>> welcome to "bloomberg markets ." earnings optimism and fed hawkish and is in focus. that's get a check of the markets. s&p still up in the green on the date up .3%. all the major indices in the green. the nasdaq and dow jones average up .2% or more appeared low volatility. the vix on decline hanging out at a 14 handle on the clock. the bond market, a bid for the two-year. 497, two basis points lower than we were on friday when we were

hanging out at just below the 5% level. the dollar getting a breather. the yen overnight seeing extreme moves around suspicions around an intervention. you had it weakening to a point when it hit 160.17 on the dollar but now it is gaining strength hanging out around 156.47. midday movers. shares of apple higher ahead of earnings this week. bernstein upgrades its rating. an unchanged price target of $195. analysts say trying weakness is more cyclical than structural. the redstone family and skydance have offered concessions to make changes in control more appealing to investors. you have paramount global up

3.6% on the day. and this week is the big fed decision where traders will look for any sense of guidance from the fed on the direction of rate cuts. this is what bloomberg guests are saying. >> if things are slowing down enough, then yes. >> we are focused on other things. whether they cut in september or november or december is not important. we are willing to trade rate cuts for earnings growth. >> the market has already started taking rates off the table. >> janet yellen has a difficult time sticking with a hawkish tone. i would not be surprised if in the q&a, they turned a little dovish. >> base case, the inflation data will soften and there may ease some restoration of the confidence. he won't be able to communicate that.

a fairly hawkish press conference. >> today's big take, one of the most read stories on the terminal, jerome powell's dovish december pipit saved the u.s. from recession. adding inflation back under control will require a more hawkish reversal. we reported on it. based on more than 60,000 fed headlines and natural language processing algorithms, you have learned a lot about how the fed has communicated. put this into context for what it means for the upcoming data. >> we tracked through december and in december there was a dramatic of his pipit which helped reinvigorate financial markets and loosen financials accommodation and review fuel financial services. it helped forestall any fallout in the labor market. we do think the fed needs to start speaking more aggressively to markets. i agree with what we heard in

the drop that jay powell have to come into the meeting swinging so he can help depressed financial conditions so that there can be more traction of monetary policy in the real economy. >> what kind of language does that mean exactly? >> he has some flexibility and i think we could hear something like -- monetary policy clearly has more work to do. yes, some of the inflationary results we've seen have been troubling. we did think they could have been a temporary blip to start the year it is proving to be more persistent. he could even say something like consensus on the committee is shifting towards fewer rate cuts. we don't get the next summary until june identity sort of indication like that would be a hawkish move. >> the other thing you explored in the story was the reasons for higher rates and the reasons for the growth we are seeing. what is the most likely scenario here? is this a more confidence in

year in a more sustained growth rate that would also lead to a greater neutral right as well? at what point do we see that kind of discussion more comfortable inside the fed? >> a couple different factors could be contributing to a higher neutral rate and some are good. more population growth due to immigration. it could be there is optimism about ai and productivity growth fueling expectations for the neutral rate over the long run. it could be some things to the downside which is an unsustainable fiscal balance crowding investment and pushing up and neutral rates. it could be the case that the fed is realizing it needs to keep its foot on the brakes longer because the neutral rate is higher than expected. >> thank you, stuart. ever the balanced view. we now bring in constance hunter. talking about the idea of higher for longer. how much higher and for how much longer? you have to worry about the

perspective of another rate hike? >> we do not think there is going to be another rate hike. several fed speakers have been asked about this. i think one of the best answers was given by the president which is the fact that inflation is not going down but it is not rising but it is plateauing. in addition, there is a lot of good reason to expect it will continue to fall but a bit more gradually. waiting for runs to filter through -- rents filtering through is hard. and a one-off event such as higher inflation for financial services or the higher inflation we saw for the auto insurance was driven by three states saying the insurers could increase their prices. california, new york, and new jersey.

and so from an economic perspective. so those one-off things will feed out. i think rate hikes is an unlikely prospect. >> i understand the earliest you believe we could see a cut would be december. what would drive that first cut? >> we have moved our first cut back to september because we think it is going to take a little while to get inflation down. we think they are going to need to see the month over month data come in more in line with what they want to see. 0.25, 0.27, not 0.3 or higher. and that will feed through to the annualized pace. we have seen it moving up on a three-month and six-month basis. they will want to see that that trajectory is heading lower. i think they will want to see it more in the 2-3 -- 2.3 or 2.5

range on an annualized basis. >> what is the risk to the september view? what would keep inflation so sticky so we have to stay at this level? >> it would be rents and oer staying higher. >> there is a lot of variability there. >> certainly on the oer because that is what people perceive. but the rent prices, we have real-time data showing those coming down. >> where, how fast ny? >> we have had a boom in multifamily housing that has been going on for a decade causing a great deal of supply. at first you had people move into single-family homes. that was the preference. you are starting to see people coming back and a multifamily but there is a lot of supply pushing down prices. >> as a new owner, i can attest

that the new york city rents are out of control. how will this feed into financial markets? when do you start to see weakening in the economy? and with inflation where it is, does the weakening concerned the fed? >> one of the risks is that we see faster deterioration in the labor market. and what you have seen is the fed saying, we are symmetrical and the risks are balanced. the risk to inflation and the labor market are balanced. a year ago they were not. they were markets were hot and the risk was to inflation not getting under control. now that the risks are balanced, there is a risk that the labor market weakens before inflation gets under control and they're faced with that dilemma. >> you have the fed meeting on wednesday. a jobs report on friday. do you start to see the lagging

jobs indicator starting to reflect this friday? or is it a few months out before you see that kind of pain? >> we expected to be softer. we expect between 210 and 230 on-the-job sprints. and that is because we had some good weather in the beginning of the year that made construction jobs stronger. we do intensive web scraping about what companies are saying on their earnings reports regarding hiring and firing decisions. that suggests that labor is coming to an end which is one of the reasons why the jobs market has been so strong. when that happens, we think we will see a bit of a softening. we think that is starting and will continue for several months. >> a bit of a softening is expected. what is the risk that the softer labor data becomes much softer? >> i think it is a solid 35%-40% risk that we see that happen and

the question is, at what pace? if it is gradual, the fed can get ahead of it. if it is son, it makes their job harder. a higher for longer stands could cause cracks. >> it is hard to tell which day will be more exhausting, wednesday or friday. thank you for that balanced view of macropolicy perspectives. coming up next we will talk about tesla because it is soaring on the preapproval from china to bring its driver assisted program to the world's biggest market. we have all the details next. ♪

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host: this is "bloomberg markets ." time now for the stock of the hour. wild moves from tesla. shares last week on a ride after weeks sales and forecasted sales but shares are soaring again after approval in principle from chinese government officials to deploy its driver assisted system. ed ludlow joins me now. talk to us about what you saw from tesla's first set of guidance on delivering new cheaper ev's compared to what you see today with this reaction from the news from china. today's news is sending shares higher. ed: exactly right. investors vote with their feet as the old adage goes. we are up 16%. on track for the biggest jump

since march 2020 one. that is in response to the news overnight. this -- the specifics are important, it is a tentative authorization for fsd in china and has clear stipulations. reaching an agreement with baidu for mapping is important. baidu is the domestic champion of that technology. data and privacy agreements because tesla has had a good relationship with china relative to other u.s. companies, it of late has been more tricky particularly in the context of data privacy. host: what about from the perspective of a chinese consumer? you think of some of tesla's biggest rivals. how do you compare this move and what it would mean for others?

ed: has sold 1.7 million vehicles-ish in china. if they are able to roll out fsd that could mean a meaningful uptick for software revenues whether they sell it as a single point of sale one time purchase or they do a subscription. both options are available in the u.s. pricing will be interesting. just as with the ev market broadly, the market for driver assisted technology is broader in china than it is here. you have many more players domestically offering something similar. but tesla has band reognition and is seen as a premium product. and elon has hung his hat on developing a robotaxi. there would be training for the future iterations of the training model that would allow for a robotaxi.

is that what they will be able to achieve? host: what do we know about elon musk's relationship with beijing . we know he has committed to visiting beijing versus india where the trip was ultimately canceled. ed: since tesla went to china, the relationship has been good. you are looking on your screen of images of elon musk meeting with china's premier. the premier was focused as a communist party leader in the shanghai area where tesla would build its plants. they got preferential loan financing. they scaled and moved so quickly on supply chain and yet more recently china has had policies of ella vetting its -- elevating its domestic champions out of concern for data privacy.

you have cameras outside the vehicle in tesla's design. and china has said you cannot have a tesla parked near military facilities. that goes back to the news from the night, not just the mapping agreement with baidu but that china has accepted tesla's position and allowing the data privacy settings to account for that. it is more positive. and go back to the stock move. this is a substantial move in the stock no matter the rationale for buying. host: thank you and happy monday. coming up, we will talk about wework coming up with a restructuring deal to counter one from the cofounder, adam neumann. we will bring you all of that next. this is bloomberg. ♪

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host: this is "bloomberg markets ." time now for the wall street beach. a new restructuring deal to get we work bankruptcy. the second time in a matter of months. let's get the details now. what do we know about why we work was given this chance with its backers including softbank which was there from the beginning? and how adam neumann was cut out of the latest deal. >> the company was once worth 47 billion. it would have set adam neumann on the path to become a trillionaire. where are we today? the company went into bankruptcy and adam neumann try to buy it out of bankruptcy. which in itself was a great twist in the story. where things stand right now is wework seems to have struck a deal with some of its existing

lenders and bond owners that would give it much needed cash. and it would allow them to come out of bankruptcy. it would be a different company then it was even two years ago. the company had more than 14 million square feet of rented space. that goes down to roughly 20 million. it is a very change the company. softbank was one of the early initial bankers. the relationship with adam neumann was stuff of legend and softbank is still plodding along trying to extract whatever it can from the massive amount of money it put into the company. host: softbank would still own a portion of wework under the deal according to our reporting. softbank would receive at least 16.5% of wework and their share could increase to as much as 36%. why does softbank want 30 six percent of wework at this point?

>> because of the amount of money they put in in the first go around. when you look at what they are putting in and the equity they can get in a reorganized company, that wipes out any hope for the pre-existing equity holders after the debt loan comes. there is very little equity left. this is not though $47 million company we talked about so much five years ago. host: it is really the creditors first, those that hold the debt that will see the money first. let's switch gears. i'm curious what you are seeing on mckenzie. a story highly read -- mckinsey is trying to pump up morale among its partners. you were part of a team about what happened. steep job cuts at mckenzie. what do we know about what is going on there? >> mckinsey needs a lot of morale boosting purée it will be

the leader's second term which will be different from when he told charge of the company. they have had two rounds of job cuts. you don't often hear that from mckinsey. this is the consulting firm that goes around and advises other corporations to make job cuts. so when you see job cuts at mckinsey, there is an understanding that there are challenges in the consulting industry. the way we talk about mckinsey is that it is the goldman sachs of consulting. they are a leading industry of what the rest of the industry has to do. host: blasts of rock and rap music -- is this convincing after the job cuts we have seen? >> it is something. i don't know if it is

convincing. if people have sat through two rounds of job cuts. they are not used to that. suddenly when you have to tap the brakes and pump the brakes and go the other way, it is disconcerting. and the broader economic environment, consulting companies are not sure. that is why it is not just mckinsey but across the space there is a level of nervousness. host: certainly bellwether. thank you for keeping an eye on the top stories. that does it for "bloomberg markets." a quick check of the markets. green on the screen after a week of green for the s&p 500. .3 percent higher for the s&p 500 and the nasdaq and the bid in the bond market continues. a two-year is below the 497 level. this is bloomberg. ♪

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>> from the world of politics to the world of business, this is "balance of power." live from washington, d.c. joe: