jon: welcome to bloomberg markets. spma; -- sonali: pretty flat david into the markets trying so hard to turn green and you are seeing a little green when you look at the nasdaq 100 on the day. you have to go down to the 10-year until you see some action. a three basis point move downward and a little bit in the short end of the curve. seven basis point move in the. -- 10-year.

we will talk about the cracks from treasury markets they are getting spooked on. jon: at the end of the day we go through earnings season and the other looks were so important. as we get guidance, that is a key driver for stocks. in the case of jm they could have been worse -- jm smucker could have been worse. stock is up about 4%. moving in the other direction, we have the parent company of dsw shoes. some key concerns based on the consumer outlook right now. speaking of laggards, we want to highlight sphere entertainment. a lot of people are enjoying getting their first look at the sphere in las vegas but some news on the convertible note issuance today spooked

investors. jon: -- sonali: apollo ceo mark rowen says that is where you can find better returns. >> if you want alpha outperformance you need to step away from public markets. i think that is happening. we are also revisiting the notion of public being safe and private being risky. this is the framework were used to be in. private meant venture capital, private equity, hedge fund. now it just means less liquid. jon: bloomberg surveillance also spoke with apollo's cohead of private equity said investors are right to be skeptical of private market valuations. >> i think a lot of sponsors overpay for assets in the last couple of years. the air is very slowly coming out that balloon. i think you can question some of the private market valuation multiples. buying at six times, we tend to see multiple expansion.

i don't have that concern for our business. sonali: we will bring in allison mcnealy he wrote the story today about how much more pain is going to be in private market valuations. are they throwing in the towel? allison: i don't think we are quite there yet. it is interesting that we are now starting to see private equity sponsors acknowledge may be need to come down a little bit. maybe they are not reflective of what the public markets would suggest. that is different than what we saw earlier this year which is a repeated messaging that private valuations were different than public market valuations and they work marked appropriately. jon: the connective tissue of these markets, the ipo market and the health of the ipo market, what are some takeaways now on what that is going to look like heading into 2024. ? allison: he's expect in the ipo

market might be a little stronger in 2024. that echoes some of the sentiment i heard across the private equity industry in the last couple of months or weeks which is that maybe things might get a little bit better in 2024. we might start seeing firms -- deals because firms cannot sit on the sidelines much longer. they want to see some capital come back and see distributions. the best way to do that is to sell assets. sonali: allison mcnealy, thank you so much for your time. tomorrow we will hear from eight banking executives on capitol hill. it is part of the senate banking committee's annual oversight hearing featuring the ceos. kevin from her as the financial services -- one of the things before you came on, a lot of folks were talking about how the bank ceos are going to use this as an opportunity to fight those capital rules. what you expect them to say?

kevin: there will be a number of topics the committee addresses and that is typically how it goes. it is a bit of a grab bag. we have a proposal before is now that would raise capital for these large banks by 20% or more. it will have a significant impact on consumers and small businesses and corporate customers, farmers, everybody across the economy. everybody that does business and relies on these institutions for that work and the economy as a whole that relies on these institutions. we have been through a crisis 15 years ago, raised capital significant, three times as much as we did then. we have significant liquidity and the banks. we have a series of other reforms they have implement it. there is no evidence we need more capital in these institutions now. just the reverse. we went through a pandemic. we went through the crisis of the spring. all these firms have performed

better than good throughout that time. sonali: these are the biggest banks. the investment bank ceos are going to show up. they were not required to be the last time and they will be facing rules to their trading desks. when you think about advocacy for the industry, do they deserve more capital required at the trading desks versus what you are seeing more blanket for these large banks that are taking these capital rules as a function of how the system evolved? kevin: 20% overall for the -- proposal broadly. capital markets, 75% increase. the quantum of additional capital that is being implemented or proposed to be and plummeted through these rules. these are not activities in projected losses not covered off already. we have been through many, many years of activity where these institutions have encountered everything you can throw at them and they have been operating with more than enough capital to

deal with all these things. we have global market shocks that occur during the stress test. they now feed directly into the annual capital requirements of the firms. there is a clear redundancy in terms of what this proposal would require for the trading book. on top of everything we have already. the costs are considerable. they can't be simply ignored. i think we are going to have to go through a process of making sure the customers, not just the firms -- it is more about -- not about the firms actually. it's about their customers. these are corporates that use headings, vanessa polities -- meanness of polities -- municipalities. they rely our capital market system, which is the envy of the world. we don't need to tax that system at this point. we have plenty of capital in the system to accommodate projected

losses. jon: just a build on some of those costs, talking about those from the banks having less financial flexibility or capital flexibility if more is being associated with needing capital buffers. kevin: when you impose additional costs against business lines, that will do one of two things. it will affect the pricing or the economics, or it will move the activity outside of the regulator banking sector altogether. we have seen that secular trend for a long time. it is accelerated during the time where we had postcrisis regulation. look at the private credit market today. look at the size and the quantity of trading that occurs outside the regulated banks and other companies you know well. we will exacerbate that. that does not mean the risk was away. it just leaves the banking system and goes to another part of the financial system. that is a part of the system

that is not regulated the way banks are. from the capital standpoint, liquidity standpoint. no fbi in see insurance if we are talking about the credit side -- fdic insurance. yes, the pressures will be there. some things will prove to be un economic potentially. those of the things we're trying to guard against. we want a balanced proposal. we think there is way to get a balanced proposal. this was never about capital, higher capital or lower capital. it was about measuring risk in a way that is consistent across all the large banks who operate globally. jon: we highlighted some of the challenges due to the interest rate environment for regional banks. there was the idea of the bigger banks possibly getting more

business or getting bigger. when we talk about it from the capital requirements standpoint, how do we think about the largest banks and the regional banks? kevin: 37 institutions are covered by this proposal. our institutions have the greatest impact associated. it is not an insignificant impact for the rest of those institutions as well. our institutions have scale. half of them are highly diversified in terms of the activities they perform. we have two investment banks and the custody bank. they are all impacted differently. vis-a-vis the regional banks, the regional banks have different pressures. they have been providing a certain type of treatment as a consequence of legislation that came after dodd-frank, the tailoring rule implement it by the fed. different sized scale banks. our view is we need banks of all

sizes in this country. our institutions work with and serve other institutions up and down the scale. it has a significant impact on those large regional banks. sonali: both of us will down a capitol hill tomorrow the cover hours of this testimony. coming up next, john kerry singles out chevron over its lack of commitment to goals. we will talk about was happening out of cop 28 next. this is bloomberg. ♪ each other rock stars? you're a rock star. you are a rock star. no more calling co-workers rock stars. look, it's great that you use workday to transform your business. but it still doesn't make you a rock star. so unless you work with an actual rock star. hi, i'm ozwald. hello ozwald. pam, you are a rock-

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jon: this is bloomberg markets.

john kerry criticized some u.s. oil producers for not doing their part to combat global warming. he singled out chevron. here's what he said at the bloomberg green festival when asked if big oil companies are on the same page with net zero goals. >> not all of them, no. regrettably. let me be fair. i want to be very fair. exxon mobil is working with us on a plan they have to do an in-kind effort with on the ground training and working with people and being able to be helpful on methane. they clearly are moving to hurley than chevron -- moving differently than chevron. we are hoping to close it out in the next hours, if not a couple of days. we will work with the world bank and have a manner being effective. >> what more can chevron do?

>> everything. [laughter] >> tell me more. [applause] >> i'm very respectfully saying you can't be outside of this initiative. we have no real evidence that they and a lot of others are doing what every company needs to do. scope one, scope two, methane 100% but -- this is what companies signed up for in the initiative. i'm not sure who it came from. it was announced that there is a global decarbonization alliance. these companies have come together. it is not insignificant. a lot of criticism has been leveled that the uae but the fact is this is the first time ever that those companies have

come to the table at a cop. what they've agreed to do is not enough in my judgment but i would rather have them doing it the not doing it. that is a pledge to do net zero 2050, i pledge to do scope one and two by 2030. a pledge to do all methane by 2030, which is really important for us, and a raise there capex on removals and -- a couple of things but bottom line is we need -- look. we have to be honest with each other, everybody and that requires the oil and gas company to equally be as equally honest with us. sonali: lo and behold, chevron is the stock of the hour and we will discuss this more with alix steel who spoke to the company. are they fighting back? alix: there take away our two

issues and we take this one which is joining the methane pledge. it is oil and gas, decarbonization charter, whatever that is worth. they are saying we are doing our part. we don't need to sign a piece of paper. we want to do more due diligence before we sign a piece of paper. look, we take it seriously. our view is this initiative seeks to raise the bar for companies who do not have set emission targets. chevron already does. our focus is on living lower targets. some of the stuff that john kerry was talking about about teaching company how to do stuff and quick fixes, chevron will say they are already doing that. why sign this sheet of paper? jon: if coordinated efforts by all are required to reach goals, if there is naming and shaming

playing out here, outside of what chevron talked about today, how does that impact this longer-term process? alix: it really doesn't. every company, the western companies i'm talking about know that methane is one of the biggest problems. i have some fun stats for you. if you look at the methane tracker, gas and oil well leaks have a significant amount of methane, equivalent to like 800 55 million tons of co2 over 20 years. it is really bad. they have to fix that. anyone who reports that will be fixing that. chevron and exxon will have their own reduction targets. chevron and particular, they want a zero flaring by 2030. there total scope, 1, 2, and three and three is the hardest you can do. it is like sonali and i buying a tank of gasoline at the pump. they are doing the stuff and it

is crucial for all oil companies to reduce methane, reduce flaring regardless of whatever targets are set at cop 28. sonali: how does this work in terms of existing partnerships? there's already an amount of things they are doing, signing a piece of paper will not make things better. are they making progress with their existing partnerships that can really push back against something like kerry's critique? alix: every company will say they are doing a good job and ahead of targets and full disclosure, etc. they bring foreign oil companies out. they will all say that, right? it becomes a question of what about the other guys, how fast can they catch up and who will pay for all of that? it's expensive to fix leaks and do all this, expensive to have helicopter flyovers or drone flyovers. that cost money. that is kind of what kerry is introducing with the global flaring and methane reduction

partnership. that is a fund he's getting some national oil companies and big oil companies here in the u.s. and the west, western europe to put money into. if you meet certain targets you can tap fracture help. chevron and exxon have not contributed to this. they want more due diligence. some of the companies that could apply for it have the money. they just have to find a but they have it. jon: thank you as always for breaking it all down. really appreciate it. alix steel on a story will continue to be watching. coming up, the bond buying frenzy has led to a surge in demand for financing in the repo market. those details are next. this is bloomberg. ♪

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sonali: this is bloomberg

markets. short-term interest rates have shown strains in recent days. it has led traders to recall the turmoil of september 2019, a time that required fed intervention. alex harris reported on this and joins us now. why is this time different than 2019? is there a sense of moral hazard under the surface here given the fed will step in if things get too tough out there? alex: great question. this time is a little different. when we finally -- whenever they hit the fan in 2019 we were talking about it, reserve scarcity, video that the fed had gone a little too far in shrinking its balance sheet and the debate over what that lowest comfortable level reserves were for the banking system was a bit higher than they had envisioned. now what we are talking about is a confluence of events

compounding the issues we are seeing in the overnight funding markets. it is also have coalescing onto the fed's -- the bank's balance sheets. there's a big treasury market, $26 trillion. a lot of it is sitting in primary dealer balance sheets. the market as long right now in those positions need to be financed. you had a month end where banks tend to pull back in the repo market so they can shore up those balance sheets. all of this created this perfect storm and created a bit more volatility in the funding markets than people are used to seeing or have not seen in a long time. it is filtering through these benchmark interest rates. that does have people thinking are we dissing the beginning of a volatility? is this going to get more volatile as time goes on in the fed continues to shrink its balance sheet as the reverse repo continues to drain, reducing the excess liquidity that is been sitting in the

market for so long. jon: i appreciate all of that break down. the volatility playing a role and complicating the story for the fed as well. we will track that theme. alex harris breaking down what's happening in the repo market for us. let's get back to the router market story and stocks today where it's been an interesting session. we have seen some willingness on the part of investors to gravitate back towards technology stocks. still seems like after that huge run-up we saw in november investors taking a bit of a breather right now. sonali: you are watching the s&p being flat on the day but it's just not catching the bid, even with the cooling of the yield. you have to wonder at what point these things decouple a little bit more. jon: absolutely. take a look at the crude trade. now nearing $72 a barrel for debbie ti. we are watching it -- wti. we are watching it closely.

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romaine: pushing back on optimism. scarlet: we are kicking off to the closing bell in the u.s.. take a look at how markets are trading with two hours to go. minimal losses here. s&p 500 stocks a little lower overall. this would mark the 14th straight day that the benchmark index has moved less than 1% in