Inflation In Focus and A Shake Up at the Fed

the Strategic Petroleum Reserve. Shooting on the Michigan State University campus has left three dead, plus the NYPD arrest of the suspected driver in yesterday's deadly you hauled truck attempt Michael Barr. More ahead, I'm John Stadtower and sorts Jail and Brunson's forty points led the next to their first

win over the Nets in more than three years. That's all straight ahead on Bloomberg day Break, the Business news you need to sturn your day, and just one fifteen minute podcast each pointing on Apple, Spotify, The Bloomberg Business Appen everywhere you get your podcasts. Good morning, I'm Nathan Hagar and I'm kerin Moscow. Here are the stories we're following Today, we begin with the key inflation report that markets have been waiting for. January's Consumer Price Index is

due out at eight thirty am Wall Street Time. We get a preview from Bloomberg's Michael McKee, starting with the good news headline, Inflation is forecast to have fallen again in January, but that's because of base effects, the fact that it was higher last year at this time. The bad news is on a month to month basis, January

price is likely rose at a faster pace. Some things like gasoline and used cars rose in price, but the government is also rejiggering its seasonal adjustments of the weight it puts on various sectors that will give the CPI a statistical boost. Bottom Line, markets and the Fed will likely look through the report anticipating some reversion this month. The Fed doesn't meet again until March. Michael McKee, Bloomberg

Daybreak Right, Mike, Thanks well. We turned to the White House now, and it looks like President Biden is to pick a new top economic advisor. We get the latest live with Bloomberg Steve Rappaport, Steve, good morning, Good morning, Karen, and Nathan. President Biden is tapping federal Reserve Vice chair Lyle Brainerd for the job, with an announcement coming as soon as today, according to people with familiar with the matter.

As Director of the National Economic Council, Brainerd will have a prominent role as the administration shifts focus to the implementation of laws such as the Inflation Reduction Act. Her appointment to succeed ANYC director Brian Ds creates an opening on the Federal Reserves Board of Governors as the Central Bank continue continues its campaign of pursuing aggressive interest rate hikes. Live in New York, I'm Steve Rappaport, Bloomberg Daybreak. Okay, Steve, Thanks.

Turning to Europe, we're seeing wages in the UK rise more than expected. Let's go live to London and get the very latest with Bloomberg's You and Potts. Good morning, Good morning, Nathan and Karen. Average earnings in the UK executive bonuses rose six point seven percent in the three months to December from the previous year, ignoring the pandemic. That's the fastest place since records began in two thousands.

One the reading another sign of Britain's tight labor market will provide I'm edition to bankiving the policymakers too high rates again next month. The latest inflation data comes tomorrow in London. I'm your port spoon boo, day break you and thank you and Asia. Today, the yen is rising as Kazooheta is officially nominated to helm the Bank of Japan. Analysts say the move will likely pay the way for a gradual pairing back of the central bank stimulus program

and checking. The yen now is at one thirty two point oh nine against the dollar. Now, let's get to the latest developments on the China balloon incident. Washington and Beijing are wang whether to hold a diplomatic meeting on the suspected spying device in the coming days. Amy Morris has details from our Bloomberg newsroom in Washington. Sources tell Bloomberg News that Secretary of State Anthony Lincoln is considering a meeting with wangy, China's top diplomat, at a security

conference later this week. This would be their first face to face talks since the balloon uproar that led to a new spike intentions. Senior officials say they have nothing official to anounces b Lincoln had called off his trip to Beijing last week. After the US identified the alleged Chinese spy balloon hovering over US airspace. The U says that balloon, which was shot down off the coast of South Carolina, was part of a global surveillance system. Since then,

three more objects have been shot down. In Washington, I maybe Morris Bloomberg Daybreak, Amy, thank You. The U s military says it's recovered significant debrief from that suspected spy balloon, but there's still a lot we don't know about the other objects taken down over the US and Canada. That's according to Republican Congressman Dusty Johnson of South Dakota, who sits on the House China Select Committee. He wants to know more about China's motivations. Are they trying to probe

our defenses? And is this the kind of traffic that's always been there and we're just doing a better job of catching it now, or is this a new and perhaps more nefarious stage in the relationship between US and and whoever is sending them in. Republican Congressman Dusty Johnson spoke at our Washington correspondent Joe Matthew on Bloomberg Sound on Catch the Show. We days at five pm Eastern on Bloomberg Radio, or listen anytime on demand wherever you

get your podcast. Let's take a look at the oil market this morning. Karen Crude is trading lower on news at the White House plans to sell more oil from the Strategic Petroleum Reserve. We get the story from Bloomberg's Charlie Pellett. Delivery is ar estimated to happen between April and June's sources say the non emergency sale will amount to twenty six million barrels of crude, and as part of the congressionally mandated sale the lawmakers approved years ago.

For the current fiscal year, the Energy Department has sought to stop some of the sales required by twenty fifteen legislation so it can refill the emergency reserve, which currently has about three hundred seventy one million barrels. After this latest release, the reserve will dip to about three hundred forty five million barrels in New York. Charlie Pellett, Bloomberg Daybreak. Okay, Charlie,

thanks checking all prices right now. Nimex crudes down one point three per cent, or a dollar six at seventy barrel Brent is down nine tenths percent at eighty five dollars eighty cents. Well. In corporate news this morning, Navan, we have more job cuts coming at four The automakers said it will eliminate about thirty eight hundred positions across Europe. The company's also trimming jobs. In the US, CEO Jim Farley targets three billion dollars in savings to help finance

a shift to electric vehicles. And in India, billionaire Katama Donnie's flagship firm reported a profit in the latest quarter on the back of improved revenues, even as the company grapples with the fallout from a short seller report, which has triggered to sell off that's swiped out a hundred twenty seven billion dollars in a Donnie's market value. This is Bloomberg. It's forty three degrees in New York. We're going to get into the fifties today, a high near

fifty under mostly sunny, breezy sky. Clouds roll in tonight. We'll get down to the low forties. Time now to take a look at some of the other stories making news in New York and around the World with Bloomberg's Michael bar Good morning, Michael, Good morning Nathan. Three people are dead and five others are wounded after a mass shooting on the campus of Michigan State University be An East Lansing late last night. Ms U Department of Public

Safety into ram. Deputy Chief Chris Rosamond says the suspect died of a self inflicted gunshot wound. Our hearts are with those who have been affected by this senseless act of violence. Giving an update like this is never easy. As a father, I can only imagine how parents are feeling right now. Deputy Chief rosman says. The forty three year old suspect has not yet been identified and was

not a student or employee of the university. New York City police are trying to learn more about the sixty two year old man who authorities say drove a U haul truck, swerved onto sidewalks, and plowed into people in a Brooklyn Bay Ridge neighborhood yesterday. One person was killed and eight others were injured. Police eventually arrested the driver after a chase. His son identified him as Wings Sorp, a troubled man with a history of harmful behavior and

stints behind barns in my d Commissioner keeaching Seoul. At this time, we have no indication that there is any terrorism involvement in this incident. So Or was living in Las Vegas, where he was convicted of stabbing his own brother in Yesterday's attack. Comes as a prosecutor told New York jurors that the man convicted of killing eight people when he drove a van onto a busy Manhattan bike path in seventeen should be executed. It would be the

state's first in six decades for the federal crime. The same jury that convicted Cipulo Sipop will hear testimony from the relatives of victims throughout the week. Around thirty six thousand people are confirmed dead in the earthquake that devastated Turkey and Syria, and aid workers fear the final death soul could double that any rescue teams have abandoned the search for survivors. However, humanitarian aid continues. New York City's

third legal cannabis dispensary open yesterday near Union Square. The Union Square Travel Agency is an effort involving the nonprofit Dove Fund. More than fifty percent of the profits will go to the Doe Fund, which provides housing and jobs to formally incarcerated or homeless people Global Needs twenty four hours a day, powered by more than twenty seven hundred journalists and analysts and over a hundred twenty countries. I'm

Michael bar This is Bloomberg NA. Thank you, Michael our Bloomberg Sports Update Now it's brought to you if I try stayed out. Good morning, John Stash, Morning Nathan. But a long time since the Knicks beat the Nets. Got to go back to January of pre COVID was after the day Kobe Bryant passed away. Since then, nine straight wins by Brooklyn, all but two were in single digits at the Guard and Knicks finally beat the Nets one oh six. Jalen Brunson again led the way forty points.

He shot fifteen of twenty one made six of nine three pointers. Is Former Villanova teammate Josh Hart has already making an impact with his new team. Second game as a Nick, Hart off the inch for twenty seven point Spencer Dinwood. He led Brooklyn with twenty eight. Both the

Knicks and Nets play tomorrow. It's the final games for them before the all Star Break kind of amazing that Brunson is as of now not slated to play in the All Star Game, but Boston's Jalen Brown is currently injured may need a replacement as pictures and catchers get ready to report and spring training the Mets tomorrow the Yankees.

On Thursday, MLB announced the ghost runner staying put. The role was put in back in twenty The COVID season has remained will now be permanent, although only in the regular season extra innings starting with a runner as second base. Andy Reid just won a second Super Bowl, was asked about retirement. Look in the mirror and I'm old. Um My, my heart though was young. I mean, I still enjoy

doing what I'm doing. I got askt fifty times here and finally I just go whatever, man, you know whatever, And that's a that's a good friends is a good friend. So I mean, he's probably telling me to get my tale out. I'm too old, but I'm good with what I'm doing right now. Blazer had reported on Fox that Read would retire. Super Bowl ratings app the audience averaged

a hundred and thirteen million third most watch. John Stashower Bloomberg Sports Live from coast to coast, from New York to San Francisco, Boston to Washington, d C. Nationwide on Sirius, xamp, the Bloomberg Business app, and Bloomberg dot Com. This is Bloomberg Daybreak. Good morning. I'm Nathan Hagar on a morning where investors maybe holding their breath just a bit while

we wait for the latest reading on inflation. The Consumer Price Index for the month of January is due out at eight thirty Wall Street time, just a little more than three hours from now. Ahead of it, we're joined right now by Michael Houston, the chief market analyst at CMC Markets. Michael, it's always great to speak with you.

The consensus when you check the Eco go function on the Bloomberg terminal, is calling for another drop in year over year inflation, but pretty significant jump when you look at the month to month number. What kind of market reaction could we see if we hit that consensus this morning? I think I think the consensus, Nathan, is pretty much priced in. I think what's not priced in is the mismatch that we've seen between bond markets, the dollar, and

stock markets since that payrolls report hit the tape. Cast your mind back to the third of February, which is obviously when we got that bumper payrolls number. UM two year yields have gone from four point zero three percent to four point five. The dollar's gone up. So it's the NEZTAC and the SMP five, So you know, there is a little bit of there's a little bit of a divergence there. They both. They can't all be right. Try and get my words out. They can't all be right.

So either the stock market is right and we're heading for the soft landing, or the bond market is right and the Fed is going to continue to hike by much more than the stock markets are pricing in. I'm of the opinion that the warm weather or the warmer weather that we saw in January is likely to see much more resilient and inflation data, much more resilient jobs data, and later this week potentially much at more resilient retail

sales numbers. And that's slightly to mean that the federal reserve is likely to hike by at least another fifty basis points between now and the summer, and the market is not pricing that interesting because we have heard from a number of analysts that we could see at least two hikes from this Federal reserve before things start to pull back, either at the end of this year early next. What has you thinking that that the market hasn't fully gotten that message just yet, just just the behavior I

think of the SMP and the nastac um. You're looking at a US two year old and four and up between four and a half and four and three quarters percent, and certainly I think there's potential for yields to go up quite a bit. The FED funds rate it's already pretty much where the two year yield rate is. So if you're working on the basis of a terminal rate of around about five point to five, and certainly an awful lot of the narrative from a number of FED

speakers suggests that's the case, then why would you buy um? Uh? You know, US US equities? They are already very fairly highly valued, and the earnings numbers, profits growth isn't particularly great relative to their valuations, So why are we heading higher when it comes to US markets? It doesn't compute. There's an awful lot going on at the moment in these markets that suggest to me that there's a slight disconnect and what stock investors are looking at and what

the bond markets are looking at. What's the possibility Michael, that we could see a harder than expected inflation reading And if we do, what could that mean from markets? I think it's quite high. You're probably going to enend up with a little bit of egg on my face. But I think that certainly core prices and I think it's core prices we need to be focused on yet, Nathan. Core prices could come in maybe potentially between five point six and five point seven. I don't think we're going

to get seen much significant softness there. Headline numbers completely different story. But we're not looking at headline numbers anymore. So we're looking potentially not point five, not point six excluding food and energy, potentially an upward revision to December and five point six five point seven on the annual basis, And I think that could potentially send us higher and knock the NASTAC and near some feedback down again. And if we were to get that scenario, would that be

a blip? Do you think in what we're seeing in inflation? What's the trajectory that we're looking at for inflation right now? The trajectory is still for a slowdown in the pace of inflation, but it's really about um the pace of that trajectory. I don't think anyone disputes that inflation is coming down. It's just that I think markets would like to think that it will go it will come down as quickly as it went up, and I'm of the

opinion that that is unlikely to happen. You've only got to look at what wage growth has been doing, only not only in the U S but here in the UK. I mean, average wage growth in the private sector here in the UK is at seven point five percent. Oh yeah,

cp I is over ten. But that is going to filter through going forward, and certainly I think as we head into the summer, wage growth is going to remain sticky and that is going to keep the FED, I would suggest, quite hawkish over the course of the next three to six mons. This is Bloomberg Daybreak Today, your morning brief on the story is making news from Wall Street to Washington and beyond. Look for us on your podcast feed at six am Eastern each morning on Apple, Spotify,

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I Heart Radio app, and on Bloomberg dot Com. I'm Nathan Hager and I'm Karen Moscow. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak