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This is the Bloomberg Surveillance Podcast. I'm Tom Keene along with Paul Sweeney. Join us each day for insight from the best in economics, finance, investment, and international relations. You can also watch the show live on YouTube. Visit the Bloomberg Podcast channel on YouTube to see the show weekday mornings from seven to ten am Eastern from our global headquarters in New York City. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen and always I'm Bloomberg Radio,
the Bloomberg Terminal, and the Bloomberg Business App. Drag ourselves back to the FED right now? Julia Cornado's perfect to do that. President of macro Policy perspectives a major duty at BMP Perry Bay in the trenches of the financial crisis. Is well, Julie, I've gotten off the beat. Does the economic data this week?
Game change? A data dependent FED?
Probably? Game change is too strong because they're meeting next week and we already know that they're not going to do anything, but they are going to give us some guidance. They are going to give us a new forecast, and they're going to we'll get a press conference, and so it might help set the tone as to you know, when we heard from Chaer Powell last week, he said, it just needs a little bit more, just a little bit more progress to confirm they're on the right track
and build their confidence before cutting rates. That doesn't sound like a very high bar, but if we get a setback in inflation, he might sound a little you know, more on the stern side us versus on the hopeful side.
And now your inflation report for the day, and that I followed carefully. The loadstone of my house, which is a price of dog food. You know what it costs you what it cost to do vet Bill and Kennell fee up with a proper fancy upper east side dog food has gone from twenty eight dollars to forty four dollars over a good five to six pandemic years as well. Juliet Coronado an update from doctor Coronado on the CPI.
Look, we have made a lot of progress, but in the first quarter of the year we often get some firmer prints. We saw that in January. We are going to see probably a little bit more of that tomorrow in the February report. We're looking for a point three on core. That would still bring the annual rate down a couple kits, but it would lead the three month annualized rate up, So it would be kind of neither
here nor there. I think in terms of the FED, it would not be particularly worrisome because you know, year on year, we're still making progress, but it would all also say there's no rush. And then you take that with the Friday employment report. You know, I think that's going to matter more Tom, the the jobs data. If that shows signs of you know, the perfect goldilocks labor conditions are starting to cool off a little bit, that might give the FED more urgency versus if that continues.
And I would say Friday's employment report it was a mixed bag. You know, the jobs number was strong, lots of downward revisions, and a pretty notable uptick of the unemployment rate. So you know, I think they're kind of in, you know, where we're getting closer to where those risks are getting balanced.
And we'll talk about this on my podcast out now, Single best idea look for that.
Later this afternoon, I'm going to talk to.
Doctor cornetto about annualized three month annualized twelve month annualized, six months annualized.
This, I know is foreign to you, Damien. Annualized is very analzed thing.
Well, here for me show I mean, for me, it's not just about it's not just about inflation in the US. It's about inflation abroad. I mean, this week we also see Brazil, Germany, India. I think at the end of the week we see France, Italy, Poland. I mean, Julia talk to us a little bit about inflation dynamics outside of the United States.
Well, that's an excellent point. I mean, we have seen progress globally, and you know, it's sort of widely thought that China is now a disinflationary force, given how much how lackluster their growth is and how much capacity they have. So globally, you know, we are actually in a much better place than we were this time last year. And it is across you know, across regions. So again we're not back down to pre pandemic, but we're certainly moving
in the right direction. And most central banks, not just the FED, with the exception of the BOG of course always the outlier, but ult central banks are considering moving off a very high spot rate. So that you know in acknowledgment of some of this progress.
Well, Julia, we also see inflation data out of Sweden on Wednesday, and as we know, the RIX Bank might be the very first developed market central bank to move. I think the market's present pricing is something like a sixty percent probability of a move by may you know, forget about inflation though, I mean you mentioned Japan. I want to talk about Japan and what we're seeing in Japan ahead of this March nineteenth meeting. What do you expect there?
Well, you know, look, Japan has been both kind of gradually pivoting away from its ultra easy stance, but very very patient in doing so. So yeah, so, so you know, will we will we actually see a move? I am not the Bank of Japan expert. I think it's you know, they're going to keep evolving and rotating. Whether this is the meeting, that's that's I'm certainly less component to put a stake in the ground on.
That, right, Julie.
I take it back to the data this week in retail sales, the consumers sixty eight sixty nine seventy seventy eight percent in my household of GDP is is well, tie in your GDP call right now with the actual retail sales statistics three month annualize that we've.
Been seeing, the consumer is buoyant. Am I right?
Well, we saw some retrenchment in the January retail sales. Remember we saw a decline in core retail sales. I would say consumers have really kind of gone back to their pre pandemic norms in the sense that they're spending. They've got jobs, they've got income, and they're spending. But what we hear, what we see in the inflation data, what we hear anecdotally the Fed's Beige Books certainly shows it right right. The consumers are price sensitive again. They want to deal, Tom, they want to deal.
Okay, Julie, I'm running out of time. I don't mean to be rude, but the it's root Monday in RESI, doctor Cornado, is you're coming in with like a two percent real GDP and you pop on disinflation and all of a sudden, are you modeling out a subpart nominal GDP?
You know, Actually, we're kind of optimistic on the productivity side of things, so we actually do think that this productivity rebound is not just a one off that it's a better trend this cycle. So we've got GDP running around two percent with a FED funds rate at five and a half percent. That's not too bad, right, And it's also the beauty of it is that it's non inflationary.
So this is solid growth that isn't necessarily inflationary that brings nominal GDP slowly gradually back down to the four and a half five percent zone, the sweet spot where the Fed wants to see it. I think that's where we're heading in the first half of this year.
Yeah, I was watching the Oscars last night, Julia, and the answer is, nobody's on speaking terms.
Are you in Constance Hunter? And speaking terms? Is it working out at macropolicy?
And I speak all the time? Really, we taxed, we speak, we zoom, we do it all Tom all the four Very good.
I saw a Constance Hunter with the Consul on Foreign Relations the other day. Good to see macro policy perspectives out on the streets of New York.
Julia Coronado there right now, and this is great.
It's sort of like the week after the employment it's a little less there's some economic data this week, but it's time to just like reassess the markets.
We did that with Brian Nick, with Francois Trahan and now joining.
Us Michael Purvis of Tall Back and as well Damien's got You know, folks, you got to see this in the studio. You really can't see this on YouTube, but you know, it's like Blomberg Business of Sports. You're worse than Scarlet's bring in like thirty pages of notes.
I do, and I highlight everything. I'm a very big young The only note.
I have is my coffee and donut message. There go, Lisa, thank you. I mean look, I mean it's like Lisa's.
Taking a photo here for social of your When are you doing this during the weekend?
I mean no, Actually I tried to wake up early on the Monday morning. Okay, have a cup of coffee, come in early and get ready to care.
You're building in purpose.
But I'm talking to the architect from Columbia first, I mean, Michael Purvers. How many people do we have a studied architecture in school? What in God's name did they do to Central Park South? They got billionaire's row. You get this gorgeous tapestry in Manhattan like Paris? Yes, and instead we put six seven, eight tall pointy skyscrapers. So Ken Griffith can wave to me, yeah, we destroyed the Manhattan skyline, right.
Do you remember when the Aol Time Warner Building was being built, a huge controversy. Look at that building now compared.
To those right buildings building, the.
Empire State Building is now looking cute, right, and the Christier Building.
I look in promortion.
But to you, seriously, to you that have really studied the art of this of architecture in Columbia, is the solution that we have to build ten more of those tall, ginormous skyscrapers to balance it out.
Apparently someone in the city government decided it was you know, I guess it brings in a lot of money and it pays other bills.
But I think, yeah, no, I mean, look, you know, we could talk about architecture all we want here, but for me, it's all about the architecture of financial markets. And within the architecture tom is volatility, which is you like that? So I mean look for me, I mean I look at volatility, but in all its forms, Michael, as you do. You know there's fxvall which is really really low. You've got equity ball and equity ball appears
to be ticking up. And during the break we were talking a little bit about some of these ETFs, these buy rite ETFs, these these kind of vol embedded ETFs. I wonder if you could talk just a little bit about what you're seeing there, the flows that have been There's been a lot of flows going into that type of product. How do you think that's impacting market? Is that suppressing ball of current levels?
Well, I I think it does until it doesn't, right, But you know, just as zoom, you know, step back for a second. If you look at the rate of cash equity volumes over the last fifteen twenty years, it's been flat. If you look at the rate of option at like just S and P options or all the options, it has been growing eight or nine percent every year, and then over the last couple of years take that up to you know, twenty five thirty percent. It has
been just extreme. And when you have this huge rise of derivatives layered on top of very static cash volumes, you're going to get weird distortions to market structure. Yeah. There, and you know it was just when it was it
four years ago, twenty eighteen. Oh my god, six years ago, Jesus, time flies where you had the XIV that shortfall ETF famously implode, and you know the Vicks the short squeeze there, the short of the short if you will, you know, it drove the VIX up to like, you know, forty six in a heartbeat, right, And I think with all these products you have to be aware of them. Some of them are actually pretty don't have as much of an impact on market structure.
So I mean, can it happen again? We were talking about the dispersion trade. I mean, what would it take to get the Vics above twenty?
Well, I you know, probably it starts that, you know, the dispersion trade just you know, it's been working great for the last year and a half.
It looks what is that for audience?
Yeah, yeah, so.
Sorry, you know sorry.
The dispersion trade.
Is well, basically, it's it's it's it's it's a trade that did some option traders put on where you're long a basket of single stock volatilities and you're hedging that against index volatility, right, and and everything works great because you know, like over the last year, you know, you think about it like you have a huge dispersion of returns. Right, you had the Magnificent seven doing seventy five percent, you
had the SPX equal waight up fourteen percent. That's a that's a recipe for like one stock or one sector is going to do well.
I want to rip up the scripture.
I just put this out on YouTube on live chat because you're expert at this. Michael Purvis on the market structure, the distortions of market structure.
What is the market structure of bitcoin?
Oh? The uh well, I.
Think you.
I was going to make equip that, you know, bitcoin going rallies to fresh time highs as it just does, doesn't make a sound, you know today, whereas you know just a few years ago, you know, would have famously broke twenty thousand, and every institutional investor had to have in a view on it.
Is it a market structure or is it contrived?
I think it's contrived personally. I I don't really way too far into the debate, but I do think there's a religious element to it, whether it's it's kind of binary, I don't I don't, you know, I don't really write on bitcoin other than pure technically, and you know, look at the technicals have certainly looked better here, whether it really you know, there Tom right now, there's there's probably a whole bunch of biotech stocks out there that you've never heard of that have gone up three acts in
the last six months or whatever. You know. Like I, I do wonder whether whether bitcoin as a mainstream ass a class that thesis is is is really behind us. Right, So maybe it goes to two hundred thousand, but does anyone really care?
Well, Michael, I mean, you know, I'm an emerging market fixed income guys. So because I cover fixed income, I like to look at foreign exchange. So let's talk about FX fall. And you know, for me, when I look at FX fall and I look out at you know, you know tenors you know called risk reversals that look at six months, one year, it's all about euro dollar that's the center of gravity in the FX universe. But over the short short term it's been a lot about
dollar yen. I wonder if you could tell us a little bit about what your thoughts are heading into this week, heading into next week with the BOJ what's going on with dollar yen?
Yeah, Look, I mean the the end certainly has been one of the more interesting cases in the correct As you know, Damien one of the more interesting FX pairs to be looking at. And I would also sort of note if you looked at goldfalls finally started picking up with his things, and there is a correlation. You know, you look at dollar yen and you look at you look at dollar gold and those two and to map
together pretty well here. And I think, you know, certainly some of the gold bulls would argue that there is ah, there really is a It feels that, you know, look, you're not supposed to be with with with with rate hikes, still rate cuts rather still to come, but not coming that My god, Gold's playing.
Purvose expertise. Which is market structure?
Which is gold is central bank buying versus retail's disinterest. That's sort of the zeitgeist out there. What's the market structure of the Magnificent seven? Because they you know, they pulse on the Bloomberg folks might now Damien is doing math, purvis is.
Expert at this.
Lisa and I are just looking at the blinky red green trying to figure out if there's more red than green.
It's really scientific. Okay, what's the.
Market structure of Nvidia or apples, you know, disappointing.
Here are they working in an normative way?
Well, look, I mean I think, you know, broadly speaking for the magnificent I don't know what do you call it four these days? You know, But basically, I think after two or three years of massive valuation volatility and sort of trying to settle into the you know, where the long run interest rates likely to be, I think that process is largely behind us. So what I'm saying, Tom, is that you kind of followed the earnings growth. If the earnings growth is there in a cyclical stock, it's
going to do well. If the earning growth is better, it continues to be outstanding in nvidio it's and video will get bid.
Twenty seconds the Purvios SPX target here with this great one.
We've nailed it on that.
Yeah, well look, you know, I officially from December, I'm at forty nine hundred. I think, you know, fifty five hundred or even higher. I even think that if the if the earnings hold up, you could even at some point this year touch six k. You won't stay there, but I think you could touch it.
So there we go.
Do we get that on tape?
Richie.
We get that on tape Purvis with the Yardennis six thousand, Michael, that was great and international relations, and we've been honored Evangelist stent On with us recently on mister Putin. It pays to go with people that have decades of experience. Aeral Cohen is at the Atlantic Council and very quietly has put together a rezumi.
That is extraordinary.
You can go back to his book Russian Imperialism, Development and Crisis from just a few years ago to really get a foundation of his work on what we observe out of Moscow. Aeral Cohen, as simply as I can, what is the imperialism the Russian imperialism of Vladimir Putin?
Well, good morning. First of all, I'm a great fan.
As you know, Russian imperialism didn't start with Leazimir Putin.
Russian imperialism started.
In the fifteenth century when the Russians finally shook off the domination of the heirs or the grandchildren of Jengi's Han. They were occupied for over two hundred and eighty years by the Mongols. They were pretty good subjects.
They paid their taxes in pelts, in hers.
Of animals, they gave their wives and daughters to the occupiers, and it was the princess intermarried. So there was sort of a commingling of the Mongols and later known as the Tatars with the Russians. And then finally they shook them off. The Mongol Empire fell apart, and one thing they got from their occupiers is how to run a centralized state. And a lot of elements of the Mongol took from the Chinese were now in the Administrative government
DNA of the Russians. And they never stopped sits. So for many, many years, for centuries, they would expand and expand.
They captured.
The peoples of the Vulgar Basin, of the Eurals Siberia, and they built the largest country on Earth and now puts it decided to put it together after the Soviet Union.
Well, okay, let's Damien jump in here.
Well, I just wanted to know, I mean, like, we're talking Russia here. But you know what's interesting is we have an election in Russia that's coming up this week, right, and we have some interesting happenings, specifically regarding the Valdi's constituency and his wife and the role she's playing and how I believe they're trying to get people to show
up for the election at certain points in time. I wonder if you can just give us a little bit of color about what's going on on the ground within Russia.
First of all, Russia had two very brief periods of voting in democracy, and after that they reverted to this Taarist pattern. Whether it was a red saw his general secretary like Lenin Stalin. You probably remember Brezhnev, the guy with the eyebrows. And then so the democracy after the Tsarist regim collapse, the Emperor Nicolas.
The second eventually was executed with his family.
That lasted all eight or nine months, nine months under under Yeltsen, Putsin's predecessor, who appointed which it wasn't.
Really elected by popular will.
He was first appointed as a heir apparent, and then they organized the elections dismantled doctor Cole.
Just because of time, we got to get this in. I think it's really important. What is the size or.
Impact of the Navalni constituency within Russia on a percentage basis?
How big are they?
Oh gosh, nobody knows. First, second, it's small. Third, Sometimes miraculously, these events and these people have oversized influence. So I do believe that both my good friend buddysniaimself who was murdered in twenty fifteen, and Alixei Navili, who was murdered just now, will have an outsized influence on the Russian people in the Russian history, and one hundred years from now people will remember their names, probably will teach these
names in school. You know what's happening now is a sham. It's sham elections. It's just going through the motions to justify reappointment.
I got to squeeze in this one last question, doctor Coen, And it's simple. You get out a map, you get in a current. Saint Petersburg, you go west. Helsinki is a cup of coffee away, and Stockholm's three cups of coffee away. What is the accordances to Putin that Sweden and Finland have joined NATO.
It is a geopolitical failure of Putin, just as the war in Ukraine is Utsin was fat and happy is selling fifty billion dollars of natural gas, billions of billions of oil, lumber, timber, the usual stuff, the raw materials of Russia always sold for centuries, and now she lost this markets, all this blah blah about how they're going to be a part of the Global South, part of what greater China. It is propaganda for the Russian people.
In reality, Utsin created the hugest self inflicted wound for the Russian international Stin.
Got to leave it there, Doctor Cohen, Thank you so much, Eric Cohen, thought provoking in Russia with the Putin election coming up. Good morning everyone, Tom Keen and the headlines and newspaper report.
Of course, last night the.
Emotion of the oscars, Like you know, there were some night high points for me and some things where I'd like, really, jim I'm a huge Jimmy kimmelfan, so I thought he nailed it out of the park.
But let's be honest.
For Lisa Matteo, the apex, I say, the apex of the Oscars was eight twenty two pm.
Keola as ILOs kenosun.
Juntos beautifully said. You see he's not such a bad bunny.
Happy birthday, brother, Good ass ya, Thank you.
International films enrich our cultural understanding by broadening our perspectives of the world and each other. Here are the nominees for International Feature Film.
The Rock and then it was downhill from there. He got best tuxedo.
By the way, is well Lisa Mateo, way in here now the rock made in early you appearance and I thought that.
Was University of Miami grad.
Oh that's right, football.
Yeah, did you play football?
Did you tune in last night?
I was sleeping by like seven, it was still light out. That was a problem with his daylight saving thing. I totally agree, totally still daylight. But I missed that one, but I heard about it, so I went to watch go on to the rest.
I have to do that.
And I also saw a naked John Cena that kind of came out.
Actually, I got a note from many years ago. He's been a fan of the show. Really was dressed when he wrote the note.
Hopefully, well maybe not.
Some people here thought it didn't really work. Did you think?
You know?
I don't keep score, but for me, if I I guess was keeping score. I only saw that Netflix won one award and Apple got shut out.
Did you hear that?
Yeah? My god, that Comcast. Congratulations to Universal and mister Robertson.
The Comcast crew for having a act of that night. Let's get to you at the newspapers Lisa, what do you all.
Right, So we're starting with surge pricing coming to more restaurant menus. All right, So we have these technology providers they're pitching these services allowed restaurants to change their prices weekly, monthly, depending on demand. Remember Wendy's got in trouble that customers had this outcry against it because they tried to do They were talking about maybe doing something like this. But these technology companies, they're putting out the software. Some companies
are starting to see actually profits from this. The Wall Street Journal Cali Barbecue, they boosted its monthly delivery sales by fifteen hundred dollars by doing that. By adding this surge surge pricing, Dave and Busters are doing it. Some people aren't Apples. They're not doing it though.
Wait waiting a little bit longer to get your pulled porks now, which it's got to be healthy. IDs sit out there in the sun for a little bit while.
If you guys said brunch at the Breakers this weekend in Florida, you rang up. It was like seven hundred dollars for two people.
You know, your bloody Mary at the Breakers cost forty dollars.
There you go, right, Brooklyn making history. Yes, they have the first all electric residential building in New York City. So that means no gas stoves. The heating, hot water, that's going to be electric too. It's forty four stories, four hundred and forty units.
It has a rooftop.
Pool, it has a terrace, it has a GM retail stores.
Well, the apartments all electric.
Do you want to know how much it's going to cost a studio thirty five hundred dollars a month. We have a one bedroom, two bedroom going for about eight thousand a month. That's and a three bedroom eleven two hundred dollars a month.
There you go.
Welcome to New York, Welcome to Brooklyn.
Thirty seconds here right now, guest stover electric. You take my guest stove away?
Yeah, I get upset my mother. I was just going to say that my mom has an electric stove. She's been renting leasing a place down in Florida right now, and she cannot cook on it. She hates it's electric. She's out.
There's new ones. I guess I don't know, wicked, wicked old school. Of course, I know it's a hot thing.
You go, yes, okay, here we go. NBA looking to expand their europe options. Damon, you probably know more about this what I mean, but these are ongoing discussion between the NBA. You have the International Basketball Federation, the euro League. They're trying to figure out how to grow basketball over in Europe, right, So they've been talking about this, but for the first time, the NBA actually considering options that could exclude the euro League. So Sportico is saying that
could include a new standalone NBA europe League. I don't I guess it was more talent over in Europe.
That is that the I guess.
So, I mean, look, they are looking for more talent, and certainly if you look at the recent drafts, I mean, all of the top players are coming from Europe. But I think it's more about trying to expand awareness, not necessarily in Europe, but in Africa as well, in the Middle East and some of these other hard to reach places. And I think that might be the.
Basis for this. For this particular.
Monday, No, it was Oscar Oh, we forgot to talk about I am Ken or I'm just Ken, the performance by Ryan Gosling at the Oscars that yes, I saw the replay of it. He had the pink cowboy hat, the whole pink rhinestone studded outfit.
But it was really good.
But he was raving about it.
Yeah, yeah, they weren't suwer No Barbia well BHILLI Eilish, you know she did she did?
You know she did a Barbie song as well. Yeah, you're going to go back now and watch a rock for the fourteenth. So I am silver Tuxedo.
I thought that was a reach.
It was fan very handsome.
I love that.
I love it.
This is a Bloomberg Surveillance podcast, bringing you the best in economics, finance, investment, and international relations. You can also watch the show live on YouTube.
Visit the Bloomberg.
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