>> this is bloomberg markets. >> we begin on a day where we are digesting fed speak in the united states. more from john williams who tried to hold back what fed chair powell deliberately said the other day at his meeting. you would not know to look at the s&p 500 because we are down a point. a lot going down today with that melt up we saw the last couple of days. the 10 year yield up 3.93, down

from 4.20 48 hours ago. bloomberg dollar index showing strength. weakness for the euro today and crude oil right now unchanged, 71.59. jon: let's talk about the corporate stories that are moving individual names today. costco paid a profit picture for investors and a special dividend that has fueled the stock. it is up 4% today. guidance coming from steel dynamics encouraging investors, those shares have been a top performer in trading, up five percent. on a day where we are seeing cautiousness in rate sensitive stocks after the run-up that we had seen the last couple of days, there is a commitment to technology. ai and intel with its latest unveiling to analysts, a positive reaction on how it might play into that ship filled

future. shares up 2.5%. a company that has been impressing wall street, getting a nod from bank of america today on some of that ai possibility continuing to grow. still some money moving into the technology center on this friday. vonnie: exactly. we heard from a few fed presidents today. earlier, we heard from ey chief economist with his own thoughts on the fed's monetary path in 2024. [video clip] >> whether it comes to the feds forecast being realized or the market expectations being realized, i think the truth in the in lies somewhere in between, probably 100 and 125 basis points of rate cuts next year with an environment where inflation is gradually slowing and we do not enter recession. if we enter recession, the game is going to be different. vonnie: definitely a pleasant picture being painted. less than an hour ago, we heard from bank of canada governor saying the bank of canada thinks

it is too early to consider rate cuts. or more, we are joined bind bloomberg's ottowa chief. do you feel he had to say this, markets all over the world turning toward the idea? >> yes, i think markets had hoped and expected he would follow powell's dovish. . but, he did not go that far. that said, it does mark a slightly dovish tone than we have heard from the bank of canada. the bank of commanded in all of its communications until today has commuted a line that says we are prepared to hike again or some variation on that. that language was not in this speech. he made reference to the need to be nimble, to adapt if necessary. he shifted the focus from being, how high do we need to go to how long do rates need to stay high?

it was a subtle shift but we could see him now starting to talk about talking about the cuts, if that makes sense. now, he is saying the debate will continue about how long policy needs to remain restrictive and we see inflation coming closer to our 2% target by the end of next year. the next couple of quarters might be challenging for canadians. but, we are going to start to have the discussion about cutting rates once we see inflation on a sustainable path to the 2% target. while it is not this extreme rubbish pivot that may be the markets had hoped for, it is a softening in the language. jon: you are calling --erik hertzberg was describing it as a slow erosion of hawkishness. the word pretzels, we have to form to make sense of central-bank language. really quickly, there was a moment earlier this year where

this bank governor sent a message to the markets that may be rate hikes were done. do you think his language -- even when we got a message the market liked from jay powell, is being cautious in part because of how he was wording things earlier this year? >> yes, that it's quite right. canadian markets got ahead of themselves earlier this year during a positive. the housing market roared back to life and consumer spending shot up. that prompted policymakers to come off the sidelines and boost rates once again. he does not want to create another situation like that. he does not want the markets pricing in cuts sooner that he is prepared to cut. i think he is being extremely cautious in his language at this point. trying to send a signal that we are not ready to cut yet. it is way too early to be talking about it.

but, we are moving in the right direction and we believe that we will get there toward the end of next year. vonnie: definitely the new challenge for central bankers worldwide. when it comes to handling the u.s. economy, the -- says the fed deserves an a. he spoke to romaine bostick in new york. [video clip] >> the fed has had a lot of work to do as it has combated inflation. those types of changes -- we have had over 500 basis points of increase in fed funds rate, that is going to great dislocations. what that shines a light on is you really have to be, if you are a large make, focused on asset and liability management. you have to be good at it and focused on being prepared. you said earlier on, there are so many different things going on in the world these days. we have got wars, significant gyrations in economies. we have had a run-up in the stock market, in rates, record

issuance for the treasury. that teaches us and we have had this lesson over a long period of time, that you have to be prepared for the unexpected. while i hope i know what might be happening in the future, we are not in the production business. we are in the preparedness business. i think that is the lesson that i would take from these things we have seen this year. >> what type of economy are you preparing for heading into 2024? >> inherent, you have to be prepared for lots of different types of the economy. i am rooting for the fact that we will have a soft landing. i think the fed deserves an a grade for how they have managed. the treasury have issued a little bit in the shorter end of the curve. it has helped markets. things so far, so good. we have had a good run-up in the stock market this year. we can feel pleased with where we are. but, you said it, there is a lot going on in the world.

things can take a different turn. for us, it is making sure we are partnering with clients and using our platforms, our market-leading platforms, to wrap ourselves around our clients, to help navigate that. we touch 20% of all investable assets in the world. we operate in 100 markets across the world. being able to be there for our clients through the uncertainty, that is what allows us to be successful. >> that position gives you a unique birdseye view as to the health of the financial system. is it healthy right now? >> i think the u.s. economy has performed remarkably well. when i visit with clients around the world, it is a common refrain that there are lots of uncertainties in the world. but, the u.s. economy has been a place to invest. the people of the country, the innovation that we see here has empowering us through some of these uncertainties and it is an investment destination of choice. i think that is one of the reasons why you have seen the

u.s. economy outperform a bit this year versus what many of us might have thought at the beginning of the year. jon: bny melon ceo speaking earlier with romaine bostick. let's get perspective on the year ahead. we are joined by christina hooper, invesco's cheap global market strategist -- chief global market strategist. on the heels of those comments about the state of the u.s. economy and how investable the u.s. is now, how are you thinking about the new year, especially the run-up we have seen in the stock market? >> there is no doubt that the u.s. economy has held up very well. but, keep in mind that it has been less vulnerable to the rate hikes cycle simply because most outstanding mortgages are fixed rate, long-term mortgages. that takes a lot of pressure off consumers.

the average rate is a little over 3.6%. while we have seen canadian consumers, european consumers, come under more pressure because of the nature of adjustable-rate mortgages went there is a significant tightening cycle, american consumers have gotten away far more unscathed. that has helped. i would draw a distinction between opportunities in markets and the strength of an economy. quite often, we can see other markets perform better, even if their economies are perceived to be weaker. in particular, if markets are discounting and economic coverage -- recovery, i would anticipate emerging markets and european equities may very well perform better than u.s. equities. jon: one of the interesting things we saw in the previous two training sessions after the messaging from jerome powell was

that many of the interest rate sensitive stocks that had struggled this year, the cyclical stocks we see in canada that have been lagging, let's say technology, started to find buying interest. are you saying the environment, if economically it holds up relatively well worldwide, that some of those sectors that underperformed this year could have better performance next year? kristina: yes, i think we are going to start to see that already. we have certainly seen that broadening of the market recently. i believe that while we are likely to see a downturn in the first half of the year, stocks tend to discount six to nine months out. they're looking through that downturn and anticipating a re-acceleration in the back half of 2024. that is the recovery trade that i think will drive better performance from emerging markets, equities and european equities. u.s. equities are likely to hold up fine. i think there is a case to be made in particular for the

technology sector. but in general, i think we are likely to see other parts of the world perform better. vonnie: how would you take advantage of that? it feels a little riskier going outside of the u.s. if you had done that this year you would have made plenty of money in certain markets. how would you advise doing that? kristina: actually, it is fairly simple. one good practice to have is simply rebalancing one's portfolio at the end of the year. a rebalancing after this year is likely to yield some alterations. a taking of some profits in u.s. equities and some investments, some increase in allocation to emerging markets, equities and european equities. it can be as simple as that. also, some emphasis on cyclicals and smaller caps. if we see a reacceleration come to fruition in the back half of this year, i think that the environment going forward is

likely to favor those areas. vonnie: what gives you such confidence that european equities will hold up, even though europe's economy seems to be doing worse than the u.s. right now? we got the pmi data today that was disappointing. when you have emerging markets, you have to look at china. you can't discount the china effect. kristina: sure, simply because while we will see that slowdown in the first half of the year, i think stocks will look ahead to the back half. i think we are going to see a recovery because pressure is being taken off those economies. if we start to see rate cuts in second quarter of 2024, that is likely to also be catalyst for reacceleration in the back half of the year. vonnie: thank you so much for joining us today. coming up, a tale of two stocks. costco jumps into the weekend.

details on both companies, next. ♪

♪ (captivating music) ♪ (♪♪) the first law of thermodynamics states that energy cannot be created or destroyed. (♪♪) but it can be passed on to the next generation. (♪♪) was also the first time you heard of a town named dinosaur, colorado. we just got an order from dinosaur, colorado. start an easy to build, powerful website for free with a partner that always puts you first. start for free at godaddy.com

jon: this is bloomberg markets. time for our stock of the our segment. the name we are watching today is darden. shares are off there are loads of the session, but still down today. this is the owner of olive garden, longhorn steakhouse is. they reported results, darden's ceo delivered on the bottom line and has been talking about focusing on profitable growth. the sales number fell short of analyst estimates. that seemed to be one of the

analyst concerns so far. vonnie: exactly. it is a fascinating insight into the consumer. there are other insights into the consumer that can be confusing. let's get to bloomberg's john edwards the third who can give us more context. on one hand, you've got darden. on the other hand, you've got costco. we are seeing a different picture. what is happening? >> what we are seeing in both cases is consumers in many cases have money to spend but they are being increasingly picky and selective about where they are spending it and how much they are spending. costco is in a fitting from being, they have a model that appeals to people who can spend money to save money. people who can afford to pay their membership fee to get the deep discounts they offer. they are getting high income consumers who are nevertheless looking to save in this

inflationary environment. with darden, you have the olive garden, longhorn steakhouse doing fairly well because people still want to go out and celebrate. some higher end chains are doing less well because people are looking to pull back, if they would have gone to a capital grill instead are going to olive garden. so. jon: that is helpful context. i wonder if we went back a year ago, especially with the restaurant operators, it felt like there was a great economic unknown. did you feel the tone or management teams on these calls was different? we are talking about whether the u.s. economy can navigate through 2024 relatively well. are the ceos speaking more confidently? john: i would say costco certainly feels confident knowing into the year. they have the model to work in this economy. they are benefiting from people

who are trading down looking for discounts but nevertheless able to afford their membership fees. one thing investors are looking for is when costco will raise those membership fees. they have been saying it is a matter of when, not if. some people are looking for that to happen sometime in the first half of the coming year. i think darden was more cautious given the trends they are seeing with their high end chains. but, they feel like they are positioned to benefit as conditions improve, if they do. jon: great to get that perspective, thanks very much. bloomberg's john edwards will continue to watch what is happening with restaurant operators and costco. technology player breaking, according to the wall street journal, doc you sign is working with advisors to consider a possible sale. if a deal like this were to come

together, it could end up being one of the largest leveraged buyout in recent memory. according to the journal, they are not necessarily near the finish line, but there is possible private equity firm interest, technology company interest. people recall this company was very popular including with investors during the pandemic, but we will continue to watch. they went public in 2018. doc you shares up 8.5% on that news. this is bloomberg. ♪

jon: this is bloomberg markets. container shipping giant instructing all vessels heading for the southern entrance of the red sea to positive wages after one of its carriers came under attack with militants who have

been attacking more and more merchant ships and the red seas. vessels they claim are connected to israel. joining us from london with more is bloomberg's l a recondite and gay a. ever since we have started covering the work, we have seen this side story developing. what can you tell us about it? >> pretty soon after things escalated in gaza, used saw vessels being attacked by the militants. that was sporadic and often times you could see a link to israel. as time has gone on, the attacks seem to be intensifying. i think to see less clarity they are connected to israel, that is a concern for the market and for trade. 12% of seaborne trade goes

through that canal. the other big canal in the pacific and atlantic oceans, the panama canal has got its own problem because of drought. it is becoming quite serious. there are lots of attempted boardings, it sounds scary for the seafarers we heard from the container carrier they are not going to use the red sea until monday. you say 12% of global trade, are there certain commodities that go through the red sea in the sense that it might be more effectual for certain items and others? alaric: it encompasses everything. loss of oil, loss of gas, loss of manufactured goods that end up in the stores in europe. i think what is coming through now will come after christmas. nonetheless, it is a vital trade

for everything. there is no one thing that stands out. i think we are expecting gas that to come through. we do not know disruptions, but there is every chance. the past couple of days, there have been three container ships attacked from what looked like reasons in connection to israel. you have to think, well, who else is going to get attacked if other people get attacked? are they going to take similar actions to maersk? as well as these container shipping companies, there have been oil tanking companies that have asked -- they are insisting that their ships be allowed to go the long way around to africa. vonnie: it is adding to costs for these companies, not just shipping extra fuel, but security costs. we have to leave it there.

this is bloomberg. ♪

i'm a little anxious, i'm a little excited. i'm gonna be emotional, she's gonna be emotional, but it's gonna be so worth it. i love that i can give back to one of our customers. i hope you enjoy these amazing gifts. oh my goodness. oh, you guys. i know you like wrestling, so we got you some vip tickets. you have made an impact. so have you. for you guys to be out here doing something like this, it restores a lot of faith in humanity. i'm a little anxious, i'm a little excited. i'm gonna be emotional, she's gonna be emotional, but it's gonna be so worth it. i love that i can give back to one of our customers. i hope you enjoy these amazing gifts. oh my goodness. oh, you guys. i know you like wrestling, so we got you some vip tickets. you have made an impact. so have you. for you guys to be out here doing something like this, it restores a lot of faith in humanity.

>> a better week for u.s. stocks than bonds. i'm scarlet fu. >> we are kicking you up to the opening bell in the united states. you expect there to be a lot of activity. s&p 500 index down .5% right now. if you missed out on the early part of the year, you could still have gained 15% of that from the end of october until now. nasdaq 100 up 29