Really what's happened in the bond market is it looks like the market got ahead of itself. We had that stronger January jobs number, which I think is what really kicked off that readjustment in market expectation. If you look at what the Fed is just continuing to tell us, data dependency and we are watching that data, the data can switch quite rapidly, which in turn can have a rapid effect on financial conditions, at least on the rate side. We really haven't broken enough yet to
do the damage that everybody thinks. This is Bloomberg Surveillance with Jonathan Ferro Lisa Abramowitz and Anne Marie Hordern, live from New York City this morning. Good morning. Good morning. For our audience worldwide, this is
Bloomberg Surveillance alongside Lisa Brown, which together with Anne-Marie Horton, I'm Jonathan Ferro your equity market on the s&p 500 down yesterday. Just a touch down this morning by a third if 1%. You know the data over the last few weeks cpi upside surprise p upside surprise. PC Lisa coming out. That's all I said yeah. Two and a half hours away and a lot of people are saying that's the big data point.
But how do you really trade it in a market that seems to be driven by its own sentiment right now? And that seems to be the lack of conviction that I've read in all of the notes overnight, I have to say. Stuart Kaiser had the headline of the of the day, frankly, is Momo FOMO or Oh no and talked about potentially shorting small caps. If this is surprising, you can translate that later in the program. But ultimately, over the last few weeks, the last two months, this market is repriced aggressively. What it thinks the Fed is going to do so
far this year, and the Fed hasn't had to adjust at all. President Williams Sounds like the President. Williams We heard about a month ago, basically three times seems about right for Fed rate cuts this year. They haven't changed their message. The market kicking and screaming came along to their view.
But here's the real question. Is the market consistently pricing in a much slower path of rate cuts right now? Are we consistently pricing in still a complete nirvana soft landing or people starting to think about what it means if an economy is not slowing down with five and a half percent benchmark rates? I can tell you the message has changed in Washington, DC. There was a man back in the 1990s. He once said, It's the economy, stupid. Well, it's not the 1990s anymore. And it's not just about the economy, stupid. Immigration is coming up as the big concern in swing states in 2024. Every state is a border state.
Well, exactly. But you're seeing pressure even from blue states on this White House to do more when it comes to southern border. President Biden will be at the southern border today, as well as former President Donald Trump. Both are trying to also lean into this
because look at this right now. Our poll shows more respondents are starting to track immigration as their top issue. Still, the economy remains front and center, but immigration is going to be one that they really need to grapple with. One put on the economy from our poll, perception of the economy is actually done better. 31% of swing state voters say the national economy is heading in the right direction.
That is up from our previous polls. The big problem is they're not giving the president credit for how they are feeling about the prospects of the economy. Even if they think it's getting better. Are they going to be at the same place at the border 300 miles apart? The three that's very well is going to be the Secret Service.
I mean, you know, if you look at how presidents travel, we're lucky they're going to be far apart for a lot of reasons. I mean, honestly, the reason why I ask this is because I wonder how far apart the messages are going to be, whether they're going to ultimately be the same message just couched in very different language. The interesting thing about our poll this morning is the issue of age.
And we could talk about this a little bit later. 82% say that Biden is too old. 51% say that Trump is too old. That's a full year age gap that needs to explain somehow.
A 30 point spread between the two things is pretty amazing, you know? You know, we can get into this and we can get into this with respect to the doctors notes that we got from President Biden as well, which basically said not a lot and placated absolutely no one. And there's this real question here about whether it's just visibility, about whether we're just seeing Biden much more than we're seeing Trump and whether Trump is more energized or whether there actually is some sort of cognitive differential that people are trying to get their hands around. I can't weigh in on that. But there is a perception gap that Biden has to climb. I find it interesting that President Biden yesterday was at Walter Reed. His physician said he's fit for duty, robust 81 year old.
Yet when you heard from the special counsel report, they said he was an older man. So it felt like this physician was almost pushing back on the special counsel report. And whether it's foreign policy, the southern border, the economy, this is going to be the trickiest for the campaign to over. I hope that I'm going to be a robust 81 year old as well, don't you? Equity futures on the S&P 500 negative here by a quarter of 1%. Here's the stage. This is how it was set up going into that PC data a little bit later on this morning.
We're down a quarter of 1% on the S&P. Yields are high by four basis points on a ten year, 430 on a ten year this morning, four 3053 and the year out doing not a whole lot. Want to wait 39 on Eurodollar. Coming up this hour, Marvin lower stage street as US stocks and treasury yields. Ahead of today's inflation data. John Lever of Eurasia Group Is President
Biden and Donald Trump hold dueling events on the southern border? And US Trade Representative Katherine Tai on tensions between the world's two largest economies. We begin with our top story, the US stock rally on pause ahead of core PC data due at 8:30 a.m.. Martin Luther State Street warning we could be in a higher for longer world. Saying, quote, If a no landing is the case, the Fed should be addressing a structurally different economy and investors need to consider higher term premiums and higher long yields than what prevailed before the pandemic. Martin joins us now for more. MARTIN, Before we jump deep into that,
let's just talk about what you're expecting at 830 Eastern Time. Yes, sure. I mean, the number is certainly going to move in a different direction than what we saw at the end of last year. You know, for the most part, PC is a combination of PI and CPI. So it's going to come in somewhere in that hot spot, 3 to 2, spot, four type of number. The markets priced it, but it's really going to resolve nothing in terms of those that think that we're going to be potentially facing inflation concerns as we go into the summer.
To those thinking that that is just a one or a one data point type of blip, So we're not really going to solve anything. We're not really going to break through many of the ranges that we've been in for really the last six weeks at this point. There was a big disconnect to start the year between what the market was priced for and what was implied in the Fed's dot plot and what they were looking to do in 2024. We've closed that gap aggressively in the last two months. What's the big disconnect there you've got your eye on right now? Um, yeah. I mean, the the big disconnect at this point still is that once we start cutting, we're going to cut aggressively towards a normalized world that looks a bit like it did before the pandemic. You know, ultimately a neutral rate
somewhere around two and a half percent. And this glide to disinflation, whether it's on the services side of things and certainly on the good side of things, which which has been deflation is going to re-establish itself, at least at the second half of the year. That there is is a sanguine view that, you know, rate cuts, once they begin, are going to just continue in earnest because things are returning back to normal. Okay, Marvin, all of this is very confusing and difficult at in a complete lack of trust in the actual data. Right. I mean, yesterday, what was this coming out from the US Labor Department, this story that Bloomberg broke about these letters sent to super users of the data, basically having this the weights for single family detached homes increased materially from December 2023 to January 2024. Nothing else is going to be said. Go on.
And then they tried to retract it. What does this mean to you? So, so. So I'm not a super user. I didn't get that. I needed that email. So so I read from Bloomberg myself. Probably the most contentious number
within CPI is this owner occupied number. It's it's an attempt to try to figure out what inflation is. For those of us that own a home, there was a change in the weights between single family and multifamily, with multifamily being under more pressure and all of us that watch the single family world or are trying to buy a house realized that inflation hasn't come down. We've always struggled with how to interpret that number. What this says to me is that you've got this bifurcation within just how to calculate it. That's not changing because the housing
market still remains high. If that confusion continues out there, that inflation confusion is going to remain out there. And ultimately we price CPI based on this very heavy weight. It should argue that we get more inflation volatility, which really, if you expect inflation to guide down to this really stable type of number, it might be a little bit optimistic given that you talk about a world in which five and a half percent is not a restrictive rate and the potential for that, which is something that very few people are thinking about, how much likelier is that right now than it was, say, six months ago, in your view? You know, it was always out there. It was whether or not you wanted to go down that thought process. The good deflation that we saw in the second half of the year, maybe the fourth quarter, made everything look great. But we always knew that that services
number, which is the biggest part of the economy, wasn't responding as aggressively. You know, we've got some decent prints coming out of ECI, but overall service inflation remains fairly high. And we've got a disconnect between what the jobs numbers are seeing, the official monthly numbers, which continue to look pretty, you know, pretty robust as well as these weekly numbers and the view that all of a sudden the jobs market is going to get right size. So within the next, you know, 3 to 6 months, we're going to get a sense of really how much of the structural change in the employment market has a long lasting effect and whether or not we've got to think about higher yields, more inflation volatility, more term premium, because the economy could be very different on where it is now than where it was back in 2019. Marvin, is that the case? If that's the case in the future, what would you do with equities right now? Yeah, you know what? And I've said it, and I've said it often, despite the duration argument, you know, growth in an economy that's for the most part, aging is going to be a very attractive part of your portfolio. So, you know, those those mag sevens do have a moat that they can defend. But cash flow positive companies are
something that wind up being somewhat attractive if yields ultimately remain higher. It does mean that basically the government bond market is a no go. And if you want to hedge, just go to Bitcoin. I'm not I'm certainly not a big fan boy. So.
So I'll. I'll leave that. I'll leave that one out there. The Treasuries Treasuries continue to have volatility, particularly particularly in long end, in my mind.
You play it from a hedge perspective. You know, we talk to customers about curve trades and things like that. You know, looking at two, five, maybe rather than $0.02. It's that type of nuance world for me right now. That's how you does the bitcoin chat Marvin thank you my like a stay straight I appreciate it we can talk about bitcoin. The inflows into the BlackRock ETF have been absolutely phenomenal. I think it was $520 million the other
day, which was a record. And we heard yesterday fund managers saying that the way that they hedge is with cash and bitcoin and that's why you're seeing it surge to new records. I do want to point out there was this small little story on the Bloomberg yesterday talking about how leverage in crypto assets is surging again including an NFT is including a Bitcoin. So, you know it's I don't know déja vu all over we do in the NFT thing all over again just short of 63 K on bitcoin. Plenty of bitcoin checks through this morning. Every few to one more.
I don't know. Let's get an update on stories elsewhere this morning in case you're playing potpourri for Dani Burger. Hey, Danny. Hey, John. In Illinois, a judge has barred Donald Trump from appearing on the primary ballot. It's the third state to impose the ban for Trump's role in the January 6th insurrection.
Trump now has until Friday to appeal, and he's already appealing a similar Colorado ruling before the US Supreme Court. Weight Watchers shares are falling a lot 23%. Oprah Winfrey said she would leave the company's board if shares continue to fall. The stock is set to hit its lowest level on record. Winfrey's departure is just the latest
blow. Weight Watchers is trying to stay relevant in this specific era. The influential talk show host says she will continue to work with the company and, quote, elevating the conversation around obesity. She served on the board and she struck a deal with Weight Watchers in 2015. Shares of Paramount, on the other hand,
are rising four and a quarter percent in the premarket. The company predicted, quote, significant earnings growth this year. That helped investors overlook a 6% sales drop as a result of shrinking ad revenue on traditional TV channels. The company also saw subscriber subscriber growth beat estimates on its Paramount Plus streaming service, which it expects to be profitable at least domestically next year. And that's your Bloomberg brief. John, it's Annie. Thank you. Up next on this program, Biden and
Trump's border showdown with Donald Trump. He'd rather weaponize this issue than actually solve it. With four more years of Biden, the hordes of illegal aliens stampeding across our borders will exceed 40 to 50 million people. That conversation up next live from New York City this morning. Good morning.
Inflation data just around the corner, equities pulling back by 0.2% on the S&P 500. Treasuries, a little softer, yields a bit higher of four basis points on a ten year full 3073 disadvantage this morning. Bonds and Trump's border showdown. All indications are this bill won't even move forward to the Senate floor. Why? A simple reason Donald Trump. He'd rather weaponize this issue than actually solve it.
With four more years of Biden, the hordes of illegal aliens stampeding across our borders will exceed 40 to 50 million people. Medicare, Social Security, health care, and public education will buckle and collapse. Here's the latest this morning. President Biden and Donald Trump hitting the campaign trail, planning dueling trips to the US-Mexico border. Immigration gaining ground on the economy as a top issue. In the latest Bloomberg morning consult
poll. Meanwhile, Trump maintaining his lead over Biden across all seven swing states. John Leeper of Eurasia Group and former policy adviser to Senator Mitch McConnell joins us now for more. John, wonderful to hear from you, sir. It always is. Can you frame for us how different these addresses might be a little bit later today from these two leaders? Well, you just saw a great preview of it.
I mean, Trump's talking about tens of millions of people coming across the southern border. Not a particularly realistic number, but Biden's on the defensive here. And this is a huge issue in the campaign this year. Immigration numbers have been very bad under his watch from the perspective of people coming over the border.
And I think he's going to be on the defensive the entire year. Plus, he's got to worry about this continued split in his own coalition from some Democrats who think the Republican approach is inhumane. And independent voters who want to see the U.S. government do something about the flow of illegal migrants.
So this is a huge opportunity for President Trump, former President Trump. It's one of the reasons he won in 2016. And if Biden can't change the narrative here, he's going to be in even more trouble than he is today. Well, to change the narrative, he might use an executive order. We know the White House was weighing this.
Do you think, before the election they will come out with some sort of executive order on the border? Yeah, I think they're going to have to. I don't know how they don't. I mean, you know, one opportunity, the politics of an executive order are quite good. It doesn't necessarily do much to change what's actually happening on the ground. He's not going to do the kind of things that Trump did. It allows him to draw attention to what he just did in that clip, which is point out that Republicans had a chance to get a border deal and turned it down because of politics. So he's trying to flip the narrative by
taking action. Whether or not it's effective is something that's going to help him politically. Well, our polling shows that respondents still think Biden is responsible for the border, but more people are starting to also lay blame on Republicans in Congress and the Trump administration. So do you think Biden has, between now and November, able to close that gap and put more of the blame on Republicans for tanking that border deal? No. I think those are kind of inside baseball arguments.
And inside baseball arguments just don't really land with voters that much. I mean, he's basically making a process case that, you know, I had a bill and the Republicans stopped it. And, you know, the incumbent president bears the blame for what's going on in the economy and in society. And he's going to have to bear that blame, even if Republicans do have a role in that. You, of course, worked for Senator Mitch McConnell yesterday. He said he's backing down from his leadership position. The president came out with a very
friendly, nice response about him talking about their time. They've worked together about American democracy based on elected representatives coming together, bridging their different points. Is this part of our politics over seeing McConnell step aside? Yeah. I mean, this is the passing of the torch to the next generation. And the next generation is a lot more aggressive, a lot more confrontational and a lot less willing and able to get things done. Then retiring senator, then leader Mitch McConnell. And I think that's a that's a real shame
for the country, because McConnell's whole thing, his entire time in office is how does he drive to get the wins on the board and get to. Yes. And that is not an attitude you see among a younger generation of lawmakers who come to Washington either to start trouble or to make statements in order to help their own political ambitions. And McConnell's only ambition was to become leader and then start doing things for the American people. And I think that that that that that outlook is a is a really, unfortunately outdated perspective. John, from here until the end of the year, does Mitch McConnell have more or less power now that he's announced his departure date? Yeah. I mean, I hate to say it, but I think
that's the wrong question. I just don't think that there's anything going to be happening between here at the end of the year. Right. And Cornell's big accomplishment is going to be passing the Ukraine aid bill through the Senate. That's done already. Maybe, you know, they'll get a
government funding deal. They'll have to deal with shutting down the government again later this year. The Ukraine question is all on the shoulders of Speaker Mike Johnson. So, you know, McConnell's announcement yesterday just recognizes the reality that 2024 is not going to be a particularly active year in the United States Congress.
The reason why I ask this is because some people are speculating what role the former President Trump is going to have in picking a new leader for the Senate. What's your view on that at a time where a lot of people are talking about the slew of John, different senators with the name John that could potentially rise to the to the home who are not necessarily on the more extreme fringes. Yeah, Trump's role here is going to be massive. I mean, if he's the president of the United States, if he's the president elect of the United States in November of this year, he will select the next leader. He will be the most important person in the party. He will be the dominant leader in the party.
If he's not, it's a very different situation. And that's where you probably see the dynamics among the Johns that you're talking about, who would be kind of vying to succeed McConnell for quite some time playing out. But if Trump's in there, you can have a pretty broad range of outcomes. I mean, I think there's another generation of leaders of potential leaders in the Senate who are not today in leadership positions, who are going to be vying to be Trump's person inside the United States Senate. And the range of outcomes here is quite wide. I don't think we have it's really early
to handicap the succession race. And John, forgive me, because we only got 4 minutes left with you and this is quite a large question, but what is the ideology of the Republican Party and former President Donald Trump? What is it anymore? I mean, this is a populist, conservative right wing movement that unified behind was a personality cult of Donald Trump. I don't know how else you think about it. You know, the goal of the party is to win back the White House, The leader, the guy who's going to win back the White House is Donald Trump. He has pushed the party in very uncomfortable directions that basically most elected officials are now comfortable with. For example, the party's hard right are not going to call it the party's populist turn against international trade.
And that's who they are right now, not just international trade against mergers and acquisitions. We used to kind of characterize the party as being somehow business friendly. We spoke to some analysts now who suggest that maybe they're not.
John, We spoke to Speaker McCarthy in the last month or so, and I tried to address this question with him, and he didn't really answer it about whether his party has just left him behind. We caught up with Nikki Haley in the last month as well. I just got the same feeling that this isn't her party anymore. It's different, it's changed, and maybe it's not turning around anytime soon. Which begs the question, John, when I
speak to my friends, traditional conservatives, old school Republicans, the kind of one another party, what are the chances that we get one? None. I mean, the US system has built itself around two major political parties. There's a lot of kind of social science reasons for that, and there's structural reasons for that. It's very difficult for independent candidates to even get on the ballot. And third parties just don't have the, you know, Coke versus Pepsi brand appeal of the Republicans and the Democrats is why there's no independent or third party governors in this country right now.
So, you know, the Republican Party is moving in a very populist direction on trade, on labor issues, on immigration, and that's who they're going to be for at least the next 5 to 10 years before a new leader comes along to force a new political realignment, which, you know, is not on the horizon right now. John, forgive me for asking this, because I know over the years you've been close with Senator McConnell. Do you think it's a failure of leadership beyond former President Donald Trump, that they weren't able to make their message, their policies that much more popular within the party and ultimately for the electorate as well? Yeah, I mean, you know, this is a democracy and the voters ultimately decide what they what they want and what they want is Donald Trump. And you can blame that on failure of messaging. But the fact of the matter is that, you know, the Republican commitment to international trade has had implications in communities across this country that have been pretty devastating. And I think that that's true. There are costs associated with a lot of
the policies associated with, you know, the Bush years of the Republican Party. And those costs have come back now in the political system. And that's just that's where we are. John, appreciate that reflection, sir. Thanks for catching up with us, John. Labor there. If you write your group, I think for the people who are hopeful that we get that third party, it's just not happening. I'm glad you brought that up, though, because in our polling, RFK is starting to be now more well-known.
He rates very popular, most so among conservatives and Republicans. And this was the numbers among the so-called double haters, the people who don't want to see Trump or Biden. His favorability rating has improved from 25% when we started this in October to 45%. If he's on the ballot, he's going to be pulling from both of these candidates. I think people in the middle just resent what's happening right now because people have a sense of. Right.
Feel like the extreme left is pushing them further. Right. A place they don't want to be. People center left feel like the people. Who are far right are pushing him
further left. It's a place they don't want to be. Seems to be the extremes of the two parties, Paramo, which is shaping the politics of this whole country. There's a reason why I'm curious about the money. I'm curious about where the money from
businesses is really going to go. At a time when I always get particularly excited for this particular election, it's hard to get excited for a lot of people. And you see that in the polling, by the way, repeatedly coming up on this program. Would you believe that Chinese equities, just looking at the CSI 300 on my screen right now up by 9% this month, this month alone for February. We're talking about that with Virginie Maisonneuve of Allianz. Up next.
Stocks on the S&P 500 negative a quarter of 1%. The big data point PC to Amazon White coming into it, stocks pulling back by 0.2% on the Nasdaq 100. Some slight subtle mild outperformance on the Russell. The small caps up 5.15 in a bond market to a ten year 30 year. The two year still in and around four 7468 yields picking up here across the curve going into this data were up by four basis points on a two year, Lisa, four basis points on tenths. The expectation is that it's likely to come in hard.
And what I keep seeing is if it comes in at 0.3 to 0.4% month over month, this core PC metric, that's not going to be good for the Fed. They're not going to like that. And that essentially in March is when it starts to get less noisy with the year over year cobs and it becomes a much more inflationary picture potentially if this pressure retain. It hasn't been good news for the two year treasury ether, let's put it that way. I mean, look look at the low and look at the high on the yield 4.1% last month. The high for seven say earlier this
month. Are we seeing stocks wake up to that. Nope. Okay. So this is really my question. Why are they treading water right now? Is it just because no one can get particularly enthusiastic and all the stories have been told? Is it because people are actually short or is because nobody has any conviction whatsoever? So they're just going to basically sit there and go like this until they can figure out what more is happening? Are they sleeping on higher rates? So are they wide awake to the reality of what got them here? They're watching the data. Yeah, exactly. And better earnings rate. So that's really what seems to be driving everything that we're seeing with respect to the confidence in equities. Two year for 68.
Let's finish on foreign exchange. One of the good dollar in the charts that we close at 150 at below one 4998. We have not had a close below 150 I think in about two weeks with negative half of 1%.
So what you see on the screen right now is a stronger Japanese yen off the back of some commentary from a board member who gave a subtle hint with the emphasis on subtle that maybe they'll move away and start hiking interest rates. It's never too subtle to get excited about the potential for moving away from negative rates. This is the comment the Bank of Japan's price target is, quote, finally coming into sight. All right. They're going to hike. They're going to hike in March. I mean, this is basically what the market goes with that kind of commentary based on the fact that they've been so tepid on any kind of guidance whatsoever.
Off the back of that, just a little bit of a break at one 5149. So 99, I'm trying to inject a little bit of insight here. People are excitement, excited, but you know, it's not trends.
We did bitcoin a little bit earlier. Super Excite. That rally's been phenomenal with Amazon. Typically you'd say the ETF news would be a Santa news event and I know lots of people said that that has not been a Santa News event at all. Yeah, but I don't really even have an understanding of what this is.
How much is this just that people don't have a diversifier because it's not bonds anymore. I mean, we heard that yesterday. I think Jonathan Stubbs was saying that right expansively Bitcoin is one of his assets that are uncorrelated to the rest of the market. I don't know what they're correlated to maybe leverage going up in this area, but to me, this sort of pops out of nowhere and seems to be on a freight train moving back to some of the hotels and other types of trading.
Nice. That train just went through Station 63 K on the screen right now. He like that now a savannah this morning investors awaiting the Fed's preferred inflation gauge call due out at 830. The that shows a terrible I love it I'm sorry good Olympics survey expecting the number to double from a month earlier to 0.4% plus another look at the US consumer with personal income and spending data. Then 210 K the estimate for jobless claims fed speak also on deck throughout the day we hear from Presidents Bostic, Goolsbee, mester and Williams claims.
I think claims are going to be super, super important given how low claims have been over the last few weeks and how strange it is that we keep getting notices from different companies about layoffs. I mean, we've heard this from company after company, whether it's Bumble, whether it's some of the bigger companies that came out yesterday, we saw some issues with Salesforce. We're seeing something with respect to guidance from HP. You know, all of these companies are Snowflake. We saw come in quite significantly. They're all of these companies that keep trimming jobs.
Why are they not showing up in the numbers? And do we start to see that Sony, Macy's, it's across the board. The Conference Board data shows that actually consumers are now very concerned with the labor market more than they've have been. It was always about inflation. Now they're also worried about job prospects. So that's something that I think you're right for. Jobless claims is important. Are we going to at some point see any cracks? Andrew Horton Also, Citi suggested that maybe claims have been a little bit misleading and taken our attention away from the weaknesses, saying elsewhere, specifically in retail sales. I'll share the quote with you all at
home. Low initial jobless claims and previously stronger data support the consensus that for now activity is solid. We continue to see a soft landing. It's the least likely outcome and expect activity to weaken later this year. Next week. Jobs report two Fridays away is a key
test and we see downside risk. Okay, I'm going to go on a rant. Everyone's saying watch the data. Everyone says the data is going to tell us everything. And then they say the data is messy, it's wrong if it's waiting things differently. And oh, yeah, it's completely misleading because you've got to look elsewhere at other data. It just creates the frustration of why we're sort of hitting our heads against a wall every time we hear someone come back. 30 minutes in, right carrier.
Out up you're going to get. But I'm with you. Whenever they talk about data dependency, it would always want me up because the real question was what data you dependent on? Totally. But we're all sort of data dependent to some degree. But how much weight do you put on one
data point versus the other? And they never seem to go into the detail of any of that. No. And when they do, it's usually pretty vague and sort of we'll see. We'll just and guess what? We don't know if this is where from I was at at 635. I look forward to 830 when that data actually drops. Here's the latest from Congress.
Congressional leaders striking a deal to avoid a government shutdown. The deal extends funding to some government agencies a week to March 8th, The second deadline to fund departments, including Defense and Homeland Security, now sits at March 22nd. Hard line Republicans already condemning the agreement, setting up another fight with Speaker Mike Johnson. Are we done? Here? I am. Are we moving on? No. It feels like perennial shutdowns. We're moving on from this potential shutdown.
But they just set up more dates where we can shut down. This is the fourth time since October that they voted on or they're about to vote on another continuing resolution. The issue here is going to be more on the politics, because Speaker Johnson is already getting a ton of flack from the hard right saying we didn't want to see another continuing resolution. You promised us you would have a continuing resolution. Ralph Norman last night said it was an insult to the American people. But yeah, the government will remain open and people will get their checks, you know, fired up about this one. No, I'm not sorry.
So we'll leave that there. Move on to this. The hits keep coming for Boeing. The Justice Department raising the possibility of criminal prosecution following last month's blowout aboard a Boeing 737 max jet. The probe stretching back to a deferred prosecution agreement after two fatal 737 max crashes back in 2021. The Alaska Air incident in January happened two days before the deal was set to expire. If prosecutors determine if Boeing failed to comply, they could bring criminal charges, at least three against the company. This is just more bad news.
And we see the shares falling yet again. And this raises this question of what's going on at Boeing to really do a deep dive investigation into what went wrong culturally and also what mishaps there were, what sort of oversights or negligence there was by some of their employees at a time where they're dealing with employee confidence, employee retention, all sorts of issues, and just sets up a whole question number of questions I'd like to ask Brooks. It's Kate did a fantastic job of this when this story first broke the cultural issues inside the company. What's changed? We've seen some personnel movement, but ultimately you're going to look to the top of this company a lot more over the next few weeks and months, especially given some of the commentary. What do they say? That it was unclear, safety requirements that they changed on a regular basis. That kind of confusion not great. The report commissioned by Congress that
we got to look into talks about this disconnect between the factory floor and the C-suite. Brooke Sutherland has talked about this. A lot of time issues that are going on the factory floor are not getting to the executives that are miles and miles away. And the FAA came out yesterday talking about some of this, but they stopped short of some of the harshest member's measures they could have had on Boeing, which would basically mean halting the production of 737 overnight. But this is a huge headache for not just Boeing, but also the FAA.
But again, the free market negative here by 0.7%. That's the latest for Boeing. Here's the latest. Over in China, investors betting the government will do more to backstop the economy out of the National Party Congress next week.
We've had a big rebound in stocks in China helping to push equities in Asia to their best February since 2015. The CSI 300 up by more than 9%. Virtually massive alliance. Global investors saying the country is headed for the great reset. Firstly joins us now for more.
Especially wonderful to hear from you because you've been constructive on this part of the world and I struggle to find anyone ask that has been can you tell us why apart from the fact that this is really under owned. Yes. Thank you. Listen, you have the headlines and you have the changes that are taking place in China where President Xi Jinping is really building a common prosperity economy. And that's a new concept, really, given the demographic profile, given, you know, the development that China has achieved. This is something that is well understood. What has happened, however, given the volatility, is many foreigners have left the market and actually over 90% of the domestic Asia market is now held by domestic investors.
So I think in that context, any good news, any, you know, labelling, if you want, of the bad news is a source of of of a potential rally. We like innovation. We don't buy China as an ETF. We buy China is an active if you want a battleground where you find a lot of very interesting companies in green tech, in medtech in tech as you know bifurcation of the world's standards, given the New world order and what I call China Phase three means that a lot has to be rebuilt in China and semiconductors, etc. There's a lot of super innovative and very interesting companies. Virginia, how do you sort of shape your view on China with things like China's banning of certain types of trading, with their banning of certain quantitative traders who maybe do the wrong trade? Yeah.
Yeah. So listen, it is an emerging market economy and we know that some emerging markets have that uncertainty linked to it. However, it is a very large market. And as I said, you know, you really don't want to have a top down ETF kind of you you really want to work with from the bottom up with quality management team, understand the business models and and really have that long term appreciation of the potential of the company. But of course very, very focused on valuation and quality of management. Is this a trade, Virginie Or is this something longer term, especially given the inconsistent policies from the top? So I think they are consistent within the Chinese perspective, if you want, in terms of, again, thinking about that long term common prosperity approach. Listen, in terms of a trade versus long
term, I'm in the long term can because I think it's the second largest economy in the world. If you look at the wealth creation, if you look at the potential for innovation, if you look at the transformation of the economy, if you look at the global South and China's influence. But I understand that for some people it might be a trade if you have not in your portfolio today, given how well a lot of markets have done around the world in the past 18 months, you know, maybe that's something people will want to look at on a trading basis. As you talk about long term investment in China, the White House, the President Biden has put out a statement. He says, I'm announcing today unprecedented actions to ensure that cars on U.S.
roads from countries of concern like China do not undermine our national security. Is directing the commerce secretary look into this. How do you deal with long term view on China when you have this acrimony that continues between Beijing and Washington? Yeah, that's definitely part of the risk, right? Very, very clearly.
And geopolitics will play. I mean, you know, my my my views on New world order and geopolitics will continue to play a growing role in markets as the world is becoming multi-polar. And the Trump administration will clearly continue to create some pressure from a bottom up perspective. When you look at those companies, you have to attack very conservative assumptions with regards to development in markets such as the US and even potentially Europe, and only have given very conservative assumptions. You still think there's a lot of upside potential given an earnings profile on a 3 to 5 year basis, then you would get into the stocks. So again, it's it's a stock by stock decision framing within a long term time horizon, but with awareness of short term risk. You mentioned what would happen if we
saw another Trump administration. But do you actually think trade policies or any policies really export controls, penalties would change whether or not it's Trump or Biden? I think they will probably come up in different format. If you look at the current negotiation that just took place, we had to a certain extent a lot of the biting. But in the end a common understanding that the relationship for the US and China is important to the world, it is important to China and to the US. So I think you have to dial. And the noise of that, you know, a
political talk with what is going on in the background. And we know that in the past 18 months there's been a lot of touch points between the two administrations, if she want. I think that this will prevail. Independent on who is in power in the White House, but the noise will probably be louder.
So again, you want to be very conservative with your valuation assessment and understand that geopolitics, politics will continue to have a growing role on markets. VIRGINIE Thank you. Virginie Marcello for Finance Global Investors. Thank you very much. Statement from the President on addressing national security risks to the US auto industry.
Let's get to that statement right now. I'll quote some of it for you. China imposes restrictions on American autos and other foreign autos operating in China. Why should connected vehicles from China be allowed to operate in our country without safeguards? Lisa, today I'm announcing unprecedented actions to ensure that cars on US roads from countries of concern like China do not undermine our national security.
I've directed my Secretary of Commerce to conduct an investigation into connected vehicles with technology from countries of concern and to take action to respond to the risks. As president, I vow to do right by auto workers and middle class families that depend on the auto industry for jobs. With this and other actions, we're going to make sure the future of the auto industry will be made here in America. With American workers now, you can
decide whether you want to put these two events together. We've just received this statement. We also understand in the last 10 minutes or so we will not be hearing from the U.S. Trade representative, Katherine Tai, this hour. And we would have liked, of course, for her to respond to this statement from the president this morning. How much heavy lifting is national
security doing and how much is it a fear of really blowing out of the water? Some of the U.S. auto manufacturers? Look, a lot of people have been expecting this. How are you going to create a moat around the U.S. auto manufacturers at a time where the Chinese manufacturers are doing it cheaper and faster? Here's the question. What are some of these provisions? Is this tariffs? Is this just an outright ban? How far does this really exposed the potential for challenges that some of the questions made in China reveals? As you know, we're already subject to a 25% tariff. I've got to throw in the 2.5% tariff on imported autos as well.
You just wonder where this is going. How much higher it will be. And if this is about getting in front of what we could see from former President Donald Trump on this campaign trail. Well, and then how much is there a daylight? I mean, you've been talking about this a lot of money. But to me, between the two candidates, to me, there's just a real question. And you've brought this up, John. What does this mean in terms of U.S. auto manufacturers and whether basically
certain of them are allowed by the U.S. government, whether they are prohibited from buying certain goods from overseas countries because that could potentially harm national security? It raises a lot of questions here. I'd be really curious to hear some more details. We'll pick up on that story in just a moment. Let's get you an update on stories elsewhere this morning.
Here's your plan. Paper if we Dani Burger. Hey, Danny. Hey, John. Another government shutdown may be averted.
Congress Congress's leader struck a last minute deal to provide one more week of funding after Saturday's deadline. It will keep parts of the government funded through the end of September, but other agencies like Defense and Homeland Security departments, could still face a March 23rd shutdown deadline. Speaker might make Johnson plans to bring the measure to the House floor today. Shares of Snowflake are plunging
premarket. If this loss holds 23%, it would be the biggest decline on record. The software maker delivered disappointing sales forecast. It also announced that the CEO, Frank Sweetman, is stepping down and he will be replaced by the company's senior vice president of AI, who, it should be said once worked for Google Advertising. AMC Theatres is cutting the pay of its CEO by 25%.
After a bad 2020 three fourth quarter profit fell short of estimates, despite a sales boost from Taylor Swift and Beyonce's concert films. AMC stock has fallen significantly over the last year, but now it expects revenue to drop as much as 9% this year because of a limited film release slate. And that's your Bloomberg brief. Jon, Danny, thank you. Appreciate it. Up next on the program, trade tensions
between the world's largest economies. America's fundamental economic strength means that we have nothing to fear from healthy economic competition with China or any other country. That conversation up next. Live from New York, this is Bloomberg. Lots of New York City equities here down by a quarter of 1% on the S&P 500 yields by four basis points, the ten year for 3073.
And this event is this morning trade tensions between the world's two largest economies. As I've said before, America's fundamental economic strength means that we have nothing to fear from healthy economic competition with China or any other country. I and other U.S. officials have repeatedly stated that the United States does not seek to decouple from China. Here's the latest today. The Biden administration is weighing the fate of Trump era tariffs amid ongoing tensions between the US and China.
The decision coming as competition ramps up for raw materials, electric vehicles and chips to power artificial intelligence. Bloomberg's Vonnie Quinn is at the WTO conference in Abu Dhabi, and she joins us now for more. VARNEY Can you just frame for us that tension that's playing out where you are right now? Well, let's just put it in the words of Paraguay, which put out a statement, John, saying literally that rich countries that have long wanted poorer ones to reduce subsidies and lower trade barriers are now being called on their own governments to reduce trade barriers. And they don't specifically cites things like in Europe, the carbon border adjustment mechanism or in America, the subsidies for semiconductor manufacturing and for electric vehicle battery manufacturing. But that's exactly what Paraguay and those that support the statement are saying. They're essentially calling out the
hypocrites, as they would see it, for subsidizing their own domestic industries and telling the less developed countries to not subsidize theirs. And in a case like India, for example, which is being seen as a real holdout here, India is trying to protect its 9 million fishermen and anglers that are trying to subsist on very low wages. And other countries are also trying to do the same for their populations, but also remember electorates. There are a lot of elections happening
this year. Vani, do you feel like people are getting split into camps where their countries are being forced to choose between China and the US and to kind of sit with those people at the table and ignore the others? To a certain extent, Lisa, there is a great word that is only used at the WTO. It's almost a new word, plurilateral. So it's the idea that you can have a multilateral agreement, but really only among the countries that agree with each other. And you don't hear this word used anywhere else except at the WTO. And in fact, I spoke with the Irish trade minister earlier on who had a good insight into how conversations are going.
He said there's a lot of pessimism around. And for example, on the e-commerce tariff moratorium extension, which is being held up by potentially India, Indonesia and maybe South Africa, he said that what will end up happening if these countries don't agree to extending the moratorium is that you will get a plurilateral agreement with all the other countries that do and that these three or four countries will be left out. He said that would be a shame and it would be a very difficult decision to make and he hopes it doesn't happen. But that's essentially what he was hinting would happen. And there you have it, a split right down the middle with some holdouts.
And they're not getting the the concessions that perhaps they would like. And the other countries just banding together and deciding they're not giving those concessions. Speaking of electric vehicles and subsidies are from the president. You talk about the national security risk to the US auto industry. We've obviously seen subsidies from China when it comes to EVs.
You talked about this race for the subsidy race. Brazil talked a lot about this, saying it's the elephant in the room. Well, those kind of countries, what are they going to do to remedy remedy that? Is there going to be, you know, trade remedies to try to combat some of these subsidies? I think the answer there is that they are going to continue subsidizing their people at least as long as they get re-elected again or as long as they need something else. And don't forget, they're also, you know, in conjunction with the WTO meetings that are happening, they're also conducting negotiations on free trade agreements. So India, for example, right now is an active discussions with the U.K., with Australia, with the European Union on
free trade agreements. Now, none of them have actually come to a conclusion. There have been several rounds of negotiations with each individual bloc or each individual country.
There seems to be stumbling blocks. I spoke also with the Indian commerce minister earlier, who arrived late because he was actually campaigning with Narendra modi in India for likely elections in April. He maintains that all of these things are separate, that they shouldn't be combined. But, of course, we know that they're combined. You can't negotiate a free trade agreement without coming to terms with some of the problems that WTO members are trying to come to terms with right now. And the director general earlier on today was very optimistic and said she hoped that there would be an agreement and that there would be what they call a chair is text at the closing ceremony this evening at 8:00.
Since then, and just in the last hour, we've been told that that closing ceremony has now been postponed until at least midnight tonight. They've got a long list of things to work through. Vonnie, appreciate the hard work over there. Thanks for joining us. Vonnie Quinn there at bloomberg in abu dhabi. Chinese tvs pose national security risks. That's why we are paramo.
This is where it's going. We've been talking about this for a while. This is where it's going. The fact that they're saying it's a national security risk because they're in your cars, they can see you. And what are they going to do with the data? And then they say we're going to protect American jobs. So which is it?
Right? Is this truly a national security concern, as we've seen with the chips, or is this something more in terms of protectionism? Well, it sounds a lot like protectionism. And what you hear, though, from Congress and we heard yesterday from Senator Hawley, he was talking about what's going on in Mexico. China is going in on Mexico big time when it comes to EVs. And his concern is this is a back door
for American consumers to get access to some of these Chinese electric vehicles. So one going around some of these national security concerns, but also these cars are being made in Mexico and they are pricepoint wise, much cheaper than the EVs the United States is offering. We'll continue this conversation in the next hour of Bloomberg Surveillance Whaley of BlackRock, Mark McInnes of the Committee for a Responsible Budget. I laugh because, you know, good luck finding one when you say sort of Credit Suisse Time brand CEO John Payton, all of that in the second hour of Bloomberg Surveillance. Up next, live from New York City on PC inflation day equity features -5.2% from New York.
This is Bloomberg. Inflation is not really in a last mile mode on its way to 2%. The inflation data is going to get much more bumpy. And if anything, I think we going to see this back and forth. The data can switch quite rapidly, which in turn can have a rapid effect on financial conditions. The Fed is beginning to open the door
for a change in policy. This is Bloomberg Surveillance with Jonathan Ferro Lisa Abramowitz and Annmarie Horden Hern. The second hour of Bloomberg Surveillance begins right now live from New York City this morning. Good morning. Good morning for our audience worldwide, this is Bloomberg Surveillance alongside lisa ravitz together with emory horton. I'm Jonathan Ferro.
You're equity. The s&p pulling back by 0.2%. We can talk about pc. We'll do that in a moment. The inflation data about 90 minutes away. We could talk about Washington, d.c. avoiding a government shutdown for now. That's good news. But we should probably talk about this protectionism and electric vehicles. The very fact that the president of the
United States believes the Chinese face could pose a national security risk. If that's the case, you consistently put that push that through. What then is the logic behind tick tock? What then is the logic behind a whole host of other things? We've already seen this with certain chips. Now we're seeing it with this new
statement out with respect to electric vehicles. The next paragraph, though, of course, is talking about protecting U.S. jobs. We've been waiting for this for quite a while. Let's be clear, We're still waiting for the policy. So this is why the policy is currently
it's 25% tariffs on Chinese face. Throw in another 2.5% on top of that for the tariff, the tax duty on top of an imported vehicle into the United States of America. How much higher is that number going to go? Well, exactly. And who's going to buy a car when there's a 25% plus tariff on them? So potentially we could see the number go higher if they want to extract more tariffs when it comes to Chinese goods. What we know now just from the president
is that they are announcing actions to ensure that cars from countries like China don't underscore national security interests of their directing the Commerce Department to conduct an investigation. What do we get at the end? Investigation is the big question. But to Lisa's point about national security, we've seen this administration really ramp up their concern about national security in China. Remember the cranes at the ports? That's now a big issue for this administration. If they're not going to allow Chinese cranes at ports or don't want to welcome, then why would they allow Americans to get in the car? But then the big issue, of course, is American jobs. What is this industry going to look like
in 5 to 10 years? We talked to a lot of new street research about this early this week. Whether this whole industry would descend into just a series of state sponsored national champions protected by massive tariffs to prevent competition from come again. And I'd ask this question this morning as well. Is the market struggling because of Chinese competition or is the TV market in this country struggling for other reasons? It's a great point, especially because a lot of people will say that actually if the cars were cheaper, you'd have greater EV adoption.
So a lot of people who are for this transition say you allow everybody in, you get to where you're going to go much quicker, but you don't protect necessarily U.S. nationals, which is, I guess one of the main issues. But China has the biggest hold because they have the ingredients it needs to make an EV. They have the access to the raw materials in 85% of the processing to make that battery. When I talk to people in the commodities world, they say China's long game isn't just selling the battery to the United States. It's saying you cannot have this battery
unless you bu
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