♪ >> i am john pilger welcome to bloomberg markets. sonali: and i am so gnarly buck. -- sonali basak from the green on the screen for the s&p 500, 0.3% higher on the day. the nasdaq 100 getting more love, almost 0.8% higher on the day. crude back on the rise, you have appointment percent gain in crude, back above $71 a barrel. 2-year yield also flat on the day, one basis point higher. it has been fluctuating.

i went to look at the 10-year yield, we just had at $37 billion auction. also watching 10-year yields on the rise. the 10 year and three year auction as well had a bit of pain, a bit of struggle in terms of selling new treasuries into a market where you are watching critical economic data ahead. you have inflation and then you have the fed ahead of us this week. not too surprising to see a bit of pressure on the treasury market once again. jon: definitely feels like macro is going to rule this week. we do have some corporate stories that are moving individual names today. in canada we have been watching blackberry where the company has named a new ceo. they are also backing away from their previous plan to do an ipo for their internet of things business. market is trying to make sense of that. the market is also reacting to occidental petroleum's moves to make a big fat, in a time when

we have seen a lot of big energy moves, chevron, exxon and now this occidental acquisition. and on the deal story, we have been tracking a lot of stories on this monday. share prices of macy's and cigna . let's start with the macy's story. you now have a suitor interested and an investment deal possibly coming together. we'll see what happens. shares are up more than 20% on that news. and then cigna, we have been watching that one closely as well. we thought there might be this pursuit of humana. they are backing away from that. investors like the news because it comes with the plan to focus on stock buybacks. a very busy developing day on the deal front. sonali: we will discuss this more with our bloomberg guest who has been following both stories. let's start with macy's. art-house. is an interesting activist

investor. what it does their pursuit of macy's say about the market? >> is not the first time someone has made an approach to macy's, it happens many times. we have also seen a bunch of retail bankruptcy filings coming in and restructurings. it's a tough business. for anyone to come in especially around a time where bed, bath & beyond had just gone through bankruptcy, it is interesting timing. and arkhouse has a background in interest- -- real estate. we will see what happens. jon: on the cigna front, in your story, the stock performance, when you're trying to determine the value of the deal is always a consideration. how to play into cigna's thinking? crystal: all m&a deals are about price and we were told by sources that it would be a good

strategic fit and could get through regular hurdle which is a concern with mergers & acquisitions. ultimately, it couldn't get there in terms of value and price. end of the reaction of the stock after the story broke also put this to a pause. we were told of deal is no longer going ahead as of now, but the company, cigna, increased its buyback by $10 billion. so there should be more action there and they are as of now still going through with some of their asset divestiture. it is interesting to see what they will do with the capital they have on hand. sonali: bloomberg's crystal tse, thank you for your time. let's bring in vice-chairman of banking. if you look at what happened to cigna, you think of the investor appetite for companies to do deals, are they willing to foot the bill here given that we have seen such muted reaction in the first place? >> thank you.

nice to see you again. the investor appetite is there, absolutely. we want to see strategic aggression and understand the timeframe to close from a regulatory standpoint because obviously if it takes two years, they have to factor that from a value standpoint. then they want to see what the value enhancement is. so the investor reaction i think will continue to be something everyone focuses in on. but so far, strategic transactions have done fine. the issue has simply been long-term regulatory impact and how long will it take and what will be the legal issues to get from here to there. sonali: what about industry? the other big elephant we have not talked about is occidental, clown rock, 10.8 billion dealer deals. he started to see mega deals. two out of three deals this year have been mega deals in the energy industry. will that drive the environment for mergers & acquisitions in 2024 leon: the environment for

mergers & acquisitions should start to get better here. it had been muted because of uncertainty only the economy, uncertainty on interest rates and uncertainty from a revelatory standpoint. those hurdles are starting to go away, but you still have a 10-year that has not gone down, it hasn't broken 4%, so financing remained expensive. . on the other hand, equity markets, from my standpoint, are at highs, so the use of equity becomes very attractive. i think you will see more transactions at large. no doubt those discussions are taking place right now and i think the boardrooms and chief executives are feeling more comfortable about an economic outlook and a pricing that they can act on. so next year should be reasonable. the other side of it will obviously be an ipo market whose opening i think continues to get delayed and that will be something we are focused on. jon: let's build on that, what would be the challenge in the ipo market going forward?

leon: i think the challenge on the ipo market is simply a factor of risk b willing to come in, from an investor standpoint, interest rates potentially starting to go down, and valuations being looked at as attractive. we had a number of transactions done in the third quarter and fourth quarter that were all good companies, they all struggled a bit on pricing and have all somewhat recovered. they certainly didn't open up the floodgates. the backlog is huge and i think companies that feel that they can price reasonably in this environment will look quite aggressively, probably less so in the first quarter, i think we will see some, but certainly in the second quarter and certainly if the fed starts to cut rates, and your guess is as good as mine as to when that occurs next year, that will be a catalyst for the ipo side. jon: what about activist investors? what are they going to be considering when it comes to

possibly shaking the tree and trying to force some change at already public companies heading into 2024? leon: the activist business continues to be relatively strong, so they will continue to shake the trees in terms of spinoffs, divestitures and, to a lesser extent, buybacks because they will begin for about companies using their capital on higher-stocks. but obviously, cost cutting will continue to be a focus for the big firms. you have seen that environment throughout the past year and in my view, there will be more money it going into the sector going into 2024 and onwards, so relatively positive form of that investing class. sonali: a week or two ago, you had someone speak at the goldman financial services forum. huge backlog for mergers & acquisitions, he said. you also only need -- restricts to stabilize -- he

said you only need rates to stabilize, not a rate cut. what do you think about that environment for mergers & acquisitions? leon: i am skeptical of how much of the pipeline turns into reality. rates have fundamentally almost stabilized at this point in time already, so i think the sectors you and i have talked about, whether it is health care, energy, technology, those will be sectors that you will see transactions done next year, small, medium and potentially large as well. sonali: over at citigroup today, they named managing directors, 304 people promoted, traders that the biggest share of that pie. what is it like to be trying to advance in investment banking job today? is there enough to come by into next year to kind of turn their fortunes around? leon: i think we're are very excited about the class. the reality is, for those of us who have gone through it, today is most exciting day in their career, they will always remember it.

. we have a phenomenal class of folks spread throughout the firm. and we are continuing to invest heavily in the sectors that have growth. i think the class we announced today is evidence of that the talent pool is good, the folks are excited about it. for them this is a steppingstone stone to a significant part of their career. we look forward to great things from this class. jon: what would be your hope for the areas where this new group is excelling over the next decade? when thinking about where cilia specializes going forward, who do you see as the longer-term focus? leon: this group is spread out over the firm -- transaction services business security service business, markets business, all doing very well and expanding. our private wealth management review continue to have great folks, the banking business, the corporate bank, the investment bank, the commercial bank.

there are a variety of areas for these folks where they will be gainfully employed in an exciting career. and obviously, technology is the overlap on everything, artificial intelligence, artificial technology affects all of these businesses and for the folks being promoted, entering at a junior level, it will be a very interesting area for them to get trained in and to develop their career skills. sonali: it's interesting, thinking versus nonbanking this has been the biggest -- banking versus nonbanking, this has been the biggest story of the year. there is frustration starting to brew about the private credit industry and competition with the big banks. how do you think about it at citigroup when financing new deals? leon: i don't view it as frustration. i view them as our partners. there are some wonderful firms that have grown up. blue olw, six street, apollo, they have been great partners

and filled a void in the marketplace that was very important. i think those businesses will continue to growth, there will be places where they will be very effective in play, places where banks will, and places where we partner together. but it is actually a good development for the market. jon: we appreciate your time, leon kalvaria citi's vice-chairman of client and banking, join us. coming up,, a publicly traded distressed mall investor is surging after filing its second bankruptcy in three years. we will have details on that. and let's take another look at 10-year treasury yield, we are seeing it fall. the auction results. we will continue to track that. this is bloomberg. ♪ insurance cuz i don't need it anymore. my kids are grown, my wife is great, let's settle up the score. it's time to travel to

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jon: this is bloomberg markets, i am jon erlichman with sonali basak. time for our stock of the hour, we have been tracking pennsylvania real estate investment trust which has filed for bankruptcy for the second time in three years. its focus on multi's made it vulnerable to the changing landscape for the commercial real estate sector and for retailers. and in higher interest rates, and the company is hiring right now. but it has really struggled with its debt load. bloomberg's abigail doolittle joins us with more. i guess, to hear about a company going bankrupt twice in three years, it seems pretty rare. i don't know what the numbers tell you. abigail: certainly never heard of it before. bankruptcy itself on a relative basis is rare, but twice in three years is pretty incredible

and the first was in 2020, the pandemic, as shoppers were not able to go out. this owner owns 19 malls, class b. lower rents, worse locations and with the pandemic, it was just more than they could handle. what makes it interesting is you have a reit going bankrupt twice. most of them try to keep their debt load at 20% of the capital structure, but when things go bad, they go bad quickly. that is the case here. you talked about their debt spiraling out of control, that was a big piece of what happened. not just the pandemic, but at this point for the second bankruptcy, rising rates. have this confluence of factors creating strange events. sonali: were there any other options for the company besides bankruptcy? abigail:? abigail: a source told me they had been working for months on alternative strategic options but apparently there are no other buyers out there. i think it has to do with all

that debt that bankruptcy was seen as the best option. they have assets of $100 million liabilities of more than $1 billion. it is skewed the wrong way. they declared bankruptcy, they offered a plan to/debt by $800 million. the restructuring is going to push out certain debt maturities. they put out some money for shareholders, very rare. two investors going in. it has to be approved by the courts. it will be interesting to see what comes up in the long-term. jon: abigail, thanks for breaking it down for us, bloomberg's abigail doolittle. . we will continue watching the reit market and also have a conversation with virginia governor glenn youngkin, who says his team is beer and for a recession in 2024. this is bloomberg. ♪

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sonali: this is "bloomberg markets." i am sonali basak alongside jon erlichman. virginia governor youngkin said voters are correct to be concerned about the risk of recession. it is some of his exclusive conversation with annmarie hordern. >> the most pressing issues today are ones of economic confidence, and really the tenant is of rising cost-of-living. it's clear over the course of now the last three years of the biden economy, we have seen inflation really run away from a lot of folks. 60% of americans are living paycheck-to-paycheck. i hear it. i think our next year or two of national economic opportunity will be defined by a lot of these important issues. one, what is happening internationally. we have more black swan risk internationally than we have seen in a long time -- war in

israel, for in ukraine, saber-rattling like we have never seen with china towards taiwan. we are seeing massive, massive challenges with regards to national security around the border and how we handle this just absolute crisis and drug flow and illegal immigration. how we are responding to the pressure it is placing on our cities. and yes, we are seeing interest rate that, while i believe the market is hoping that these come down next year, hope is not a strategy. in fact, there is a big difference between markets and the economy. in this case, i think interest rates will be higher-for-longer. i think it has a massive effect -- >> you don't think the fed will cut next year? >> the fed will cut when we have a recession. [laughs] this is their ability of the mild recession that i expect we will see next year that we are building into virginia's plans.

finally we have a real challenge around reaching a budget agreement. while there have been two postponements of this debate, come january and february will have it again, and i think it is just a reality of their is a lot of distance between agreeing here. so those factors also just to me that we do have a risk of recession. i hope we don't have one, we continue in virginia to drive things that are expansive in policies so we can have more jobs. at the end of the day, in virginia we are planning for a mild recession. i will make sure we are prepared and if we don't have one, virginians will be a lot better off. jon: obviously one of the considerations within that conversation is where inflation is heading into next year. tomorrow we will get the november cpi print in the morning. let's bring in bloomberg's chief

u.s. economist anna wong for preview. what are you expecting? anna: we are expecting lower energy costs will give the fed a christmas present via a flat headline cpi tomorrow. we are expecting also that core cpi, which has picked up a bit to 0.27% on a monthly basis. year-over-year, that means headline would fall from 3.2% to 3.1% and core would stay around 4%. i think really the bigger picture to take away is that last friday we saw from the university of michigan survey that short-term inflation expectations have plunged from about 4% to just 3.1% and highly driven by lower energy prices. what we are seeing is a mild winter, so people's energy bills are not as high as before.

that is a gift from the weather and energy component alone. sonali: a lot of luck on the side of the administration. what about the fed? inflation is not going to be less of things like oil prices. does it change the contradiction in terms of the fed cuts into next year? anna: the fed cares about two things first, what the court inflation data is showing. and second, what inflation expectations are showing. the fact that we have seen a plunge in short-term inflation expectations actually gives room for the fed to cut. if they see that core inflation is on track to fall to 2.5 percent, 2.6%, i think the marker which signals the fed could be cutting is if the six month annualized core cpi or core pce, gets to about 2.6%. that is about the time where the fed could cut. so i think we will see a cut in

the first half of 2024. jon: alright, we will be watching closely. anna wong with the broader outlook for the economy. we have the fed decision and the inflation numbers this week. when it comes to the markets, you started talking a little bit about what was happening in the treasury market. we continue to keep tabs on the 10-year yield. we are also watching a bit of buying in the broader s&p 500 today. sonali: interesting, we are near session highs for the s&p 500, and looking at an interesting rally. fairly broad-based. 400 stocks or so nearly in the green for the s&p. to your point, the 10-year yield, what do you make of the day were so much economic data is still ahead of us? we will be watching that dot plot. jon: as we prepare for that, we leave it at that. . for sonali basak, i am jon erlichman. this is bloomberg. ♪

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romaine: equity quality picks up in what could be the last real trading of the week. i am romaine, and look who's here. katie: i am back! we do have a rally on our hands, about two hours until those bells rang. take a look at the s&p 500, up about 3%. it does not look like much, but those are session highs, really following throug