>> this is bloomberg markets with alix steel and guy johnson. alix: 30 minutes into the u.s. trading day on this monday,

23rd. the top market stories we are following. the stocks shake off seven straight weeks of losses as china unveils a plan to support the economy and president biden hints at possible tear for leaf. the semi giant sets at site on vmware. the stock is down by about 5% in the market. davos in the path to deglobalization. more leaders tackle the effect of a globalized world. we will talk to executives for the next two hours. welcome to bloomberg markets. it feels like we all forgot we had a bear market on friday. guy: it did not last long and we rallied through it and there was some options action in there as well. we seem to have forgotten and moved on relatively quickly. the scars are going to take a while to heal. there's kind of a pause as everyone focuses on the good

news. if we get another eight weeks out, that's a record. we are in the outer edges of what markets do right now. i think this will be a dad owes themed week -- davos themed week. the issue of globalization goes into why markets are up a little bit today. the president's comments on tariffs. if he is going to ease up, that's can i help on the supply side as well. it was interesting to hear what he said. you can solve the problem with interest rate rises. can only solve it with supply-side reform and that's basically what he was talking about. looking at things from a different point of view today. alix: even if things are fixed on the tariff front overnight for example will all of a sudden supply be shipped into the u.s.. i have doubts about how that can get fixed. guy: i agree but it is

interesting people are focusing on the tariffs rather than taiwan comments which i think a much more positive for the market. i think the taiwan comments taken at face value are a risk. let's talk about it a little bit more. we bring in a few smarter voices. president biden still in asia, while he was there he did signal he would reconsider chinese tariffs imposed by the trump administration. >> i'm talking with the secretary when we get home. we do not -- those were imposed by the last administration and under consideration. >> it would seem one way of maybe resolving some of the issues we are facing right now. the world economic forum underway, yes there are cows rather than snow in the background. globalization or deglobalization

definitely the main stage. the question is how far can deglobalization go. michael mckee joining us to discuss as is annmarie hordern. let's talk a little bit about those biden comments on paris. is this -- tariffs. is this a recognition we have a supply-side problem and one of the ways of resolving that would be to reduce tariffs? is this effectively signaling globalization is going forward? annmarie: i think the first thing is when you look at the supply side we are talking about inflation and that's their biggest domestic hurdle right now. american families will be heading to the polls soon for the midterm election but this also is not new. the president said a few weeks ago this was under discussion. now saying he will sit down with janet yellen to discuss this. he wanted to make clear to the

audience that we did not impose these tariffs. they have come under pressure because of inflation thanks so high. you have the likes of the peterson institute saying if you remove those tariffs, one .7 percentage points could be shaved off of inflation. the question is how much will hit the end consumer as they are under pressure from the likes of chamber of commerce and some economists and lawyers to remove those. another of the administration will be asking we have midterm elections in november. if they remove these, are they seen as soft on china and that is something the administration does not want to be seen as. alix: on the economic front let's pretend it does happen. how quickly does that feed into inflation. michael: the peterson institute said over the course of the year and they think once the tariffs are removed, then you could see

about a 3/10 percent decrease in inflation on a monthly basis. the problem is many contacts for imports are already signed. we are also getting to the season where everybody starts ordering for the holidays and so it could have an effect by the end of the year. it does not help with the november 1 tuesday problem for the democratic party. the other issue is him sure they're having a grand old time arguing about this in davos, does it really and for -- doesn't really affect inflation. there are all kinds of studies that say a big impact or not much at all. as far as the president sitting down with janet yellen, he really needs to sit down with catherine because the u.s. trade representative has been very much opposed to removing the tariffs and she argues the peterson institute study is somewhere between an interesting academic exercise and a fantasy. guy: why wouldn't it -- sorry,

that is amazing. why is it a fantasy? why would it have such little effect on reality? americans are dealing with inflation right now. if you raise the cost of imported goods, why would reducing the effect of that reduce inflation? michael: it would a little bit over a period of time. a lot of it is absorbed by middlemen so not every thing makes through. biden has been talking about three had a $35 billion worth of tariff reductions per that's about 25% of those they put on. it isn't a huge amount of money and it has more symbolic value perhaps then it does actual economic value. alix: not to mention the fact we are seeing on shoring moves from companies so they are not vulnerable to the likes of china. i wonder how much that will change. guy eluded to this before --

alluded to this before, the comments on taiwan seem to be pushed to the side in favor of the tariff conversation bear that a strong repercussions from the white house. can you talk us through a little bit of that. annmarie: this is the fourth time the white house, biden or aids have come out after biden made a comment on taiwan to then walk it back. so one white house official said the president did say they are approaching this and taking in consideration and still maintain this one china policy. but the president was asked whether or not they would come to the defense of taiwan and his remarks were yes it's a commitment we made. he said the idea is we take it by force is just not appropriate, it will disclose the entire region. i'm reading off the statement because these words are tricky in the white house is saying he's talking about not sending

u.s. military troops but sending military aid. but this does obviously put the -- on chinese officials. something that may not want to hear. guy: i appreciate that, but isn't that -- if you think about the comments on tariffs, you made the correct comment saying there's dangers the president in the midst of the big week on china. he can balance that out by saying look at my comments on taiwan, doesn't one go hand-in-hand? i appreciate the white house officials are walking in back, but in some ways isn't it smart politics, he's able to walk back the tariffs and i appreciate what mike had to say about what ties said about this. , but if he can put himself in a position reason look at my comments on taiwan isn't in a better political position?

>> that something the republicans want to see, very tough defender of taiwan and the taiwanese relationship the united states. a few people have messaged me asking you think the president was being very ambiguous meaning the white house walks it back but a number of times he's said the u.s. will defend taiwan and that is the incredibly tough on beijing. potentially the same time as they weigh these tariffs. we just don't know if they go hand-in-hand. but it is an excellent point. alix: we still have stocks up. the s&p up three tents of 1%. thanks a lot. great to catch up with you guys on this monday. we'll pose that question to who's joining us next of where they think we are in the deglobalization cycle. this is bloomberg. ♪

another crazy day? of course—you're a cio in 2022. but you're ready. because you've got the next generation in global secure networking from comcast business. with fully integrated security solutions all in one place. so you're covered. on-premise and in the cloud. you can run things the way you want —your team, ours or a mix of both. with the nation's largest ip network. from the most innovative company. bring on today with comcast business. powering possibilities.™

>> we are looking into the 2022 year for especially developing a high level of debt. when your cost of servicing your debt jump up and you are in a very tight fiscal condition, of course this is the time when the imf has to step up and we will. alix: that was earlier the world economic forum where did deglobalization is a central theme which leads to the question the day, how far can the trend go. want to bring in a portfolio manager at kate anderson rudnick. you have to invest longer-term

buried has global -- longer-term. >> globalization or deglobalization is a great talking point for a lot of politicians. we seen the challenges of the hyper globalization and a sense supply chains are rigid, but they are not necessarily built for flexibility. we have seen the downsides of that. but being able to re-onshore is a really challenging slow process. there are reasons why globalization happens. some countries are better at producing certain things. i am not buying my romance novels from germany but i love their cars. it's a function of being able to amass the right quantities of inventory in places where it makes the most sense. i think longer term we will see some movement to onshore where it makes sense. semiconductors coming back to the u.s..

but generally speaking i don't think there will be a wholesale change. >> i'm genuinely googling german romantic novels now. [laughter] guy: i haven't read them. but they do exist is my point is what i'm trying to say prayed the point about deglobalization is that it will likely be inflationary. you talk about comparative advantage, that comparative advantage leads to lower cost and lower inflation rates going forward. if we revert that it will be higher inflation. he's talking about the fact we are trying to fight the war the wrong way right now. we have a supply-side problem with the fed is raising rates. so if we are using the wrong tools right now, what will be the implication of that? >> i think inflation is a near-term problem. being able to hold sales and onshore your supply is a

multiyear process. in the u.s. it will take years to build. so i think the talk of deglobalization is more so a political point. we need to move to these more flexible and have more good jobs onshore. but the real fight with inflation is happening on the monetary level and it's not so much about where we are. i don't think that's super related because they are so different. >> without immediate relief. so with that in mind and we look at a market that had a terrible seven weeks, particularly last week. today were up by 7/10 of 1%. i wonder is the worst over or will we be in a no man's land. >> i think the level of volatility is the case that we are still probably not settled in into the bottom. this is probably one of the most

emotional markets we seen a long time. it is worse than my four-year-old toddler. it is all over the place. if you think about what we are doing. these companies fundamentals are not moving 20% to 30% in the span of months. so that really is the case this is about investor emotion and spirit. when we have this level of volatility it's not a place where we are genuinely completely oversold. everyone has to say i am done with this market. we are not there yet because we are seeing so much money flow back in when we get the short rallies. >> what are you getting from those companies in terms of where we are with the consumer. i've listened to a number of people today particular from the banking world talking about the fact the consumer is still in great shape which kind of goes contrary to what we've seen

lately. what is your sense of where we are. if the consumers in great shape than we have a way to go with this. julie: you have a strong consumer, of the economy can chug along for a good time. the sentiment is really bad but generally speaking sentiment is a was the best indicator of consumer's health. i do think it a certain point gas prices start to be really meaningful. we start half goat -- have to go back into work whether we like it or not. i think with all the bad news about inflation that causes people to reevaluate how they are spending their money. a nice boost people traveling because they have so much cabin fever over the summer and then we will really have a retrenchment and i think you could see very soft back-to-school numbers. you could see a tough holiday season and that would be difficult for a lot of the u.s. economy to shoulder. guy: we've offended a few germans today.

we are getting a few comments. we have collective responsibility here. thank you very much indeed. greatly appreciated. thank you very much indeed. swiss romantic novelist maybe we should talk about them as well. coming up, joining us from davos , speaking to the team there. will get his take on supply chain as well. the construction sector interesting place right now. labor prices going up. this is bloomberg. ♪

>> raising rates is not in a solve the problem of inflation. it's going to make it more difficult because you aren't going to be able to make the investment. you have supply-side and revenge

issues. guy: the call from professor stiglitz. speaking to the team -- vos earlier -- in davos. joining us now, the ceo of --. haslinda: not just about surging inflation prices. it's with a higher rate and expectations of a slowdown in the economy. we seen a pushback, she's not factoring that in at this point in time. let's get perspective from a company which is one of the largest industrial companies in france. good to have you with us. what assumptions are you making about inflation and at this point in time that seems to be the new normal. do you have to pass on all the cost to your consumers? >> the vast majority of that comes from energy.

how do we cope with that with a first priority for customers in availability on the job side making sure with all the disruption on the supply chain. so good service. the second part of that, we are the leader worldwide so we provide solutions for energy efficiency. when you provide solutions, value-added products, it does help and you yet -- and yet last year we had the higher inflation , this year again we are doing with a price increase. but the availability, good solutions for customers. >> all against a backdrop of expectations of a slowdown in the economy. are you looking perhaps at companies canceling on project? >> that has been the number one

question for the last two months. i keep saying we have a huge backlog of reservation in europe. energy efficiency is important for carbon neutrality. he is very important for the purchasing power of households and now it's even more important in geopolitics in terms of getting our independence and sovereignty right so there is a perfect alignment on jobs for renovation to energy efficiency. now that backlog of folders in europe, a lot of accumulated savings of households over the last two or three years. you need to renovate your attic, a changer garage for an office. in the u.s. we have a good level of housing stock. good demand. we are at 40% in india. it varies country by country but overall we might have a bit of

the question in 2023 but that's 50% of our self and its strong and we need the renovation rate over the next year. >> not all of your shareholders are happy with how you're doing it. your activist shareholder bluebell reportedly is pushing for you to reorganize your business and also perhaps replacer chairman. how are you responding to all of that? >> we value all the insights and perspective from those big or small and we are open to constructive dialogue. what we are doing is country by country very pragmatic. i think this to maximize what we create, being moved by promising

markets, >> what can be expected? >> would did that last year thanks to the deep successful transformation over the last year. so the largest in the sector, of largest extension the sector was here. so we keep rolling out successful strategy and i can tell you we are very happy about the job with what we've developed of last few years and there's a lot more to come the next few years. >> thank you so much for that. >> we are handing it back to you. >> we are back very shortly. thank you very much indeed. the ceo. a few comments coming through reading the text of the speech is about to deliver.

must take into account the income short the labor market not rapid demand gains. if the bank is prepared to raise rates again if needed. back to davos. the intel ceo joins us from the world economic forum up there in the swiss alps. we will talk about what's happening with the supply chain story. that conversation coming up next. this is bloomberg. ♪

>> a lot has changed since the beginning of the year. the biggest changes discounted tightening by banks, particularly the fed. we've seen that flow through the bond market and we seen the equities declined so far largely a function of the change in discount rates. you haven't seen a major change in expected earnings growth and

so that to us is the thing we are watching. if this is a head fake or continuing that would be the shoe that drops. alix: that was rebecca patterson speaking earlier. we are one hour into trading on the u.s. session. it is confusion. asset 100 can't make up its mind. abigail: another unpredictable day. moments ago we had the nasdaq 100 down. now back up in the s&p 500 moving closer to its pre-market. the nasdaq 100 up about 3/10 of 1%. really outperforming banks. the best day in about five days. helping out of course we have rising up about four basis points. the 10 year yield as bond sell off a little bit on this risk on tone. the net interest income, that has all the big banks for 5%.

despite the fact that we have this historic backup yield. about 25% here for some. today you can see the rise. maybe this net interest income guidance for jp morgan will help the bank. as we have some of the individual movers. vmware absolute storing up on the news that broadcom may consider a bid. the chipmakers moving into software, vmware vmware is a cloud maker -- a cloud software company. so a real blockbuster and of course vmware is one of those dell companies. as for the market on the day.

we force that rebound friday. it felt like after the s&p 500 get the technical bear market briefly down 20%. it felt like that for a little while. the one thing that can be attractive for some of the dip buyers is valuations paid s&p 500 force pe at 6.4 times. slightly below the 10 year average. you can see it still above that. in that 2018 brief correction many bear market, 2008 and 2009. went below 10 times, actually a single digit devalue. nonetheless it's attractive here. >> intel is down 19% year-to-date, pat is the ceo,

he's up a mountain, let's listen to a conversation with him. >> we welcome our television audience and radio listeners joining me now at the world economic forum is intel ceo pat gelsinger. the world has been preoccupied with this -- supply chain disruptions. saying he's like -- there's light at the end of that on all. you are not so upbeat. >> we definitely think supply demand balance at 2024. a year ago i said 2023, since then we seen a number of equipments and supply chains move out. that -- so overall 2024 until we see a reasonable balancing of semiconductor supply chain. >> when you take a look at the

point, just waiting to unload 70 or 60 ships per that's causing a lot of issues. >> a cup -- it's on the back of many other supply chain issues so you're sort of beaten down and may be the softening of the economy, a little bit of consumer softness. just a little bit but we are still out for 2024. of us of the shanghai ports graded a bit more turbulence. >> we talk about a slowdown, although overseeing a pushback saying we are not looking at a global recession. what that means, what assumptions are you making? >> we see a bit of softening. haslinda: can you give a number to that? pat: number of percentage points there.

we were originally expecting the pc industry to be up a couple of points this year. no it is sort of flat, the down a point. but on the business side, the enterprising commercial side, no change. continuing to have real strength in those areas of the market. inflation concerns, tightening the monetary policy, the continuing supply chain, things will be a little bit choppy. >> alix: you're also -- haslinda: you're also reviewing where you make your chips. perhaps that decision resonating even more given what we are seeing in china. how is that coming along. pat: we are all in on rebuilding what we call the geographically balanced resilience supply chain. this industry was 80% in u.s. and europe 30 years ago. now it's 80% manufactured in asia. what happened? it was -- a joke to some of the

congressional leaders. we never voted to get rid of this industry. but those countries voted to get this industry. they put strong packages in place to attract the industry there and now we see we are way too dependent on so few places in the world. what aspect of your life is now becoming more digit -- not becoming more digital? my consumer, my health care, transportation, how i work and live. where the oil reserves are defined geopolitics for the last five decades. let's do this in a way that we have more resilience to the supply chain. haslinda: it is great you want to make the u.s. and europe a priority but also scaling

quickly, how soon can you get there? pat: weed out the ohio side expansions in arizona. new research in france, expansions continuing in ireland and what we are anxious to see is the u.s. and eu chip stack skit completed that allow us to make that good economic investment. part of the challenges we are competing with countries that are very actively incentivized -- investments in asia pay they have to be competitive worldwide or it can compete. so that's what we are looking for the eu leaders as well as the u.s. congressional leaders get these done so we can go faster. haslinda: we are speaking to pat gelsinger, intel ceo in davos. we talk about how we want to wrap up that ramp up that production, but what kind of

government support are you getting? is it enough? pat: the u.s. chip act. the european chip stack, 45 billion euros. as we look at those programs and help shape them, they make us competitive in the world. we feel very good that these are very good steps forward. and it's against what i call the moonshot. by the end of the decade our objective is we go from 80% asia, 20% u.s. and europe to 50-50. 30% u.s., 20% of europe, 50% asia. that's the goal we are driving these four. these are great steps forward and they have been successful to drive towards that goal. haslinda: we heard seeking and urging for manufacturing data. is that a game changer? will that help -- how will that help solve the supply chain disruption? pat: we are supportive of the

general idea or visibility there. i don't think that's the solution. i think it helps it. fundamentally we have to build more resilient supply chain. we have to do that with staff and attract more aspects of the system supply chain. we need balance across the u.s., europe and asia. as the fundamental answer to what we see as the supply chain the future. haslinda: i like your reaction to what we reported on bloomberg tv today. looking at acquiring vmware. more consolidation within the industry. >> i woke up to the news little bit startled as well.

i say if it helps vmware be more compelling innovative growth story than that's good. and if not then it's not good. they play certain place in the ecosystem. that super important for the future and i want to make sure they continue to do that for a long time. haslinda: is broad, -- broadcom acquiring vmware good? pat: it was surprising news today. we have to make sure vmware is a great innovation engine for the future. haslinda: do you see the consolidation further consolidation in the industry? in excess of 40% for the year already. pat: the correction in multiples we've seen. i thing we were overheated with some of these high multiples and that comes back down to earth a little bit.

i think there will be consolidation bird weaved on several acquisitions this year and i don't think any of that is bad in that sense. physics ordinary flow for new ipo's new offerings into the market. is this normal cycle, this is an exciting industry. haslinda: lots of headwinds for companies for governance, inflation, supply chain disruption. what's the biggest risk? pat: i think overall this economic uncertainty and crate some of these headwinds for customers and what they are forecasting. i think two responses, some near-term up and down is what we're focused on. this -- prudently where we are making a 10 year cycle investment.

also the core of why we're here at davos in the public-private partnership. governments and companies coming together to drive industry policy for a piece of the long-term geographically balanced supply chain. haslinda: great insights, thank you for joining us. back to you. alix: thank you so much. he was the ceo of vmware in 2012 to 2021. great to get his insight on the potential. we will, the copresent will be joining us next. this is bloomberg. ♪

- [narrator] it's a mixed up world. and the way we work looks a little different. but whether you embrace the new normal or just want to get back to the routines that feel right, x-chair continues to be at the forefront of change, which is why we've launched the all new x-chair with elemax. elemax combines gentle body temperature regulation with stress melting massage to increase your comfort working from home or at the office. feel more refreshed in seconds with dual fans that actively deliver a clean air flow

or you can wrap your back in the soothing warmth of heat therapy and access four combinations of massage for deep relief from tension. our patented dynamic variable lumbar support and scifloat infinite recline technology remain unchanged. order an x-chair with elemax today. use code tv and get $50 off plus a free foot rest. hey, change happened and we've made it a good thing with all new elemax from x-chair. now the future feels better than ever before. order x-chair with elemax today. use code tv and get $50 off plus a free foot rest.

>> you are looking at a live shot of the principal room. coming up, -- investments ceo

joining us. alix: let's go back to davos where government leaders, executives are meeting at the world economic forum. haslinda: it is about inflation and there are expectations out there given that it will be passed down to consumers there will be putting more debt on their credit card get perspective inside. good to have you with us. what are you seeing it mastercard? are people putting more debt on credit cards? >> so far we haven't seen any drop in terms of consumer spending. the resiliency is there. what we are seeing in europe and the u.s. is is a nice recovery story. people are spending more money.

i think a lot of that is driven by the fact there was government stimulus, their savings. the labor market is pretty strong and tight so you're seeing wage increases as well. it gives people a lot of room in confidence. the pressure on inflation is a good one. he greets uncertainty down the road. my hope is it will be transitory. it's going to increase in of the disproportionate negative impact on this. haslinda: the question is for how long. data suggests debt will reach a record by summer and what's the risk than of people being deep in debt? ling: that's what i'm saying. i think the whole thing around inflation is something every government needs to address and take seriously. because of disproportionate impact on low income middle-class people, rich people

don't care about inflation. people who can least afford it will be hit hard. it is a concern and a worry. i so believe largely the inflationary profession ash pressures have been caused largely by the supply chain disruptions and that will get adjusted. the timeline is a bit uncertain. i don't want to get into predictions but it's something we should watch out for. haslinda: the u.s. is a huge market and so is china. it seeing a slowdown braid when you look at the latest data, retail sales contracting 11%. what do you see in terms of the e-commerce industry? ling: overall retail sales are negative for china this year today. now overall from an e-commerce perspective it's really interesting. last year e-commerce outperformed general retail. this year, e-commerce

year-to-date for china is around 3% versus the negative growth in retail sales. as a proportion of the overall sales, e-commerce continues to outpace and the percentage is increasing from somewhere around 25% after 28%. haslinda: what is the outlook? the first time u.s. growth will exceed that of china in a very long time. what is the outlook? ling: sometimes our spend growth is not necessarily directly correlated with the overall gdp growth. there's a lot of pent up demand in china as you know. i think people just really haven't been able to travel outside of china. overseas students in the u.s., of those who have been able to go overseas you're seeing a recovery.

we remain cautiously optimistic. haslinda: mastercard has been -- it's no secret mastercard wants to partake in the digital yuan and you are waiting for approval. where are you on that. ling: we are waiting for approval for a license to conduct domestic switching business. we are working closely with the regulator in order to continue to advance their. from a digital perspective, i'm not aware of any approval being given to anybody from a cross-border processing perspective. they're conducting a domestic pilot, major cities from across the perspective. i think the major issue will be merchant acceptance. how would that work, how do you create the interoperability. so very early days.

haslinda: crypto, you are all in. saying it wants to be part of the crypto space. given what we saw recently, shirley that is an indication it's not ready for mass adoption. ling: last time we met we talked about this. i think about it as an investment class and is a digital currency. as an investment class, there's risk, of this volatility. so that's what you are seeing right now in the crypto space. we want to support the consumer preference for crypto advancement for the buying and selling of crypto. we want to be in those. from a digital currency, whether this is a private stablecoin or central bank digital currency a think it's still early days. china is probably further ahead, but when a digital currency is

approved, a properly sanctioned by central bank to be used as a legal tender, we are getting a network ready to support that. we need to be there. haslinda: thank you so much for that. joining us here in davos. guy: thank you very much indeed. fascinating conversation in davos. christine lagarde saying in the last couple of seconds at the rate hike plan at the ecb wants a faster option. this is bloomberg. ♪

>> strong economy, big storm

clouds. i'm calling them storm clouds because they are storm clouds prayed they may dissipate. it was a hurricane, i would tell you that. they may not dissipate. obviously we want to turn out well. guy: i always love his glasses when he wears a like that. jp morgan ceo speaking yesterday saying the u.s. economy remains strong. the firm also announcing today it's raising its estimates for net interest income. probably why u.s. banks are as they are today. a lot of pushback of the last few days as a result of the plan to spend more money basically. he's keeping that cost estimate stable saying we will make more money over here. hopefully they balance each

other out. alix: what's also interesting is when he talked about credit. he said he's never seen credit look this good and they haven't set aside that much for credit and haven't seen that much for credit losses. also concern spreads will blowout. guy: when you listen to what the bankers are saying today they are saying really positive things. european closes coming up next. we will get the take on these markets prayed this is bloomberg. ♪

guy: european stocks higher. commodities and banks leading the way up. come down to the close starts right now. >> the countdown is on in europe. this is bloomberg markets: european close with guy johnso