Morning, good morning. This is bloomberg surveillance. Equity futures unchanged on the s p. Alltime highs off the back of a hotter than expected cpi report. Theres a difference between what economists expected and what the market was priced for. Making absolutely no sense whatsoever. Which one was it. Basically youre having people justify the story at a time when there are more than half of the components of the dutch them coming in hotter than expected. Theres a lot of seasonal issues with the fact prices reset. They can explain it away because the fed wants to cut rates. On the flipside it doesnt make any sense for the fed to cut rates if you see a reacceleration in goods pricing. If you see that in the other components of this index. Is it a fed thats going to cut rates matter what or is it stickier inflation people have to grapple with . Bank of america saying this, Service Inflation good surprise. You can take comfort from the discomfort of the latter. We are still on the down trend but the risk around that story with clearly shifted which is if we had been pushing out the first cut. This is what the fed looks at when they have their forecast. Shes now penciling for pce when they get ppi later this week they will properly make those forecasts put pce is coming march 29 after the next fed meeting so what clues will beget after the next fed meeting. Thats when people will have more conviction on where this story is going. Jonathan retail sales, ppi on deck. Annmarie when you look at the lisa when you look at the credit card spending data you it is conflicted. It is 20 narrative time and the narrative people want to choose as stocks go up. Jonathan stocks went up big time in the session. Need to talk about whats happening in washington dc. A vote in the house on potentially banning tiktok or pushing them to sell it. Annmarie it looks like the house this morning will vote yes on that bill, they are bringing it up under suspension of rules and that it goes to the senate. We are already hearing a lot of suspicion from senators theres parts of this bill they do not like. What does it mean for other companies that can be in similar situations . Its very fast right now. That momentum may slow in the senate. The president of the United States as if it passes through both chambers he will sign it. We heard from the Chinese Foreign ministry and they said they are bullying and this will come back to bite them already potentially we could see this becoming a bigger geopolitical story. Jonathan meta cannot get into the country, google tried and failed. Twitter, facebook and youtube are all banned. This captures the u. S. China relationship over so many different dimensions. It exposes the inability to deal with it and it also explains why there will be this tension between these two countries. If xi decides the u. S. Version of tiktok is banned, it is banned. What if someone tries to do that stateside . It takes ages. Lisa you might say thats a feature, not a bug of democracy. Biz a question of how we counter a nation but plays by different rules with different sets as they operate in this country. When you Start Talking about tiktok our minds mightve gone to the same places in terms of what does this stay about our country and young people as former President Trump said will go crazy if they have their tiktok taken away from them. I think thats an exaggeration. I do think the fact and you pointed to this a Pew Research Center said about 43 of tiktok users say they regularly get their news there. About one in three of all adults younger than 30. Annmarie weve seen a lot of these individuals at the behest of tiktok call the representative and say dont vote for this. You brought up a point about the fact its taken so long. Almost to the day one year ago i wrote about what they told tiktok which was sell or prepare for a band. That was one year ago. This has taken years to develop. It kind of went silent for a while and behind closed doors using lawmakers continue to want to get this legislation through and it took them by surprise how quickly this is about to hit the house floor. Jonathan getting your day started this wednesday morning totally unchanged on the s p, in the bond market the tiniest bit of price action up a single basis point on the 10 year. Coming up this hour, the equity rally shrugs off another hot cpi print. Kate wallace with the house set to vote on a bill that could force the sale of tiktok. David rosenberg on the state of the economy with the fed decision. The s p 500 shrugging off another hot cpi print setting another alltime high. She says fed cuts look further away. The key risk, sticky inflation. Unwinding momentum with crowded positioning and some key names. Great to have you with us in new york. How did you explain yesterday. It was wild. To be honest with you. We have continued to see equity markets moving upwards. If you look at momentum signals, momentum positioning it is at levels you saw in the tech bubble which to me is a little frightening. Valuations are high and the evidences, it seems like the equity market does not care. Lisa the fed says that they want to cut. How much is that underpinning the momentum trade that keeps on keeping on. Its a concern they will not renounce cuts because if inflation does come in higher. What does that mean to cut rates. Lets say it went to 4 . In the sense that if you have higher inflation that will push prices higher. And you wont have that policy entity to be even harder to stop that kind of increase in prices. What about the Market Dynamic makes you think markets are waking up to that. And stocks will not. Shorter term bonds have actually started going up in yield a little bit more. And the twoyear german bonds has been following on the short side so it seems like the short end of the curve is waking up but whats always been interesting to me is this been a big disconnect for the equity move. And a fixed income has been reacting to those cuts. Equity keeps soaring higher. So its not concerned yet. Thats why point out the crowding potential and the idea you have increases in certain names so people are starting to get nervous about that concentration. Jonathan how are you positioning about that . You are seeing different asset class returns. You still see positive correlation between stocks and bonds and higher bond volatility. To us what that means is inflation is still driving prices and whats going on is inflation like moves you are not seeing that classic risk off relationship between stocks and bonds so you are seeing disparate positions and youre seeing higher for longer things look great. Looking at the screen thinking about where weve been, gold is up, krudys sideways. What signal can you take away from the commodity market . What we have seen that has been interesting is disinflation in the agricultural market. What makes me nervous is thats the one thing people of been focused on and if you see that start to turn and we see goods prices and Commodity Prices turn more on the upswing the met inflation narrative gets more room to run. It has been tricky. Its very range bound. Some of the commodities have been an outsider which is been up in the month of february. Annmarie does this really matter . You have an asset we initially were shocked because its valentines day it turns out it was much more of a supply chain story. But coco matters because its one of those its 27 , its could be pushed on effect through supply chains. Theres a huge dispersion. Corn is way down and cocoa his way up. So it goes to johns point is you get to pick the narrative you like. Things are going up, if its oil, you we dont know yet. Annmarie is this solely a china story developing in the middle east . Theres been continued volatility in oil prices based on the narrative and geopolitical issues in the middle east. They havent had a huge impact on prices yet. There continues to be starts and stocks when you see prices get a little bit of momentum. In general they havent broken out based on political moves. This is quite common in thats one factor that impacts prices. Lisa taking a step back there is a thesis that seems to be underpinning some of the rally we are seeing in equities. Even if bond yields go up. What youre seeing is strengthening the economy and may be a little but of warmth and the inflation rates really stems from that growth. At which point our yields problematic for stocks that have seem immune to tire rate so far. A lot of people dont want to say this but it doesnt sound fun, it seems like higher yields is less restrictive than people wouldve thought. Obviously everybody wants lower yields because its tougher on middleclass and people trying to finance and deal with other issues in terms of business practice. At the same time it doesnt seem to be that out of the normal for longerterm yields in for a short periods of time it looks like the equity market is Still Producing growth earnings and we are navigating these higher rates despite the fact we dont like them. Jonathan you stand short in the bond market . We are still seeing those signals in the bond market. But it has been interesting seeing long signals in january. They quickly turned around. I do think theres room to move if we see Inflation Numbers coming up. Retail sales. Jonathan katie its good to see you. Your twoyear this morning. On the tenure up by single basis point. Stories elsewhere, heres your bloomberg brief. Former President Donald Trump secured the republican president ial nomination with primary victories in georgia, mississippi and washington. A rematch between trump and President Biden is now set for november. He refrained from his usual Victory Party and instead posted a video statement on social media saying we are not going to take time to celebrate. We will celebrate in eight months when the election is over. Ken griffin says the fed should move slowly lowering rates so they dont have to reverse course later. Speaking at the conference, griffin said causing and then changing direction back towards higher rates quickly would be the most devastating course of action to pursue. The feds next policy decision is due next wednesday. Boeings is growing wider. Asking them to stop building the max 10 jets. Some of the biggest carriers gather the conference tuesday. And discuss similar issues for quality concerns. Boeing stock is down this year. Thats your bloomberg brief. How much Higher Affairs going this summer off the back of this . You talk about the capacity concerns, lets talk about getting to colorado. Jonathan that story coming up later this morning. Up next the house voting on a tiktok band. Want to make it something not a fearful social media platform but one that is very positive and in order to do that we have to see the divesting of it from the chinese government. Good morning. Get help reaching your goals with j. P. Morgan wealth plan, a digital money coach in the chase mobile® app. Use it to set and track your goals, big and small. And see how changes you make today. Could help put them within reach. From your first big move to retiring poolside and the other goals along the way. Wealth plan can help get you there. J. P. Morgan Wealth Management. Really quiet price action to kick off wednesday morning. Going nowhere on the s p. The euro, 1. 0929. Yields are higher by a single basis point. Under surveillance the house voting on a tiktok band. What we here are the threats being posed to americans by the Chinese Communist party through in this Case Companies in this case more specifically tiktok. We are not there to we want to make it something that is not a fearful social media platform, but one that is very positive and in order to do that we have to seek divesting of it from the chinese government. The house set to vote today on a bill that would force tiktoks chinabased Parent Company to sell the app. The bill needs a two 30s two thirds we anticipate strong support in the senate likely to back the legislation is passed easing connection to send President Biden a bill which is promised to sign. I want to start with former president. Blowing up agreement on capitol hill before. Why is he struggling to blow up this one . Bipartisanship has been the key to china u. S. Relations for five or six years now. The National Security concern of the tiktok application and what it means for surveillance back into china is a concern of three or four years now. The administration has worked with the hill and legislation telling congress it needed broader authority. This is that broader authority. Annmarie china has mentioned what they plan on doing. They say its inevitably going to come back and bite the u. S. Itself. China has pointed to a potential tit for tat. Do you expect china to do something in retaliation . The question is what they can do and what they will do. As the u. S. And china work through a transition and their relationship bid ministers and calls it competition. Its competition across the front on many different platforms. Every day. As you saw coming out of the successful meeting when the u. S. And china reignited discussions on all levels. There still every day of sharp competition between the u. S. And china. Not just a worldview, but also how governments treat people. From the happy days of wto to a much more realistic relationship. Annmarie we hear from senators who are wavering a little bit. Talking about concerns and what the unintended consequences. Told congress they should be leading by example. Who do you think is not to back this . The people who wont back it probably fall into two buckets. People who are persuaded by the argument out of market. What a second group would be those working towards the election and dont want to be perceived as a victory for President Biden. Lisa lets talk about the tictactoe we were hearing about. They want this to exist in a different format. How could tiktok sell this to the company with administration the doesnt like tieups of Large Companies or even mediumsized companies. Intervening in a most every single proposed deal. I think thats the core of why this question has lingered from a policy standpoint for three or four years. They are certain about the National Security risk that the tiktok application process poses broadly and at the same time there concerned about unintended consequences. As i said before they are concerned maybe they dont have full Legal Authority to do with the Interagency Task force that spoke through the committee on Foreign Investment in the u. S. Last year would want to do. This is typical of joe biden. He has ideas in the legislature. Lisa are you saying essentially nothing will actually happen for a long time . Remember at the end of the Trump Administration oracle was brought in by the doj the deal would be struck with a constant backdoor to traffic over tiktok and they could monitor without the company knowing braided you go fastforward, the legislation doesnt require bytedance to divest. The operation it cannot be deaf around north korea. Associating strongly with china. We got confirmation of biden trump volume two. With regards to this tiktok story weve got a decent idea about the current president will govern with a second term. A decent idea given how the stories played out. Former President Trump is known to be very transactional, it is the fact some of his friends have positions in tiktok and its caused him to waver. This is not new. We saw this in the second year. Set basically to put this out a at least in the u. S. Hearing from friends in the company braden its two very stark different views and as much as people say americans do not want this rematch. It provides americans who are strongly divided a very stark choice. We are going to see this bill. You mentioned how this is a big win for biden. My question is eight months before the election this has issues for republicans and democrats prayed why are they doing it now . I did not mean to imply. I dont know either party who has this issue very well. Im not sure its a clear win for anyone. Its been very intent on a National Security. It might be perceived as a win. Outside of that politically i dont know how this plays. Great to get your thoughts, appreciate your time this morning. Going through the house a little bit later on this morning. Lisa the house will be coming back in sometimes these tend to be a little bit more time. The former president doesnt want us to go through. Coming up pretty clearly. Does that set us up for a pursuit of metain the years to come. We know the ftc has an ongoing issue in terms of thinking their monopoly especially the fact they bought up instagram and whatsapp. That happened in the final weeks of the Trump Administration. The ftc chair is dealing with it. Its still ongoing. Whether or not its a biden or Trump White House these antitrust issues are not going away . Lisa we keep flirting with what are these platforms doing to children and their minds and their education. As a mother of children its an ongoing concern and i think there is some conflicting messages from the types of policies driven from concern on the lack of evidence. If you have a child interested in being a communist, maybe look away from tiktok. If theyre not being taught about the pitfalls of that thats a problem with the education system. Theres a lot of questions. Snapping a two day losing streak on the s p in a rather bizarre. Equity markets alltime highs apparently. Equity futures just about unchanged. Negative by 0. 1 . Lets turn to the bond market. Twoyear, 4. 60. 10 basis points and change. Up another two basis on the 10 year. And intuitive reaction in the bond market. We just ripped a few minutes after the cpi report. It literally lasted about 60 seconds and then we rallied and did not turn back. Lisa trying to understand the different components of inflation and why people were so sanguine about a reacceleration of inflation when we are seeing a reacceleration in things like goods and services on used car prices. The only answer i can come up with is people dont re