vonnie quinn: let us have a quick check of the markets, we saw a fedex earnings, a bellwether for the economy came in disappointing and we have the s&p 500 holding onto some small gains today, inching closer to the record. this is of course as traders look forward to pce data friday and gdp data thursday. up to .7% for the s&p 500. the 10-year yield for the auction is 3.88. crude oil and barely holding onto gains, like he is saying that it may have supply shortages because of the red sea problems. that continues.

bitcoin is up 3.5%. potential scc approval of a spot bitcoin etf for more than one eminent. they have to make it decision by january 10th. consumer confidence rose in december by the emotions early 2021 as americans grew more upbeat about the labor market and the inflation outlook. in it peterson has concerns going into the new year. -- dana peterson has concerns going into the new year. >> they should still be concerned, wages are not going to rise as much. all of the excess savings is going to go away. consumers have debt, credit card debt and buy now, pay later types of loans. all of those things are going to coalesce into softer growth in the first half. vonnie: let us get to our guest, active global strategist for lpl financial. it is the consumer and concern -- you have concerns, is the

consumer among them? >> the lower wage earners, absolutely. they are suffering because of the higher rates on credit cards . delinquencies are picking up. those who bought vehicles with subprime loans are seeing their vehicles taken away. it is difficult for them. as we go up the scale as long as the labor market remains resilient, the u.s. consumer is going to continue spending. 70% of gdp comes from the consumer. vonnie: i know you say stocks are over by almost any metric and you are saying that valuations are really very rich here. what are we going to see for the first quarter? are we going to see a correction? >> will see volatility if we go into the -- we will see volatility if we see the first quarter going over bond. they are overbought still even though the top seven names, they

magnificent seven have been quiet for a couple of trading sessions. their valuations are really rich. the rest of the market, they are catching up. if you look at the russell 2000 which is a small mid-cap, their valuation still remains well below where the overall market is. it is a broad market. diversified market. nonetheless, overall we do not want to go into christmas goodies and it is better for the market if we pull back and go back in with the rally over the next week and into early january. expect the market will be underpinned by first-quarter earnings and guidance. it should be solid or exiting the earnings recession and it should be good news for the market. vonnie: you have been saying it

seems like the stock market is not vulnerable. you are quite positive on some of the internals. we are seeing breadth brought in and we are seeing the small and midsize companies do better and the earnings recession is out of the way. what is to prevent the stock rally from continuing to ralling other we have had the fed pivot? vonnie: it is actually the fed. that has to do with the market surge predicated on the lower and lower treasury supply. we do not know what will be in 2024. the supply can continue to gain. that would be difficult for the market if we do not see buyers showing up. the tenure auctions. also, if the fed does not cut rates. we are going into today's market with 81% probability that the fed will cut rates in march. right now, you have to ask yourself what does the fed

think when they consumer sentiment is climbing? it is a catalyst for the consumer to continue to make purchases. either in durables or just discretionary. this is something the fed does not want to see. vonnie: what are traders refusing to give up on a march rate cut? -- why are traders refusing to give up on a march rate cut? >> traders are convinced and they have been all along. by the way, when the fomc member actually answered them and said i can see a rate cut, they went in even more full force but the fact is a matter is the question is what would be the catalyst for the fed to lower rates in march? it would have to be either liquidity rise up because something breaks by the end the fed needs to come in or that the

market suddenly sees a recession in recession which at this stage is not likely. right now you are starting to see gdp forecast through the fourth quarter under 3%. still solid enough to warrant expectations that we get through to the march economy that is still expanding. not stellar, but solid. therefore, would keep the fed -- what would keep the fed from a sitting on the sidelines again? one of the questions is political. if the fed at all once to cut rates, even because they believe that inflation is coming down at subject pace as to warrant effective -- such a pace as to warrant lower rates, to get into the election season as it picks up. do something that even though the fed denies, the fact is most federal reserve board members do

not want to be seen as helping is a party. that would warrant a cut early on before the leaks. it cuts and hikes to take a long time to work their way into the barter economy. -- broader economy. vonnie: they will be involved either way move or no move. if you have been in cash or partially in cash, what do you do to get off of the sidelines? >> you would look at preferred. we were long preferred. the market was well known, suddenly they preferred indexes. you could get a nice return and preferreds. look at the bank if you go into preferredd though there -- preferreds, go there. it eases the volatility, to sort of diminish and dissipate. in addition to that, on the equity side, we like industrials

and we like the oil market where i should say the energy complex. it is still attractive and by the way, we do not need a problem in the middle east to underpin oil prices. there are a number of other catalysts including by the way the strategic petroleum reserve punishment program. -- punishment program. the biden administration took out barrels and there are only in 11 million barrels and i can point something out. they have to move on this because it will become a theme for the republicans if they do not replenish that strategic petroleum reserve. vonnie: thank you for joining us today. much appreciated. let us get you the details on the 20 year treasury auction. we have issued at 4.2% art they 1:00 p.m. sale. it was stopped at 4.213 versus

4.198. the yield was 4.213 at the auction. let us get a better opinion from bloomberg intelligence rates strategist ira. $13 billion and a reopening, can you characterize the result for us? >> it is a mediocre to admit on the weaker side of an auction. usually the first reopening, the new 20 year that was issued in november, usually the first auction goes pretty well with pretty strong demand. this one came with weaker demand, we look is in the cold bit to cover and that was the lowest bid to cover of the last several months. at the same time, primary dealers received more of this issue than they have since october of 2022. you had dealers mop update lack of demand. because the dealer smoked that up it is probably a bit of a weaker auction than we would

have expected going in. vonnie: dealers put 2.9% versus an average of 10.4%. as you said, the bit to cover it was weaker, 2.55 times as compared to 2.6. perhaps a little weaker, does it signify anything about duration and what the market is feeling about duration right now? >> i suspect a part of this is that people who were getting flat on the market. no one wants to take duration exposure before they go home for the holidays. i think that part of this is just an acknowledgment that we have had this strong rally. we do not want to buy as much duration here. let us not take a lot of risk until the new year and we will reassess where we want to be and how we want to be positioned going into the data coming in the first half of january. vonnie: five weeks ago, a 20 year yield traded with five

handle. bloomberg's ira jersey, thank you so much. up next, we turn to the commercial real estate outlook. this is bloomberg. ♪ that first time you take a step back. i made that. with your very own online store. i sold that. and you can manage it all in one place. i built this. and it was easy, with a partner that puts you first. godaddy. [announcer] if you're thinking about earning your degree online, snhu can help you get there. - i felt supported throughout the whole process, even from the first call.

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vonnie: this is bloomberg markets. u.s. housing market had dated to bit torrent mortgage rates sliding for a fifth straight week. fixed mortgage dropping by 24 basis points to 6.83%. that is the lowest level since june and suggest potential for the housing market to gain some traction in the new year. let us discuss these rates and the commercial market with the

cbre head of market research and abigail doolittle. it is an entirely different world when you are talking about commercial real state than -- real estate than homes. we had better data than anticipated but what is the outlook for commercial real estate? any silver linings on the horizon? >> the last few years of interest rate rises have wreaked havoc in the commercial real state --real estate. we are used to low rates for so long. the worst is behind us. there will be value degradation that happens over the next six months as we wait for interest rates to come back down. gently. we believe that as that happens, investors come back into the market and the capital markets will be unlocked. we have to remember is for the most part, not entirely, commercial real state --real estate has good fundamentals.

we wait for it to be to put into the market when things turn back on again. with things holding back from -- banks holding back from lending that means a lot of all-cash buyers in the form of endowments or sovereign wealth funds are able to come in and deploy their capital and interesting value add or even opportunistic strategies. >> many smart people are talking about 2024 as a potential moment of reckoning. that is not at odds with what you are talking about. do you think that it could be pretty painful as there is this a meeting of minds in terms of where values are after this period of low rates and high rates plus the changing fundamentals? especially around office from working from home? >> we believe about most of the value reduction has already happened in the commercial real estate market.

as the markets activate and you have that price discovery that happens. office is an entirely different animal, there is a lot of variety in the different types of office space, generally what we see is the prime market is still doing very well. that is the top 10% of the market. we are past prime deliveries. we are past peak construction coming to market from an office market perspective which is going to help the supply side the vacancy continued to rise and getting resilience to the client office market. we believe that demand in that space could outpace supply by the end of 2024. >> relative to the financing side of it, 1.5 trillion or so cnbs spread out widely among regional banks earlier this year. a few of those regional banks collapsed. do you think that this movement

through values changing of hands and the opportunity you are talking about for some and paying for others, could it cause pressure on these regional banks? could we see future collapses or is that behind us? >> most of it is behind us, that is not to say it will not see more distress and that will not challenge some regional banks. we have to remember that most of that distress will be and the lower commodities space of the office market. most of the fundamentals across commercial real state and other sectors --across and other sectors is pretty strong. it is pretty low and you do not think it is anything to destabilize the markets. not all refinancing has to happen at once. as rates begin to calm down, hopefully that will ultimately help any of that distress that may be out there in the market today. vonnie: i was reading about product agreed to by the 5th avenue building that it is housed at, 420 $5 million come

apart i wanted to go ahead with it. is that a good opportunity? might we see more brick-and-mortar retail because of the distress? >> i think the brick-and-mortar retail is interesting right now. that is one asset that is extremely strong from an fundamental standpoint because they have right sized over the last decade and there isn't a lot of construction that has come to bring a rising vacancy in that space. as was early in the program the consumer is relatively strong right now. there are a lot of tailwinds to the retail market. any value at purchases and opportunistic byes in the retail sector can do, they should absolutely execute now because that window is really shrinking as we enter 2024 and again interest rates start to fall. >> we have talked about office and retail and of course there is multifamily and industrial. two spaces that have held up pretty well.

i understand that a lot of supply is coming due over the next year. do you expect it will be absorbed in a coherent fashion? 1 unlike -->> on my office that is past peak construction, multifamily and industrial is different. there has been a lot of development in that space and we are continuing to see record amount of supplies from both industrials and multifamily perspective coming to market. that will raise vacancy and it is going to moderate rent growth. again, it is off of highs that were extremely almost unsustainable over the last few years. it feels more painful than actually is. they give you an example industrial will be under 5% vacancy and rent growth is still going to be in the high single digits. different from the double digits they were seeing in the last few years. still very strong. the fundamentals and the demographics in both of those sectors are very strong.

industrial standpoint expects e-commerce growth. a lot of the supply is coming in areas of strong population growth and onshore manufacturing and diversification of ports around the u.s.. it is very strong. we believe supply and demand will come into balance quickly in 2024. vonnie: we much appreciate your time, that is julie and abigail doolittle. still ahead, almost three years as tesla started trading on the s&p 500. we discussed what its performance has been lacking -- discuss why its performance has been lacking. this is bloomberg. ♪ (adventurous music) ♪

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don't worry. i've got you covered. yes! choose benefits without the mess. that's working with gusto. vonnie: this is bloomberg markets, time for a wall street beats. tesla celebrity an anniversary.

tomorrow it will be a three year component of the s&p 500. tesla shares closed in december 2020, the session before the company doing the s&p 500. they are hovering around 255. let us discuss their performance with keith in detroit. it will be fine, but it would lag the s&p 500 by a good amount. that is not the full story. huge amount of volatility. whited to slot not doing the s&p 500 and its gains -- why did tesla not join the s&p 500 with its gains? >> it has been full of ups and downs. one point that the stock was 80% above that. one point it was less than half of the value. the ev market has become very unpredictable. it has slowed down and that is playing down all ev maker shares. tesla has done better than most

and the story is different if you look at tesla, just this year. the stock has doubled this year. vonnie: exactly, along with the other megacap's. perhaps not as much as them. evaluation before it went into the s&p 500, could you describe it as overvalued? >> what happened is a lot of fund managers anticipating it going into the s&p 500. the stock in 2020 went up by more than 700%. it was quite a ride up. then, ride down, lately, it is really bouncing back. not so much because of its ev characteristics, it is more like an ai play at this point. investors are counting on elon musk's plan for self-driving technology. if you like tesla could be a first mover on that and i could give what is already the most valuable automaker in the world even more value. vonnie: how important are those

self-driving aspirations? are we getting any closer to the day when cars will actually drive themselves fully and 100%? >> that is very fraught. tesla just last week had to 2 million vehicles to make some fixes to its autopilot software. there has been a lot of controversy around elon's claims of full self-driving and its autopilot feature. it has not been an easy road to self-driving. investors still have faith that elon is ahead of the pack on that. vonnie: it is a fascinating look when you look at the analyst table because of 23 isa 23 holds 11 cells. analysts are extraordinarily divided about this company. is it a question of faith? >>. yes. look at their price target projections. they see the stock going down a little bit more. is this mix of -- it is this mix

of the ev slowdown which is really real and inventory of electric vehicles is reaching record highs and then whether or not follow ai and self-driving component will come through. vonnie: keith is covering it all for us and thank you for that. thank you for recording tesla, down . 2%. we hold onto our gains, the s&p 500 up .1%. nasdaq up point 4%. the bdi and brent up fractionally, 10-year yield at 389.20. the red sea forcing ships to read about the impact on global trade, next. this is bloomberg.

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markets. vonnie: this labor market will not be deterred. green on the screen, inching closer to that record for the s&p 500. up 6.5 points. the market will look forward to the friday pc data that the fed is looking forward to. earnings from fedex. the market trying to look past that. 10 year yield at 3,8901, back

where it was at the beginning of this year. 10 year option was ok, maybe a bit weaker than what traders were hoping for. crude oil, we are off our highs that still trading around 73.92. it does not look any better for the snarls in the red sea and the panama canal. bitcoin, as the imminent decision on spot etf's for bitcoin approaches, rally once again today, up 3.5%. jon: we will keep watching bitcoin. we are also watching shares of fedex, despite the fact that the s&p is positive right now. negative day for shares of the shipping giant, down more than 10% right now. we knew cost-cutting would be focusing the quarterly results. there are lingering concerns

about the profitability for the business and what margins will look like going forward. there did seem to be a concern with the rv maker dealing with some challenges. let's take a look at general mills shares. they are a big player in serial but also the premium pet food provider. looks like customers are a little more cautious on that right now. shares down 2%. also seeing weakness in minerals. there was an exclusive interview the bloomberg had earlier with companies dealing with uncertainty in panama. the project there is one of the key copper providers around the world. we will continue to watch that story heading into 2024. vonnie: we will stay on commodities now. oil extending its recent gains as we brace for disruptions in the red sea, crucial artery

shipping 8% of the world oil. julia, we are not adding to gains, but we have come up white tape. this is partially the supply issue, partially a red sea issue. julia: we were at five-month lows before these red sea issues came into play. that injected geopolitical risk into the end of the market. have we come off those highs? yes. the actual impact on physical barrels of oil will be around 4%. but, still, because we cannot price in how geopolitical tensions will escalate, that is why there is still risk in the market. but the market is still bearish. traders see oversupply in 2024. jon: we are weeks removed from that skeptical reaction to the latest action from opec-plus.

is it the fact that in this geopolitical uncertainty moment that this is something the market more tangibly can see happening with oil companies that have been pulling back from the red sea as a result of the attacks, versus with opec-plus, it seemed like there was in that case so much uncertainty about the execution on those production cuts. julia: it is really on the execution of production cuts. we have not seen that in the past with russia or the other countries. there was a strong discontent between the african countries on these production cuts. that is why the market was seeing we will wait and see if these production cuts materialize. vonnie: it seems like the spread between wti and brent's whitening. has that got to do with geopolitical tensions. jon: absolutely. and we are seeing pushing points develop. but brenton, little tensions in

the red sea still hanging premium there. jon: in terms of the oil story for the consumer, we are talking broadly about the idea of inflation trends improving. how closely does the outlook for oil play into the broader economic story that everybody is curious about heading into 2024? julia: prices are falling. the biden administration is happy. even though we saw a bit of a jump in gasoline prices recently, that is still much less than the four dollars a gallon were worried about. for consumers, that is great news. vonnie: thank you. keeping an eye on oil prices for us. out now to how the red sea situation could attend global trade -- upend global trade and already is. we already today had headlines from ikea and abercrombie & fitch.

the companies are calling this out at this point. what is going on with them? >> you see an extension of the risks we are already aware of. the houthis have been increasing their attacks and the u.s. has stepped up its competition. companies are trying to be cautious. it does not hurt to take extra time to go around versus subjected to a missile attack. jon: on the geopolitical front, for the u.s., what should we be watching? bloomberg reporting on the potential for action but the hope for some kind of diplomatic solution? felice: the israel-hamas war is complicated. you had israel's president herzog yesterday talking about a humanitarian pause. if there can be progress on that front, the situation will calm down. the houthis are backed by her

ron -- by iran and so is a must. you have many moving parts in the situation. vonnie: you have saudi arabia, the united arab emirates, all complicated. but if you want to buy a shelf from ipf and suddenly it is not going through the red sea, will you have to pay more for it to go over africa or a t-shirt from abercrombie & fitch that now has to go by air? felice: there will not be that much of an impact. you see that in terms of stocks being up, wti crude just being up a bit. it has been paring its gains today. there is very little shipping relatively that has to go through that narrow passage between yemen and saudi arabia and the coast of africa toward the suez canal. jon: we have in the interim seen so many of these companies shifting away and we will seek

if they bring that activity back to the red sea how long that takes. we were talking with julia about the outlook for the oil market. what are we learning, though, about past examples with the houthis impacting infrastructure? what is the market key into there based on what we have learned from history? jon: the houthis mounted a major attack on saudi arabia in 2019. the disruption was brief. in the back of peoples minds is the tension of what they are capable of. the civil war continues. they have a conflict with iran and there is that risk of a broader regional escalation which is not completely off the table. vonnie: let's hope not. appreciate it. coming out, watching shares of macron ahead of earnings. what to watch for,.

this is bloomberg. ♪

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it even cleans itself. just add water, a drop of soap, and blend. make your princess dreams come true. order yours now from blendjet.com. jon: this is bloomberg markets. time for our stock of the hour. tracking shares of micron ahead of the company's earnings. investors are going to be looking for evidence of a recovery story that we have been watching play out through the stock price. chipmakers shares have rallied 60% this year on bats it has navigated the worst of an industry downturn. let's get a preview now.

outperform rating on micron. what will you be watching tonight? >> a couple of things to look out for, predominantly the guidance. they already announced positively. this is what they have got. the main thing is going to be revenue guidance for the quarter. the street is down. we are higher than the street. the second is the gross margin trajectory. if it will be positive or not. the bigger question is pricing memory has been on a rebound the last few months. how long and how sustainable is it? jon: the balancing act is this has been the year of people trying to see where the technology curve is taking us. everybody is looking for

exposure to things like ai or even a future filled with electric vehicles. some investors are looking at the long-term potential there. >> that is a fair point. clearly, for ai, people have been playing the game, but companies like micron also benefited from something like a bm. -- hbm. demand for that has improved dramatically because of ai applications. i would say that micron probably has about 10% more today than the hbm. aa becomes more rampant and -- vonnie: you upped your price

target to $100 a share after micron preannounced and you are expecting more improvements after we hear the final results later today. we are starting from a low base. why should i give you hope? krish: interesting question. many -- number he tends to be cyclical. you can see numbers go down dramatically and it always over or under shoots in either direction. gross margins are still negative. the biggest difference of this cycle has been the suppliers. micron cut utilization rates. they have taken upon in the factories in order to include the supply coming online. your beginning to see the demand is stabilizing, intern -- inventory levels are stabilizing. that is led to an improvement in pricing. it is interesting to look into it next year and things like ai.

on the ai side, you see -- coming down. the potential to recover should drive incremental demand. as it happens, utilization rates go up. you get better fixed cost. vonnie: you mentioned the smartphones, pcs, what will read learn about the next quarter in both of those markets from micron's earnings later? krish: micron, there quarter ends in february. we have not seen a recovery quite yet. depending on who you talk to, chinese do your -- new year, and for pcs volume, probably from a pc standpoint, maybe the

recovery is not quite evident in the said quarter but in 2024, you should start seeing that. jon: you mentioned nvidia. investors have been talking how that company navigates the messaging. with the tensions between the u.s. and china right now, with respect chinese government and micron, the ban on ships is something the ceo has talked about and tried to explain, sort of making up some of the business without that. are you going to be listening for any updates on the chinese situation? krish: before the chinese banned micron, direct sales to china was around 15%. i think the exposure -- but the

infrastructure has been impacted by the ban. in the end of the day, i think china will buy from samsung and hynek's. that opens up the rest of the board for micron. it is not necessarily move the numbers as much. as far as some headwind in the short term, as the chips get moved on from china or the rest of the world, the long end should be fine. but at the margin, it is a slight negative. but i think the stock market has discounted many of the weaknesses. vonnie: thank you for your time. micron earnings out after the closing bell. outperform rating on micron. wall street bonuses looking bleak after the year of fewer

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time for for what it's worth. $2.7 trillion is the total

volume for deals in 2023. it is actually the worst deal for global -- year for global dealmaking in a decade he -- in a decade. some challenges on the bonus front for wall street. bonuses could decide as much as 25%. it is not all doom and gloom. some in equity underwriting or wealth management could see a modest bump, but the firm expects most bonuses to be down. catherine cowdery has been digging into the latest numbers. if you had to characterize what you found, what would you say the landscape looks like? catherine: it is a boring bonus season. nobody is crushing it but nobody is getting killed either. there is -- the traders are

going to have to see a bit more of a bump then when you are going through the investment banking numbers. however, some banks are paying up for their investment bankers in order to see them stay for when the deals might return next year. we do not want to get into a period where these bankers have left and there is nobody to do the work once it returns. therefore, you might see that 25% drop move closer to the low single digits. vonnie: deals have been telling us for how many quarters the deals are coming back? but difference between traders and investment banking bonuses, is it likely to diverge any more than it is? katherine: toward trading, volatility is always a good thing. we have had a volatile year. for the first nine months, trading was down 5%, but the

last three months of the year have been active, so we might end up closer to. that means that trading bonuses we are hearing from the lot banks will be flat to slightly up. for goldman sachs and bank of america, our sources are telling us that those banks will be paying their traders slightly more than citibank, which is focused on expense cutting. jon: that you brought that up. if you have reported, this has been a year where there has been some highlighted cost controls, at least at some of the biggest banks. katherine: each quarter, ceos are asked about how they are managing costs, keeping expenses low, but when it comes to talent, you do not want to be too stingy and lose your best people. at any bank, those higher

performers are going to get paid. what a bank ceo does not want to do is come back the next quarter and say the performance has been hurt because they do not have the people to keep building and grow revenue. if you are building out a trading desk, you want to continue that momentum. ryan moynahan -- brian moynihan has said that bank of america will dedicate more capital to the training unit if they can continue to deploy that money and grow. that could change if there is quarters where the unit is hurt, but so far we are seeing if you in more capital, they have been able to take market share from their competitors. vonnie: it is important for some of the banks. they already slashed bonuses that goldman and was it bank of america? do they need to sweeten the deal? katherine: you bring up a great

point, comparison year-over-year. last year was disappointing. that is why this year it might not seem as disappointing but we are going off of the disappointing year to a flat year. flat, nobody is going to be celebrating, but nobody may feel the disappointment or cuts that they felt a euro ago. the year before that was the year money was flowing, deals were being done, and you had investment anchors coming away with huge bonuses and you also saw competition across the street where folks were leaving for a higher paycheck. even standards-based pain was increasing. jon: the bonus breakdown. great insight. thanks. we know that both traders and bankers are watching the mood of the markets. we are seeing vying for the s&p 500. we will continue tracking wall street throughout the day. this is bloomberg.

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but sentiment stays the same. katie: we are keeping you off to the closing bell in the u.s. about two hours away, pretty quiet. s&p 500 just about unchanged. nasdaq 100 up .1%. even as you see a bit coming back into the bond market, a rally building, 10 year yield currently down by basis points, breaking below 3.9%. how low can we go? a look at gold -- even as you see that