>> good morning. we are counting down to the asia

open. shery ahn: the boj set for the final g10 rate decision of the year. paul: the chicago fed president says it is too early to declare victory over inflation. shery ahn: hong kong set to put jim eli on trial -- jimmy ali on trial. paul: the last full week of trading, 2023. new zealand underway. modest declines. aussie futures pointing lower after a big finish at the end of last week. the yen continuing strong, relatively speaking.

largely inspired by some of what we heard from the fed last week. the aussie dollar, not a lot of change. shery ahn: interesting to see the moves last week after the fomc meeting, this optimism about the dovish pivot and throughout the week, it faded. now the fed is out-of-the-way. we have to focus on the other central decisions. the boj, tuesday, likely to keep unchanged, despite the fact that we got volatility in the yen. commentary by officials talking about exit scenarios, a signal some took as imminent change. the consensus seems to be no change this week. rate decisions in asia, indonesia, no change expected. columbia, chile, china as well.

south american centrals cutting, they were ahead of the cycle. paul: still unpacking last week's fed meeting, appears dovish. we've heard from austin gold to from the chicago fed, saying it is too early to declare victory. he's not ruling out the possibility of easing in march. in terms, that discussion ongoing. john williams friday saying march is premature, never mind the plot. he says the fed is not talking about cuts. the market thinks otherwise. shery ahn: markets reacting to the latest commentary, the

dollar paring back losses from earlier in the session, rising for the first time in four days. our next guest believes we are still in a higher for longer rates environment. hilary kramer, give us your take on the fomc decision and how markets are taking it and if that is the reason why you are not so offer risk -- not so optimistic about the magnificent seven? hilary: the fed has changed their tune. we do macro investing. this is all about jerome powell wanting to keep his job. once he heard donald trump say he would be fired, the minute he gets reelected -- powell got

ahead of himself. now he has to go back to following the line. 2%. we are at 3%. unemployment is low. u.s. cannot be in a position where it gets heated with exuberance. the fed will walk it back a bit. this has been incredible. to go from 0% to 5.5% in 15 months. to then start cutting back down, no. the fed will take its time. janet yellen on the circuit last week. the fed used to be so quiet and mysterious. now it is doing too much talking. that's a problem. shery ahn: more talking last week. let's talk about the rates environment affecting the tech

sector, especially the magnificent seven. hilary: as soon as rates get cut, tech takes off. that's the equation. we are expecting tech to do well. the market is overbought. every sector except for energy and health care, we are overbought. in terms of tech, if we don't see rate cuts, we won't see tech continued to go up so fast. apple, we believe they cannot pull rabbits out of the hat. shery ahn: another record last week. the broader sector or are there parts of the market that could

offer opportunities? hilary: small caps, in this day and age, meaning five to $20 billion, that money might rotate into. we will see opportunities. look at shopify. that's where i get that. hub spot. four oddity, israeli company using ai, trying to make a run on sephora. there are opportunities. realize it doesn't matter if mortgage rates are 8% or 7%. it's not going to suddenly make people say, now i can move. we need to watch real estate. real estate will be the key. energy -- we had a respite.

the price of oil dropped so much. that helped. that has been significant for the market. shery ahn: you are overweight energy? hilary: 80 points, fall time you high on the s&p, hitting the all-time high on the dow is one thing. the market is marching and wants to see 80 points and see the all-time high. fund managers want a good end of year, but then they all start gaming the system. we will have a santa claus rally. shery ahn: well that include small caps? you mentioned names. we've seen outperformance of the russell 2000, in december, it's usually a good month for those names. hilary: yes. small names will run up because of buying on the russell 2000

and 3000 etf's. also, hedge funds have so much concentrated money, they can bring names up. it takes one hedge fund to bring $5 billion stock up. we should have optimism. there's excitement. the market has been kind to so many. shouldn't think suddenly we will see rates get cut. the fed, paul they are doing is trying to make sure they have the bullets they need, if we have some geopolitical or exegetic shock, or if earnings end up not being where earnings expectations lie. shery ahn: the final earnings season of the year. jp morgan in one month. interesting the profit outlook has not changed, despite the incredible rally in stocks. what gives? well give? hilary: credit quality.

30% rate credit cards. i'm seeing the money sloshing. people are able to get $40,000 of credit, and they are spending it. there's a sense of irresponsibility out there. that will be an issue. financials themselves, banks will have a problem. we've had $10 billion of ipo's instead of $100 billion. there have been cross-border transactions instead of m&a. brokerage firms will do well. jp morgan is careful. they will define. the more regional banks that don't have the excess pillow, the ability to withstand cracks to credit, they could come down. we've been starting to selloff some of our banks. we loved busy.

we unloaded it. they got ahead of themselves. fulton financial, the small jp morgan. shery ahn: that was after march? hilary: just recently. the financials have started to rally way too much too fast. we have companies out there like evercore, lazard. they do so well when we have bankruptcies and restructurings and forced m&a. those banks haven't been able to keep up in terms of stock price. they could surprise up. certainly they will. we will see the impact, it's been talked about too much, but all of the injectable weight loss drugs, we cannot

underestimate how powerful that is going to impact the earnings on companies like synovial, diabetes, novo nordisk, nbo. shery ahn: that will be interesting. so far, they've been resilient and optimistic that retailers wouldn't get hurt. hilary: i think they will get hurt. it is beyond anything anyone realizes, the extent to which america is hooked on taking all these. there's a lot of generic versions of those injectables. shery ahn: going into the holidays, american consumers -- what do you think the trend will be when we get january and we look back at retail sales numbers of how these companies did? we are talking about the potential failure of more companies, eventually that will filter through to the consumer.

when will we feel that? hilary: by the end of the first quarter, into the second. it's inevitable. has to happen. at some point, the banks cut off credit. right now spending is taking place. there will be stars. macy's came back. they are one of the only survivors. i was here the day in november, the new york city marathon, i talked about deckers, which has the hokah sneakers and uggs. the stock just hit 700. we could see it hit 800. lowe's companies, we do research, there were a lot of stock. one cannot even order online. there is so much demand. we will see some companies do well. ultimately, so many jobs will be lost because of ai.

we are going to have bankruptcies. they consumer big-box companies will go out a business. it's inevitable. right now the party is on. everyone should wait for the s&p to hit the all-time high before they even think of selling. shery ahn: great to have you with us. hilary kramer. coming up, international pressure intensifying against israel as it pushes back on cease fire calls from france, u.k. and germany. this is bloomberg. ♪

shery ahn: israel pushing back on calls for a cease-fire as the civilian death toll mounts in the third month of the war. u.k. and germany calling for a truce. we've been talking about the u.s. prodding israel to be more mindful of civilian casualties. we are hearing from the u.k. and germany. >> president biden last week calling the bombing indiscriminate which was the beginning of the u.s. pushback on over enthusiasm on the part of israel. israel pushing back. over the weekend, a joint letter from david cameron and the german counterpart urging a sustainable cease fire. they are defining that as a

piece lasting for generations. "israel will not win this war if it destroys peace. they have a right to end the threat posed by hamas but too many civilians have been killed." the french foreign minister called for a durable truce. these calls coming after france admitted one of its diplomats had been killed due to injuries sustained by israeli bombing at the southern strip of the gaza strip. this coming out the back of bad losses for israel including the killing of three of its own hostages in gaza. we learned they had emerged shirtless from a building in a neighborhood in northern gaza, holding a makeshift white flag, and one shouted help in hebrew.

protests against benjamin netanyahu got more heated after those revelations. they started friday outside military headquarters, then more took place saturday evening, looking for the government to do something about hostages still left in gaza. netanyahu vowing to press on and the foreign minister saying "any call for a cease-fire with hamas is a prize for terrorism and we won't agree." that pressure will continue to ramp this week domestically and internationally. lloyd austin has begun a visit to israel, bahrain and qatar to work with partners and allies to advance defense capabilities. washington is concerned about increasing attacks on red sea shipping, militants backed by iran. >> in terms of the prisoner for

hostage exchanges, have we seen developments? vonnie: we have 129 is really hostages inside gaza. -- israeli hostages inside gaza. calls for something to get going again have gone unheeded. israel took back its negotiating team from qatar on december 2. the focus shifted this week on one-on-one talks. they took place in europe at an undisclosed location. israel media reporting there has been progress. it seems to be extraordinarily slow but at least something is happening. paul: vonnie quinn. other top geopolitical stories, vladimir putin says he has no intention of attacking nato countries. he says moscow has no territorial claims with members. president biden said russia

wouldn't stop at ukraine. the white house is trying to convince u.s. lawmakers to release $160 billion in military aid, held up in a dispute with republicans over border security. egypt is monitoring tensions in the red sea. assault have increased in recent weeks, militants targeting vessels. several shipping lines are pausing voyages on the red sea. the philippines is seeking more military agreements with other countries that would allow joint training. the president visited japan and said manila was looking to boost alliances, amid heightened tensions with china in the south china sea. chinese ships blasted water cannons at philippine vessels. shery ahn: let's turn to energy.

a surprise surge in u.s. shale production posing a threat to opec. sue, a few months ago, the sector influence, u.s. shale on the industry was being downplayed. >> u.s. shale has always been considered opec's nemesis. at one point it was a big threat. now it is back and in a very big way. the permian basin to wax tessa's to north carolina, have ramped up production. this is putting output to a record just as opec and allies with the brakes on supplies and curb output in an attempt to prop up oil price. last year u.s. forecasters predicted domestic shale oil production would average 12.5 million barrels per day during the corner quarter.

today, there has been a reconsideration, up to 13.3 million barrels a day. that's a huge difference. it's the equivalent of adding a new venezuela to global supplies. we've been reporting on the output of u.s. oil has been a surprise to the oil markets globally. one analyst says u.s. has played a huge role in global markets this year. one major market participant points out that what we are seeing with shale in terms of u.s. production, it is not drill baby drill like it was during the shale boom, but it is meaningful and measured growth. it is one more element that adds to the oversupply issue that has been the major pressure on oil. paul: we've seen oil prices holding the two month decline. su: that has a lot to do with

the fed, spurring risk on rally in the last two days. the five-day charts for west intermediate and brent. friday, oil prices ended lower but were able to hold onto the gains. wti ending the week above $71, brent crude took a dip late friday but had a weekly gain. that breaks seven straight losing weeks for oil futures. the fed is ending its aggressive rate hikes cycle and that is positive for all commodities, including oil. the overarching concern has been oversupply. last week, the iea adding to the bearish outlook by slashing estimates. economic activity has weakened. we are not seeing the demand expected out of china. there are still concerns about recession ahead.

all of this causing analysts to believe the near term direction for oil is lower. paul: you can get a roundup of the stories you need to know to get your day going in today's issue of daybreak. subscribers can customize settings so you only getting industries you care about. this is bloomberg. ♪

shery ahn: daybreak australia. a unit of mitsubishi uft is buying the link administration in a deal valued at 744 million u.s. dollars. a 24% premium to the friday closing price.

the board is unanimously recommending shareholders vote in favor. z entertainment has asked to extend the deadline with sony. the deal to create a media giant had a deadline of december 21. zee has been locked in a showdown with sony over whether the ceo would lead the firm after the murder. sony is -- after the merger. more to come. this is bloomberg. ♪

it's an amazing thing when you show generosity of spirit to someone. and you want people to be saved and to have a better life, then you don't stop. the idea that we have saved five million people's lives, it's overwhelming. it's everything. shery ahn: robin vince says ceos need to be prepared for the

unexpected. >> the fed has had work to do combating inflation. over 500 basis points increase in feds fund rate in a short time will create dislocations. that shines a light, if you are a large bank, you have to be focused on asset and liability management. you have to be good at it. you have to focus on being prepared. so many things going on in the world these days. wars, significant gyrations in economies, a big run up on the stock market, rates. record issuance from the treasury. that teaches us you really have to be prepared for the unexpected. while i hope i know what might be happening in the future, we are not in the predictions business. we are in the preparedness business. that's the lesson i would take

from all these things. >> what type of economy are you preparing for? >> inherent in the word, eventualities, you have to be prepared for lots of types. i'm rooting for the fact we will have a soft landing and the fed deserves an a for all the things they've done and how they managed the treasury. they issued the shorter end of the curve. that has helped markets. so far so good. we've had a good run-up in the stock market this year. we can feel pleased. but you said it, there's a lot going on in the world. things could take a turn. for us, it's about making sure we are partnering with client and using our platforms to wrap ourselves around our clients to help them navigate. we touched 20% of investable assets in the world. we operate in 100 markets across

the world. to be there for our clients through uncertainty, that allows us to be successful. >> that position gives you a unique view as to the health of the system. >> u.s. economy has performed remarkably well. when i visit clients around the world, it's a common refrain there are lots of uncertainty in the world, but the u.s. economy has been a place to invest. the people of the country, the innovation has been powering us through uncertainty. it's an investment destination of choice. that's one of the reasons why you've seen the u.s. economy outperform this year versus what we thought at the beginning of the year. paul: robin vince speaking with romaine bostick. currency movements this monday morning in the asia-pacific. not a lot of movement for the

aussie and kiwi dollars. take a look at yen. fair bit of strength. the dollar spot index sharply lower after the fed decision. the dots indicating easing may be on the way. a bit sideways the past couple days. yuan strengthening. fx, let's bring in our next guest. thanks for joining us. i under stand -- you see a continuing to ease but as usual there seems to be a disconnect on loosening policy. mahjabeen: the surprise at the fed meeting last week was the extension on the rate cut.

they upgraded to 75. i think that could play into markets next year. one thing that stood out last week was long run rate expectations. the fed said they moved from 2.5% to 3.3% range to a more narrowing of 2.5% to 3%. members of the committee are now getting more dovish. we think interest rates, we were expecting 100 base points cut next year. paul: the fed, the catalyst. are there other factors you are looking at, predicting the strength of the dollar? mahjabeen: the u.s. has been

successful in moderating inflation, as opposed to other economies. other economies are catching up. europe, u.k. has seen inflation fall drastically over the last few reports. these economies have now moved into a positive real rate environment. that has been a benefit to these currencies. that's played out well against u.s. the u.s. alone, there are questions around the fiscal sustainability, even the credit agencies are concerned. elections next year plays into policy uncertainty, if anything. these are a couple drivers which would weigh on the u.s. dollar ahead. paul: risk to that outlook? what's the possibility of shock

or something going on geopolitically? mahjabeen: interesting this year, the svb situation and the hamas-israel conflict ongoing. the u.s. dollar tends to be a safe haven currency. interesting, we have seen the swiss franc outperform the u.s. in this situation. investors are looking at the issues the economy may be having. they may move toward the swiss franc is a better option. paul: the yen strengthened on the back of the fed decision. the boj meeting this week. we aren't expecting change. what do you see happening in terms of the future of negative rates in japan? mahjabeen: we think they will

exit negative rate policy next year. part to say that hard to say, that is one step to negative rates or the beginning of a series of hikes? look at what the boj is expecting in '25, they are looking at core inflation -- [indiscernible] -- below target. that indicates they don't think inflation will be a long-lasting issue in the future. it may be more moving out of the negative policy. we think that will be april. paul: yen, we've seen it strengthen, but historically weak. where you see it heading in '24? mahjabeen: 1.36, end of '24.

ahead of every meeting, there are expectations. there have been tweaking. that plays into volatility. we are at the end of the year now. liquidity, in the last week, we have seen sharp moves, which seems to stabilize now. moving forward, one side of the story is the boj shift. the dollar-yen story reflects the u.s. we have seen the long end yields move down, and that will support the strength of the yen. paul: all right, thanks so much. shery ahn: breaking news out of chile, the results of the referendum in order to approve a new constitution. chileans rejected the second attempt for a new charter, more

than 50% tallied, 55% against. the right wing party conceded defeat in the referendum with its president saying they will respect the decision of the voters. let's bring in carolina gonzales. this was expected. polling indicated this would be rejected. it took years in the making. how significant is this? reporter: pretty. the constitution currently in place that dates back to the dictatorship will remain. this comes at a time when there has been a political struggle for passing any reforms by the president's administration. this was their second attempt. it was the result of protests that started in 2019, the result of subway fare increases which ultimately led to chileans going

to the streets and asking for wider changes. all these proposals, they've all been rejected. we got into this, there is not any tags. we will have the status quo. paul: years in the making, two attempts and no change. now what? reporter: the administration says there will not be a third attempt, however analysts have said this will not bring closure to the process because this issue is within, and the people will be present. there will not be a change that will address whatever took people to the streets in 2019. there won't be a third attempt, however, once the presidential elections come around in '25, this topic will resurface and there might be another attempt. there will still be modifications to the current constitution. in august, they passed a law

that requires, that lowers a requirement to change any amendments in the constitution established. shery ahn: this was a key drive. i wonder how this will tie his ends, even as he has two more years left. tell us about market reaction expected. they come online. reporter: markets have priced in the result. polling in the past weeks have shown this would, despite the narrowing. there shouldn't be much of a reaction. it should be muted. this, in a way provides certainty, that the process is over, in terms of bringing a new process of choosing new constitutions and starting this process again, however the uncertainty will remain because

there won't really be changes that were written rested by the people -- requested by the people. shery ahn: chile rejecting a second attempt to draft a new constitution. this is bloomberg. ♪

paul: jimmy lai set to go on

trial monday after 1000 days in prison. it is the city's highest profile case, following widespread antigovernment protests in 2019. we're live outside the magistrate court. big day. what are we expecting to hear? reporter: this is a landmark court case from hong kong. it is being closely scrutinized by western governments. statements by david cameron over the weekend. lawmakers in the u.s. and canada have called for his immediate release. it's important because of what it means for hong kong as a financial hub. critics of the law, hong kong maintains it safeguards its

critics say it compromises the rule of law, which has been the basis of hong kong's identity for so many years. shery ahn: u.s. state department on the trial saying they are condemning the prosecution of lai. the u.s. urging beijing, hong kong officials to respect press freedom, and to immediately release jimmy. we are getting the latest lines. tell us more about the international implications. you mentioned the u.k. urging beijing for his freedom. we are now hearing from the u.s. what does this mean going forward? reporter: it underscores why this case is important in terms of the geopolitical implications.

there is a risk this becomes a flashpoint for u.s.-china relations and u.s. relations with hong kong. lawmakers have been vocal in washington and brussels, and westminster, about the case in particular. there will be this question, whether this slight warming we have had in relations, whether that can remain, given there has been so much vocal criticism over hong kong. the broader question is for some, the case of jimmy lai, symbolizes how far beijing has been willing to go to crush dissent in this city, going beyond just the case of an individual in hong kong, but has taken on this symbolic power, the crackdown hong kong have seen in the past five years since the pro-democracy protests of 2019.

paul: rebecca, thank you. you can watch us live and see past interviews on our interactive tv function, tv . you can become part of the conversation by sending us instant messages during our show. this is terminal subscribers only, check it out. this is bloomberg. ♪

shery ahn: robert friedman says copper prices need to double to stimulate the industry into building new mines. he expects strong demand from china. >> everybody thinks of the real estate sector in china. it's a broader economy. solar, wind, new energy. massive. >> what do you think the demand will be like? >> healthy. physical inventories are low. chinese smelters are scrambling to find feed. the refining charges are down sharply, meaning they are hungry. the miners are having trouble

supplying enough copper concentrate. that's a global issue. >> morgan stanley thinks it will go 9000 by second quarter. is that realistic? >> more or less consensus. middle-of-the-road. part argue. -- hard to argue. >> will that disrupt demand? >> in order to build a new mine, $9,000 is not enough per ton to stimulate the industry, to take the risk, to build huge mines in latin america. the traditional minds are -- mines are $20 billion each and 20 years of work. you need $15,000 per ton stable

for a long time before the industry can gear up. >> wow. >> we've seen that. copper disruptions are rising rapidly robert. what's the supply picture look like in '24? >> if i hold a telephone book out here for one hour, i can't do it but if you put a feather on it, after an hour, you will break my arm. disruptions in panama, chile is late. that's enough to take the slack off. we are in deficit already. as the fed weakens rates, in an election year, almost any additional disruption could cause a sharp upward spike in prices. paul: ivanhoe founder robert friedman speaking with bloomberg.

market opens in australia at the top, seven minutes away. let's take a look. energy and mining stocks in focus. the price of iron or easing. oil price moving around, bouncing off the lows, brent trading at $76 per barrel. some of those minors we are watching -- miners we are watching. looking at insurers in australia as well. qbe. cyclone jasper hitting northern queensland, downgraded. the flooding in its wake has been impressive. half a meter of rainfall in places. this is the gateway to the great barrier reef. number of planes at mccanns airport have been flooded.

floodwaters up to the bottom of the fuselage. some people are stranded on rooftops, in crocodile infested waters. the remnants of cyclone jasper causing havoc. insurers, want to watch. shery ahn: really terrible. we continue to see more examples of extreme weather with climate change impacting the world. take a look at markets now. downside pressure for the futures, after gaining ground five consecutive sessions, being at the highest level since august. suffice to say, the a6 100 is already there on the rsi 14 levels. qe stocks losing ground for a second session. we've been watching kiwi dollar prices after the weekly gain last week.

kiwi futures not doing much after gaining ground friday around the one week highs. a lot of volatility in equity markets in japan. the japanese yen has been volatile. we are not seeing a lot of movement in fx but more to come this week. paul: a lot of centrals this week, including turkiye, chile. the big one, the bank of japan, the last bastion in the world. we might get a few clues on how short-lived it will be. inflation will be the key. . japanese cpi numbers at the end of the week the end strengthening a bit largely think to the fed moves at the

end of last week. elsewhere the aussie dollar pretty much stuck. the bloomberg dollar spot index eased off on the fed decision. the chicago fed says it is too early to declare victory over inflation. the rhetoric unchanged. the market thinks otherwise. the australian market opening next. this is bloomberg. ♪

sherry bob