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Speaker 1: Good morning.

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Speaker 2: I'm Nathan Hager and I'm Karen Moscow. Here are the

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Speaker 2: stories we're following today.

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Speaker 3: We begin in Washington.

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Speaker 1: That's where a temporary spending bill to avoid a government

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Speaker 1: shutdown this weekend has cleared its first hurdle.

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Speaker 3: Bloomberg's Amy Morris has more from the nation's capital.

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Speaker 4: The Senate voted to advance the measure that will fund

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Speaker 4: some federal agencies through March first and others through March eighth.

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Speaker 4: The interim funding is the support of congressional leaders, including

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Speaker 4: House Speaker Mike Johnson, so the prospects for passage in

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Speaker 4: both chambers are good. Does not include several disputed items

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Speaker 4: like eight for Ukraine restrictions along the US border or

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Speaker 4: an eighty billion dollar business tax package. And there are

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Speaker 4: hard right conservatives in the House who oppose funding agencies

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Speaker 4: at current levels, but Speaker Johnson can bypass them by

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Speaker 4: relying on Democrats for support.

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Speaker 3: In Washington. Amy Moore as Bloomberg Radio.

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Speaker 2: All right, Amy, thanks well. Now to the latest on

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Speaker 2: the race for the White House. It's on to New

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Speaker 2: Hampshire for the Republican candidates, and Bloomberg's at Baxter reports

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Speaker 2: are really starting to heat up.

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Speaker 5: Nicki Haley has been very careful not to directly attack

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Speaker 5: Donald Trump, but one day after Iowa as she's calling

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Speaker 5: him a bully and a liar. Trump lamb based Haley

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Speaker 5: as a disaster. Now this all comes with polling that

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Speaker 5: chowse the two very close. In New Hampshire, Real Clear

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Speaker 5: Politics has Trump by about fourteen points, but the American

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Speaker 5: Research Group even called it dead even at forty four percent,

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Speaker 5: with Ron Desatus at only four percent. Tomorrow's schedule debate

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Speaker 5: has been canceled because Haley declined if Trump wasn't going

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Speaker 5: to be there at Baxter Bloomberg.

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Speaker 3: Radio, Okay, and thanks. Now let's turn to the Middle East.

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Speaker 1: Israel and Hamas have reached a deal to deliver medicine

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Speaker 1: and other aid to Gaza. That's according to the government

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Speaker 1: in Kadra, which says this is in exchange for medicine

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Speaker 1: reaching the hostages being held by Hamas. White House National

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Speaker 1: Security Advisor Jake Sullivan says there is still a risk

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Speaker 1: this war widens to a regional conflict.

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Speaker 3: We do see a pathway to a shift in the.

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Speaker 6: Military campaign in Gaza, a reduction in tensions and the

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Speaker 6: exchange of fire along Israel's northern border, a reduction in

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Speaker 6: the risk of escalation in other parts of the region,

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Speaker 6: and we'll have to continue to deal with the Hoothi threat.

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Speaker 1: National Security Advisor Jake Sullivan spoke from the World Economic

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Speaker 1: Forum in Davos. Israeli President Isaac Herzog plans to bring

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Speaker 1: the families of hostages to the slopes in Switzerland today

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Speaker 1: to step up pressure for their release.

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Speaker 2: Well, Nathan, back here in the US, we are waiting

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Speaker 2: for a key economic group board as doubt grows on

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Speaker 2: whether the FED will start cutting rates as soon as March,

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Speaker 2: and we get the very latest with the Bloomberg's John Tucker,

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Speaker 2: John and Karen.

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Speaker 7: Retail sales probably increased in December. However, the control group sales,

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Speaker 7: which strip out volatile items, that likely slowed to a

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Speaker 7: more subdue pace. Traders are launching on every piece of

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Speaker 7: data as the FAN enters a blackout period next week. Yesterday,

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Speaker 7: Federal Reserve Governor Christopher Waller threw a little cold water

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Speaker 7: around the idea of FED rate cuts as soon as March.

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Speaker 8: With economic activity and labor markets in good shape, and

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Speaker 8: inflation coming down gradually to two percent, I see no

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Speaker 8: reason to move as quickly or cut as rapidly as

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Speaker 8: in the past.

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Speaker 7: With Wallner's comments, Transury suffered their biggest one day price

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Speaker 7: drop in two months. Yield Seweragetan also drag stocks lower.

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Speaker 7: John Tucker Bloomberg.

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Speaker 1: Radio, John thanks, rates are very much in focus overseas

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Speaker 1: that the World Economic Forum. European Central Bank President Christine

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Speaker 1: Legard said the ECB will probably cut rates by the summer.

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Speaker 9: I would say it's likely too, but I have to

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Speaker 9: be reserved because we're also saying that we are data

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Speaker 9: dependent and that there is still a level of uncertainty

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Speaker 9: and some indicators that are not anchored at the level

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Speaker 9: where we would love to see them.

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Speaker 1: ECB President Leaguard made those comments to Francine Lockwha at

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Speaker 1: Bloomberg House in Davos. You can hear their full conversation

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Speaker 1: on the Bloomberg Talks podcast.

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Speaker 2: Well Nathan investors are scaling back their expectations for rake

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Speaker 2: cuts from the Bank of England this year. Inflation in

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Speaker 2: the UK unexpectedly accelerated for the first time in ten months.

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Speaker 2: December's consumer price index was four percent higher than the

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Speaker 2: previous year.

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Speaker 1: On Wall Street, Karen JP Morgan Chase is bucking a trend,

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Speaker 1: the bank plans to hire more workers. We caught up

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Speaker 1: with JP Morgan president Daniel Pinto at Davos.

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Speaker 10: We are employed at the end of the year around

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Speaker 10: three hundred and twenty thousand people. So the number of

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Speaker 10: people that employ has been growing.

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Speaker 11: And not ranking.

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Speaker 10: So I think that where we see opportunities and we

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Speaker 10: can have our clients, for sure, we'll focus on that.

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Speaker 1: Daniel Pinto's comments come after JP Morgan closed out the

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Speaker 1: most profitable year in US banking history.

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Speaker 2: Also more banking news this morning, Nathan, the government is

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Speaker 2: unveiling a long awaited rule that could slash the biggest

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Speaker 2: bank's income from overdraft fees by as much as three

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Speaker 2: and a half billion dollars each year. Under the regulation

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Speaker 2: from the Consumer Financial Protection Bureau, banks would only be

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Speaker 2: able to charge what it costs for them to break

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Speaker 2: even for covering an overdraft or a bu by a

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Speaker 2: specific cap that would effectively eliminate overdraft charges for customers,

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Speaker 2: which right now average about thirty five dollars.

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Speaker 1: Let's turn to some corporate news now. Karen Apple has

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Speaker 1: reached a milestone. The company's dethroned Samsung to become the

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Speaker 1: world's top phone maker in twenty twenty twenty three. IDC

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Speaker 1: estimates the iPhone accounted for a fifth of the global

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Speaker 1: market last year with close to two hundred thirty five

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Speaker 1: million shipments. Apple's dominated recent holiday quarters, but the full

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Speaker 1: year surge is unprecedented, and it suggests Apple is weathering

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Speaker 1: an industry wide slump better than its rivals.

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Speaker 2: And finally, Nathan, it was supposed to be the merger

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Speaker 2: from Heaven, or at least from thirty thousand feet, but

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Speaker 2: now a federal judges block Jet Blues three point eight

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Speaker 2: billion dollar acquisition of Spirit Airlines. The judge says the

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Speaker 2: combination with stifle competition and raise fares for consumers. Jet

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Speaker 2: Blue and Spirit contended that consolidation is the only way

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Speaker 2: smaller airlines can effectively compete with the dominant carriers. Time

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Speaker 2: and not for look at some of the other stories

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Speaker 2: making news around the world. For that, we're joined by

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Speaker 2: Bloomberg's Amy Morris Amy, Good morning, Good morning, Karen.

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Speaker 4: President Biden is worried about his supplemental bills stalling out

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Speaker 4: in Congress, so he's inviting some of the key players

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Speaker 4: to the White House today.

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Speaker 3: Bloomberg's Nancy lyons with the latest.

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Speaker 12: White House Press Secretary Karine Jean Pierre provided a list

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Speaker 12: of those invited to the meeting, and then Biden.

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Speaker 11: Will host congressional leaders from the Senate and the House,

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Speaker 11: along with key committee leaders and ranking members.

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Speaker 12: She says there's a lot to talk about, but President

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Speaker 12: Biden has one topic he's especially concerned with.

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Speaker 2: This is going to be about discussing critical importance of

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Speaker 2: the President's Facial Security supplemental request.

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Speaker 12: That's the proposal to further fund Ukraine, Israel, and Taiwan.

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Speaker 12: Republicans are refusing to move on that until there's a

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Speaker 12: consensus on a new border policy in Washington. Nancy lyons

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Speaker 12: Bloomberg Radio.

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Speaker 4: Secretary of State Anthony Blincoln says soil should be treated

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Speaker 4: as a precious resource, telling the World Economic Forum in

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Speaker 4: Davos that lack of food is causing unprecedented global migration

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Speaker 4: flows at Russia's war in Ukraine and attacks by who

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Speaker 4: they rebels and the Red Sea have made things worse.

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Speaker 5: A parent who can't put food on the table for

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Speaker 5: their children picks up the family and moves because it's

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Speaker 5: the most basic thing, the most important thing that they

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Speaker 5: can do.

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Speaker 4: Lincoln says, the problem is likely to get worse as

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Speaker 4: climate change threatens to reduce crop yields. Now Climate Envoy

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Speaker 4: John Kerry, also at the World Economic Forum, says he's

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Speaker 4: stepping down from the role within the Biden administration so

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Speaker 4: he can take on a more vocal position for the

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Speaker 4: Biden campaign. He assured other world climate leaders that yes,

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Speaker 4: he'll still be around.

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Speaker 13: I'm going to stay at this and there are so

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Speaker 13: many different ways to continue to be able to be

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Speaker 13: engaged in this.

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Speaker 14: So unfortunately you're stock.

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Speaker 13: You'll see me at the copy you see.

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Speaker 4: Rivia Carrie says regardless of who wins the election, the

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Speaker 4: global climate agenda will remain solid, and the World Health

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Speaker 4: Organization says the number of adult tobacco users is on

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Speaker 4: the decline. The organization says the biggest decrease in tobacco

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Speaker 4: use is seen happening in lower to middle income countries.

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Speaker 9: We have nineteen million less smokers than we had two

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Speaker 9: years ago. That is the first time that we see

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Speaker 9: such a decline.

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Speaker 4: Doctor Rudiger Kresh is urging countries to continue putting control

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Speaker 4: policies in place for tobacco. Global News twenty four hours

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Speaker 4: a day and whenever you want it with Bloomberg News Now.

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Speaker 4: I'm Amy Morris and this is Bloomberg Karen. All right, Amy,

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Speaker 4: thank you.

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Speaker 2: We do bring you news throughout the day right here

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Speaker 2: on Bloomberg Radio. But now you can get the latest

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Speaker 2: news on demand, and that means whenever you want it.

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Speaker 2: Subscribe to Bloomberg News Now to get the latest headlines

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Speaker 2: of the click of a button. Get informed on your schedule.

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Speaker 2: You can listen and subscribe to Bloomberg News Now on

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Speaker 2: the Bloomberg Business app, Bloomberg dot com plus apples, Spotify,

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Speaker 2: and anywhere else you get your podcasts. Time now for

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Speaker 2: the Bloomberg Sports Update. Here's John stash Hour John.

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Speaker 15: Charny Atlanta Falcons, one of seven NFL teams looking for

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Speaker 15: a head coach at indications that the Falcons are looking

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Speaker 15: for a big name to be their new coach. The

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Speaker 15: day after they interviewed Bill Belichick, they interviewed Jim Harbaugh,

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Speaker 15: who previously had already interviewed with the Los Angeles Chargers.

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Speaker 15: So Harbaugh clearly hasn't interest in returning to the NFL

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Speaker 15: and leaving Michigan, where he just won a national championship. Reportedly,

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Speaker 15: Harbaugh if he stays with Michigan wants it written into

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Speaker 15: his contract that he can't be fired due to NCAA violations.

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Speaker 15: Mike Tomlin has reportedly told his team in Pittsburgh that

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Speaker 15: he'll remain as coach of the Steelers. It's the job

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Speaker 15: he's had for seventeen years. The Steelers had only had

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Speaker 15: three different head coaches in the last fifty four years.

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Speaker 15: Jason Kelsey told his teammates in Philadelphia just after that

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Speaker 15: blowout loss at Tampa Bay at the end of their

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Speaker 15: season that he's retiring at age thirty six, thirteen years

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Speaker 15: all with the Eagles. He won a Super Bowl, He

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Speaker 15: went to the Pro Bowls seven times. Taulliat tadabaloo. That's

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Speaker 15: to his younger brother, who's been playing quarterback for Maryland.

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Speaker 15: Denied a waiver for another year of eligibility, so he

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Speaker 15: journing the Pro Battle. The NBA's top two big man

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Speaker 15: and Joe lmb And outplayed the Kola Yokiz. He scored

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Speaker 15: forty one points in the second straight game. Philadelphia beat

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Speaker 15: Denver one twenty six one twenty one big comeback and Phoenix,

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Speaker 15: led by Kevin Durant, they were down twenty two to

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Speaker 15: the fourth court of the Sun's rallied top Sacramento by two.

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Speaker 15: Hockey of the Capitals are two nothing to win over Anaheim,

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Speaker 15: kyl and Shops second right, Purdue.

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Speaker 3: An easy win at Indiana. John Skashanwer Bloomberg Sports.

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Speaker 13: From coast to coast, from New York to San Francisco,

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Speaker 13: Boston to Washington, DC, nationwide on siriusxam, the Bloomberg Business

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Speaker 13: app in Bloomberg dot com.

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Speaker 3: This is Bloomberg Daybreak. Good morning, I'm Nathan Hager.

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Speaker 1: European Central Bank President Christine Legard says aggressive bets on

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Speaker 1: interest straight cuts from the financial markets are not helping

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Speaker 1: policymakers with their task to bring down inflation, but she

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Speaker 1: says it is likely the ECB will cut rates in

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Speaker 1: the summer. Madame Lecguard spoke with our editor at large

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Speaker 1: France seen Lockwow from the World Economic Forums Bloomberg House

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Speaker 1: in Davos, Switzerland.

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Speaker 3: Let's listen in to part of that conversation.

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Speaker 11: Now, when you look at inflation, when you look at

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Speaker 11: monetary policy, what's changed your mind on how quickly we

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Speaker 11: get a cut from the ECB?

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Speaker 9: You know, when I look at a year ago in

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Speaker 9: doubles and when I compare that with where we are today,

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Speaker 9: I see a slope downward, but certainly not a slope

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Speaker 9: which is at target where we want it.

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Speaker 14: So that's what we have achieved.

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Speaker 9: I think in a little over a year, bring inflation

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Speaker 9: back from where it was in October twenty two at

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Speaker 9: ten point two percent down to a two point nine

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Speaker 9: percent month and month December, and certainly with the prospect

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Speaker 9: of keeping it down and further down because our target

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Speaker 9: is two percent and we are you know, I would

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Speaker 9: have said a year ago that we are determined we

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Speaker 9: want to get it to SI I would say to

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Speaker 9: you now that we are confident that we will get

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Speaker 9: it to that target two percent medium turn.

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Speaker 14: Are market's too optimistic on the industry. I'm not going

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Speaker 14: to comment on markets.

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Speaker 9: Markets do their job, they have their numbers, they have

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Speaker 9: their objectives. What we do at the CB, and what

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Speaker 9: I think most central banks would do, is work as

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Speaker 9: hard as we can collecting data using artificial intelligence by

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Speaker 9: the way for that, analyzing data, confronting viewpoints, checking models

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Speaker 9: against empirical data, doing scenario analysis, and being as as

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Speaker 9: comprehensive as we can to anticipate what's coming. And it's

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Speaker 9: hard because what many people don't understand is that monetary

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Speaker 9: policy works with a lag. So whatever we do now

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Speaker 9: is going to have an impact in a few months

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Speaker 9: and sometimes a year or two, and we have to

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Speaker 9: take that in account to decide what we do, how

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Speaker 9: long we hold, and what decision we make in due course.

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Speaker 11: When you say that you gather data also with AI,

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Speaker 11: it does AI also analyze because again you're looking at

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Speaker 11: the current data. You're trying to forecast what your monetary

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Speaker 11: policy is doing in the future.

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Speaker 14: So is it algorithms? Like, how does that work?

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Speaker 9: We do data collection a lot, we don't We don't

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Speaker 9: determine monetary policy using algorithm and artificial intelligence. And I

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Speaker 9: think that time we can check with the AI experts,

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Speaker 9: of course, but I don't think that that time has

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Speaker 9: come yet.

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Speaker 11: When you look at again the forecast, and I understand

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Speaker 11: you're not focused on the market, but if the markets prices.

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Speaker 9: That are not focused, we look at them, we look

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Speaker 9: at what they say. We are attentive, but everyone has

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Speaker 9: their job and we cannot, you know, sort of second

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Speaker 9: guess what they will think that we are thinking that

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Speaker 9: they are second guessing. I mean, it's it's a catch

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Speaker 9: twenty two job, right, But.

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Speaker 11: If the market is too optimistic about cuts, does it

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Speaker 11: actually hurt and not.

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Speaker 14: Help the fight against inflation by doing that?

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Speaker 11: I was going to ask you that, So it makes

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Speaker 11: sure your job harder if if they're actually mispricing what

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Speaker 11: you're trying to tell them.

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Speaker 9: It is not helping a fight against inflation. If if

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Speaker 9: the anticipation is such that you know, they are way

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Speaker 9: too high compared with what's likely to happen.

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Speaker 11: Is it too early to cry victory against inflation? How

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Speaker 11: do you see it behaving?

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Speaker 9: We are on the on the right path, We are

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Speaker 9: directionally towards the two percent. But unless and until we

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Speaker 9: are confident that it is sustainably at two percent medium

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Speaker 9: term and we have the data to you know, support.

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Speaker 14: It, I'm not going to shout victory. No, not yet.

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Speaker 11: How much is the inflation reduction thanks to your monetary

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Speaker 11: power and how.

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Speaker 14: Much of it is like, No, I wouldn't call it luck.

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Speaker 9: I think two factors have played a critical role, and

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Speaker 9: it's the decline in energy prices that we have observed.

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Speaker 9: You know, energy prices pushed prices up massively, and energy

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Speaker 9: prices decline of course has a similar impact.

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Speaker 14: So that's number one.

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Speaker 9: Number two the bottlenecks that we have observed as a

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Speaker 9: result of COVID in particular, and which lasted quite a

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Speaker 9: lot of quite a long time, has gradually faded out,

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Speaker 9: and that also had an impact, you know, more supply,

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Speaker 9: more availability of goods.

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Speaker 14: Second factor.

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Speaker 9: The third factor is monetary policy, and it's undoubtedly been effective,

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Speaker 9: if only to anchor inflation expectations, which we know is

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Speaker 9: really important. So it has had an impact on inflation itself,

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Speaker 9: but it has definitely had an impact on inflation expectations,

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Speaker 9: which by all accounts and all surveys and all measurements

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Speaker 9: have come down and are really now broadly onto that

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Speaker 9: two percent medium term target that we have. I know

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Speaker 9: it's obsessive two percent medium term targets, but yeah.

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Speaker 14: That's what it is.

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Speaker 11: Yeah, but at least it's auld guide the markets, right,

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Speaker 11: I mean, it's.

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Speaker 14: Good to be upsetsed.

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Speaker 9: Well, if they don't know that that's what we are

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Speaker 9: aiming for, then they need to have the head examined,

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Speaker 9: that's for sure.

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Speaker 11: And then again talk to me a little bit about

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Speaker 11: wage bargaining. So again is that going to be on

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Speaker 11: the upside and could that change you know, the timing

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Speaker 11: of a possible work.

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Speaker 9: Well, I'm glad you mentioned wages in general, wage bargaining

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Speaker 9: in particular, and I'll go to that, but I want

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Speaker 9: to tell you that there are three things that I'm

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Speaker 9: watching carefully. Wage bargainings, profit margins, energy prices, and hopefully

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Speaker 9: not but the coming back of supply bottom Miex. Those

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Speaker 9: are four key components which could have a serious impact

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Speaker 9: on the work that we're doing against inflation.

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Speaker 14: But back to your wage question.

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Speaker 9: Wages have gone up, but relatively slowly, so in prices

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Speaker 9: have gone up earlier and faster than wages, so we

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Speaker 9: are now facing a moment of not only some degree

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Speaker 9: of alignment, but catch up as well. So employees have

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Speaker 9: lost purchasing power in the course of twenty one twenty two,

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Speaker 9: and there is now a catch up effect in the

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Speaker 9: bargaining discussions that are taking place. We will know a

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Speaker 9: lot more, probably in April May, because the numbers the

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Speaker 9: bargaining agreements are being negotiated in the first quarter of

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Speaker 9: every year, and the results come in after the agreements

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Speaker 9: have been closed, so that gives us indication that we

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Speaker 9: can corroborate and verify in the late spring, I would

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Speaker 9: say of of twenty four, that will be a strong

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Speaker 9: indication our wages slowly catching up, and that catch up

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Speaker 9: process will take place over the course of two or

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Speaker 9: three years possibly, or is there a very strong catch

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Speaker 9: up coupled with an alignment with inflation, which would give

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Speaker 9: me concern because while we're not seeing today's second round effect,

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Speaker 9: that could be the result of this sort of twofold process.

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Speaker 11: Are you confident there will be a cut this year

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Speaker 11: in interest rates?

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Speaker 14: Confident?

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Speaker 9: I'm confident that short off another major shock, we have

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Speaker 9: reach reached a peak. Okay, Now we have to stay

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Speaker 9: restrictive for as long as necessary to make sure that

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Speaker 9: we get to that state where we're all saying, okay,

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Speaker 9: confident that it is at two percent medium term. I

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Speaker 9: know some people argue that maybe we are overshooting, maybe

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Speaker 9: we're taking risks. I think the risk would be worse

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Speaker 9: if we went too fast and had.

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Speaker 14: To come back to more tightening, because we would.

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Speaker 9: Have wasted all the efforts that everybody has put in

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Speaker 9: the last fifteen months. The US election, Yeah, let me

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Speaker 9: have some coffee.

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Speaker 14: How arid are you about the US election?

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Speaker 9: It's for the American people to decide what they want

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Speaker 9: with their politics, with their government.

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Speaker 14: With their future.

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Speaker 9: But obviously we are all concerned about it because the

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Speaker 9: United States is the largest economy, the largest defense country

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Speaker 9: in the world, and has been a beacon of democracy

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Speaker 9: with all its upside and downside. But this is what

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Speaker 9: they should be considering, and of course we cannot interfere

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Speaker 9: with their choice. It's their choice and that's the beauty

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Speaker 9: of democracy. But we have to be extremely attentive and anticipate,

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Speaker 9: just as we do with inflation. You know, we do scenarios.

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Speaker 9: What if, what if? Then what do we do? Because

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Speaker 9: that's the real question. And you know where I sit

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Speaker 9: now in Frankfurt, head of the ECB, I think that

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Speaker 9: we have to be strong as Europeans and not assume

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Speaker 9: that we can rely on whoever our friends are around

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Speaker 9: the world, because these things change over the course of time,

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Speaker 9: as we have seen.

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Speaker 11: So what if Donald Trump gets into the White House,

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Speaker 11: what are some of the policies that europe could be

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Speaker 11: put in place to not be cut also between China

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Speaker 11: and the US with Donald Trump and the White House.

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Speaker 9: Well, for one, it has to be strong of its

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Speaker 9: own and if I look at my own shop, because

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Speaker 9: it matters to monetary policy transmission, I think that and

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Speaker 9: you will hear that from others. We have to accelerate

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Speaker 9: capital market union. We need financing in Europe. There is

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Speaker 9: a lot of saving in Europe, and we have to

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Speaker 9: make sure that those savings actually stay here to finance

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Speaker 9: what needs to be financed, which is predominantly the climate transition,

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Speaker 9: which is digitalization, which is enough industrialization conducted with a

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Speaker 9: targeted approach so that we can on the key in

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Speaker 9: the key areas be self sufficient.

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Speaker 11: Are there policies that you would put in place now

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Speaker 11: for Europe to I guess counter the US exceptionalism, which

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Speaker 11: you know could be questioned going forward.

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Speaker 9: I think I would accelerate many of the initiatives that

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Speaker 9: have been taken, and I would encourage European leaders to

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Speaker 9: put aside a little bit they respective idiosyncraty idiosyncratic differences

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Speaker 9: to be more together because you know, it's a question

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Speaker 9: of off size and scale, and Europe is a very

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Speaker 9: large market, has a very sizable population, has capacity to innovate,

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Speaker 9: has financing. It has to you know, be a little

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Speaker 9: bit more cohesive together and forward looking.

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