.320 --> 0:19:06.840 at the end of the day, price stability and maximum 0:19:06.880 --> 0:19:10.560 employment are their mandid. So just about thirty seconds left here, 0:19:10.600 --> 0:19:14.080 do you think we're at full employment now? I think 0:19:14.160 --> 0:19:17.119 we're certainly close, if if not already there. And I 0:19:17.200 --> 0:19:20.600 think it was revealing in the press conference that he 0:19:21.200 --> 0:19:24.200 that Pal said that most participants already think that we 0:19:24.280 --> 0:19:26.680 are at a maximum employment. We see that across a 0:19:26.760 --> 0:19:29.520 number of indicators, not just the unemployment rate, but what 0:19:29.600 --> 0:19:31.040 we see in terms of the quits what we see 0:19:31.080 --> 0:19:33.879 in terms of wage growth. So this is is certainly 0:19:33.920 --> 0:19:36.560 a strong labor market and we saw that and phatically 0:19:36.640 --> 0:19:40.680 reflected in Palace comments in the press conference yesterday. All right, Sarah, 0:19:40.720 --> 0:19:42.840 as always, thanks for your insights. I really appreciate it. 0:19:42.880 --> 0:19:46.200 Sarah House, senior economists at Wells Fargo with us this 0:19:46.440 --> 0:19:50.119 morning as we take a look at markets, UH, a 0:19:50.160 --> 0:19:52.160 little bit of shaking us now in the futures contracts 0:19:52.200 --> 0:19:53.760 with U S and P futures now a three point 0:19:53.800 --> 0:19:57.679 STAFF futures back down by about nine points and NASTAC 0:19:57.760 --> 0:20:01.359 futures are higher by thirty eight points. You're listening to 0:20:01.520 --> 0:20:09.200 Bloomberg Daybreak Bloomberg eleven three oh Weather. As we braced 0:20:09.200 --> 0:20:11.080 for nor Easter today. We'll have a mix of sun 0:20:11.160 --> 0:20:13.240 and clouds and a high in your thirty Winter storm 0:20:13.240 --> 0:20:15.280 watch kicks in tomorrow night. We could have two to 0:20:15.480 --> 0:20:19.080 six inches, most of it over Long Island by tomorrow evening. 0:20:22.040 --> 0:20:26.520 Broadcasting live from the Bloomberg Interactive Broker Studio in New York, 0:20:26.680 --> 0:20:31.320 Bloomberg Living Freedom to Washington, d C. Bloomberg to Boston, 0:20:31.440 --> 0:20:34.840 Bloomberg one O six one does San Francisco, Bloomberg nine 0:20:34.920 --> 0:20:37.840 sixteen to the country sirius XM chad A one ninet 0:20:38.119 --> 0:20:41.280 and around the globe the Bloomberg Business app in Bloomberg 0:20:41.400 --> 0:20:50.960 Radio dot com. This is Bloomberg Daybreak and it's thirty 0:20:51.000 --> 0:20:53.520 on Wall Street. Good morning. I'm Terar in Moscow. I'm 0:20:53.600 --> 0:20:56.320 Nathan Hagar. Bloomberg Daybreak is brought to you by SEI 0:20:56.480 --> 0:21:00.480 Crises emphasized character and partnership, One mission, one community. SEI. 0:21:00.680 --> 0:21:02.800 Go to se I C dot com slash I M 0:21:03.000 --> 0:21:05.399 S and we're just about four hours away from the 0:21:05.440 --> 0:21:07.320 open of US trading. Let's get you up to date 0:21:07.359 --> 0:21:09.000 on the news you need to know at this hour. 0:21:09.240 --> 0:21:12.720 Stocks are mixed around the world this morning. That's after 0:21:12.840 --> 0:21:16.000 the Federal reserves hawkish tone on interest rates. At one point, 0:21:16.040 --> 0:21:19.399 Nowadack futures were down more than two percent before turning higher. 0:21:19.760 --> 0:21:22.760 Jeff Rosenberg of black Rock says the Fed has a 0:21:22.840 --> 0:21:26.840 tough job ahead. How difficult it is for the Fed 0:21:27.000 --> 0:21:30.880 to navigate to that soft landing that's implicit in those 0:21:31.000 --> 0:21:33.840 SEP forecasts, and that really raises the risks here, I 0:21:33.920 --> 0:21:37.320 think for financial markets. Black Rocks Jeff Rosenberg says the 0:21:37.440 --> 0:21:40.680 market had anticipated a more dubbish message from the FED, 0:21:40.960 --> 0:21:43.000 and the question for the market now, Karen, is just 0:21:43.240 --> 0:21:45.959 how many times the Fed will raise rates. Let's get 0:21:46.000 --> 0:21:49.320 the latest live with Bloomberg's Rnita Young Rnita Nathan. Traders 0:21:49.359 --> 0:21:52.040 are ramping up bets to see five FED rate hikes 0:21:52.119 --> 0:21:54.760 this year that would bring the Central Banks target rate 0:21:54.840 --> 0:21:57.679 to around one and a half percent. The wagers are 0:21:57.760 --> 0:22:01.400 rippling through markets with short dated bond and equity slumping. 0:22:01.800 --> 0:22:04.959 Money markets are pricing thirty basis points of fit tightening 0:22:05.000 --> 0:22:08.040