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.

>> from new york, i'm caroline hyde with paul sweeney. paul: we are in the radio studio, how about that? caroline: how about that? it is a joy to be here on what i call boxing day. paul: explain it, please. caroline: it's the day we all go crazy for shopping in the u.k. technically boxing day is where one deals with the boxes one has opened on christmas day and finds themselves more boxes. but it is technically a vacation day, a holiday over in europe. sensible lot. but not here in the u.s. pipe caroline hyde is working today. caroline, thank you so much for joining us here in our radio studio. we're simulcasting bloomberg radio and tv today. stocks higher again today, caroline. s&p is up about a quarter of 1%. nasdaq is up about .4%. what an eight, nine weeks it's been. yields are steady. 10-year treasury yielding about 3.9%. on the commodities front, crude oil a little bit higher, just under $76 a barrel. gold steady at $22 an ounce.

bitcoin is lower. i call that out for matt miller. he is our crypto person working from home, just under $43,000 per token. coming up, the latest research on food companies with an analyst from sanford bernstein. plus the market call from ed perks, franklin income investors c.i.o. caroline, did you have a good holiday, hopefully? caroline: it was wonderful. i'm of that time where i've got young kids. pipe you do, oh, boy. caroline: they are 4-6 and living their best lives, literally santa is incredibly real right now. yeah, the injection of overall joy was pretty high. pipe that's great. all my guys are out of the house kind of doing their own thing, so it's kind of like, oh, but we've been through it all. so it's all good. good to be back here on a tuesday in a holiday-shortened week. markets higher here. i've got a bone to pick with our next analyst. she covers all of wall street.

it's not been a great year. >> it's been the worst year we've seen in a decade. there are some signs of life. listen, what's happening now is all the banks want to keep as much staff as they can after a really brutal year. it's been a lot of job cuts this year. they're hoping that with stability in rates, with a more stable market, we are back on the rise, that perhaps next year will be a better year for activity, for deal activity. what are we looking at? between the third and fourth quarter of this year, we've seen deal volumes jump by about $160 billion. of that, two of them were mega deals, about $125 billion worth of deals were two large oil deals. and so it september the stage for next year -- it sets the stage for next year. what kind of deal making are we really going to see? anti-trust concerns have started to wane a little bit after a few big wins, like microsoft activision. the other thing that could fuel the story is private equity.

limited partners are demanding returns, and we're getting into this environment where valuations are resetting and they're ready to start selling assets, albeit at a lower price than they would have hoped in the boom times of 2021. caroline: if any of the news of today is to go by a theme, bristol, of course, adding to its own spree. bristol-myerssquibb, a $4.1 billion deal. this is about a drug developer. are we likely to see certain sectors win out? is healthcare, many feel that it's recession-proof in some way. is there an area of consolidation or more idiosyncratic? >> this kind of strategy, go ahead, you were talking about bristol-myerssquibb, this was another massive deal, one of the large he is top five deals of this year. healthcare, technology even, a return to some technology deals, energies, by far the most exciting sector. i think back to an interesting conversation i had with a banker just a couple of weeks ago with this idea that a couple of years ago, oil was a dirty word.

now, with kind of the waning of the concerns that we've seen this year, a lot of people have thrown in the towel with so much concern about oil prices, and a reliance on u.s. drilling and u.s. energy, that you are seeing big oil deals again, and a return to the love of the energy industry and natural resources in a way that we haven't seen in many years. and so those are some factors, big strategic deals, companies ready to spend money after not spending money for a long time, and i would also say that includes car. this idea that companies will be willing to let go of certain assets, sell them to private equity, because they're really in search of investors concerns to fuel them into next year after a melt this year, really. pipe how did the league table turn out this year? >> thank you for fascinating. we're working on our year end. goldman sachs, shocker. what's interesting -- caroline: other bits of businesses haven't done so hot. >> exactly. it's been a tough year for banking all around.

and again, it's a muted year, but we were in the middle of the year, and there was a lot of frustration here, because you had goldman sachs falling behind j.p. morgan halfway through the year. they have catapulted beyond j.p. morgan into the end of the year. we have a couple of days left, and the deals have still been coming in, so i don't like to say this is a definitive number, but goldman sachs is the only major bank right now with more than a 30% market share of the m&a market. by comparison, j.p. morgan is standing at 26%. i cannot wait to run those numbers into friday, because goldman's lead is getting quite significant to j.p. morgan and morgan stanley. pipe ok. caroline: going back to the tech area, and it's interesting you referenced a couple of times the microsoft-activision deal finally getting a blessing from the u.k. but when i look at what closed out the year or closed out prior to christmas, the fact that the adobe deal did unwind, it feels

just when we're talking on the tech show daily that, really, the head winds coming from regulators are so strong that many companies are just put off trying to do this right now. >> right, and the u.k. has been strong as well. it used to be that the f.t.c. were the biggest cops in town and people were very afraid. but people are equally afraid of how the u.k. would also start to clamp down, particularly on big tech deals. they've had really stringent rules around technology. now, you know, next year one thing that's interesting that will be an interesting source of tension is a lot of these tech companies have waited. they have waited to raise money because they didn't want to take it down. they have waited to go public. they have waited to sell. and so when we look at the calculus next year, how much pressure they'll be under to do one of those three things. we'll be fascinated. and if there is that concern, a lot of soul searching right now with that deal, because there's a lot of questions around getting that calculus right the next time around, because to go through a deal process and then it not work out at the end is a

costly endeavor for both the startup and the big tech guys. caroline: to be fair, the billion that they got from adobe, they sort of saw this coming, many would say. they saw the regulatory hurdles. >> they sure did. that point that they saw it and went through it, it's a risk, right? every deal is holding that kind of risk, especially in this environment. guys, there's another kind of curveball here that we have to consider, and it's the election cycle next year, because if we are under a republican administration of some sort moving into 2025, then there's a big question on whether these antitrust concerns will not exist in the same way as they do today. there's another big antitrust one. think about big u.s. steel deal. that's another fascinating one to keep an eye on as we watch these companies go through approval process, international buyers, what role they will have. you think about the pga deal earlier this year and just how much lawmakers started to step up, not just the regulatory

bodies. certainly sets up for an interesting 2024. paul: all right, we'll chat with you plenty next year. we need more m&a out of you and more i.p.o.'s. >> i'll be ready. paul: thank you so much. she covers all things wall street for bloomberg news. caroline, got a little bit of green on the screen here, not too much here. volume is kind of light. what's going on out there in the markets? i guess it's another good start to what would be the eighth or ninth week of gains in the s&p 500. >> coming off eight consecutive weeks of gains here, and then don't sleep on the s&p 500. even though it seems like it's quiet today, it's about .6% away from that record that was last reached on january 3, 2022. that magic number around 4796 and some change there. that's something else the stoxx team is keeping a close eye on. also one of my functions that i like to use, particularly during the holiday kind of shortened

trading week, is avat. it's a way to kind of gauge what volume looks like in the overall market. if you look right now, it's down about 50% over the past 30 days. clearly you can see just given the holidays, not as many traders out there, but paul and i were talking about this on friday, because that was the kickoff to the santa claus rally period, caroline. that's the last five trading days of the year and the first two of the new year. the s&p 500 tends to gain about 1.3% in that span going back to 1969. really, it's not supposed to be what jeff called a trading strategy. it's more an indicator whether or not the s&p 500 bucks that trend or continues it going into the new year. typically, historically that bodes well for stocks, but there's a lot of different indicators out there, as well as the january barometer. that's how january goes. if it's weaker in that month, a lot of things looking ahead to, but especially this week, i mean, even though it's lighter on the economic calendar, no fed

speak this week. they are on holiday, but when you look at the eco calendar, it is lighter. we actually have a lot of holiday -- when you are looking at the housing market in particular, we are going to get some indicators for that. we'll have pending home sales later this week, but this morning we actually got a reading when it comes to housing prices from the fhaa. prices rose, but still climbing when you look at year-over-year numbers. home builders stocks, when paul and i have talked this year about, the industry group and the s&p 500, what a tear they've been on, even though there was weakness back in the summer, up over 70% in that group. caroline: the fundamentals have been one of the market trying to get ahead of the fed at the moment, with the markets pricing in, and the fed is currently pricing in next year or at least anticipating. but go to some of the geopolitical shops that are currently trying, because the one thing that has been moving is oil. i do see some increased tensions. that does seem to be the only

thing that would have investors' minds tracked today. >> definitely, that's a big thing, too, when you think about what's happening, especially with the correlation between oil prices and energy stocks. if you look at imap one of the functions i like to use in the s&p 500, but if you look at that and other groups in the s&p 500, energy is the biggest gainer, up close to .9%, so you do see the correlation a little bit there with oil prices, but again, when you think about how much energy was on last year compared to one happened with, as we've seen inflation continue to come down, but you do see the spikes any time there is maybe some pressure there with oil prices, what that potentially means for energy stocks. paul: great headline on bloomberg here. global g.d.p. set for slowest noncrisis year since dot-com bubble. does it feel that way? i don't know, it just doesn't feel that way. but i guess in europe, certainly recession for much of europe. china slowing growth, reopened trade did work. but here in the u.s., it feels

solid, even though we know the fourth quarter print is going to be a lot slower than the third quarter. >> bringing that up, the atlanta fed g.d.p. now model, it came down a little bit, but 2.3% was the latest estimate on december 22. you do see the holiday quarter slowing from close to 5% in the third quarter, but still over 2%. that's not necessarily bad for the u.s. economy there. that's not necessarily when people keep arguing about a recession, you can't see that number yet. people were out. i was flying over the weekend, actually came back yesterday. paul: another wedding? >> no, i went to visit my parents. they live where the majority of americans go when they retire, they do live in florida. i was down there. a lot of people there. paul: jess marries people. >> i'm an owe fish ant, yeah. but not a wedding this time, just down there for the holidays. paul: am i really married by jess? i mean, i need a priest. i need a rabbi.

caroline: am a married woman already, but trying that. >> if anyone needs to get hitched, i give the great speeches, so there you go. but i have to say, full flight on the way back. it was packed. to me, lot of people out there spending money right in and out. paul: people are spending. i think they were. we'll get some more color on the holiday spending coming up. but boy, people were out and about going nuts on saturday, i can tell you about that. s&p 500 up .3%. jess, thanks so much for joining us. she coffers all the markets for bloomberg news here. s&p up .3%. the nasdaq up .4%. we call out the russell here in this studio, because the russell 2000 has been the real gainer this year, up .5%. ♪ ♪ ♪ ♪

be ready for any market with a liquid etf. get in and out with dia.

paul: good tuesday morning here. we are in our interactive studio, simulcasting bloomberg radio and television. we've got a little bit of green

on the screen here. i'm can caroline hyde. a little bit of a lift here on this holiday-shortened week. the s&p up. we've had eight weeks of positive returns for the s&p 500. what a way to end the year. caroline: it was the best track record in about five years for the s&p, and it's been relentless. but the desire of the market to think that the federal reserve will cut and will cut aggressively next year, well, this time last year, economists generally got it wrong. we thought we would just have a few hikes and be done with it. no, we hiked hard. we're up, what, up all the way to almost 5%. we're then thinking about the way in which we're going to pan out next year. we don't always get it right. paul: no, we don't. keep the forecast coming from wall street. sarah joins us from san francisco, one of my favorite all-time cities. the grill, if you're out there, that's the place to go for a good bite to eat.

sarah, what do you make of what we've seen over these last eight weeks? i mean, identify been doing this for 35 years, i had no idea this was going to happen. what do you make of this last eight weeks of performance in the markets? sapp i was a bear going into this year, i thought it wasn't going to be a great year, and i skipped the two most important letters in the alphabet, a and i, because that really changed everything. the rally is broadening out, as we've seen. but so much of the early kind of momentum, and i think what really saved the year was just tech, specifically a.i. and tech. so the question mark and the problem is going to be as we get into 2024, we get more earnings seasons under our belt, and these a.i.-adjacent companies come back and they're not generating a ton of revenue on a.i. or even on chips is going to slow down the momentum. if that momentum slows down for a.i. and then tech, is the russell next? is it going to broaden out in

the same way it sped up? i think that to me is really the question mark over the next couple of months. caroline: the reason we love having you on bloomberg is because your focus sven tour, early stage, seed rounds. what's been so interesting is while the bigger deals have seen down rounds or indeed new money coming in and people not wanting to admit the valuations are trading at, precede and seed has been active. where have you been writing checks to when you are seeing the hype around a.i.? >> yeah, really small companies are not necessarily super wealthy, poised to compete against some of the huge a.i. companies to do l.l.m.'s is an incredibly expensive, which means expensive, expensive endeavor to design and make chips this hard. i'm in one chip design company, which has done really well. it was a spin out of google. they started doing tech

processing units focused on self-driving cars a few years back when that was the big thing. and now they're really well positioned for a.i. so there are some companies, but it takes a lot of money, it takes a lot of people who spent a lot of time already in the industry, and there's not a ton of those. where i've been seeing a lot more interest is, for me, it's been look ago lot around kind of the shift in everything from retail to social media, looking at more marketplace type models, especially in higher end retail, as we've seen sort of the far fetches and matches of the world really kind of struggle and falter. caroline: boy, did it struggle. i mean, wow. >> that was rough. that was rough, yeah. so what comes next? because people are not buying high-understand things. people aren't only shopping in stores again, but obviously the way that business has been going for these big ecom conglomerating isn't quite working. paul: if i have a really cool

idea technology, you know, a black box, and i go to sand hill road, can i raise money today? will people fund me? with a v.c. community fund me? >> it is december 26, everyone is out for at least another seed. v.c.'s love their vacation. you know, there are checks being written. we see this when demo day comes around. we see this in general. for the most part, a lot of the money in venture has shifted earlier stage. it is hard right now if a company comes to you and wants to double their last valuation that they got in 2021 that was super high, and they don't necessarily need the money, because a lot of companies cut employees pretty aggressively. so there's a lot of tension in getting the bigger later stage rounds done for all but a couple of really, really hot companies. so a lot of people have turned their gaze earlier. seed rounds are sort of the safe place to play, because there's

another phenomena happening, because if you were at one of these big tech companies waiting to go public, and now you realize that wait could be infinite or they did go public and the stock price isn't working out, then you're looking at your options and saying the best thing for my career could be to start a new company versus hoping that these startups, restricted stock units, eventually make me some money. we haven't seen a massive explosion of new companies, but there certainly is a lot of impetus for smart people to go out and start something, and for these bigger funds to write earlier stage checks than they normally do, because it's such a much cleaner cap cable than when you're trying to fix something that was overvalued in 2021. caroline: and look, the desire to get into some of these really successful rocket ships of late, like $100 billion valuation that we understand is being happening by open a.i., you also have

spacex, people squabbling to get into that. now, sarah, i go personal for a moment, because paul asks, would he be able to raise mean? not many checks by you and me, a white woman or you, a woman of color, how has that dynamic changed? are we see more diversity in the pre-seed and seed? >> yes and no. whenever there's a down turn, people tend to kind of stick to their knitting, return to what they know. humans have a really, really influence by people who look like me, who reminds me of my. there was a great fortune cover story on josh kushner recently, who's a friend, and smart and has done a great jeer, but the first big check from the university of pennsylvania, that endowment was saying, hey, we wrote him a $10 million check and his fund won, which is a huge anchor check. he kind of reminded me of my son or i forget whatever he said, reminded me when i was younger. you can do everything right, but

if you don't get to go in front of a multibillion dollar endowment and remind them of themselves, it's a lot harder to raise. and so certainly as things have slowed down, we've seen that a lot. are things better than they were a decade ago for women and people of color? yes. but that bar is so incredibly low that it's not great, and what we're seeing as i would have expected is with this slowdown happening, it disproportionately impacts communities who are already underrepresented, and that tends to hold pretty steady. also, depending on different racial groups, they often have different soak yo economic realities, where if you're at that job in google and you have student loans to pay off or you're the highest earner in your family ever, then the sort of pressure to stay there and keep earning, versus quit your job and start a startup that might fail, is higher when things are shakier in the macro i think. paul: just about 30 seconds,

what's the feeling for 2024 on the valley this year, better than 2023? >> i think that things are going to start to thaw in terms of fundraising. a lot of these big companies, they're going to run out of money or they're going to raise more. so i think that if 2023 was ok in the public, but a lot was sort of frozen in private, i think 2024 privates have to thaw out. paul: very good. sarah, thanks so much for joining us, managing director at clio capital, joining us from san francisco. i mean, you and ed ludlow, you're all over the technology. is the expectation 2024 is better, challenging? caroline: hopefully there will be more exit, but certainly more of the same. there is more optimism as the fund metals change, as rates starts to come lower, more risk appetite. talking of what's happening on the west coast, some breaking news coming from apple. apple is appealing that i.t.c., international trade commission

ban on the sales of its watches. remember, that has been cooperating. we knew it was likely to happen, the fact that the company has said, look, you've been going against some of our patent the, therefore, we've already seen apple pull apple watches from online sales, they're seeking emergency motion for a delay in the watch case. interesting that it's the most valuable company in the world is still having to fight these quibbles about technology and personnel. the issue is, look, you took our people, and with it, our patent. paul: absolutely. apple stock pretty much unchanged today, up 48% year to date. investors still feel pretty solid about the fundamental story there at apple. this is bloomberg. ♪

paul: we are back, looking at the markets on this tuesday morning. a little bit of a lift to the market. it's been eight weeks in a row, let's keep it going to the year-end rally. the s&p up .2%, the nasdaq up about .4%. the fed has pivoted and we are pivoting along with it. caroline: we are not just getting consumer data, showing inflation is in the right direction, i.e. slowing. we also get the pce numbers and the idea that we are getting the

most preferred measure from the fed, showing the calling and slowing -- calming and slowing. paul: and the treasury market, 3.8 9%. we used to be close to 5%, but we are down your 3.89%. that is a big move. let's check in with kelly -- peggy collins, who has her finger on the pulse of what is happening in washington. it seems like the biden administration, if they want to say they've got inflation under control, they've got a good argument to make. what do you see down there? peggy: we are seeing signs that the soft landing is in reach, but certainly there are risks out there in the market. the data that came out on friday, a couple of points to note, we are seeing inflation

cooling and consumer sentiment start to rise. that is not necessarily matching with what we are seeing in political polls in terms of how people are feeling about the economy, but consumer sentiment is starting to shift and a more positive direction as we see those inflation figures cool down. caroline: what is the new word that was coined last year or this year? basically vibes, the vibe economy. you are giving us christmas vibes, and it has the most delightful christmas vibe at the moment. there has been a sense -- there has been this tension between the economy and how it has been performing and what it feels like. when we are about to go into an election cycle and see that the vibes are positive, what does the consumers need to do and feel to ensure that is positive into 2024? peggy: on one hand, we are

seeing jobs hold up, which is hugely important for how people feel not only about their own security and home lives, but the natural economy. we have seen the job market hold up and see that wages and salaries are continuing to go up as well. that is on the positive side. i think people are hoping they will see two other main things. gas prices staying stable and the other, prices continuing to soften in terms of the inflation. the one factor in terms of the political intersection, with inflation coming down, prices are still higher than people saw in the grocery store, for example, two or three years ago. that is also the disconnect. people see the and -- the data coming out and inflation coming down, but things are

still high at the supermarket. caroline: vibe section. it is a new word from a contributor to bloomberg opinion. it wasn't a feeling we were interest ash and, in fact, we dodged one entirely. but the vibesecion has been real. paul: and gas prices, three dollars five cents in new jersey, that is a solid move down in gasoline prices. but peggy, you mentioned prices are higher. how do i spin that if i am in the white house? inflation is down from 9% at a peak rate of 3%, but prices are higher, aren't they? peggy: the white house is pointing to different things in the economy -- we came out of a

pandemic and were able to continue to prove the jobs market and doing things like infrastructure and building were semiconductor chip factories in the u.s., but people are not feeling it in their day-to-day lives. we are seeing the whole mortgage loan rate dropped pretty precipitously, so that might not only whole up the housing market, but make people feel like they can move around and have too many days to buy. that struggled under the weight of inflation. caroline: lastly, what about wage inflation and ultimately, 2023 has been a year where employees decided may be that they would join unions, pushback -- ultimately, is the pendulum swinging somewhat and will we see any softness in this labor market? peggy jobless claims are coming out on thursday. the jobs report for december will be out in early january, but the jobs market has continued to be incredibly

resilient, and that is something people are watching closely in terms of sentiment on the economy. the friday data on wages was positive as well, so that overall makes people feel like their incomes are higher and they are able to spend. that is what we are seeing so far, but we will see if that can hold up in 2024. caroline: peggy collins, thank you so much. the shops were busy, it felt like people were eager to spend, go out, celebrate and splash their cash on some food items. we want to get into the intricacies of where we have been in food inflation on the stocks linked to the food companies. they have not had a particularly strong 2023. for more, we welcome alexia howard. we appreciate you coming on. i know you are another british

transplant, so thank you for coming on on boxing day. why have companies around the food area been beaten up somewhat? we have seen the prices come down and is that affecting their margins? alexia: 2023 has been a pretty terrible year for the u.s. packaged food companies. they underperformed the market by 30%, we have not seen that kind of performance in quite some time. that's pretty bad. some of it is volumes not recovering as price growth slowed, a big piece that pulled stocks down from may to august or so. in august, we started to hear more about new weight locks drugs -- weight loss drugs, pulling investors up short and worried about what the long-term outlook might be. paul: that's where i want to go. i do not by the weight loss drug thing impacting all these

companies, whether it is packaged foods or soda companies. is that really a thing? is an investor in boston selling a block of stock because they think ozempic will impact procter & gamble? alexia: that was what was happening from august through the end of the year. i think we got through some of that now, but i think there was a big concern about how much of an impact these new drugs might have on the long-term implication for packaged foods. if we take a step back, i do not think it will have an and norma's impacts. it will be modest, slow and steady pressure over a number of years. we will not be falling off a cliff, so we have to put that concern to one side, but there might be pockets where there might be more pressure. as some ozempic patients reports, they are not eating junk food or greasy food as much.

there might be areas across more pressure than food as a whole. caroline: could that mean consolidation? alexia: it could be. we saw 3g trying to consolidate the fact -- packaged food market. that experiment did not work, ultimately, but if you look at u.s. packaged food companies, it is the most fragmented consumers staples segment in the developed world. we might see more merges, consolidations of the industry at the time. paul: how does inflation work in your world? prices went up during the pandemic for lv to cheese. did they come back down or do they not go up as much going forward? alexia: typically not.

what we have seen in many previous cycles, prices go up but remain fairly sticky as the input cost pressures slow down. we might see more promotional activity coming back and a bit of deflation, but i do not think we will see a wholehearted reduction in prices across the board. caroline: where have we seen sustained higher prices not coming down? it was more about weather, crops -- where have we seen sustained inflationary pressure? alexia: if you look from 2021 onwards and certainly through 2022, we saw 15 to 20% price inflation across most multi-ingredient packaged food. in single ingredient packaged foods, like meat, dairy, and produce, we saw prices come up

and through the course of 2020 three, a lot of the single ingredients did come down in price and caused people to cook from scratch a bit more this year. but the packaged food, the multi-ingredient packaged food categories, those prices remain fairly sticky. paul: my buying activity really changed during the pandemic. i found myself buying more stuff at the store because you could not go out as much, and i was trading down from brand names to store brands. how prevalent is that? am i in the norm? what is going on? alexia: that was not too much the norm during the pandemic. the retailers were not pushing their store brands too hard. if you think about the store brands, they are 20% to 30% cheaper and there are supply chain issues for those store brands. what we have seen for most of the pandemic was that branded

players were doing even better than normal. we all saw we focused on eating at home and spending less on packaged food products. even as the inflation has rolled through and slowed down, private label store brands are not coming back to life yet. typically, what happens is if unemployment starts to rise, as we saw in the financial crisis, privately, store brands come into their own, but we have not seen that so far. at the moment, they seem to be at a. caroline: let's go into names, companies you analyze that you think will be the outperformer's in 2024. on this stock, 27 buys, not a single cell. it feels like the market sees

something is up. alexia: they have carried on trucking the last two or three years. they have done well through the pandemic and in the last few orders. the company is coming into its own in emerging markets and their acquisition strategy seems to be paying off well. chocolate doesn't have much storebrand exposure, so the brands are strong around the world and it is performing well. we are talking about a high quality compounds -- if you think about it from five or six years ago, it is being recognized for the strong global presence it really is. paul: alexia howard, senior research analyst who covers the u.s. food business for sanford-bernstein. they do some seriously good research. they have come out with these black books that are the definitive cases of research on the company or topic, and highly valued on wall street.

caroline: we like bloomberg intelligence too. we used to do a black book or two. paul: that is some really high valued stuff there. we have some green on the screen, the s&p 500 up .3%, the nasdaq up .4% and the russell, our small-cap or's have been outperforming since late october. that broadening end of the market, a lot of technicians say that is a good thing for the market. caroline: not just the magnificent seven? paul: not just the magnificent seven, 10 year yield, 3.89%. 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. ♪ caroline: today following christmas, it is a joy to be here in the studio with paul

sweeney. we are looking at overall policymaking, the idea that the federal reserve will be able to cut into this economy. that guides us higher when it comes to equities, and we are expecting a big bond auction coming up at 1:00 p.m. we were talking about the vibe recession a little bit ago. the idea that people have been feeling a little under pressure. a lot of pressure can be built in from the cost of childcare. i am fortunate to have a wonderful au pair, and we went for one because of the cost basis analysis of it all. childcare is forcing parents and decide hustles, apparently. kelsey butler is in the studio with us today, and a traumatic increase in the childcare -- dramatic increase in childcare cost and a dramatic interest in your story.

what are some of the findings you have on how people are trying to make this work? kelsey: i hear people are doing this and more extreme things, and i am excited to keep digging into this further. what set me off on wanting to dig into this, was an example of a pair i talked to for an earlier childcare story. she works for an s&p 100 company, any kind of job where you think you should be able to avoid the necessities of life. but she works a full-time job and part-time at a childcare center in order to get a discount. caroline: what? kelsey: she saves $3500 a month on her children's care, and when you tally that up, that is a lot of money per year. i could not get that story out of my head. i talked to parents doing side hustles and a lot of shapes and forms. paul: where you are trying to

attract employees back to the office -- food, foosball, why do corporations by and large in this country, matt miller recently noted the difference between childcare in germany versus the u.s. why don't operations in the u.s. provide childcare? kelsey: it is one of those businesses that is very hard to automate care of babies and bodies, and it is an expensive business. that is why the cost is so high for parents. there are rules and regulations about ratios that can be had, so you need one caregiver that can only care for three or four children at a time. it's a cost issue. paul: is it a liability issue? i can see that if i am an employer -- i am not sure i want

to offer that opportunity. kelsey: absolutely. a lot of employers, at the end of the day, have not grasped the fact that this is a serious issue for their workforce. 4% of employers at all offer some form of subsidized childcare for their workers at all. so companies are not really meeting their workforce where they are on this. caroline: and it is not only an american issue. i was lucky enough to live in berlin prior to having children, but they have more of a support situation there. in the u.k., the price of childcare has gone through the roof too. post-brexit, fewer people are lending their services as child carers and it drives people back into the workforce. one of the good things we have seen is participation rates in the workforce, particularly from women.

are we going to see that fall off again or is it affecting men and women in an equal manner? kelsey: there are showing some worrying signs. bank of america institute took a big look at millions of customer accounts across the u.s., and they saw the number of dual income households is falling. not only that, families with childcare costs are doing things like drawing down on their savings more and spending less, so we are seeing some economic ramifications there. it is worrying too, because we saw prime age female labor participation hit a record earlier this year. after all those gains, worrying to have a potential backslide. paul: and the pandemic, when folks were working from home, and some people felt that was a benefit because you can provide the childcare -- now, this back to work thing, it highlights it even more for a lot of folks. kelsey: return to office will definitely affect this. one interesting thing that i

uncovered, digging deep on social media, particularly tiktok, is people working from home and also caring for their kids. some without, but some with their employer's permission. they are in task-based jobs where they work a different time zone than the rest of their colleagues, so it is ok for them to watch a toddler and do their job. that said, and might be overwhelming. paul: kelsey, we appreciate you joining us. she is a bloomberg equality reporter, joining us live in our new york studio. i, for one, can proudly say that i did not go into a store this holiday season to buy. a couple of clicks of the mouse, wrote a couple of checks, done. talking to simone foxman, you are out there in the world -- what happens to our holiday shopping season?

simone: i am spending on line, as are most of the american public. the early data we are getting here, and mastercard has a ending pulse out, showing overall consumers are spending. consumer spending, according to their metric, rose 3.1% on a year-over-year basis, but when you look at online versus in-store, e-commerce is the winner, up 6.3% year to date versus in-store, two point 2%. also, people going to restaurants this holiday season? they are spending 7.8% more at restaurants that a year ago. this for the period of november 1 to december 24, does not take into account inflation. food way from home is where that inflation is happening, but it does say something about the experience versus goods, choice, and overall, a healthy consumer. caroline: any read as to where

online is becoming more prevalent? we were talking about how temu has lured in a new type of buyer. they have halloween outfits there. paul: what? caroline:temu, t-e-m-u. they are taking on amazon and alibaba. it takes longer to get the goods, but it is a lower price point. are we seeing the break down into mastercard numbers as to where people are going online? simone: not in these specific mastercard numbers. we get some indication for what they are spending on apparel versus jewelry, seeing some declines. the retailers have been talking about the omni-channel. we want you to be able to go

into a store, try something on, play around with it, go home, buy it online and we will have it ready for you at the store tomorrow or later this afternoon. that is a real genesis for them. it is not just online, it is online, or delivery, because we are on the way to christmas dinner and we want to pick it up. it is not just online spending, it was a breakdown in different ways that people can get stuff. paul: and the story in retail over the last 10 or 15 years was the death of the department store. we have talked to other folks in retail, and that has not happened. the footprint has shrunk but the store is still there. simone: that is the point of the omni-channel stuff. allowing companies to use their department stores as means of

shipping goods to their consumers are delivering goods to their consumers in a variety of different ways. some people can walk in and play around, and that is the only way they will get their stuff, because it allowing people to ship stuff from a place that is closer and get their goods to them. paul: i live across the street from the shore hills mall in new jersey. it is packed. cars are lined up on route 24 to get in over the weekend. simone: you hear about the death of malls. caroline: all of the ones near me are empty, they are becoming kids party zones, which i am all for, but it is deeply sad when you go into the hudson valley mall right now. simone: some a quality malls are good, but -- paul: b and c, tough. it looks like the consumer, by a lot of data points out there, retail sales are hanging in

there and the consumer is hanging in there. you can't keep a good consumer down. we will have more with ed perks, coming up. ♪ stitch fix. -my stylist curates unique personal looks that are just for me. kind of nice. i like that. give them your size, your style, your budget. i keep what i like and send back the rest. -what can i say? my stylist gets me. they get me. and they'll get you too.

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paul: caroline hyde and paul

sweeney, simulcasting radio and tv. that is a special holiday treat. caroline: so tech. paul: the nasdaq up about .4%. the russell 2000 small-cap errors, leading the way today on a holiday shortened week of .6%. i am a little disappointed at my wall street friends. i thought that the ipo market should have been much, much better than it was this year. if you give me a market of 25 percent i'm going to rip out a lot of deals. not so much of this year. sonali basak is our wall street group. what do they need to ramp up the ipo activity? sonali: we had a year with a couple of landmark names. if you look at how they are trading, it is pretty muted. most of the companies that have gone public have not attracted the s&p 500, let alone met the

expectations of the ipo investor themselves. it begs the question of what 2024 looks like. we know that it's been a tough year for deals. there has been a recalibration. how investors are thinking about how to invest in these companies, particularly ones that are unprofitable in the case of certain tech companies, or levered to the knees when it comes to private equity-backed companies. the recalibration process is going on and you are seeing bankers lineup for 2024. what is interesting about 2024 is that the window was fairly narrow. many of these companies are expected to go in the second quarter of next year. when you get later than that you run into the u.s. election cycle . any worries that volatility coming into the market could throw a wrench in the ipo window. caroline: when i think of arm and instacart, when they did come through that rather short ipo window we had this year, they all talked up their ai prowess. are we going to see once again

the tech companies have to reopen, or will we see other industry groups? sonali: we have a handful of types of companies like storage and private equity-backed companies and private equity companies on their own, consumer companies, things that have been long in the making like reddit coming to market. it could be interesting. while some of these names are kind of exciting for those reasons, the ipo investor wants fresh supply. i will go back to the idea that the once this year haven't done that well. when you have that on top of some of these structural ipo window problems, there is a real question on how well some of these start to do next year. what is interesting on the private equity side is private equity firms are facing a lot of pressure from their investors. limited partners. to start to return money. caroline: same with the vc's. sonali: what you are seeing happening is 2021 was a boom year. 2022 was not the same.

2023 was not good at all for an ipo investor. you are having private equity and vc company start to recalibrate their expectations or returns. their investors really fall in line as well because there is an idea that maybe you are going to see 30% markdowns. paul: this whole concept of a down round, back in my day that was a nonstarter. a lot of companies that came public this year did come with a down valuation. it feels like that taboo may have been broken for some companies, industries. sonali: the bankers and investors and companies are working hard to try to explain to people that these are not the boom times of 2020 one. we are in a historic rate cutting cycle. this is the start of a new era where there needs to be reasonable thinking around valuations that will simply not be what you saw in 2021. who is happy to buy into this new reset valuation is a new

thing. on the private equity side, it depends, really. there is a very big difference between 30% markdown for private equity firm that is still able to get a bit of a profit off of a buying price and a 90% markdown. that's what we are seeing in some of these private down round, markdowns we are seeing. caroline: the crypto related funds overseas, for example, and some of those markdowns. we have heard in the tech show is secondary market have any. basically, people who are looking at these valuations of certain privately held company saying, i actually don't mind allowing you to get some liquidity, you employee or very early investor. i will come at a lower valuation. is the secondary market where it's at? sonali: the secondary market is getting more fascinating. you think about the remarks of elon musk. openai, spacex, stunning valuations. caroline: one of the few.

sonali: totally. there are reasons, what are they? stock for employees, acquisition currency, essentially. there are frustrations about going public. the quarterly reporting, the cost of going public. if you have these private conversations with private equity vc firms and even banks sometimes, they will say, is the ipo market broken, fractured? are there structural issues to going public when there are so many good issues staying private? caroline: people don't get so irritated by your quarterly report. sonali: you don't need to be profitable. right, exactly. those kinds of questions are permeating and it is an existential question. one private equity titan once told me, if i was a bank, he says, i would be working very hard to figure out how to fix

the ipo given the fees associated with that market. given not just the 2023 struggles it has had, but the structural issues it has had more recently. caroline: it will be a brilliant 2024. we will chew it all through with sonali basak who will be back with fascinating stories around crypto. let's talk about the valuations. let's bring in and perks. we have been hearing about the interesting ramifications of a market that is ripped high in the last few months, and ultimately with these very heady high with feels like decent back valuations companies can't come public. the fundamental picture has been one of the market wanting to anticipate cuts and then some. 150 basis point seems to be where the market is at next year. where do you lie on that scale?

ed: we think there is still later mendez amount of uncertainty. as it relates directly to interest-rate cuts by the federal reserve next year, it comes down to, in our opinion, the why we might see that cutting. there are a broad range of scenarios. on the one hand it could be the economy remains resilient and the fed starts to ease. maybe not at the pace that some investors are discounting, but nonetheless starts to ease to prevent policy from just becoming more restrictive. there is some element of normalization that will need to take place. on the other hand, and we entirely ruled out a more difficult economic scenario that leads to a more aggressive easing by the fed to offset that a -- that economic weakness. at the core is ensuring there is price stability that the fed is confident in. caroline: i know that you focus on -- paul: i know you focus on income in your portfolio, and you have a neighbor by the name of tim cook. apple only pays a half a percent

dividend yield. i assume that you go to cupertino regularly and berate him for not paying a higher dividend. what are your thoughts on apple and their use of cash? shouldn't they pay a higher dividend? ed: yeah. i think that this is a topic for a lot of the mega companies. they have the balance sheets to support it and we have always been an advocate for broadening your investor base. there are investors like ourselves that seek income and we can do other things like get securities or look for ways to structure synthetic-type convertibles and still have an attractive way to play these companies, but we very much think that all of these companies could pay higher dividends and thus broaden their investor base. caroline: instead, they do buybacks. ed: there is room for both. we think many companies can think about capital allocation broadly. dividend payments, share buybacks, certainly strategic

m&a, and internal needs. paul: they will have over $100 billion this year. the 101, go to cupertino, make the point for me. caroline: all 10 one's to do is buy some companies, and he can't. -- tim wants to do is buy some companies, and he can't. paul: risk on, stocks up big time, yields pulling down dramatically, the 10 year at 3.9%. does it feel like the market is out over its skis a little bit? ed: this has largely been, in our opinion, an unwind of the damage done in september and october. the 10 year treasuries going back to where we were in august. there are reasons for the selloff. the selloff was very dramatic. we peaked at nearly 5% of the 10-year and that has largely been unwound. we think that has been the key element of what has driven it.

when we look more broadly at where valuations are today, particularly in light with the expectations for the economy moving into 2020 four, we look at something like investment-grade corporate yields, today little above five point 1% for investment-grade corporate bonds using the bloomberg corporate bond index, you compare that to the prior decade. actually, going back to the end of two thousand nine the average is closer to 340. we think there are attractive returns for income investors and buying assets like investment-grade corporate bonds and that intern will be both the coupon, the carry that you get attractive income for the first time in well over a decade. and this normalization. we ultimately think that 10-year treasuries can over the next 12 to 18 months trade a bit lower delivering nice total return for those kinds of assets. caroline: would you say stick to u.s. treasuries? have you been looking at international offerings?

ed: for us, we are more domestically focused. i think when we look at other developed markets, into western europe, yields have started to rise as well. that is something that much of this past decade, again, suffering yields outside of the u.s. were dramatically lower and really offered very little opportunity for our portfolios. as we have moved into this now more normal interest rate regime around the world, we think that you may find better opportunities, more opportunities come outside the u.s.. paul: caroline has famously been long the magnificent seven so she is laughing all the way to the bank. i have not. do i chase the magnificent seven in 2024, or do i look for some sectors that may be haven't participated? ed: the magnificent seven had a tremendous 2023. if you look at the two-year chart it is less aggressive. it certainly shows the volatility of these kinds of companies. they are tremendous companies

and we think they benefited quite a bit in 2020 three from enthusiasm around ai. i think what will be important in 2024 for these companies to deliver on that and show that they can drive earnings growth based upon some of these themes. the market has definitely brought out over the last eight to 10 weeks. we think that that is fundamentally positive. some sectors have lagged mostly due to the rate backdrop of 2023, like financials, health care, and staples and utilities. we think that there are some nice valuation opportunities in some of the sectors. really heading into a year like 2024, this uncertainty and the economic outcome, we want to be pretty diversified. we think we have the opportunity in these markets, not just on these individual sectors, but across a range of asset classes. paul: appreciate getting a few

minutes of your time. the president of franklin advisors and chief investment officer located in san mateo, california. a nice campus at san mateo. spent a ton of time there in the starbucks waiting for my meeting time to see the good folks at franklin. folks in fort lauderdale do a lot of international investing as well. they are truly global advisors, franklin advisors. they were global before anybody else. it was r.o.e. bigo, franklin advisors, and the bahamas. caroline: terrible places to be based. florida in the bahamas. paul: and right here at san mateo. good folks out there. the s&p 500 is .3%. this is bloomberg. ♪ manage all your sales from one place with a partner that always puts you first. (we did it) start today at godaddy.com

caroline: welcome back, we are simulcasting on this 26th of december, myself, caroline hyde,

and paul sweeney talking about how you might not have received an apple watch this christmas. you can purchase one, some of the latest models, and a cosco or best buy, but you couldn't get them online or at their stores. apple basically anticipated the watch band that is currently occurring being prompted by the fact that we have a health technology patent, two, and apparently apple violated them. u.s. national trade commission determined this is an occurrence in october and the white house has refused to overturn the sales ban. let's go to the ceo of mossimo about why he is taking his fight to apple. >> ever since 2013 when they contacted me and said noninvasive monitoring, they want us to meet with them because they want to integrate our technology, we haven't heard from them. instead, they ended up putting 25 of my engineers, including

our chief medical officer and cto from a spinoff company. this is not an accidental infringement. this is a deliberate taking of our intellectual property. caroline: you spent millions to take on apple. is this because of your business, what you think could win out being forced to pay your for your technology, to settle, or something else? >> first, i'm glad that the world can see that we are the true inventors and creators of this technology. we want to let you know that by banning the apple watch with spo2, there is no issue. the apple internal documents that we saw in court shows that they knew that their product wasn't good enough to be used medically and they didn't even seek fda clearance because of that. they got two measurements a day on 37% of the people. we get over 70,000 measurements per day on everyone.

they pushed that anyway because as their email showed, they thought in the chaos of covid, this is their quotation, they could get market share away from fitbit. why did we sue them? this is our intellectual property. we have our own product that i'm showing here. we have been in the business for 35 years. not only with consumers, but with hospitals. we got fda clearance for stork, a baby monitor to help parents monitor their baby's pulse proximity when they are not next to them. paul: i learned a lot in that interview. that was the maximo chairman, ceo, and found there. we are going to buy the bloomberg news mark gurman who knows everything about what is happening in cupertino. i learned a lot with the interview with mr. kiani.

what are the folks in cupertino saying? mark: they have gone further than anyone else trying to shake it on apple. samsung tried to get iphone and ipad models band a decade ago. barack obama vetoed that. epic games tried to take on the app store a couple of years ago and largely lost a lawsuit against apple. now the apple watch. sales of the apple watch series nine and ultra 2 officially stopped in apple retail stores two days ago on christmas eve. today, the u.s. trade organization and their ambassador put out a statement saying that they are not getting involved. we are not going to stop this. there is no veto coming from the white house or anyone in the u.s. government. today, apple filed appeals to the federal court circuit with

the goal of getting an emergency stay to delay this order until mid-january, when the u.s. customs agency is poised to give a response to apple's software update that they've developed to fix the issue. it is supposed to happen january 12. apple wants this ban removed until january 12 when they anticipate the ban being reversed. apple is pulling every lever that it could, but they have some egg on their face. this is something that they knew was possible for months, and yet there was no resolution until after the ban went into place. caroline: does this have an impact on consumer sentiment around the product? in any way do you think that their own products take market share? mark: i don't see any scenario in which the products take any market share. does it impact consumer sentiment? this has become something of a mainstream news story.

consumers are asking questions. why is the apple watch banned? what is wrong with my apple watch? will my apple watch it stop working? the questions are being raised in that's not good for apple and its marketing engine. the worst part of this for apple is exactly to your point about consumer sentiment. from a revenue standpoint if this is reversed in a couple of weeks they have basically lost essentially nothing material. in terms of their q1, this ban not going into effect until the tail end of december will basically cause them no pain on their guidance and revenue. we are talking about probably $100 million, maybe a little more or a little less. certainly, consumer sentiment is the biggest impact unless this bleeds into february or march. paul: how did we get here? our good friends at cupertino are very good at avoiding any of these types of situations as it

relates to technology and licensing technology, creating technology. is this a misstep on the part of apple? mark: it is unclear. i am not a patent litigator or expert. it is unclear how egregiously they are violating these masimo patents. it is unclear what mistakes they made. my understanding is that they developed this technology in house. that they did it mostly on their own volition. there was a scenario about a decade ago where they met wit . masimo and hired twentysomething people from masimo, including the cto of their sister company and chief marketing officer -- chief medical officer of masimo to run their health efforts. the origin of this is a trade secret and patents case. that came to fruition before apple released a apple watch

with a blood oxygen sensor. after the blood oxygen sensor release, apple watch 6, that is when masimo filed the complaint asking for the import ban. two years later, that has come into place. apple has gotten off the hook for two years. plus, masimo wanted this ban to come into place in the summer so the apple watch series 9 would be delayed and it would mess up apple's entire holiday season. in terms of the impact this is a hollow victory for masimo. as we talked about earlier, it is negative on the consumer sentiment if this goes on. apple could be in sizable trouble and they clearly need to be more careful. caroline: you have given great context that this has happened once before with samsung trying to block certain products. at that point president obama did take a step. give us context on how much this happens. masimo's argument is, you took

our people. there's no way that we could have fought back. the amount of money that you had to offer these people, this talent, we can't secure that. how does this end up winning out for smaller companies building great product on the west coast but seeing their talent lost to some of the bigger companies? mark: i'm not sure that is something that could be stopped. there is nothing illegal about apple hiring people from other companies, people leaving from their own volition. i think the part where mossimo feels the most burned is they feel bait and switch. that apple approach them for a meeting in 2013 about a partnership or acquisition. apple heavily considered buying masimo but instead decided to hire its people. it is ugly and unfair. it is something that may be a company as big as apple who goes around proclaiming that they believe in people's rights, that they believe in certain things,

that they believe in these positive things, and then behind the scenes they are doing things like this, it is pretty nasty stuff. the big question is, is it illegal? at this point, i don't think that anyone is proclaiming that is able to make a judgment on this that it's illegal. it is a terrible look, nasty, but they are not necessarily breaking any laws. there's is nothing that could be stopped. paul: thank you for joining us. our go to voice on all things apple. i think that he basically sets up a tent outside of apple headquarters and that is where he gets his stuff. the s&p 500 is up a quarter percent and the nasdaq up .3%. why not, it is 2023. this is bloomberg. ♪

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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. caroline: december 26. you are listening to a simulcast with paul sweeney and caroline hyde. up 3% on the day and still geopolitical tensions around the red sea and concerns that the broadening crisis and conflict in the middle east. we want to harken back to expertise that we found on the show and "bloomberg technology" when we spoke to the flexport ceo on supply chains amid the red sea attacks. >> you are seeing in the container shipping lines where there is effectively no

container shipping lines transiting through the red sea. you see a lot of red dots but those are other shipping lines. this is what carries most of the goods that you buy. they have decided that it is not safe for crewmembers. one of them was hit with the missile, and two were narrowly missed and the company said it isn't worth it for the insurance premiums and crewmember safety. they are going around. the impact is it is a 25% longer journey. now, that is delayed, but it is less about the delays than a reduction in supply of ships because you need more ships to service the trade lane. 25% more ships. >> flex port has shared data on some of those diversions. around 180 vessels finding an alternative route. explain why flexport tracks the data. >> we are one of the largest in the world. it is a platform for shipping cargo around the world. the things that makes people

choose flexport is we do a good job of monitoring where the cargo is. we use satellites and integrations with the carriers. an interesting point about technology is that a lot of the ships transiting the red sea have turned off their satellite transponder. they don't want to be targeted by the rebels. they can use the same data. the exact moment that you would like to see where's the ship it disappears from your system. a 25% reduction in supply can lead to a huge swing in price. prices between three and four times higher for shipping from asia to europe on ocean freight, and that is a big impact on the price of consumer goods. we talked about inflation. maybe people think it is under control but all of a sudden you have these new factors. > we have seen the price of oil tick up. what about your own business? many would say during the supply chain headaches of 2020 one, that was a boon time for flex

port. how does that impact the? >> we are trying to serve customers and do a good job. when prices go up they have to pay more. that is what it is. prices out of your control. it creates a lot of chaos. imagine the ship that was hit with the missile, for example, the msc, it was meant to go to barcelona and pick up 4 containers for a flexport customer and bring them to morocco next week. that is en masse on every ship that is diverted. teams are working overtime to keep up with this and do a good job for our customers. they pay us to make sure that their cargo arrives on time or if not they are well informed about what's going on. paul: a fascinating discussion with ryan peterson, the flexport ceo talking about global shipping through the difficult

part of the world right now. the interview that caroline had a couple of weeks ago. the ceo and founder of greenwich media strategies, thank you for joining us. in that part of the world there are so many uncertainties and it is such a fluid situation. let's start with the red sea. what is the status of shipping in the red sea? is everyone diverting or are people taking their chances? >> over the last few weeks you had the houthi militants funded by iran attacking vessels in the red sea. commercial ships of all kind to destabilize things. it is frankly an effort to destabilize things without the an all out war and instigating a major response from the united states. we had shipping company say they

would divert traffic around africa, which we know would increase costs majorly. also, it would create delay times that could lead to global inflation and so on. the u.s. responded saying we are creating an international navy coalition. the united states has and it has a number of companies that have participated to control the red sea and the suez canal to allow shipping. they created it. we don't have the details on how many vessels or ships are there from the united states and which countries, but we know that it has already diminished risk. it hasn't eliminated it entirely, but it has decrease the risk. as of yesterday you have some shipping companies have announced that they will resume shipping through the red sea and suez canal. not all of them, but as people see that things are calmer they will resume shipping entirely. caroline: maybe that takes off

some of the anxiety that we've seen from a price perspective in all we will prices, however, the conflict, all of this stemming from conflict between hamas, israel. i interested come of course, in ultimately how you see that ramping up. there has been increased concerns around iran vis-a-vis israel. how are we seeing that ratcheting up its concerns for you? hagar: i don't see any let up in that conflict. or in the aggression. also, the aggression pursued by hamas in this conflict. since last week there have been a number of efforts to reopen a truce. the israeli president offered a one-week truce in exchange for another round of hostage and prisoner exchanges. egypt has come up with an ambitious plan that i don't think we'll stick friend mor -- that i don't think we'll stick for a more permanent cease-fire for hostages and changing the

power structure in palestine. hama has rejectedoth offers of these cease-fires. i do think that you will see small humanitarian truces that are short in nature. we know that hamas and the israeli government have agreed, in principle, to two humanitarian pauses that yielded a hostage exchange. we will see that again. until that happens, the israeli government has been very public about this, saying there is no let up. netanyahu said that there is no stop to what we are seeing on the ground in gaza. in my own experience when i worked at the white house on conflicts, including conflict between israel and hamas, these wars are short in the grand scheme of wars. i don't expect it to last this intensely passed the new year. into the new year, maybe a month

or so, but i expect around february it will die down, but it won't stop until the is really government gets at the heart of hamas' leadership in the south of gaza. paul: what is the support for netanyahu at this point and the overall war effort? where are we in that right now? hagar: great question. israelis have spoken loudly against netanyahu. they were speaking loudly against him before october 7 because of his own corruption scandals, how he was trying to overhaul of the judiciary inside israel in order to protect himself from these corruption investigations, there was already a lot of animosity and protests against. this has only increased that sentiment further. a lot of his policies created the vulnerabilities that hamas took advantage of when they pursued their horrific terrorist attack on october 7. they are in the middle of this

intense war. you have what appears to be a majority of israelis, and there has been a lot of israeli polling against netanyahu and more in the favor of benny gantz, the wartime cabinet. i don't expect netanyahu to be forced out at this moment or to resign, but the intense operations, when they slow down, which i expect sometime after the new year, that is when the israelis will say, now it is time to kick out netanyahu and i expect benny gantz to be put into place. caroline: what then of the administration? we are headed towards an election in 2024. with your 12 years of experience in government, what will the response level end up being from the white house? hagar: i don't expect the position of the white house, when it comes to calling for a cease-fire or place conditions on u.s. aid to israel, to change at all. they are banking on the fact

that it will be short-lived. it will be. in the grand scheme of how wars go around the world and in history, the wars between israel and hamas tend to be relatively short. they may be banking on that but a lot stems from a genuine desire to defeat hamas completely and believe that the israeli government can do so. by the way, i agree given that we sought happen with the international coalition against isis. that may not be that they can eradicate hamas completely, but defeating hamas and its military and governing capabilities is an achievable goal in my opinion. you can see that the biden administration wants that and they don't want to show a lack of support for israel at this time. that is why they won't place additional conditions that already exist on the weaponry, equipment, and vehicles going to israel. that said, you see them heightening the rhetoric on the u.s. side calling on israel to limit casualties, to be as targeted as possible, to

transfer to low intensity operations. not only is it morally the right thing to do, but in terms of the strategic, broader secure israeli state, harming civilians in this way, killing them in this way, doesn't help them achieve that goal. as secretary austen says, it would replace a tactical victory with a strategic defeat. that is why you continue to see the u.s. continuing to advise them this way. paul: the middle east isn't the only hotspot. we have the war in ukraine. i spoke with an admiral, the former nato chairman, and he said that he returned from korea. he said what he believes is going to have to happen in ukraine is what happened in korea in 1952 or 19 53. swapping land for peace. is there any feeling in that part of the world that that is on the table or possible? what is the update? hagar: it is not the feeling certainly coming from ukraine.

it is not entirely at the feeling in europe. you see things starting to become a little awkward or uncomfortable. i am so glad you are asking about ukraine. nobody is really. just because the attention has diverted to israel and gaza doesn't mean the war has let up. things seem to be in somewhat of a stalemate, though i have to stress that while we see a lot of press article saying that ukraine is losing its counteroffensive, that's not true. in july come ukraine regained 50% of the territory russia seized since 2022, and that a significant. that said, they are running out of ammunition. president zelenskyy pleaded the congress for more aid. a lot of experts say that they will run out by march. that said, i believe that the beginning of this year, 2024, that congress will pass a new round of aid for ukraine, israel, and the southern border, which is what republicans say is

holding up aid. president biden said he will compromise on that and i think they will come to an agreement. that said, it shows that things are becoming more difficult. in garnering support for ukraine. that is in part because it is an election year. americans are growing more weary. not the majority, but a lot are growing more weary of support for ukraine. obviously, you have inflation. in europe, you have the same. the hungarian prime minister got in the way of the eu sending another aid package to ukraine. they require consensus of all 27 member states to pass something like that. you are seeing difficulties arise. they will get there. they will cross the finish line in the new year, but given how difficult it's becoming i'm not surprised you are seeing leaders saying, we don't want to leave ukraine in the lurch like this. maybe we need to consider how to lay the groundwork for

negotiations and position ukraine in a strong of a position as possible. paul: really appreciate getting your perspective. ceo and founder of greenwich media strategies and adjunct professor at the columbia university school of international affairs and nonresident senior fellow at the atlantic council center. a lot of geopolitical risk for investors still front and center to start the new year. caroline: one of the notes that we didn't manage to delve into is what this means for president xi, what he might do and the focus on china and taiwan. we will be discussing china from an economic perspective at least. paul: a lot of hotspots around the world for investors to discount as they look forward. this is bloomberg. ♪

paul: you think back a year ago and, caroline, i think that everyone had 2023 as the

reopening of china being a major play. it doesn't feel like it has really played out. the question is, what happened, where do we go from here? julia covers all of the emerging markets for bloomberg news and is based in sao paulo, brazil. the china call seemed like a reasonable call. it seem like an easy call to make a year ago. what happened? julia: it was a total consensus call. goldman, morgan stanley, bank of america, everyone saying china would reopen and be a wave that lifts all boats and it is super positive for emerging markets. where you end up seeing is the opposite. china has been a drag on emerging markets as a whole. if you look at it, the em index, which is heavy china, 30% china weighting, it is down 15%

underperforming u.s. stocks by the most in 35 years or something. strip china and it is up by the most in four years by about the most amount -- the same amount. the beginning of a massive rally, and in the end, because of china, and all of the hopes with the covid restrictions easing that it would lift everything, and it didn't happen. caroline: that is why, for example, getting a call out of goldman, the head of global currency rates saying, now, think about em and em x china going forward. julia: it is a theme that we keep seeing. we saw the em xchina etf surging in inflows. it is now bigger than for the china etf which a few years ago was 50 times bigger. you are seeing a lot of money flow out of china in all asset

classes. it depends on the call, but you are seeing latin america benefit, a lot of india, a lot of money managers calling for the growth prospects of india and reforms and money keeps flowing out of china. paul: i wonder what em investors are saying today? to me, as you mentioned it is a big part of the msci so you have to be there, but it feels almost an investable. this "china risk" where the governor can risk havoc on my business, i think of alibaba, the ibm of china, they took alibaba out to the woodshed. what do they think about the ability to invest in china these days? julia: you see the surprises. the property crisis was a big -- nobody saw it coming and it coming and wiped out 70 billion of value. it is harder to invest.

what you are seeing and we are hearing from investors a lot is that the gauges what we look at, the msci for em stocks is losing its place as a benchmark because you have to look at china and ex china. because the index is so heavy it is not representative of what is happening in emerging markets where you are seeing a broad rally when you discount 30% that's china. caroline: look at what happened on friday of last week with the gaming sector. extraordinary bait and switch it felt like once again in terms of the overall view of gaming and whether or not you will be charged for an adult using the gaming sector when you are making in app purchases. later, china approves 105 new video games on monday to try to calm the concerns that it feels as though, ultimately, people are feeling very misguided by what happens with china.

ultimately, therefore, where do they invest? is there a country that we single out, viewpoint that you need to be elsewhere at the moment? julia: the most consensus call at the moment is india. it is what we keep hearing. you have to invest in india. saudi arabia comes up a lot. at -- as does latin america. brazil and chile have been cutting rates. mexico is another destination. it is close to the u.s.. you have a lot of companies moving factories to mexico, which is a boon to the economy. those are the geographies we are hearing the most about while money managers leave china kind of alone for a while. caroline: so great to have time with you. we appreciate you dialing in from latin america. you are based over there, thinking all things of managing editor for the em markets americans. thank you for your timing. gaming sector feels like a good time to talk about toys.

that is a smooth segue from one viewpoint to another. we are joined by simone foxman, who has been keeping an eye on what is selling. for me the 26th of december was the u.k. equivalent of black friday where we make the most of sales. what is happening at the moment? simone: discount up to 35% this season on toys according to adobe analytics. a lot of these toymakers like hasbro and mattel have said that folks will wait until the last minute to try to game these discounts. but we have seen is a decline in toy prices. they are down 5%. prices are down 5% since march. data companies are estimating that we will see an 8% overall annual sales decline this year. this is why folks like hasbro are cutting 1100 jobs, lowering their forecasts, talking about

headwinds that are stronger than they hadn't dissipated. some of this -- than they had anticipated. some of this may be the aren't getting the consumer right. some may be that they are spending on experiences over stuff. paul: hasbro down about 16%. both are trailing the s&p 500. my kids are old, so we are not in the toy game. was there an it toy this year? caroline: a squishy is what everyone talks about. i don't understand what they are. they seem to be a cushion, soft, cuddly toy. my kids just made up toys that they seemed to want. i would like a pokemon lantern, which doesn't seem to exist anywhere. the two that i order from some slightly questionable online retailers don't arrive on time. ultimately, simone, i feel like it was the year of the toy, the

euro the barbie. they did their marketing incredibly well. yet, we are still wanting it for the price point? simone: i think so. everyone is getting in on this game of trying to tie their stuff to these broader experiences, broader entertainment stories. ultimately, there is going to be a limit to how much people want to spend on this. paul: it might be a call on the consumer? maybe consumers are weakening, consumer credit has gone higher, maybe they don't have the discretion of income in their pockets? simone: hence why they are waiting for sales. you think about the profile of the person buying toys. they are probably younger and younger people have not seen as much wealth built up overall. there are lots of people buying by now pay later, total consumer

credit card balances are up 16.6% on a year on year basis, a record. paul: there is no toys "r" us anymore, so i guess you go to walmart or target? caroline: walmart is also dialing into some chinese providers. our stockings for the kids, don't tell my kids because they think we bought the stockings, but they are coming from temu. my husband did the whole thing from the chinese retailer rather than going to amazons and the like. i wonder if there are new players when it comes to the toy area? simone: that has to be part of it. what also has to be part of it is continuing supply chain woes for some of these. caroline: there are two pokemon lantern's still not at my door. simone: santa has to blame this on the supply chain. when you look back over the last two months, i was looking at how the companies had performed over the past two months, and even

hasbro and mattel, those shares have really been on a tear. you look across pretty much every single retailer, it's up, with the exception of walmart. i don't know if you have the screen up, it is down 3% since november 1, down over 5%. caroline: they don't just sell toys, though. simone: i think there was the idea coming into this fourth quarter that people would shop at places where they cannot only get toys but could did groceries and things like that. that was going to be walmart. paul: do you know who the largest grocery store chain is in the u.s.? walmart. i didn't know that until a couple of years ago. caroline: who did you think it was? paul: i don't know. kroger? walmart? i have to get out more. i have to get off of this island and get into some real-world

walmarts and check out the shopping experience. more coming up. this is bloomberg. ♪

♪ caroline: live from new york, it

is your simulcast with tv and radio joined together. it's great to be here on december 26. it's boxing day. not the sports type. i guess it gets physical if you break this down. then you go out and you spend more of your money post christmas. paul: what do you do with the gifts you buy on boxing day? caroline: it's self gifting. you bite your electronics you haven't been given and you got the ugly sweater. ultimately, it's a day of rest in europe but it has not been a day of rest in the u.s.. if you are looking at some of the volumes, you might feel as though it is. we are still on the high side is for the u.s. markets. the s&p 500 is still clinging to gains, eight weeks of them. we are up another 0.3%. volumes are at about 45% but the

nasdaq is still high thanks to the magnificent seven for the year. the two year yield, a big auction of notes being sold at around 1 p.m. we are up five basis points with maybe some selling into that supply pressure. up another 3% on the geopolitical tension. paul: the red sea in particular this time. caroline: we've got plenty to discuss in terms of where we go in terms of the market. we want to bringing in our next guest to talk about this. it has been mixed for new year when you think about the way in which every economist got it wrong in the direction of travel and how far we go in terms of borrowing costs going higher. they never anticipated the ramp up but now we see we will be cutting to an extraordinary degree. the markets see 150 basis points

for the next year. do you feel the market is getting ahead of itself? >> good morning and thank you for having me. yes, i think the market is a little bit ahead of itself. that's to put it gently. there is still some talk about earlier rate cuts from the federal reserve. i don't see how that will happen. we look for rate cuts to come around the middle part of the year at about 100 basis points total. we've gotten so much momentum still. we saw third-quarter growth revised down last week. that's still a heck of a strong number. that was the very first estimate that was come out with his 4.9%. q4 so far, we've seen signs of

slowing but there is still a lot of momentum. just last week, we saw the personal spending and come data still very strong, .3% real spending. it was across the board. i look at the key things that people could be spending on or would not be spending on if they were worried and there are still more spending on dining out and were spending on recreational goods and vehicles. if things were tough, you wouldn't be doing all of that and there there were still spending on that front. we are still seeing some decent momentum into the fourth order and the turn of the year. earlier rate cuts i think are just overblown. caroline: if we see the resilience, if we see maybe wage inflation, do you think the fed will have to become more joined up in its approach to messaging?

that's where the whiplash comes in. fed chair powell speaking of perhaps the necessity to start cutting a couple of fed people coming out against that. are we getting a consistent message? >> up until recently i would say yes but i don't know what happened at that fed meeting. i feel fed chair powell took the markets for a ride when he talked about rate cuts entering the discussion and he pushed back on the question of when it will happen. that's why we so that parade of every single fed official coming out shortly after saying hold up, the earlier discussion of rate cuts is premature and we have to see more data. we are looking at the totality of the data and i think there will be more of that before we

see the official rate cuts. we believe it will happen again in the middle part of next year. the fact that things are slowly slowing and the fact that inflation is coming down, it's a good place to be right now. paul: can we officially take the recession talk off the table? >> we've always been in that soft landing category. i think we had us down negative one point but we took that out. this is the whole soft landing/no landing/any landing scenario. we still see things slowing around the turn of this year and this will prompt the fed rate cuts to come along around june. i don't think a hard landing or actual recession looks like it's

in the cards but things could change quickly. a lot of uncertainty is playing out there as the new year begins. as of right now, we are not looking for an actual full-fledged recession. paul: i think the fed has done a decent job here coming out of a pandemic which they didn't teach you in business school, maybe a little bit late but by and large, they seemed to have manage this thing pretty well if in fact we get a soft landing. what you're feeling now that we have some hindsight? >> the fact that we are at this stage in the last few days of 2023 and the soft landing narrative continues to play out and more and more people have hopped on it in the last few months. no one would have imagined this. unemployment is still tight and wage growth is still on the rise

but not as high as it was. this is almost goldilocksish. it's something the fed is welcoming and it seems like they've done a great job and the fact that the u.s. economy remains resilient after rate hikes is pretty darn good. i think they should give themselves a pat on the back but it's not over until it's over and we will have to see how 2024 plays out if we see more signs of heavier breaking on the economy. caroline: let's talk about the risk factors. tell us a little about what you think could pull back a consumer at this point. >> if consumers see more signs

of supply chain issues coming back into the mix, china is open again so that's fine but we've got everything happening in the red sea. there was a story this morning about europe trying to create its own battery chain scenario and has had problems sourcing supplies because of competition from the u.s.. that could throw a wrench into that. geopolitics and the war in ukraine, the conflict in the middle east, if that ramps up and we have a number of elections coming up next year. we've got taiwan coming up in january and a whole series of european elections during the year and of course the u.s. coming up in november. these could throw a big wrench and all of this. i like to look at climate as well. it seems like it's a faraway story a couple of years ago but

it's still very much here. we can see it like in toronto which is a green christmas. that could -- this could potentially add to inflationary pressures as to how it affects food prices. paul: thanks so much for joining us. that looks like a pretty solid soft landing at this point. 2023 by my count, we lost a couple of the exchanges for the crypto space. bitcoin is up 150% and the market doesn't care. sonali basak follows all of this stuff. i'm talking about the binance guy. you call him cz, not a good year for him but economically, darned good year. sonali: what's amazing is the story about how they've calculated his fortune based on

the stake he has tied to binance. bit gone -- bitcoin has been done well and binance is the exchange and the fact that his fortune grew by $25 billion is more than five times what binance has paid in a large u.s. settlement tied to different allegations from different regulators including anti-money laundering. he is not alone here. what's amazing is in that settlement, there are questions around how much he suffers from what had happened here when he's able to keep the stake in binance which is why he increases well to such a massive degree is such a big story. caroline: who would've thought the centralized element of decentralized finance is still at play. talk about another key player in crypto.

if you go back to the birth of crypto and early players, many would say digital conference group. great scale investment is where excited market sees spot bitcoin etf coming in january. one of the key players for the etf's grayscale investment. why has barry silver stepped down as chairman? sonali: they didn't give a reason why that it is fascinating. his own well grew by $1.5 billion this year. grayscale investment owns that trust. then you have other parts, genesis for example, filing for bankruptcy and ensnared in relieve problems. to your point, grayscale investments in early january is

the deadline for the sec decide whether they will approve this conversion of certain etf's. people are waiting to see whether the grayscale bit: trust -- bitcoin trust will be able to convert as well. is it a governance question? they did not give a reason. what's interesting about him stepping down as the chair of grayscale comes on the weight of lawsuits and this idea he's being succeeded by another dcg executive which is the parent company. caroline: the cfo? sonali: that's right and there is still another executive on the board in a significant way at grayscale but why did barry step down the middle of this messiness around the empire? caroline:caroline: that draws questions. messiness? in crypto? paul: it's up another 150% this year. sonali: it's resilient.

caroline: the idea being it's totally decentralized from anything that's happening on the exchanges at play. we thank you as always. we've got so much more to talk about when it comes to some of the m&a happening in the world of finance. paul: in might , i will be an m&a banker in pharma. every week there is another deal. if you can't bring the drug come you just go out and buy it. that's what happens and big pharma and that's what we've got here. bristol making another big deal in the pharma space. that is coming up. this is bloomberg. ♪

caroline: welcome, it is bloomberg markets and you are listening across tv and radio. let's do some m&a news.

we are down 2% on bristol-myers squibb because it will be splashing the cash come up billion dollars worth. it has agreed to buy a company for $4.1 billion. why are they beefing up? madison miller is joining us to discuss the latest and greatest. this particular deal pipe bristol-myers squibb, why are they buying in the space? where they doubling in their share price? >> it shows the value of these radial pharmaceutical drugs. big pharma is really interested in getting in on this space. we've seen deals with eli lilly earlier this year. that was in october in bristol bought another cancer drug maker in october as well. we obviously talked about the

cancer drug space. what's different about these drugs as opposed to the chemotherapy that everyone knows about, these are more targeted at tumors and attack the cancerous cells and they leave the healthy cells relatively unscathed. they are safer for the patients. you have less off target effects of there is a lot of innovation in this space and big pharma wants in on that and that's what we see in this deal. caroline: when i think of bio and pharma, i think of biotech in the deals being unwound. i think more broadly of the regulatory issues. why are these big deals getting through? >> i guess it's not as big of a deal. there is a differentiation in the types of treatments. is this a new type of therapeutic? these targeted radio pharmaceutical drugs versus

buying a super similar drug to what bristol myers already has? these biotech companies are smaller in many cases as we've seen with the eli lilly acquisition. i think it was a $1.4 billion deal. it's a little bit smaller compared to the pfizer deal which was $3 billion. it's when the companies are smaller and there's differentiation in the types of deals being developed and the drugs being developed. paul: when i see the story on an m&a trait , igom-a go and i wonder which investors are getting paid here? centerview partners is advising on this. folks are getting paid on wall street.

it seems like every single monday we walk into the office and see big pharma buying some type of biotech company. do investors care whether these companies develop their drugs on their own or acquire them? do investors care how they get there? >> a lot of times, i think investors are excited when companies do this type of m&a. the reaction today was a little different but a lot of times, this is what happens in pharma. they go to the smaller biotech companies that are doing the innovative work and acquire them. we already usually talk about deals and the weight loss drug space. cancer is another big one that pharma is still hot on. there's all of this innovation in different drugs being developed that are safer potentially and at the biotech

level. cancer and weight loss drugs, we saw the last deal with bristol was therapeutics last week. they were developing a drug for schizophrenia which there hasn't been treatment for that for decades. there is actually a lot of recent m&a happening with analysts and investors. they expect that to continue going into 2024 and it will just increase. paul: it seems when you think about the schemes for the stock market, one was ai and the second was ai junior which was the weight loss drugs. if i wanted to raise money in the vc community and health care do i have to be cancer or weight loss? >> that's what it seems like. that's part of this story.

there are other deals that were happening in the pharma space. there is a lot of interest in innovative things that we haven't talked about as much because all the money is going to weight loss drugs that's where the investor interest is. there is nonaddictive pain treatments that are moving into studies. that's another area that eli lilly is interested in outside of weight loss drugs. we have alzheimer's treatments as well they're coming so there is quite a bit happening. most of the focus has been on weight loss drugs. caroline: has all the value been running out of it? do the investors feel the market has moved far and fast on these bets and we are out of place? >> when it comes to eli lilly, they think this company is -- it

has risen to a in sync valuation because they have continued innovation and other treatments that looked to be better than the ones it currently has on the market. the precipice of this weight-loss drug market, ozempic 2.0 is already on the way and there will be new versions and lots of versions with less side effects and it's only going to grow from here which is crazy because the growth is already been insane this year. to think this market could grow potentially even more and other drugmakers will come into it as well is pretty amazing. paul: i'm a little skeptical because it seems these drugs have been out there for a while. now they are telling me they can

cure everything until the common cold. it feels like it's too much, too soon and a lot of hype. what's the feeling within the community as to the efficacy of some of these types of drugs? >> it's interesting, when we first saw the heart disease data over the summer, there was some skepticism among cardiologists. we really want to dig into this data more and see all of the data in order to make a decision about whether we will prescribe these drugs to our patients. once she saw the data, many of them were sort of convinced of the benefits and there was all of these amazing things we saw that 75% of patients ended up not developing diabetes where maybe they would have. while there deftly is a lot of hype and we seen the over hype

affects that this will have an effect on airlines in retail and all of these things, that's a little overblown. we are really just beginning to understand how these drugs could benefit other conditions and that comes down to the fact that cardiac metabolic conditions are linked together. it shows how these systems are interrelated. paul: absolutely, it's been a fascinating topic to develop here. it's been amazing. she covers all things health care for bloomberg news. i kinda go to sam fazelli who is very skeptical but even he says there is a lot of applications for some of these weight loss

drug she is trying to understand . caroline: what's the efficacy of the fate of ozempic? the u.s. fda has been seizing thousands of units of counterfeitozempic and novartis is having a tough time getting out supply. check out some of the images to know if yours is authentic. paul: we can all agree about the high cost of drugs but they delivered the vaccine so i'm done beating on the health care companies and big pharma. they deliver the vaccine record time. this is bloomberg. ♪

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paul: we are simulcasting, radio and tv together. we are looking at these markets. we got gains on the screen with a little bit of green as it relates to the equities. the s&p 500 out about -- up about 0.3%. the russell 2000 is over 1% today in the small-cap stocks are outperforming. yields are a little bit higher. wti crude oil is up 3.4% tonight -- today.

i will call out bitcoin because tom keene is not here. he calls it bit dog. it's off about 3% today. i did not go to a store during the shopping season. i clicked a couple of mouse and that was done. i added a couple of people -- i patted a couple of people on the back and handed out cash to other people and said merry christmas, that was it. simone foxes here to cover the equity markets. talk about what we are hearing from the experts in the retail world about how this holiday shopping season is shaping up? simone: you were emblematic of shoppers this season. the short hills mall was busy as you told me earlier but the main place we saw a lot of growth in terms of shopping was e-commerce. all of this came from early data

from mastercard spending. overall retail sales for november 1-december 24 was up 3.1% non-inflation-adjusted. e-commerce is the real standout, up three point 6%. there was 2.2% more seals on the line then in-store with also people going to restaurants. that was up 8%. most of the other categories came in paul: even. paul:another index is the new york strip steak. 30 six st in manhattan, $63 for the new york strip steak and $48 before the pandemic. i don't know, our cows more expensive? simone: there's been inflation in prices will go up. things are slowing but most things with the exception of

toys notably, most things are not declining. caroline: when we think of experiences versus online purchasing, we will get a direct take next but thank you for the data. the chief revenue officer is joining us. i think about cashback and coupons and being able to track consumer sentiment online in particular. it is the consumer as resilient as it was this time last year when it comes to e-commerce purchasing? >> it's a great question and it was a massive holiday season especially for people like us who cultivate great loyalties and incentives, rewards, discounts, coupons. unlike the last couple of holiday shopping seasons, we had to wait until last minute to see those consumer dollars flow through which is a scary moment.

the last couple of years, shopping started in october and november in earnest. this year it really started on cyber week. we kind of anticipated that would happen and it did happen knowing that consumers would likely be waiting for the best possible deals. particularly interesting is because consumers waited, there was a lot of pent-up demand into december that made it quite hard for many retailers and brands to sustain the promotional activity through end of the year. some were smart with their budgets and some less smart and it created the winners and losers. caroline: let's talk about the winners. >> from a category standpoint, there are some interesting things. travel did quite well. a sensibility because consumers

were waiting for the best deals on highpoint purchases. with thought electronics would be a big winner but not so much. they started to come back a little bit in december but given the discretionary purchases, we thought those dollars would wait for the big deals to occur. apparel was another one that wasn't so super, ostensibly because that's a bit discretionary and people are not gifting apparel as much as something for yourself as far as what you might want and not need. we saw incredible growth out of department stores, marketplaces, footwear, toys. apparel and electronics were the only two that were a tad lackluster. paul: against my better judgment, i bought an xbox for one of my offspring. i did it begrudgingly. he had a pretty good year. how do we feel about the

consumer? i'm not sure how the consumer is paying for all of this? what are the retailers telling you about credit and that kind of thing? >> we see consumer spending. you just listed the stats there. we have to remember that consumers are spending but they are looking for the best value. that's really putting brand loyalty into question. you see a lot of retailers and brands scrambling to figure out what this need is for how they retain shoppers going forward. while there are certainly signs of inflation cooling, i think there are many facets of our current economy, political landscape, a lot will be happening in the next year that's going to mean that consumers are still very value driven. it's going to create a challenge and the juxtaposition for retailers. at the beginning of the year, you will hear a lot of retailers looking to return to health which will be they are looking

for better profit margins coming out of a competitive promotional q4. paul: that's where i wanted to go. i hear about consumer seeking value and promotions. what does that mean for the retailer margins? >> it's a challenge. they usually are used to having to give quite a lot in q4 and then comes the ability to recoup those healthy margins. that's more important now coming off of covid when loyalty was in question and retailers have been spending to earn back shoppers for the last couple of years. this return to health is important and there are couple of things they can do to meet a shopper where they are while still offering incentives. there are things like cashback which is a great lever for allowing a retailer to charge a regular price but create an incentive for a shopper. you said you did not go in-store

too much to shop this holiday season but that is a big and growing arena especially for younger shoppers. another area that retailers can think to invest is in incentivizing things like buying online and picking up in-store which can give an incentive but drive consumers to shop where they know they will get additional purchases once the consumers are in the store. paul: thank you so much for joining us. she is the chief revenue officer , giving us the latest on what's been a pretty solid holiday shopping season. good for the retailers out there. switching to investing, more people are buying into alternative investments, think jewelry, sports cars, sneakers and memorabilia. we have a former sports business reporter is been a memorabilia

collector and investor for the last 25 years. he says how he finds value. >> memorabilia's a great market because it tugs at the heartstrings. it does something beyond supply and demand. it reminds people of one they were at the games with their father and reminds people of a movie, gets them close to history. that's really important. vonnie: how did you begin to understand how to value something? >> any good investor has to be curious. i've lost in some markets. you don't just move on and save lost them a why did i lose? i started investing in vhs tapes that are sealed and that made sense because it was mini movie posters on a piece of outdated movie technology. i put money into it and it did not turn out to be the market i thought. there are basically 6-10 people controlling the market and it

masqueraded as if the masses were into it. just like anything, when things don't work out, you become good by making the states and asking why it didn't work out. vonnie: do you factor when storage and authentication and how do you look at it? >> i don't think about return but i think before i buy it all the costs going into it. i also think about when i would sell it. i often sell things on anniversaries, 50th anniversary, 75th anniversary, all the stuff that is historical to america, i'm waiting until 2026 because that's the 250th anniversary. vonnie: will the market be glutted that year? >> if you have the best. there are situations where the apollo 11 moon landing where i miss the anniversary by a week or two weeks and it cost me money. that's when you sell into that new cycle and that's when there's fervor and love for that event and two weeks later, it's

not as hot. vvvvonniie: how much capital have you put into this? >> i put in almost one million bucks. vonnie: do you consider a cancellation risk or maybe other controversial personalities? >> i got rid of all my bill gates stuff. i probably made money on that because i think he has not been canceled and might not be. vonnie: what was the most fun item you bought even though it didn't make you money? >> ferris buehler cost me one of the 50,000. vonnie: he wore that jacket for the movie? >> the hawks in e-house didn't do a good job of publicizing it. there is not a single article that said it was available. movie costumes are always

bothered by the fact there is 10 of them. i contacted the custom designer who was 71 years old, marilyn vance. i said how do i know it's one of the real ones? she said you have to buy it first and then i can tell you. ok, so i bought it and i said what do i look for. it was a sweater originally, not a vest. i cut off the sleeves. if you look inside both arm holes, you will see that we sowed the armholes so it didn't freight or unravel. then i said would you write a letter for me to say this is 101? that's a way of creating value. the auction house didn't say it was one of one. it's really only valuable if it is. that to me -- it's the most iconic movie custom of the 1980's.

i would be disappointed if it sold for less than 3 million. caroline: i thought collectibles were and fts. they've had a pretty tough time. people can still collect the tangible goods. i feel like you are a guy who has classic cars. paul: no. barry riddles has classic cars and if matt miller is there, i just leave and get lunch. i collect coins when i was a youngster. i got a 1927 penny and phenomenal condition. i got it at a deli a month ago and it supersedes the one i had in my book from when i was 12. it's in that good condition. caroline: romaine bostick is

also a coin collector. paul: when we downsized and we were getting out of our house, i will say we had about one billion legos. caroline: you were keeping denmark going single-handedly. paul: three boys and four years apart so you had to buy the new ones every time. i don't know what you do with all of them. caroline: maybe you can get something for them. paul: there you go, alternative investments. the s&p 500 is mainstream and it's up 0.3% today. russell is where you want to be, up 1% today. this is bloomberg. ♪

paul: we are live in their bloomberg interactive studio we are simulcasting.

i didn't know they could do that. we are on radio and tv. that's how you do it on a holiday week. we have green on the screen and i will take credit for that. caroline: you are telling people to go along? paul: the russell is up 1% so that's been a nice story in the last seven or eight weeks, the broadening out of this market. for the first eight months, it was this magnificent seven that was driving everything but now the equal weighted s&p 500, you get a better 12% return. market technicians tell me that's a good thing to have in this market. she writes stuff over the weekend. if you pay attention to the bloomberg terminal, you see some good content talking about the markets. what are you looking at? >> you did mention the russell

2000 so we are looking at small caps because it's up around 1%. if you look back to late october when we saw the russell up for the last six weeks, it's up more than 20% since then. when you look at the russell 2000 relative to the s&p 500 over the past three years, it's still on pace for his worst three-year stretch since the late 1990's. but it's been a hard-hit corner of the market. the small-cap stocks have been kind of mediocre. paul: i've done small caps for 30 years but it's always been tough to make money. >> also, the way the index and the russell 2000 and the percentage for particular sectors is different than when you say the s&p 500. the tech composition is different than when you say you have the majority of that focused toward mega cap tech as

well as the nasdaq 100. when you look at small caps, the russell 2000 is more weighted toward valued corners of the market. when you think about financials which banks got hit hard early this year or you think about health care, it will be more weighted heavily for those sectors versus the bigger indexes. that's what you typically see the the underperformance. caroline: you just traded sideways since the beginning of 2022. go back to the tech play and whether or not -- we've heard from certain guests across the entire ecosystem but also bloomberg technology that is time to broaden out from the magnificent seven. >> we have been seeing that not sister small caps but banks as well because we talked about this year with the regional bank stresses but that in addition to small caps a been another corner of the market that's outperformed. if you look at bank of america,

they have their different positioning data specifically geared for their clients but coming out of the summer, we some workflows into financials. when you talk about financials, it's broad and it's not just banks. you also have fintech and insurers. it's because of the changes, those companies used to be housing technology and now they are in financials. because mutual funds were under position, they were going more toward insurance companies as well as fintech. that's something that going into next year, because mutual friends are underexposed, will we see another move into banks because of that? paul: what are the strategists saying? everyone's got their outlook for next year's or strategist looking for a continuation next year? are they saying may -- maybe we are seeing the performance recently is done for next year. >> there is always a table on

the terminal. if you look at the end of 2024, the actual average for the s&p 500 is expected to be 4833. that's not too far away from where the s&p 500 is already trading. if you think about strategist coming into this year, they felt the s&p would be around 4000 and that did not happen. it's a stones throw away from an all-time high. going into next year, even though sell side analysts were forced to push up those estimates, not that for higher than where the index is already trading. it will be interesting to see how things shake out into next year. when you look at equity strategist, they feel next year the s&p 500 will still be around where it is now. caroline: equities are sexy and fun but it doesn't compare to the monolith of the bond market.

are we done on bond prices? >> that's the big question. when i talk to strategist and my sources, because of the fall we've seen bond yields especially with the 10 year, we've seen the correlation as prices have come down and how that has supported the broader start market. what that means is if there is a point of how far yields all to wear that as a potential concern where the economy is headed. most people have not been as concerned about the drop in yield so far. when paul and i spoke with ira jury who heads up rates, it's getting close to where his call was about where the 10 year would end this year. it seemed a couple of months ago, it wouldn't of been the case but on pace to where it could be there. as long as yields continue to fall, it will help longer duration and growth stocks. paul: your colleague on the

equity team follows the new issue market. what is he thinking about? will we get more deals? the stock market is up. >> if we have more deals, that will bode well from where the economy is headed. we had some ipo's earlier this year. when they started coming out, they were pricing above the midpoint range. we've seen the pricing start to come in around the midpoint range which is disappointing that it comes to valuations. into next year, it looks more optimistic even though we've had a tough trajectory. that corresponds with what the federal reserve's doing and the rate hiking cycle. there is more optimism as far as what it could mean for deals going into next year. caroline: go global for a moment. the talk of the town in the trade of the year is seemingly the u.s. has there been anywhere else to win? >> india is one of those big

winners. that's a key focus looking into next year. there are supposed to be the momentum with india and the elections coming up, not just u.s. elections but elections happening in india. if the prime minister does not get reelected, that could run the risk of a bigger market correction in that corner of the market. you have jeffries estimating a 25% or more correction if the premise there doesn't get reelected. that's been a gangbusters area corner of the market. paul: let's talk important stuff. tomorrow at 9 p.m. eastern time, those aggies playing oklahoma state in the tax act texas bowl from houston. how do we feel about the aggies? >> i'm feeling pretty good but it was a tough season for a variety of reasons. you will probably give me a hard time. paul: can we send caroline down

to texas? >> tom keene's father went to texas. we should all go. paul: explain to her listeners how big football is in >> >> college? if you look at texas a&m come is the biggest public college in the u.s., 70,000 students. i think there was more than 50,000 so when i went there. they rebuilt the field in recent years which was gangbusters. i feel like it would be fun. the dixie chicken is popular. paul: the dixie chicken bar. >> tom keene wants to go. if you want beer and wings. it's very texas. paul: they would love me in there. >> you would be popular down there. paul: texas a&m and oklahoma state 9:00 tomorrow night in the tax at texas bowl. looking at the markets, just treading water right now.

the s&p 500 is up about zero -- 0.4% in the same for the dow and the nasdaq. a nice steady day here in the russell is giving is more life, up over 1%. i will call out the vix for tom keene. caroline: i suspect he is not listening. paul: he is into his surveillance cocktail i hope. the vix is just above 13. the yields are pretty much steady at 3.9%. it was just 5% seven or eight weeks ago. caroline: they are about to get that auction in about five minutes time. $8 billion worth? paul: i don't know what to do with those auctions. wta crude is up a solid 3% today. gold is a little bit higher. bitcoin is off three points. just below 42,000 on bitcoin.

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.

>> p.m. on the east coast.

a day of green. volumes allied. s&p 500. all-time high. nasdaq. high. 4/10 of a present. big tech on top. intel doing well. seemingly doing some investing in israel in particular confirming they will invest a total of $25 billion after securing incentives from the government a kise time that the geopolitical concern and risk in the m&a surveys because bristol-myers squibb spending more than $4 billion on the date to be up a little bit on the fact it will be putting more money into a biotech company, a regional drug developer. we are often bitcoin by 3.5%. that is where we trade.

profit-taking after the run-up. but we want to dig in more broadly to markets what it means at this moment when we've had such a run-up and we do that with the coo and chief investment strategist at entrepreneur shares. before i get your take, what are entrepreneur shares, entrepreneurial companies from your perspective? >> the ones led by an entrepreneur, founder, ceo after they go public and we bring the model to the public market and that is 30 years of research from the founder and ceo and for example we identify with five dollars stock not $500 and through research was uncovering the next generation of entrepreneurs who would lead the company's tomorrow. >> by definition is this focused on technology, biotechnology where do you guys find the most

opportunities? >> exactly. tech, i.t., communications services, biotech, health care general. we are real estate, heavy communications, tech, growth companies high-growth companies where most of the on-chip news are found to invest back into the company and think long term grow organically rather than through m&a acquisitions and invest heavily on research and development so that is how we identify these companies and there are many of them so we have to choose the ones we believe will be the next entrepreneurs in the mecca caps in the space. i've taken a bunch of these companies public back of the day and one pushback i would get as a banker analyst is this controls. giving the founders you know may be 10 votes for a share giving the public giving one vote per share. how do you get comfortable with

that? >> so we so we take 15 different attributes that altogether comprise the factors, so not just that but the company and how the leadership of the entrepreneur and how they lead, their compensation, whether heavy compensation or invest back into the company. for example the old entrepreneurs, the google people behind google mark zuckerberg they were among the first to invest more into their company rather than thinking selfishly on how much compensation they will receive so we are trying to identify every single attitude that we believe makes a company entrepreneurial rather than your credit. >> so tim cook obviously not founder of apple so apple is not on the list alphabet no longer run by its founder so i assume not on the list so where are we

out that meta other than meta and nvidia, where are you seeing opportunities in smaller caps, the magnificent seven, nvidia, meta seeing some real power over this year, where have been the alternatives for you? eva: so definitely what we think out with the current interest rate environment that is bullish for stocks especially for small-cap stocks high-growth company the long duration as its long duration equities are the ones that suffered the most when interest rates were going higher in 2021, 2022, 2023, now we have the opposite so the corollary is true where interest rates are coming down in long duration equities of the ones that are doing that with their cash flows in a big way so as a result we have seen in recent months if they have been out of most of the categories so we are moving down the smaller cap and entrepreneurs can be found everywhere but are much heavier

now and smaller cap and high-growth companies where how very balancing we are portfolios and we think that narrative will hold true through the end of the year and 2024 as whizzing the fed dot plot what it implies is that the fed rate is going to go from 5.2 5% current levels to five point 50% next year -- 4.5 sent next year, three point 5% 2025 and 3.5 and 2.5 percent in 2020 60 that's a big drop in interest rates and that is why the the variable of high-growth equities. >> one thing i've noticed about these entrepreneurial companies is the founder and the entrepreneur is great at creating the company and creating the technology but may be not the best manager and it is time to bring in some adults at some point and we saw that with eric schmidt at google at one point, how do you think about that when you're looking at these entrepreneurial companies?

eva: that is an amazing question and we call these the corporate soldiers the coo, x ceo of facebook was one of them so we look at the leadership team in general and again again their compensation comes into our research for all the executive fee and how they help each other and so and that kendra and if the developing non-entrepreneur cab dropped where everybody is investing into the company rather than thinking short-term and taking liquidating their equities that were taking all these factors into consideration but usually what we say is the good entrepreneurs of the ones who are invested in their companies and they think their personal images associated with the country are the ones we want to surround themselves with by a last price and jobs and so we we are happy to find that most of the time that these entrepreneurs are surrounding themselves with exceptional people. >> so where has that not worked

or where have you had an entrepreneurial-led business that has not managed to live up to your expectations? eva: it is unfortunate to say that the new generation of entrepreneurs are not as i would say as ethical or not investing into the company as the prior generations would be, so we have seen the difference in terms of the generation of entrepreneurs. the younger the entrepreneur they tend to be more selfish or thinking short-term and we have seen this with many of them and i can name them now but there are many examples of entrepreneurs we have seen they are not behaving appropriately or as we would call it in an entrepreneurial way, so we try to avoid these companies and so again the research we are doing is taking into consideration different attitudes that are very important when justifying why is a company entrepreneurial or not. caroline: so you are long tesla?

>> yes, we are long tesla, although we have that lower weight than our benchmark right now and are moving away and lowering our weights and make a cap entrepreneurial companies and were adding more to small-cap entrepreneurial companies because again the interest rate environment will be the ones that will outperform most of the categories. caroline: fascinating. we thank you for joining us really brought across the board there. we thank you when it comes to all things entrepreneurial focused and indeed where you should be placing your bets. so, so much more when it comes to the world of stocks and stock picking but we want to be interweaving within this conversations the ongoing geopolitical narrative we have had. now oil has been up on the day and indeed has had a good month overall and we got to talk with

one particular company led by an entrepreneur in fact they had to bring back performer founder into the fold after some instability at the business still by private business flexed board, ron peterson, and we had a chat with him about what it is about, supply chain, tracking and what they're seeing at this time of red sea attacks. take a listen. >> you are seeing it in the container ship lines where there are effectively no container ship lines transiting through the red sea. the ocean containers, this is what carries most of the goods that you buy finished goods traveling in containers have decided it is not safe for crewmembers safety and one got hit with a missile and two got narrowly the mists and these company said it is not worth it on the insurance premiums and crew member safety so there going around. the easiest way to think about it is that it is a 25% longer journey that is delayed but less

about the delays than it is a reduction in supply of ships because you now need more ships to service the trade line because there are 25% warships. >> flexed port has a shared data on some of those diversions around 180 vessels finding an alternative around which would explain why flexed port tracks that data. >> we are one of the largest plate forwarders in the world. it is a platform for shipping cargo so one of the things that makes us choose it is we do a good job monitoring where the cargo is with satellites and use integrations with the carries on one interesting point about technology is a lot of the ships transiting the red sea or near that area have turned off their satellite transponder because they don't want to be targeted by the rebels who can use the same data so at that exact moment you would like to see where is the ship and what is going on it disappears from your system but a 25% reduction in supply can lead to a huge swing

in price. prices are three to four times higher for shipping from asia to europe on ocean freight and that is a big impact on the price of consumer goods and we talk about inflation and may be people think it is under control but all of a sudden you have these new factors that were unaccounted for. >> we have seen the price of oil pickup. what about the impact on your business because many would say during the supply chain headaches and that put that light made of what occurred during 2020 to 2021 was a boom time for flexport. how does that impact you ultimately? >> well we are trying to serve our customers and do a good job so when prices go up they have to pay more and of course that is what it is a price out of your control but it creates a lot of chaos and you know because imagine that ship that got hit with the missile for example, the palladium three, just off the coast of yemen with a missile, it was meant to go to barcelona and pick up four containers for a flexport customer and bring them to

morocco next week. that is on every ship that got diverted and has to replan every schedule so teams are working overtime to keep up with this and do a good job for our customers. that is what they pay us to do to make sure their cargo arrives on time or if not they are well-informed about what is going on. paul: that was the flexpor ceot talking about global supply chains, a key, key issue that raised its head during the pandemic and we got a lot smarter about what the global supply chain means and how it can impact all parts of the economy in all parts of our lives getting more play here as well given some of the turmoil in the mid east and in europe. really starting to see it just in crude oil over the last kind of week to 10 days, about 10% off that recent low, brent crude let's do that the international crude up almost 3% today, $81.37

so transiting through the red sea i did not know where the red sea was before this happened so i hit my google maps and i said oh yeah, that is important. caroline: you are living up to every american stereotype. [laughter] paul: oh, the suez canal, i get that, an important body of water and security is paramount for a lot of folks and for a lot of global trade and again, i learned about 12% of global trade goes through the red sea and i think we all got a little smarter on that suggest trying to stay a little bit educated what's happening on the global supply chain route here so we looked at wti crude oil here at wti crude oil here the u.s. up 3%, $75 $.83 on wti crude oil modities.e watch all those this is bloomberg. ♪ rude. who are you? i'm an investor in a fund that helps advance innovative sports tech like this smart fitness mirror. i'm also mr. leg day...1989!

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paul: we are live in our radio studio in the bloomberg headquarters.

we have been hearing about this recession for 18 months, the most telegraphed recession that has not occurred but one of the concerns is what it will mean for certain companies particularly the highly leveraged companies in vulnerable companies will we see a surgeon bankruptcies? we have seen some notable ones at the beginning of the pandemic but not many as we thought but still some concern out there and we are joined now here in our new york studio. what have we seen on the bankruptcy front and 2023 as we head into 2024? >> how is it incredible with the s&p at highs and the nasdaq up 50% you have seen the spate of bankruptcies and with rates higher for longer and uncertainty around the pivot there is uncertainty that bankruptcies continued so that we have seen some notable names,

right aid, melon crop, parties video, yellow, we work. an amazing amount -- at the beginning of the pandemic, the one that got my attention was brooks brothers. that is your demographic isn't it? yes. it is incredible. bed, bath & beyond. although there were winners. they bought the ip and hands been using it so interesting things coming out of bankruptcies but there have been more than 20 companies with at least $1 billion in liabilities that have filed just this year. so far. paul: one of those names are retail, is that where it starts, your direct relationship with the consumer folds first and we head into other industry groups? sonali: it is the biggest group,

consumer discretionary is 20% of all bankruptcies but you start to see those industries sets broadening, health care companies, industrial companies, private equity backed companies with an krups he said a 13-year high. a lot of these companies have not even seen the brunt of the pain. my brilliant colleague did a documentary earlier this year where she was saying expect those companies and does what, we are seeing those bankruptcies hit the wire. justin today a company called points id that went public through a spac and another company now filing for bankruptcy after the exuberance of 2021. ed filed a week or so ago. it is amazing, so remember byrd was one of the companies that had flown into billion-dollar unicorn territory one of the fastest paces we have seen so how quickly some of these companies are unraveling and broadening into more areas now as well. paul: bloomberg intelligence has

an analyst who covers distressed debt and he has phenomenal research some of the best on the street and he can find these companies and what he does is he finds out ok in a bankruptcy who gets paid? you know that is really key because it's one thing to go into bankruptcy then the fun starts and then you have to figure out which of the creditors get paid, senior lenders, subordinated lenders, creditors, employees, it is brutal, but there is\ money to be made. if these bond. it is fascinating because if you want to get real wall street about it if the problem is so many of these companies back in prior cycles looking like a vulture on wall street was kind of cool. now that paradigm has changed in all of these companies are big private credit companies now too and want to look friendly to companies and other lenders and want to look friendly to other

investors and so they are reticent to play dirty in these environments. caroline: it goes back to the sovereign debt crisis. it was all very well when a company goes over its skis but was greases over its keys in your becoming a vulture people do not like that. [crosstalk] caroline: speaking out there is a record wall of maturities in the sovereign debt world coming up as well so when we think about restructuring opportunities it will get quite messy on the sovereign side in the corporate side knowing into next year. in a higher interest rate environment. paul: 2024i feel like we are going to see commercial real estate be a category that is really going to see some high-profile bankruptcies or just really problems. think about these office buildings that are helpful i know the leases are long-term leases but they have to start running up sometime and i was wondering how that will play out. sonali: the regional banking system is not out of the woods yet and there is a question how much capital there is in the private capital world to fill this void and i the wife the situation circular and caroline was talking about retail bankruptcy what happens to the

real estate when a store goes bankrupt?some of it they sell that but some of it goes to the wayside and wewoe r had to renegotiate its leases. kcaroline: it's going to be one big halloween store. sonali: yes. incredible. or you were saying earlier -- [laughter] we will need one million christmases to keep up keep us away from the pain we have already seen this year but there are still tons of stress even without a recession. paul: do wall street firms have a restructuring groups? lazard at one point had a really good restructuring group. [crosstalk] caroline: they have been hiring. sonali: they have been more active in those m&a businesses. i thought of this for you because there has been such little m&a work but there has been restructuring work and when i talk with bankers and i asked them about what kind of talents they want to bring on board younger talents in particular they are focusing on people who

can focus on capital management, balance sheet restructuring. [crosstalk] real boring stuff. [laughter] bring out your accounting textbooks everyone in your corporate finance work. paul: credit training so i went to the chase manhattan bank credit training program which even today i will see that on people's resumes that they have been on the street for 30 years because credit analysis is so important for somebody different points in so many different places but particular restructuring and trying to figure out where the money is and where the capitalism who will get payback and all that kind of stuff. sonali: absolutely and the boutiques have bigger restructuring arms because if you are a big bank and have money in a company or investors in the company that you're working on behalf of it complicates the situation a little bit and so really those big boutique firms guggenheim, pgt, they are the ones, lazard, they have been put to work at a time like this. caroline: how is the ftx bankruptcy going on? sonali: so much fun for me. that is another thing.

caroline: to understand that is sort of like a pool of assets which i'm not sure every single accountant has been trained in. sonali: and the people who have lost money from the beginning and how much money they will get back it is obviously becoming less and they put in and the ripple effects of the bankruptcy still being felt. paul: so who is i mean where are we on the process?is there a sense of investors will get anything back? sonali: it is interesting. i have to go back and look. caroline: it is starting to improve? sonali: yep there have been very large let me give you this one which is one of the most interesting examples and asset management firm and they had a lot of money stuck in ftx and just recently they were able to liquidate at $65 million claim. this is a small hedge funds of that money was a big deal and there were concerns around this hedge fund at the time and this is now many months later that at the same time their ability to liquidate that claim and it was

a sale of their claim. this is not them getting their money back, but there claims being sold, has helped them. paul: there is an alternative asset business will people will invest on legal claims thinking i think your claim is worth $.60 on the dollar and i will give you $.50 for it today. caroline: they have to notice salon that has been doing well. sonali: or their stake in anthropic. caroline: yes. they would ride to the rescue of ftx. [crosstalk] sonali: it is a reminder the bankruptcy process in the united states work so that people can get some money back. caroline: this is why you do protection. sonali: exactly. paul: all right. thank you. we appreciate that. she does all things wall street. is that how we do it? we call her all things wall street. sonali: local finance. [laughter] caroline: and the disruption thereof wall street. [laughter] and a healthy taste of crypto in your sphere of influence as

well. paul: bitcoin for those that care is below $42,000. i'm not sure where the support level is but when it breaks below a notable figure even number like 42 thousand dollars a gets my attention, our 3.6% today. caroline: let's do a quick broader market check because the nasdaq 100 still higer on the day. crypto. bitcoin. a little bit of a pain point versus yours tilde but remember maybe this is profit-taking towards the year. i do shine a light on intel and the fact they're committing to $25 billion of investment. we will now talk about kindness within corporations up next. stick with us for it. this is bloomberg. ♪ - [mo] if you're thinking about going back to school, this is for you.

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paul: all right. we are here in our bloomberg radio studio simulcasting radio tv we can do that here at bloomberg looking out the markets here pretty solid date. we will take it. it is a quiet day between rasmus and new year's but the s&p 500, dow, nasdaq are up so we will take that on a holiday-short week here so some pretty good stuff. looking at yield steady here at 3.89 percent but the story for me in the commodity space is crude oil up 3%, $75.70 a barrel

so that continued tension in the middle east being felt in the commodities market. caroline: look you just said it as a holiday short weekend it is a holiday because people have been gifting and receiving gifts and baby thinking about doing a little bit of good in the world and we thought therefore it might be interesting to think about how kindness is being enacted are not in the corporate landscape. there is a value it would seem in kindness and the impact it can have on corporate culture in particular. there is a load of data done by one organization that we welcome to the program. kindness.org. we have been discussing how you have been funding and thinking about the analysis kindness.org. you have been working with 23 and me, ulta beauty, unilever, thinking about how you can activate kindness internally. those thinking i will switch off my radio tv because they will

get in some soft stuff like kindness what is your retort about? >> it is measurable and a wise smart is in his tactic. we have seen again through the signs and data that was companies are investing into kindness internally/externally how they communicate to consumers it is good for the bottom line. that is the bottom line message. caroline: let's talk about your bottom line. ultimately you are in the business of sensitive skin therefore sensitivity. i can see that, across from a marketing perspective but why commit your money to this research and wife enacted and use yourself as a guinea pig too. >> we are a skin/help company founded 15 years ago after an act of kindness, so we were helping another neighbor in our community, so kindness has always been important in the dna of our company and we knew that we had seen outsized results in the industry in terms of the

score value, decreased customer acquisition cost, and aside from having good products, we knew that it was the kindness leading to those outsized results and by working with kindness.org for the first time ever we were able to develop a customized tool that can measure the amount of kindness in any organization which can compare back to their own results. paul: i guess in your work and in your experience what are some of the companies doing and what can companies do to promote that type of work environment that fosters kindness in the workplace? >> sure so to his point and some of what we looked at originally was how to measure the kindness of a company, so we developed a new tool and tested it across sectors with six companies and use that to ultimately determine

how kindness is showing up within companies and why it matters to their employees, so we can use that to assess any company. we call it a company kindness quotient and gives you a baseline to understand how kind you are now and how well it always or treating each other and from there we think about equipping teen/leaders lowe's companies at large with the tools they need to better activate kindness. i like to remind everyone that it is seen as a soft skill but it is measurable and tangible and we now have enough data to show why ed matters so we mine people that every act's a difference and look at the workshops and educational material we provided look at providing a framework for companies that they can better commit to choosing kindness more often and again, knowing that it is good for the bottom line when you do. paul: you are a medical doctor and the cofounder of a skin/health company. from your work, experience,

kindness in the workplace how does that impact the overall health of individuals? what have you found? >> i say we spend so much time particularly this time if you're thinking about the resolutions in terms of diets, exercise, kindness has that much to do with your overall health and well-being as both exercise and diet, so as a physician who works and preventative medicine i encourage people to think about kindness as a preventative practice they can incorporate into their lives for real health benefits. caroline: the reason i came across kindness.org as of late is because you were coming to wall street to the nasdaq to ring the bell and tried to ultimately what is it you are starting to see resonate with businesses? because you have been already taking this to children and that i can see as a parent the way in which i'm trying to think about our kids having thoughts other than their own and ways in which

ultimately to have mental health impact of their own kindness can help them and teaching it in schools, what made you click this was something in purposeful when a business? >> i want to put kindness on the public agenda and send a signal that it can be embraced as a powerful business tool and it is not fluffy, we, soft, feminine or any of these narratives perpetuate it as being seen as anti-good for companies, if you will, and when i thought about what we know from the science and what are own research has shown us that kindness.org, it is linked to happiness and well-being and there is so much to validate why this is good for you so we set out to try to study that and work companies to help us better understand how important it is. at the end of a study we did was sit companies again across multiple sectors we saw that employees care more about kindness and they did income. now that is not to say you should not pay people well but it is saying you can pay off you

want and if it is an unkind culture the retention and things you seek to focus on when it comes to growing your business to scaling your business and seeing success in the end it will not matter if you're not investing into your team and their well-being, so it is trying to make a business case for companies for meeting people where they spend the most time for children in classrooms, and adults where they are working. paul: i don't know how this fits in working from home and hybrid in the discussion of coming back to work. in your experience in the last several years how has this may be changed a little bit? >> certainly in our company it has made us more cohesive and able to work from home better than probably a lot of other companies who do not have a culture based on kindness. we spend three quarters of our adult lives basically in the workplace, and so if we can measure and affect the workplace with kindness, that will have

tremendous ripple effect throughout the entire community, homes, and what we do at work has a profound impact on the rest of our lives. paul: fascinating discussion here. we appreciate your time. the cofounder and ceo of kindness.org. in the cofounder of beekman 1802, putting kindness in the workplace. 2024 will bring more clarity on the future of hybrid work and return to office policies. as part of our work smarter series here is how nicholas bloom of stanford explains how hybrid work is here to stay. >> if you look at folks working from home they feel happy or work from home. in the data what we see that if typically you're working from home may 3 days a week, that we see the maximum happiness and work satisfaction and life satisfaction scores. >> one of the hottest topics is

hybrid work and remote work, and the academic who has led the research influencing what we think and know about it is professor nicholas bloom, professor of economics at stanford university. i went to visit him on campus and begin by asking him about the state of play right now. >> to give you a rough overview of where we are 60% of americans, northern europeans, i should say, a good global developed country number can't work from home at all, so people who work in mcdonald's, driving cars, hospital security, they still have to come in every day. there is 30% that are hybrid that are typically working from home two days a week and then there is a remaining 10% that are fully remote and working from home every day date and, day out. when you are in those last two groups, you get to 28% of data.

>> that data sounds conclusive but not everyone is on the same page when it comes to the way hybrid works in practice. what else does the data show? >> if you look at the data employees typically want to work from home about three days a week. what we are doing for graduates professionals, something like two days a week, and senior managers want more like one day a week, so it is almost like haggling. the employees 13 and the managers want one and they settled up two and two is where it is roughly right, so you think about a typical week, monday, friday i'm home, saving the commute, quiet time, email, reading, writing, tuesday, wednesday, thursday and the office, mentoring, presentation, so that is roughly working and where things are setting up. >> you call what we are expanding a mass social experiment in working

arrangements with the speed and scale that is surprising and important isn't it? >> yes, i don't think there has been anything this big probably since world war ii. what we saw was millions of men went to fight and millions of women went to work in factories, shops, and it seems obvious and now but it was not obvious backbend that women can do these jobs just as well as men and in many cases better so that kind of stuck in the men came back in the female labor force puts patient jumped and has been rising ever since. the only other thing that is similar because the pandemic generated this massive jump that everyone kind of turned around and said, wow, this work from home is not perfect but we should be doing more of it than we used to. >> there is another significant shift at work that is ai. >> ai has a really big intersection of work from home in the following sense, if you are hybrid, you are coming into the office let's say three days a week and ai probably helps you out and makes you more

productive with copilot for coding that helps you to write and design stuff so i don't see it as a threat but supporting the job. it is different if you're fully remote. if you are fully remote, ai potentially particular if you're doing a repetitive relatively basic job can replace your job so what i mean is if you think about ai, the software, visual, voice side is good. if this was a zoom call i could just be a made up and after what you may figure it out but if i was in person the robot that replaced me will never work so you think of data entry, call centers, hr, payroll, this kind of thing fully remote, a lot of this may be replaced by ai in five to 10 years. >> what has been the most surprising piece of data you have uncovered in all of this research? >> i would say that work from home has worked so much. i did a study in 2010 to 2012

that showed this enormous productivity working from home so if you had asked me if there was a global pandemic and everyone was first home, what would happen, i would have said it would be chaos and everything would collapse. as it happened it has worked out surprisingly well annexed, by 2023 we are probably better off in terms of productivity higher in some groups, so i have been amazed about how well it has worked and it makes you think what else is out there that we should change. maybe longer holidays. may be a five-day week. maybe organizational structure. we discover we are much betterd off. ♪ caroline: this is so industry-specific isn't it ultimately? the way we think about hybrid cannot work for everyone. those in retail. those who need to be in person, doctors, anchors, tv, radio, but there has been this movement by

wall street to get people back in an office and i wonder how it impacts culture going forward and how retention ends up being. paul: it is interesting. i worked 30 years on wall street and when i think back to all the firms i worked at, it is the people. it's not the deals, offices, it is the people. so i think if my kids are forming those relationships in the way those relationships work was working all night with people traveling stuck in airports and having meals with them all the time. i don't know how they re-create that but this is the new way. it is the new way. the productivity has been phenomenal. the global economy. it is the way to go. caroline: maybe you can have some grit just three days. two days work from home. this is bloomberg. ♪ ♪ ♪ ♪

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caroline: now after all these festivities did anyone unwrap an apple watch?

that is the key question after the front run of a sales band heading into these festivities when we saw apple via the u.s. international trade commission determined that they can no longer be selling smart watches because they violated not one but two of the patents held by massimo, a health tech company. there has been an ongoing narrative on the bloomberg technology show and we had the ceo and founder of mossimo join us last week to tell us why he is taking up this issue so strongly with apple. take a listen. >> ever since 2013 when they contacted me and said they want us to go in, meet with them because they want to integrate our technology, we have not heard from them and instead they recruited 25 of my engineers including our chief medical officer and cto from a spinoff company and this is not an accidental infringement. this is deliberate taking of our intellectual property. caroline: you spent millions to

take on apple. is this because of your business and what you think ultimate you could win out with them being forced to pay you for your use of your technology or to settle or something bigger? >> i am glad the world can see we are the true creators and inventors of this technology. we want to let you know that by banning the apple watch, there is no issue because apple's internal documents we saw in court showed they knew the product was not good enough to be used medically and did not even seek fda clearance because of that. their own testing showed they got two measurements a day on 37% of the people. that is it. we'd get 70,000 a day on everyone. and they pushed it out anyway because there is no showed that they thought in the chaos of covid, this is their quotation, they could get market share away from fitbit.

why do we sue them? this is our intellectual property and we have our own product that i am showing here and we have been in the business for 35 years, not only now consumers but hospitals. in fact we just got fda clearance for a product we call stork, a baby monitor to help parents monitor their babies pulse proximity when they are not next to them. paul: that was the founder and ceo of masimo speaking with bloomberg last week because they have of that the bit of an issue with apple in terms of some of the patents associated with the web watch which is put a -- on their ability to sell the watch over the last 10 days. mark gurman is here and covers apple really well and knows what's happening in cupertino. from apple's perspective here, this seems like it is not typical apple behavior and they

don't usually find themselves in these situations here. what are we hearing from apple as it relates to some of these issues with its watch? mark: apple never gets into these situations. in fact when the itc ruling came down on october 26 two months ago to today, i think the initial reaction from everyone including myself to be honest was that apple will find a way to get out of this. they will either settle or convince the biden administration to issue a veto or will get an update before it goes into place but no, they have some egg on their faces i said earlier getting to this point and is an embarrassment to the company. in terms of the impact of the apple watch ba thisn could not come at a worse time for masimo. masimo if wanted to inflict pain on apple, b should have complacent to months ago.

athey actually pitch the itc complaint to the idc two years ago but for apple you're talking about losing about only five days of sales at only apple's own retail stores in the online store. a lot of those orders and sales have been configured into their q1 earnings, so i don't anticipate much of a headwind on the q1 announcement at the end of january or early february. this is something that if it continues to bleed into february or march may impact q2 or q3 but i don't believe there will be a big negative head was on apple's financials at this point and in terms of what they're saying, they are appealing to everyone other than the pope to who they believe can get this thing reversed and have gone to the federal circuit and asked the itc for a stay. they are submitting a new apple watch software update to the u.s. customs agency and hoping it gets approved by mid-january so right now we are in a wait and see approach. caroline: can you fill us in.

we heard from masimo and understand why he is taking issue in fighting this fight, even though it costs him. why isn't apple settling? do you have any idea of what they feel it is as the advantage for them to keep fighting? mark: if you settled these patent disputes especially at the gigantic numbers a settlement with masimo would require, you're talking about setting a precedent that other companies with patents looking for places where apple is infringing, right? apple has made very quietly 400,000, 500 thousand dollars settlement with individual patent owners for many years that no one knows about, right? they have the ability to write those checks without telling anyone. they have had small multimillion dollar settlements. masimo it is a public company and something the whole world is paying attention to and certainly you have been talking

about it all day for the last two weeks or so so certainly they don't want to set that president the. other thing is they truly believe they did nothing wrong and don't believethey sold the technology and given how public and how open masimo have been about these issues it does not pretend to apple a place where apple would want to engage. apple does not like to engage with people who are talking publicly about their issues with apple, so that is another component as well. paul: does apple have a credible case in defense here? i mean, i don't know, it just seems like the masimo people are the folks who really traffic in this defender doing the work here. does apple have a credible defense, do you think? mark: i can't give you an opinion on whether it is credible but i can tell you what people in the apple world including the lawyers are arguing. let me break it down because it is interesting and complex. ok. masimo over the years has made a ton of money from patent infringement lawsuits. there is another company which acquired another company many

years ago that developed devices, medical devices. masimo sued both companies and got huge multiyear licensing agreement settlements with them over seminar patents are the same patents that apple and masimo are at war over now. in those licensing agreements would strike 10, 20, 15 years ago and those that started to dry up. the revenue that masimo has gotten from them has gone away over the past several quarters. some are making the argument that apple is in the crosshairs of masimo because masimo it is looking for a new revenue stream, licensing agreements to prop up the revenue, right? that is one angle. at the same time, as joe showed caroline on bloomberg tv last week, they have developed their own smartwatch. he showed the w!, that looks like the apple watch and apple is suing masimo because it looks

like apple watch. they have another watch called the freedom watch, a rounded design, that is $1000 and they are hoping that becomes popular. so what apple lawyers believe is that masimo is trying to get apple out of the market and will not happen long-term of course and order to get licensing revenue and create space and the wearables market for their upcoming watches. that is the apple argument. masimo's lawyers argument is that is not what masimo is doing. they are going after apple because they believe apple has stolen their ip and masimo saying they are not creative or vindictive enough to come up with something like that but you can see both sides of the argument. caroline: very briefly does this have any impact on how they hire talent in the future or how they communicate this to consumers from masimo's perspective. mark: from apple's perspective i

don't think you will see them talk about this lawsuit publicly or get into blood oxygen in terms of patents publicly. apple does not get into that in their marketing messages on their website or presentations. in terms of hiring, they will have to be careful to tell the stories of apple meeting with dozens of companies a month, hundreds of companies that year, startups, seeing their technology missing we should acquire this technology, and in cases where they don't acquire a company, hiring their engineers in recruiting their engineers to build those technologies and take the technology and reinvented in putting the other company out of business. caroline: you have been all over this story. it continues to build. we thank you so much for the latest on the apple watch dispute. meanwhile, four george hours of kelly -- gorgeous hours of tel.

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>> welcome to bloomberg markets.

after eight weeks of green s&p we continuing the santa claus rally looking at a year ending pretty strong. >> lower liquidity. at the same time, stocks and the green and the santa claus rally on track and it encompasses the last five inc. trading sessions of the old year in the first of the new and so we will see if we can continue the streak and we are very very close to that record and we will see where we closed today 4771 for tens of a percent on the s&p 500 now we did have a two-year option which was pretty successful and you see the 10 year yield is below 390 unbelievable action on the part of bonds and we continue to see gains and oil up another 3.3% for new york crude, wti 7598 and as you can see the vix above 13. that will be an interesting question for 2024 will we see an

elevated vix because we have not this year. sonali: >> yeah >>, it has been calm. green across-the-board. nasdaq 100. that portends of 1%. remember this is being driven up a little bit in part with until rising more than 4% by bust of the stock ineptly in the green and you have the nasdaq composite held by m&a and you have one of the biggest gainers in that index and you have bristol-myers squibb adding to its buying streak previous m&a and were still watching deals going into the end of the year and look up up stock semiconductor inmate decks up more than 1.5% also ending the year strong small to mid-cap stocks russell 2000 also seeing a lot of it up almost 1.2%. now joining us now we will talk more about the markets with the president and founder of point wealth capital management. let's talk with some of the things we are seeing across the market because you are seeing love in the small caps to mid-caps and it has been something we have seen in recent weeks. at what point do you see the

other parts of the market really start to catch up with the love that we have seen in the large cash? >> yeah. we have definitely seen more participation from the rest of the market not just the magnificent seven which has gone up about 75% year to date. we are now seeing that rally brought and small-cap tick up and you know small-cap value really has gone up 15% year to date, so you know we really think that will start picking up pace in 2024. sonali: what sets the stage for 2024 and the rally in the tech and disease how much more steam is there really to drive the market higher into next year? >> well, i mean with ai you could see the magnificent seven go out before it comes down but that said what supports the stock price and the magnificent seven right now? it will be difficult to see

revenue you know fulfilled and support the prices we are seeing in the increase we saw in 2023 as we look at these other sectors that have not done as well like for example energy which you definitely see the uptick today and consumer staples and health care utilities are negative still for 2023. we think there will be that reversion to the mean, so if 2023 was a year of disparity where you saw large-cap growth really outperform and you were rewarded for concentration, we see 2024 as the year of equilibrium where you will see the laggards kind of come back up. sonali: do we start to have that early on in the new year and will there be a reallocation early in january? >> we>> are seeing that now and think that will continue and set the pace for 2024. that said you were talking about

volatility in 2024 and perhaps we are seeing an uptick in the vix. we believe that 2020 four is a presidential election year and we generally see volatility during those years so we definitely see that but you know back to the question. we do see that you know small-cap and some of these laggards will be coming up. sonali: you mentioned the magnificent seven could continue to perform well but what what they do with the cash they have absorbed so far? they are very cash rich right now. >> absolutely. $1 trillion have flowed into money markets and still the number one attraction for inflows and we really do believe that there is going to be some fear of missing out. you will see some of that cash coming into equities and fixed income in 2024, and that will be that tailwind.

so we are cautiously optimistic about both markets. you're starting to see a significant bid in the bond market and do you start to play the bond market more specifically next year or deeply equities? >> well, we are seeing low equity risk premiums, so we are seeing it really does not paid to necessarily be overweight in equities versus fixed income in 2024. you have the yield in fixed income very very attractive and you also see the potential with rate cuts you see a bit more appreciation potential in fixed income, so combine the two and you get you know a very attractive attractive market in fixed income. that said not all fixed income is created equal. we are seeing more opportunity in investment grade and see the yield right now and those spreads are definitely very tight so we are slightly

overweight fixed income and we are overweight investment grade going more long-term than say shorter-term. sonali: when you think about the equity market that you played the indices or do you start to pick on specific names that have been unloved in this market? >> yes, definitely picking the names that you know have been lacking in the love in 2023 we see that there has been obviously this trend over the past years to go towards passive investments in etf's, but we really see 2024 that it is going to be more about active investing. if you are going to stay passive we would definitely recommend going more equal weight s&p 500 versus market weight because there has been this dominance with large-cap growth so if you go equal weight you are going to see just naturally if the laggards pick up are going to see more outperformance. vonnie: doesn't it all depend on what the fed actually does?

can we make upward diction until we know what the fed is going to be doing in the first quarter and beyond? >> it is true and we don't have a crystal ball and don't know what the fed would do but they have said they are likely going to cut rates three times and if you look at the individual members of the fomc they are forecasting four times in markets have priced in six maybe seven times that the fed is going to be cutting rate so although we don't have a crystal ball we can't go by generally what they are saying which is they will be cutting rates. vonnie: what are the challenges to your view? are you concerned with interest expense or demand destruction from the interest rate increases we have seen in the lack of monetary policy? sandra: yes, we are definitely you know concerned. we are optimistic about

cautiously optimistic right? the rate increases have not been fully fully manifest in the economy, but you know the markets are kind a bit ahead of themselves so what we are really looking at and we are looking at closely our jobs. we think the fed is looking closely at jobs and unemployment rate right now. unemployment actually ticked downward from november to december, and you know cpi has gone down, and the 10 year treasury has gone down so actually this is looking really good and that said, we are looking very closely at those three things just like the fed is. sonali: how closely are you looking at the consumer strength? on one hand the consumer has held up and on the other hand the job market is starting to we can just a bit here, so if we are looking at a consumer that has held up so far this year, at what point does their weakness bleed into the market next year? sandra: we are seeing it right

now, seeing even though consumer spending is strong in bolstering gdp in the economy right now, we are seeing people start to spend on the margin. we are seeing credit card debt increase in credit card balances stay longer and we are also seeing people are being more careful where they are spending and how much they are spending. we think that will continue and if unemployment increases up, then we think we will see consumer spending come down. consumer confidence has come down and we think that will way on consumer mentality right now. sonali: we have been asking you about the types of things you would buy in this environment heading into the next year but when you point to the consumer does that point to any selling areas too. sandra: yeah just like we believe you should invest in the areas that have been on loved in 2023, you should be a bit wary

and expect volatility in the areas that have been exceptional he well i consumer discretionary , so in 2024, look for you know perhaps some of the sectors that have done extremely well, maybe do not as well, not necessarily come down, but be more volatile than some of the unloved sectors. vonnie: you say you slightly favor bonds overstock so where in fixed income does it look attractive? sandra: well, you know longer-term duration we are seeing inflows in longer-term duration bonds in an investment grade and we think those will be those areas where you will want to move more money into because as the fed cuts interest rates, the fixed income market knows that, and so you know what are the rates that will be fixed for longer-term? those will be the longer duration areas. vonnie: thank you so much for

joining us today. sandra: thank you so much. vonnie: it is fascinating to watch the equity market encz higher. -- encz higher. sonali: it is amazing. even if you look at the s&p in shanghai and were betting on the pivot it's not like you are seeing pain underneath the market that still exist in some sectors that center was pointing out, some sectors in the red on the year and by the way other forms of pain like bankruptcies with these higher rate issues. vonnie: some huge bankruptcies this year. wework might be idiosyncratic but the commercial real estate story. sonali: and you're seeing exuberance pop out of the market in those stories. you saw another de-spac issue hit bankruptcy. at what point does the exuberant start to flow out of the market in those value trade start to get more? love once again vonnie: it has been a difficult

year for many financials more than 50,000 jobs lost in the financials this year and you've been reporting it all year and it must've been a really difficult year for banks. we know banks are one of the areas that are actually down on the year nearly 50% of the s&p 500 done year to date but the kbw bank conducts is down 5.5 percent compared to the s&p 500 and the nasdaq stain. sonali: amazing some of the bonds for those stocks are struggling below par and you have to wonder at what point investors accountable to take some conviction bets. vonnie: if you are long the market at the beginning of the year and did not get scared off by the previous year's performance then you are very happy and if you are ed yardeni you're looking for more gains, also goldman sachs raising its forecast the last few days from 4700 to 5100 and the coming year. coming up, the latest numbers on the whole day shopping season and speaking with the president and cofounder of card lists.

the s&p 500 and the nasdaq up at that level in bitcoin all 3%, and we have wti crude $75.87 a barrel. quiet trading but you get the feeling there is some conviction at the margins. for our bloomberg radio listeners, continue to listen. this is bloomberg. ♪ (sfx: stone wheel crafting) ♪ the biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently.

it still does. what can you do with spy? ♪

sonali: this is bloomberg markets. vonnie: i am vonnie quinn.

mastercard data shows holiday sales rose 3.1% this year, a slower pace than 2022 was sales from november 1 through december 24 grew at a rate of 7.6%. for more perspective on holiday spending let's bring in the president and cofounder of cardless who has issued and launch more credit cards than any bank in the last two years, so you are well-placed to know what is going on with the consumer. are you seeing different consumers and a different outlook from each? >> first of all, happy holidays and thank you for having me on. excited to be on the show today. i am the president of cardless and we help brands launch credit cards. one is a partnership with simon property group, one of the largest chains in the country today. we've seen a lot of holiday shopping in partnership with them so we want to talk more about that.

vonnie: ok. give us the details. what kind of shopping are people doing and when you say simon property credit card, do you mean malls? >> yes, you can use the credit card where amex is excepted. our primary driver is shopping in the malls. november is probably the number one month of the year for holiday shopping and shopping in general, so black friday was our number one day in terms of performance and spend on the card. we saw a 40% week over week jump compared with the week before and that is 11% up from this week last year. sonali: why are you betting on malls at this period of time when there has been an uptick in online shopping? >> two things. number one, the pandemic change consumer preferences. we saw people return to physical retail environments.

simon has performed remarkably well and resilient during a difficult time especially going into 2021 and a lot of that pent-up demand we saw last year alleviated itself in the malls, so i think you know it is the end of runaway inflation now and like you were talking about in your last segment, it will be back to normal last year but right now we are not seeing that in our card businesses as people continue to spend at the highest rates on record. sonali: the view from the last guest was the consumer is starting to feel pain at this time. at what point are you concerned that spending will catch up to them given that we have seen credit card debt surpassed $1 trillion in the united states recently? michael: yeah, we have not seen total spend come down but have seen revolve rate tick up, the percentage of consumers barring money on their credit card so if that continues to play out it

will be an early indicator of some of the consumer pain to come. vonnie: cardless is a co-brander with lots of businesses you work with. what does that mean? where do you get your revenue? michael: so, we make money and two ways. we partner with brands like simon, but also airlines, generally brands in the travel space, e-commerce, and retail, and as people transact, we get a percentage of the processing fees and make money as people borrow money on those cards, so both of those ways. vonnie: how will it work when interest rates are actually coming down? how do you plan for next year when the market is saying there will be six to seven interest rate cuts on the fetid think maybe three and in this environment? ban yeah, -- michael: yeah, so

like any business that deals in credit, the fed rate is something you keep track of date and and they out, and hopefully the right cuts to come in 2024 will be passed along to customer so we have very low interest rate loans as the fed has increased rates, our you know rates on cards have gone up and we would expect them to go down next year passing on that benefit to our cardholders. sonali: sonali: how sonali: much can they come down given how levered the consumer is? michael: our hope is they are coming down proportional to fed rates, so every time there is a great increase it is proportionally passed onto the consumer and when there is a great cut it is proportionally subtracted from the total apr the consumer is paying. with that said, we are still feeling the effects of inflation so our hope is consumers are spending wisely, because credit cards are a viable product, particularly the rewards component of it, but you have to use it response we to get true

value of it as a consumer. sonali: you were talking earlier about what you saw around the holiday time, black friday, cyber monday, but how much does that spending really continue past the holiday season? there are questions about how much is left for the consumer, particularly when they do not need to spend. michael: that is a good question. first of all we have can seen -- have seen continued resiliency but not the level of pent-up demand we saw coming out of the pandemic, especially around stimulus checks and a bunch of consumer income changes, so to win dollars next year, retailers will have to be smarter. i see consumers being more frugal and targeted about where they are spending and that is our goal as a business, to help brands and consumers make intelligent decisions about where to shop and how to get value. vonnie: talk a little bit about

the prospect of raising capital next year. i know you have raised $60 million to date for your company. i feel like fintech perhaps the trend has moved on and private equity and the money is going into ai companies and so on. what are you finding and is it more difficult to raise money these days? michael: it is certainly more difficult to raise money but we have an incredible backer and investors, american express helping with the last round, and i think going into next year we will look at the public markets first and foremost to see what they are doing in our sector. a firm's up something like 100% on the year so a lot of rebound in consumer contextual to help the private markets in the same sector. sonali: do you have an inclination to go public yourself. vonnie: sounds like it. michael: one date that is the hope but we are a young business five years old in february so our goal is to help consumers

than help brands be data-driven decisions using ai of course, but our number one goal is how do we help consumers in a very crowded market at a time when things are changing from a macro perspective. sonali: we thank you so much for your time. it is interesting to talk about other fintechs. affirm has had a rally but trading below its ipo price and to hear him speak about a competitor, buy now pay later versus traditional credit cards, there is a sense embedded in that statement as if all you know rising tides can lift all boats here particularly in fintech as they distance themselves from that capital-heavy interest-rate -sensitive traditional-regional bank this year. vonnie: exactly in the fact they have lunch so many credit cards with partners is a testament to how well they have done but at the same time you have to wonder because this is a shark-infested

water of an industry and you have to wonder it must be very difficult what the prospects are for next year and beyond, and especially if they're thinking about going public, you don't want to miss the window where public markets have moved well on from this kind of thing. sonali: we know it is small and it's not as if they have the whole year to go public if they want to. it is really before the u.s. election. what is interesting about the finance. as we talk so much about the consumer as it pertains to retail but how levered these financial companies are to the american consumer is fascinating particularly when there is concern about how much stimulus may or may not be in the system to spend into next year. vonnie: we know that stimulus for the bottom quartile is well spent at this point and perhaps for the top quartile, so there are definitely various parts of you know that population that are finding economic conditions very different from other parts of the population and you have to wonder if if companies like this are appealing to these

people a lot more than other companies. i mean you know a credit card is not to say coming out of your bank account. sonali: have you been racking up those reward points this year? vonnie: i am trying to spend them because they are subject to inflation so i don't want to lose my miles. how about you? sonali: yeah especially given that flights have been exhausting late expensive. i want to get of the country but i can. still ahead, we will talk about movies, the aquaman sequel topping the box offices holiday weekend. there is a relatively low turnout, only $40 million over four days. we will talk about the year that was in movies. that is ahead. this is bloomberg. ♪ s that are just for me. kind of nice. i like that. give them your size, your style, your budget. i keep what i like and send back the rest. -what can i say? my stylist gets me. they get me. and they'll get you too.

sonali: this is bloomberg markets. i am sonali basak with vonnie quinn. volume is incredibly low today. vonnie: we are only treating about one-third of our average for the last month or so but at the s&p 500 is up 0.4%, inching ever closer to the record close at 4774 right now. the dow jones is up 0.5%. nasdaq is up 0.5%, and the nasdaq 100, .5 %. the 2-year yield is up

a-basis-point and a half. 10-year yield is down to three point 88. wti crude is up 2.75%, even as companies are returning to the red sea. and then, of course, we have the vix index which is elevated, but really off its lows, barely above 13. sonali: sonali: also elevated is almost every major index. nasdaq 100 is up zero point 5%. but the semiconductor index has every stock in the green so far in the day, up 65% on the year. the russell 2000 is also conversely getting some love, almost 1.3% up on the day. this is an index we have seen finale start to get the love that the rest of the market has been seeing. vonnie: nearly 60% up to date. sonali: that is the ai boom. from ai to hollywood. 2023 was a memorable year from

labor disputes to layoffs, to changes in leadership. we will talk about what lies ahead for both hollywood and the box office. joining us now is our guest, a senior media analyst at comms score, to talk about a little bit about what to expect for next year. because the reality is that the strikes for 2023 may start to put in in that the calendar for next year. how much of an issue is that, paul? paul: that's right. it has already been happening. we saw it with major movements in big films. you talk about a year of 2023 that has been incredible, i mean, i have been doing this for years, and from oppenheimer to the sound of freedom and everything in between, plus this past weekend we had two indian cinema films and two japanese cinema films in the top 10. i think there is a seachange

going on. it's not always the traditional, cookie-cutter, blockbuster types of movies. i think audiences are really gravitating more towards the offbeat and unique stories. it is really playing out at the box office. sonali: the box office, as you see it now, it's interesting that it is not every release getting so much love, let's say. the "aquaman" release was impressive in how much it missed expectations. is there an influx of too many genres, particularly when you think about it superheroes? paul: a lot of people talk about superhero fatigue and sometimes you do see that. really each movie rises and falls on its own. i don't think people are necessarily against a particular genre, though if they get enough of them in that steady stream on the screen that don't live up to expectations, then people look elsewhere for their entertainment. right now according to our

numbers, we are sitting at a $.8 billion a year to date domestically. we are hoping to get to $9 billion. we may not get there by the 31st. but i will say that if you are a moviegoer right now, really over this week -- you had the "aquaman" movie, "anyone but you ," "the iron claw." yesterday "the color purple" did really well, 18.5 million dollars. so there is so much out there for moviegoers. films like the holdovers, priscilla. so many cool movies. "godzilla minus one," another indian cinema film. it's been a great time to be a moviegoer. but it is tougher at the box office for the christmas holiday, the three days through sunday earning about 96 million dollars. in other years we have seen for

the christmas weekend 100 million, one hundred 50 million, sometimes over 200 million dollars. so it is a bit slow as we wind up the year at the box office. sonali: if we hadn't had the taylor swift and beyonce movies, would we be talking about a big slice off the total? paul: the taylor swift will be opened at $92.8 million, a quarter of a billion worldwide. those two movies, barbie and oppenheimer grossed over $1 billion. over a billion dollars in the box office from three movies that held the summer box office eclipse the $4 billion mark which is what we used to see in the pre-pandemic era. that means that the summer of 2023 is a much higher percentage of the year if we wind up close to $9 billion. that it is in other years. everything is topsy-turvy.

up is down and down is up. vonnie: theatre test streaming windows, are they getting different? for example, i just want to see napoleon nia think it is coming out in a couple of weeks in streaming. that feels like a shorter window. paul: definitely. that was a bridge too far pre-pandemic, the 90 day window was set in stone, 75-90 days meaning the time between when a film is in the theater and then available for streaming. i think shortening the windows works. dynamic windowwing works. there is that whole idea that if people know they have to wait a pretty long time, they may run out to the dealers so they can see that movie on the big screen. so streaming has an impact. i think more of the impact on streaming is that people are seeing so many types of genres -- international cinema,

documentaries, films that really push the envelope, and they are wanting to see that in your big screen. so again, i may be overstating, but i feel like we're back in the 1970's when audiences are looking for the "raging bull," movies that changed cinema. sonali: i think i speak for mourning and myself when i say i will wait and go to the box office most days. don't enjoy the popcorn. how does that change the way that people are thinking about putting out films when so many consumers are sonali-ing and vonnie-ing it? paul: if you go and see "ferrari" in the theater today, you will be blown away by that experience. you might think, i want to do that in the future, go to a movie theater. even though streaming's great,

there is something singular about the moviegoing experience. think about the "barbenheimer" phenomenon, that wouldn't have happened had everyone stayed home and had those films been available at home from the get-go. that shows you that if you look at what is happening -- remember, "barbie" and "open hammer,": or not cookie-cutter films, they are big blockbusters with huge directors and huge cast but they had a point of view that was very different and played well with the audiences rather than stopping at the same thing time and again. streaming opens the mind of moviegoers to all the different types of content, seeing films and tv shows that really push the envelope. maybe we'll get back to more of that on the big screen at the movies in the years to come. there may be a cultural shift there. vonnie: paul, when will we know if theaters will put up prices? it feels like they are keeping prices at the old theater going level.

maybe it's a new experience and theaters have to be more fun and so on. you would expect prices should go up. will they? paul: it could. part of it is that the premium large format, the imax, really high-end experiences of sight and sound, i don't know if people want to pay more, but they are willing to pay more for those experiences. movie theaters are doing their job. they obviously don't create the movies, they are the custodians. the host for the audience. they are doing a great job of making these immersive experiences happen when you are at the theater to keep you there with all kinds of activities in the lobby. some theaters have outdoor activities, great food and beverage service. it really is i think a bargain in terms of going out on a date night or taking the family out to a movie.

it seems expensive, but compared to other things like going out on a trip or a theme parks, i think it's a great experience. in 2023, you talk to anyone who enjoyed the "barbenheimer" experience, that wouldn't have happened anywhere but at the movie theater. sonali: what about 2024 and 2025, when you are looking at the big hits that you expect, what are you most looking forward to? paul: there is a whole bunch of movies coming out on the calendar. we have "doom part ii" which moved to march 1. "kung fu panda iv," there is "despicable me iv," all of these numbers. there are some great movies on the lake. but i think for audiences, they want to know that they are being listened to and when the creative's in the studios are putting these together, if

certain tried and true brands are not working -- and we saw that a lot. we saw a lot of movies that were tried and true brands that didn't live up to those expectations. that is the most powerful entity in hollywood -- the audience telling studios and create is what they are really looking for when they go to the movie theater. it's a great intelligence to have. vonnie: paul, happy theater going over the next few days and into the new year. paul: i appreciate it. good to see you. vonnie: we will be back with him in a little bit. our thanks to him. meanwhile, luxury auction house sotheby's says macro uncertainty is not slowing its outlook, especially when it comes to selling iconic sports memorabilia. the ceo spoke to us in an interview with manus cranny earlier this month. >> you are the billion-dollar man. you just had the art sales. when i look around this room, you have ferraris, merchandise.

what is going to sing in this week's sales? >> i think the sale rates across all categories will be strong. over jewelry and watch sales will be particularly strong, but in terms of high-value, you have the lamborghini and other cars which are exceptional. you have also got the llano messy jerseys -- now know messy jerseys -- leonel messy jerseys from the world cup. >> he is a living legend. six jerseys. that bidding is open, $5 million at the moment? >> $5 million at the moment. but there is some time to go. >> there is a lot of excitement around that? have you spoken to beckham, will you send him -- sign him up next year? >> we will see if this one breaks the record. but the rise of sports merchandise is absolutely a phenomenon. we signed a deal with the nba

about two weeks ago to bring game-worn jerseys from nba matches this year. we had of a first cell and it was a huge success. >> argentina versus america, that is what goes through my mind, argentinian jerseys versus jordan's nba jersey. who do you think will win? >> [laughter] we will see. >> tell me what we got here. i will not fit into that. am i? >> we could try. it may be possible. this is an amazing thing. the history of sport and these game-worn suits. in this case, this is lewis hamilton's first grand prix suit from 2007. it is part of our broader force collectibles sale. two weeks ago in las vegas we sold his first mercedes formula one car from the 2013 is in where he raised 15 of the 19 races, the beginning of the lewis hamilton, mercedes dynasty.

sold for $18 million. vonnie: sotheby's ceo charles stuart. we should note the coveted jerseys worn by leonel messy sold for a whopping $7.8 million . coming up,, our "wall street week" daily segment today. and michael berkowitz will be here. for our bloomberg tv and radio listeners, stay tuned, a more "markets" coming right up. this is bloomberg. ♪

vonnie: this is "bloomberg markets." i am vonnie quinn alongside

sonali basak. david westin joins us with a special guest. david. david: we continue with the luxury theme though 19 within dollars for a suit you're talking about quiet luxury. michael berkowitz is the norwegian wills founder and ceo. welcome back, good to have you here. >> good to be back. david: how did your quiet luxury to this holiday season? >> the whole year was quite strong and the last few months were really very strong. it beyond what we expected. really to the point where usually we tell our customers that if he were to shop with us late january, february, we would still have the core items. i looked over inventory and for many of our core styles, we have one or two pieces left in each size. so that's a good problem to have, if you want one, get it soon. thankfully, it was very strong. david: how is the supply chain looking? can you replenish inventory?

michael: not this year. we have what we have for this fall and winter and already soon we placed our order with factories in italy for the next year. that is it for this year and then we close up shop. we will do our spring-summer collection, march-april time, but the big stuff happens again next year. david: do you have a sense of how the retail segment, the overall data, how did luxury do as opposed to mainstream? michael: it is interesting, our customer you can separate into two types, the typical luxury guy or girl who is usually spending luxury prices, usually shopping in luxury stores. that is over all doing very well. then there is also the splurger, the person who is usually bargain-hunting and doesn't typically spend at our price points but for other items that they feel they keep on buying and will not get what they want, they will splurge and say i need a coat that does what it is supposed to do. i need a coat that looks nice and will keep me dry.

we had a customer from blackstone who bought from us and he said that cotonou to do three things, keep you warm, keep you dry, and yours check all three. for customers who don't usually spend that much, they are the splurge customers and they will come to us. in both of those worlds, we are seeing very strong however, some of the other vendors are not seeing it quite as strong if they don't have the performance aspect, especially for the splurge customer. you have to have compelling features. you have to have more to the story or else they might be veering away from some spending right now. david: the u.s. consumer has done remarkably well. there are reports that it might be weakening a bit -- sounds like you are not seeing that yourself. do you think you are taking away market share from others? michael: no, actually, a lot of the competitors, if you will, from 20, 30 years ago, left the space. big brands the people at home would be pretty familiar with,

have geared themselves more into urban wear and streetwear and have left more of this quiet luxury behind. so we are picking up a lot of those people are shopping and they don't know what to get. we have heard this from some of the big department stores we sell to that we are picking up a lot of customers who would have walked out empty-handed if it wasn't for norwegian wool. we are getting customers who weren't going to buy a coat if they didn't know about us. david: one of the big stories has been the return to office, employers have been really urging their employees to come back. how is that affecting your demand? michael: we are seeing that happening a lot. even some customers may not be back five days a week but are back three or four days a week and their closet has to reflect that. one thing we are seeing is a lot of shopping from the suburbs. we always see the big cities -- boston, chicago, d.c. and new york and the european big cities.

this year, the zip codes have extended beyond the big cities more so than in previous years. i think it is because a lot of those customers were city people who bought homes in a lot of these places and now they are coming back to the office and commuting for the first time with her in their car or train and now they need a coat for that. back to work is suddenly happening and it is helping us. david: . david: how cyclical is your business? we identify you with worn garments. in the summer, we don't need warm garments. has it come up or down? is it at peak for you? michael: definitely at peak. sports jackets and raincoats, we sell those all year long and some of them do peak in march or april when it is chilly but not freezing. our raincoats are good for august so we still have a continued business all year round, but certainly, fall and winter is our peak. david:. david: we are about to end 2023 what does 2024 look like to you? there is a lot of talk about

recession and whether they will be a drop off in the economy. michael: there are a lot of people who, these shows that consume more than me, but i think we are headed towards a soft landing. certainly our luxury customers are agnostic to that anyway, but if things are looking strong. i would say there are a lot of fundamentals looking strong -- some of the things going on in other parts of the world that have not spilled beyond that. there is a pretty positive, strong sentiment amongst customers for us, we are continuing to do what we are doing focusing on our core products but also developing new items. we get feedback from customers and we bring that to our production and design team. david: you have a strong base, it sounds like. how do you expand from here? more outlets? more products westmark more demographic? michael: last time i was here i mentioned more growth on the women's side which we launched recently. it has been a huge source of

growth and will be, because there is a lot of wide space on the paper. and yes, more products for existing customers to continue buying other products from us that really and body norwegian will performance, like our cashmere baseball caps and hats. those are things we didn't have and we continue to develop more of those types of accessories. geographically, europe has been a major source of growth. we did a pop-up in milan this year and we are looking to do one in paris for 2024. putting our product in more areas. and i think a lot of people still may not have heard about us, especially if they weren't in the market. we are still reaching more of those guys. david: what about costs that you have to pay, but also, costs you can pass on to customers. where are we on inflation, from your point of view? michael: it's manageable. what we try to do is really make sure we are still viewed as value. so we don't like to just spend

more and then put it onto the customer there is some pushback if you do that too much. other brands i think have done that way too quickly and in most cases the quality has gone down, we will never do that, have the price go up in the callista go down. sometimes to maintain that quality, we do have to raise prices. but we try to do it in a manageable way so it isn't going up more than anything else you are seeing. we try to keep things in certain thresholds, so the entry below $5,900. you try to keep it psychologically in certain buckets. david: really great to have you back, michael. congratulations on the strong season. norwegian wool ceo and founder michael berkowitz. sonali: david, thank you for your time. next up, we talk more about the private credit market. we have been focusing a lot on that all year long. we will talk a little bit about apart that people don't talk about enough, the middle market.

we have that regional banks, but is there capacity in the private markets to start taking up for the regional left behind? vonnie: exactly, who will be the participants, who will get a bigger slice of the pie, and what will the incentive be for these private debt issuers to step up to the plate? and is there enough supply for everybody who wants in westmark because apparently everybody wants in on it. sonali: was interesting is we have been talking about the bankruptcies in the private equity market. 13 year high so the private credit layers could have some cracks under the market. we will get insight into those markets with art penn, ceo of penn and park advisors. that is a business that we know has gotten a lot bigger and a lot more involved into the big ticket deals rather than the small once.

vonnie: the interesting thing is the difference between private equity and private debt. huge valuations on both sides. sonali: the private credit versus debt issue, is there enough love in the private debt markets when you see public fixed income coming back there it is? vonnie: exactly. sonali: we are looking at the s&p 500 up 0.4%. you're counting you down to "the close" in the middle of the santa claus rally. we will more about the markets next, including commodity markets. we will be back in just a minute. ♪

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vonnie: tower bloomberg tv and radio listeners, will come back to "bloomberg markets." i am vonnie quinn alongside sonali basak. the indices moved higher today as we continue the santa claus rally. here is a look at the stocks making 52-week high's. chip stocks like intel and western digital and micron. but cbre is also making a 52-week high. sonali: go figure. promising news in the housing market these days. you look at other indices for a moment, we have things like the -- moving higher more than the nasdaq composite and the nasdaq 100. with interesting about the nasdaq composite, you are seeing love from mergers & acquisitions related stocks helping drive that index further higher. also a rally in the small caps and mid-caps. quite exciting of the day when he think about how broad you are seeing the love in the market even on a thin day of trading.

vonnie: one of the big stories of 2022 has been the continuing growth of private credit. that growth has caught the attention of wall street, with many big names in banking moving to direct lending operations of their own. for more, let's bring in art penn, pennantpark investment advisors ceo which oversees over $6 million in private credit and has a massive history in this area. very excited to hear where you have gotten busy this year. art: 2023 was a very active year. we are focused on the court middle market, the classic middle-market companies that sometimes didn't have easy access to capital as say the upper, middle market companies. we had a busy 2023 and the outlook for 24 looks strong also. you just mentioned m&a-driven stocks with interest rates stabilizing and perhaps coming down, that should spur mergers & acquisitions and deal activity.

vonnie: so what returns are you looking for. what would you want to see in 2024 and what do you get in -- and what did you get in 2023? art: in 2023, firstly it was top of the capital stack, lower risk loans. we have been getting very nice, double-digit returns, 11%, 12% when we have done more opportunistic transactions, higher yield personally, it has been the low to mid teens. and that is based on base rates being so high as well as spreads being higher in the core middle-market. so we are very pleased with the yields we are getting importantly, and most importantly, we are pleased with credit performance. credit performance ultimately drives overall returns and avoiding default is the key thing that we are trying to avoid. that is why we try to have a

defensive posture and keep leverage reasonable. we always structure covenants that have meaning, protections built into the document. sonali: speak a little more -- double down on the default idea. i am glad you brought it up, because a lot of folks in the industry -- talk to how many people in your world have not seen this cycle, do you expect people to be blindsided by an uptick in default rates? art: it's an excellent point. we have been around 17 years so we have seen a real recession, a global financial crisis are a few of us who have experienced that. covid was not a real recession, it was more of a shock that was temporary. so we like keeping leverage low and reasonable, that is why there is always significant cushion built into our deals from the standpoint of a leverage and interest coverage.

in the upper-middle-market, leverage levels are high, substantially less cushioned. we hope some of our peers have chosen credit that is resilient and stable and can whether any downturn. we certainly believe that as lenders, we have to protect the down side first and the upside takes care of itself. we feel very good about coming into any kind of economic scenario in 2024. but we will see. sonali: even a soft landing, say we get one, the reality is most of the private credit market are not these mega deals we are seeing. they are only a handful of players in the mega marker that we have seemingly developed. so how resilient are small to midsize companies in the event of even a soft landing? art: it's interesting. in bloomberg, you guys have done an excellent job covering this space and you are covering the

mega deals and you are covering the players in the upper-middle-market, there is actually where the biggest volume is by far and where the leveraging levels i think, have gotten stretched a bit and where the cushions by think, are a little bit tighter. in the core and middle-market, we can structure better leverage, better yields, we can structure covenants that have meaning. some of the rating agencies talked about covenant erosion in the upper-blue market. it's because they are competing and trying to this intermediate the higher market. to compete against those markets, you have to give up covenant protection. so we think in the core middle-market where we are focused, there are tighter deals, there is lower leverage and tighter covenants. and the bigger risk and higher leverage might be in the upper and middle market deals. vonnie: talk to us about what you're are seeing ratings agencies do, because they are

getting more involved in this area. and what that means for you. are there certain areas you wouldn't touch, for example, going into 2024 -- real estate, commercial as one example? art: we don't traffic in real estate, in fact, one of our biggest doctors is government services and defense. it has always been a big sector for us and we always thought it was a steady and stable sector. we think with what is going on geopolitically, it's an even better sector to be focused on with strong tailwinds. certain sectors have helped given demographics and aging, health care tends to be a strong sector. we are focused on deals structured with lower leverage, with tight controls were we feel the capital is preserved by the way, i think some of the larger allocators we have been dealing with recently are starting to pivot more towards the core middle-market, and away from the upper middle-market because it might be a little bit overdone. the covenant erosion, the yields

are getting concerning. so we have seen some nice movement recently from some of the large allocators. vonnie: how are you doing with competition? even as you say if you are finding corners of the market that may not be attractive to the larger players, you still must receive more competition on the deal by deal basis. art: it's interesting. in our world, the core middle-market, we are seeing the same players. as you guys mentioned there is more flow coming from the pullback of the regional banks, so from the standpoint of supply and demand, it is more in our favor because we are seeing more supply coming from companies that can find capital from the regional banks. so we feel very good about it, with a combination of more robust m&a, the combination of regional banks pulling back. it is below the threshold of the upper middle-market. we feel very good about it.

sonali:. sonali: i would like to imagine that on the christmas week investment bankers are sitting home watching bloomberg hoping for deals to come back next year. i am wondering when you have those conversations in the background, how big is that pipeline? what kind of deals and what is the velocity of that? art: again, in the core middle-market where we are placed, we are still very busy. i would say on the upper end, the fact that interest rates have been volatile has met it has been harder for buyers and owners of bigger companies to come together. now that interest rates seem to be flat or maybe on a downward path, perhaps decisions can be made at -- an equilibrium can be reached which may indeed make those investment bankers sitting home watching bloomberg tv today happier about a 2024 deal flow. sonali: what kind of deals? when you think about it size what's interesting is how much of those types of participants in the deal market have

increasingly chosen the private credit channel versus the banks. cut up the competition a little for us -- set up the competition a little for us? art: if you are in the middle market base, you want efficient capital. the broader syndicated market were able to provide that. increasingly over time, the private debt market provided that. today it's a horse race between the two issuers to the extent they have paper to sell, to the extent there are deals to. not a variety of choices. with the growth of private credit, it has come to this intermediate that broader syndicated market. all of a sudden the big banks -- one of their profit generators which were leveraged loans and bonds, now one of their profit generators is -- risk which is why you have seen a number of announcements from larger banks in the last few in terms of trying to more aggressively get into private credit.

we are thrilled to have them compete. it raises the threshold for where we can focus in the core middle-market. they can fight for market share amongst each other and will have a very nice court middle-market playing field through which to select hopefully excellent credit. vonnie: you have done everything from high yield lemon, to distressed at apollo -- high-yield at lehman brothers, to distressed at apollo. what is the space saying to you right now? art: the market is telling us that they certainly believe the fed is going to move somewhat quickly to reduce interest rates. that is what the market is telling us. as prudent credit selectors, we have to understand the downside case and understand both interest rates staying higher-for-longer, and potential economic weakness. that is how we underwrite. we underwrite looking at the downside and hoping for the upside, but we have to underwrite for the downside case which is higher-for-longer and

potential economic weakness. sonali: speaking to her point on your experience in distressed at apollo nonetheless there is a sense year that big private credit firms will behave differently in this cycle. do you believe it? art: it depends what you call behavior. everyone is a fiduciary, they have inverse -- investors that they have to be fiduciaries on behalf of. that is the assumption that everyone will try to be fiduciary for their customers. we will see. [laughter] vonnie: thank you for more of your time. he will be back next year as the deal volume ticks backups. there have been so much talk about the distressed cycle, what it looks like, a lot of distressed debt out there. but you have the apollos of the

world putting on the nice guy hat and saying, "we are different now." we are big private credit folks and have to play nice with the companies and other private credit firms out there. the behavior has changed because the ecosystem has changed, but we haven't seen the worst of it come to the surface yet. vonnie: absolutely not. talk about a rolling recession, you could have ruling -- rolling mini crises. when these markets change, they change quickly. not letting other asset classes. you could have something going from 100 to 60 in one night. sonali: it's not unanimous. think back to years ago when private credit firms flocked into the energy market got so burned that they didn't get back in at scale. you wonder if there are parts of the market still showing the kind of pain if you were to see those kinds of ruling recessions. retail, for example, has had serious pain, big bankruptcies this year.

vonnie: and interest -- real estate as well. sonali: interesting how you heard him say he wouldn't play in that field. the lack of capital in these ugly areas back the question, who steps in when everyone steps out? vonnie: well, i am sure you will find them for us in 2024. [laughter] can't wait to hear more. sonali: absolutely. coming up next,, from privat credit to corporate america as some companies have pulled back from their work from home policies. some experts say that hybrid work is not going away anytime soon -- hopefully. we will have the details ahead. this is bloomberg. ♪

sonali: this is "bloomberg markets."

i am sonali basak along with bonelli quinn. there are signals the federal reserve may occur at interest rates before the next year general election. for more on what lies ahead, peggy collins, bloomberg news' washington bureau chief joins us now. when you talk about the latest inflation prints, how much does it help president biden given americans are still feeling the pinch of inflation relative to what they used to pay for the price of goods? peggy: we are not sure yet. we are seeing sentiment numbers picking up as recently as friday in the university of michigan report. whether that will translate to how people feel about the economy in a political sense still remains to be seen. our bloomberg morning consult poll shows people are still downward on the economy when they look at it nationally, in part, because even though prices are coming down, they are still higher than where they were a couple of years ago. that is where i think the biotin

camp is struggling to pick up momentum, on the sentiment front, even as we are seeing consumer sentiment pick on a broader sense. . that is good for the fed in terms of pull off it's tough landing. vonnie: it's fascinating because even this morning the data was, for the most part better than forecast -- in ninth monthly increase in home prices, for example, which i am not sure i would have anticipated. we also had the philly fed services activity increasing, economists were looking for a decrease from the previous month. also the dallas fed manufacturing activity was down, but not down as much as people were expecting at all. what is the consensus around how we can have moderate growth without any pain to speak of? peggy: it's interesting in the synth that we have been asking that question i think for over a year now in terms of how long can this economy keep up the pace in terms of job growth and overall growth?

and time and time again, the economy has proven to be more resilient than we thought. in the housing market, in the days and weeks ahead, we are looking for mortgage rates. we are seeing them come down pretty precipitously from around 8% to now below 7%. that could help the housing market. we're also looking at jobless claims coming out later this week and the jobs report for december will be click on the heels of the new year. those are some of the things we are looking at, but certainly the u.s. economy has continued to be very resilient. vonnie: i have to ask you given that you are all over washington, d.c., we heard at powell's press conference the typical question, "next year is an election year, will you have that factor into your decision-making?" he vehemently denied that. but i heard something interesting last week, that we say don't fight the fed but we should also add, don't fight janet yellen, as the treasury

secretary. how big of an impact will she have next year on policymaking? peggy: there are a lot of things facing the treasury department next year that janet yellen will be key on. the administration is rolling out its outbound investment rule which is part of that relationship with china. certainly the treasury market,, as you said, is big on investors' mind. and also there is a lot of issues related to the global and diplomatic front on the inflation front in particular, with the strife between the ukraine and russia continuing, as well as the middle east. he things the treasury department will have on its plate along with other things next year they could certainly impact the markets in ways we are not expectingm you so much for joining us, and happy santa claus rally to you. santa claus came early and keeps on coming in the markets. we will change gears and talk about office hallways. they are buzzing with debate about the future of hybrid work and return to office policies.

we talked with a world renowned economist and business professor, to discuss how companies are trying to balance the needs of employees and employers, and whether hybrid work is here to stay. >> if you look at folks working from home, they certainly feel happier to work from home. . in the data, we see that typically if you're working from home may 3 days a week, we see the maximum happiness and work satisfaction scores. ♪ >> one of the hottest topics is hybrid work and remote work. and the academic who has led the research influencing what we think and know about it is professor nicholas bloom, professor of economics at stanford university. i went to visit him on campus, and i began by asking him about the state of play right now. >> to give you a rough overview of where we are, 60% of

americans of northern europeans, i should say, the pretty global developed country number can't work from home at all. people who work driving cars, hospitals, security, they still have to come in every day. another 30% are hybrid that typically are working from home two days a week. then there is the remaining 10% that are fully remote and they are working from home every day, day in, day out. you add those last two groups, you have 28% of the data. >> that data sounds quite conclusive. but not everyone is on the same page when it comes to managing the week hybrid work is being practiced. what else does the data show? >> if you look in the data, employees typically want to work from home about three days a week. we are currently doing, for graduates, professionals something like two days a week. senior managers work more like one. so there is like a haggling,

employees 13, senior managers want one, so they settle on two. to be honest, i think two is where it is roughly right. take about a typical week, monday-friday, i am at home. i recharge, i have time to do email, reading, writing. tuesday through thursday, i am in the office doing meetings and presentations. >> you have called what we are experiencing a massive social experiment in working arrangements. the speed and skill of it is what is surprising and important, isn't it? >> i honestly don't think there has been anything this big probably since world war ii, what we saw is millions of men went off work. millions of women were called to work in factories and shops. society discovered that women can do these jobs just as well as men and in many cases, better. that kind of stuck. the men came back and women's

labor force participation jumped and has been raising ever since. the only other thing that is similar is the pandemic generated this massive jump. everyone turned around and said, working from home is not imperfect, but we should be ng a lot more about than we used to. >> there is another significant shift at work, of course, and that is ai. >> ai has a really big intersection of work from home in the foreign sense. if you are hybrid, you are coming to the office less than three days. ai probably helps out, makes you productive, helps you to design and write. for hybrid workers, i think it is maybe supporting their job. it is very different if you are fully remote. if you are fully remote, it i potentially, particularly if you are doing a repetitive, basic job, it could replace your job. when he think of the software side of it, the visual side or the voice side is pretty good.

if this was a zoom call, i could be an. if i was in-person, the robot that replaces this is fast and clunky and will not work. you think of data entry, call centers, hr, payroll the kind of thing that is fully remote, a lot of this may be replaced by ai in five to 10 years. >> what has been the most surprising piece of data you have uncovered in all of this research? >> it's surprising, that i would say this witches that work from home has worked so much. i did a study back in 2010-2012 that showed enormous promise in productivity impact in work from home. if you asked me that it is a global pandemic and everyone was forced home and what would happen, i would have probably said it would be chaos. as it has happened, it has worked out surprisingly well, and actually by 2023 productivity will be a bit higher. i have been amazed about how well it has worked.

it makes you think what else is out there that we should change. may be long summer holidays? maybe a five day week? maybe organizational structure? full of this stuff could change and we could discover we are much better off. vonnie: that was bloomberg's julia hobsbawm. you can find more stories from bloomberg originals streaming online and in the bloomberg app. coming up, we will be talking commodities and having a look at the renewable energy space, and this company's ecosystem plans and speak to the company's president and ceo. stay tuned. this is bloomberg. ♪ the first time you made a sale online with godaddy 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

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vonnie: this is "bloomberg markets." i am vonnie quinn along with sonali basak. as we look at where we stand as we head into the final trading week in 2023, it seems to be a green one so far at least. we have the s&p 500 just off a record. the last time it hit these kinds of levels we were talking in january of 2022. it is at 4781 now. several stocks making 52-week highs including intel.

it's a celebration of everything that happened in 2023, it seems like, including the 10-year yield shooting up and coming back down. we at 3.89 and change. we had a complete round trips. crude oil up 2.2% to only $5.16. the gains are muted. then we have the vix slightly higher than it has been for most of the year. bear in mind the vix has been insanely muted in 2023 for what has been going on underneath the hood. sonali: all of the indices are up on the day and some getting more love than others. the russell 2000 is up almost 1.5%. the fact that every single stock in that index is up today, up more than 2.1% and gaining steam. its reason to stick with us, for the santa claus rally. vonnie: as you say, literally

every stock, micron is up 1%. it really is a continuation of the narrative. when does the narrative change? one thing that might change the narrative's tensions, geopolitical tensions. oil is rising as tensions remain high over shipping disruptions in the red sea after a spate of poutine attacks -- houthi attacks. oil climbing after already rallying through percent last week. so let's bring in a simon casey with more on the energy markets. we have houthi rebels attacking a container ship in the last few hours that was transiting the red sea. this after shipping companies had said we will go back to the red sea because now this multicountry task force has our backs, which seemed like it was going to put an end to everything. now we have another attack. what is going on? >>/going on. on christmas eve, they plan to

go back to the red sea. we're still waiting for details of this task force and how it will be implemented. meantime, we have most oil cargoes reproducing away from the red sea now, being forced to sail march longer voyages, more potential delays and that is being market. on there is still this risk that we could see further escalations in the region. by that, i mean we could possibly see further escalations in iraq from the houthi rebels. that is fueling fears that we could see knock-on effects on shipping and oil from the arabian gulf. that is the real fear.

vonnie: it's not being priced into markets, is it? we are seeing some gains in oil, but the wti is a $75 a barrel, not much to be concerned about. the index has been coming down a couple of weeks now, well off its highs. >> you are right, oil is not anywhere near $100 a barrel and nor are freight prices. in the oil market you could have pleasured this -- measured this. there are forecasts next year looking at a collapse in oil prices. it is probably keeping a lid on prices for now. we will just have to wait and see. go back a couple of weeks and nobody was talking about the houthi rebels doing what they are doing now. things move pretty quickly in this region. vonnie: the demand picture really explains the downside

price action, but what about the upside risk that still exists? >> demand came in with production cuts this month. they could try to shore up things once more. the saudis could be acting to a large extent on their own right now. that is the upside. the other upside risk is that there are intentions to escalate further and we could see an oil tanker attacked in the red sea. we have not really seen something that serious so far,. there have been some ships damaged. but nothing where a tanker has been destroyed or sunk or severely damaged. that would send jitters throughout the oil market. sonali: these are some pretty dire potential outcomes. how are traders preparing for

the possibility of all? simon: events? simon: i wouldn't look at the futures markets. i would look at the options markets, there has been interesting treating and options markets in the. last few months. . . traders tend to go there. vonnie: simon is our managing editor for commodities and energy for all of the americas, simon casey there. staying with energy, a different area of energy is hydrogen. the treasury department just releasing guidance on the inflation reduction act's hydrogen production tax credit. some say it could hinder the industry in the united states rather than grow it. let's bring in someone who is directly involved for more on the impact on companies in general. let's bring in andy marsh, president and ceo of plug power. your first reaction to the guidance that was issued friday by the treasury?

andy: supporting. many of us feel that he didn't follow the law. the people who were primarily as possible for writing it people like senator carper and senator manchin have said so. so there is a great deal of disappointment. that being said, there is a lot of work still to be done. it certainly makes europe much more attractive than the united states in the near term. but there is now a calming period and plug power will participate in the comment period. vonnie: there is a 60-day comment period and i can imagine there will be intense lobbying. can you give us specifics on why the hydrogen credits, which provides three dollars per kilogram of production, what it will not spur more domestic production? andy: so, out of nowhere, there were three additions that were made administratively by the biden administration associated

with a concept called originality, which really limit the regions that you can use to generate hydrogen versus the grid. i think the one that really has people the most excited is additionality, which limits the use of nuclear power with electrolyzers which create great hydrogen. it certainly puts many in the hydrogen field at risk. as well as time-matching which you can't influence until way after 2030. they have been working on this issue for a long time. the regulations state 2028. we think from a plug perspective, we can work around originality issues. they may not be great for the whole hydrogen industry, but it is something we can work around. and look, the documents --

hundreds and hundreds of pages and so far, there are many, many contradictions. there will be an aggressive effort by ourselves and others in the industry to help straighten the regulations out. and also another positive i can say, i talked to many senators who tell me that it will get easier, not harder. we expect regulations to loosen up. sonali: as you fight some of these regulations, what are you most looking for? and how much do you expect the biden administration to actually meet in the middle? andy: i think them biden administration's hearing lots from political appointees and lots from the hydrogen hubs. there were seven hydrogen hubs announced in november that were put at risk. i am hopeful that the voices of leading senators, the voices of leading governors, will have --

as well as companies, will have an influence in modifying the rules to be aligned quite honestly with the legislation. sonali: it's worth asking also, these new, what is the economic impact, in your estimation? andy: we have spent a lot of time, probably spend millions of dollars working with consultants understanding the regulations and the impact. our initial take from our models is that it reduces the hydrogen output in the united states by 2030 by 70%, end of the u.s. will not be able to achieve its green header general goals which include -- its green header general goals which include reaching 30 gigawatts by day by 2030. we think that number is now in the sixth gigawatt or seven? what range. that is why we are confident there will be changes once there is a comment period for the regulation.

vonnie: what do you say to those who say that hydrogen might be clean on its on, but when it is used in conjunction with natural gas or some other fossil fuel, it's a dirty source of energy? andy: first, i would look -- at also consider electric vehicles are dirty source of energy. many of them run on coal. vonnie: sure. andy: but it is a journey. plug is involved with green hydrogen, which means you have to have a renewable source online to provide the generation. and i think when we look at it, you are never able to scale the industry to where you need to go unless you provide a playing field that is open during the next five or six years. businesses can scale electrolyzers which are the critical component in generating green hydrogen so that they are cost-effective. when these laws were written,

they were written with the purpose of driving down the cost of electrolyzers to match fossil fuel generated energy. by tightening the rules, we actually are donating, ultimately, a source of energy which is important for 26% of the reduction in co2 in time. where it is disappointing, i think the administration will keep an open mind. i would expect some changes. vonnie: on a personal note with plug power, on your third quarter earnings call, you mentioned various ways you were trying to raise money. obviously, the stock has been on a bit of a journey in the last few years. can you give us an update on your conversations with the department andy: andy: ? we expect in the first quarter we will be making an announcement. more importantly, plug has a very, very strong balance sheet, a balance sheet that is close to $5 billion, we have great

customers, and this has been a very tough year. but it's my experience when you take a look -- does anyone really believe fossil fuels is the answer for the future? and slug is the leading pure play hydrogen company in the world, so i feel confident about the coming year. sonali: thank you so much for your time, andy marsh is the president and ceo of plug power. interesting when we think about energy sources, the roller coaster not in hydrogen-related companies and the biden administration's actions. you also see the roller coaster when you think about what we have seen in the energy industry more broadly. on the one hand, m&a is really fueling that traditional fossil fuel industry. taking a look this morning, this company is in the $160 billion move in m&a in the third quarter. the megadeal's we have seen in

the energy industry. the fossil fuel industry alone. vonnie: i suppose it is no wonder as we saw a huge runoff in prices. just swimming in cash. you wonder if there will be something similar in the tech space after the magnificent 7's rally in the last year. we also have a strict regulatory environment right now. sonali: and at the end of the day, the investors will vote with their feet. next, we will talk about the markets and count you down to the market close with sam stovall, cfra research chief investment strategist. eighth street weeks of gains. this is bloomberg. ♪ -- eight straight weeks of gains. this is bloomberg. ♪

sonali: this is "bloomberg markets."

." i am sonali basak with vonnie quinn. the markets still a bit on fire. here with us is sam stovall -- sam stovall, cfra research's chief investment strategist. everything green. still on fire today, sam. does this last into the new year and continue on, or is there something that can throw off this rally? sam: hi. actually i think the old high on the s&p 500 is acting like a tractor beam, sort of pulling up the index. i think we will not stop until we make that final 20 points from where we are right now which would end up concluding the bear market that we endured in 2022. then i wouldn't be surprised if the market takes a breather, digests some of these gains for advancing because historically, the market tends to rise another 9.5%, 10% in about three to four

months after recovering all that it lost in the prior bear market. sonali: there has certainly been a bit of euphoria in the market this idea that the animal spirits are back with the idea that the rate hiking cycle not only is coming to an end, but potentially pivoting. what happens when the fed actually starts to pivot? how much of the enthusiasm is priced in? sam: a lot of it is priced in, investors are anticipate her's and that's why on average, we have had a 14% gain in the s&p 500 between the last rate hike and the first rate cut. going back to the late 1980's when fed chair alan greenspan actually started telling us about fed funds rate changes -- -- prior to that the only informed us of discomfort changes -- but since the late 1980's, we have had six times in which we were in the pause period and the market rose in five of those six times.

but once we did actually experience a rate cut, two of those six times, we did end up falling in six months. but on average, we ended up doing pretty well, up about 6.5% on top of that 14% on average that we had experienced leading up to the first rate cut. vonnie: you have seen a few business cycles and studied even more. is there anything about this particular time that suggests it plate be different? -- suggests it might be different? sam: this time in 2022, expectations were because we were looking at an inverted yield curve, a negative year on year of leading economic indicators, that we would go through an earnings recession, that we should have been in economic recession. but because the consumer remain so resilient, the jobs picture remained at a point that many economists a while ago thought was more than full employment.

that is causing many people to scratch their heads. so now the question is will we, won't we? like pulling petals from a daisy. do we end up falling into recession, and if it happened so late after the fact, do these indicators still get the credit for calling it? vonnie: gosh, that's a great image. is it still the magnificent 7 that supports the next leg of the rally? sam: it might be more like them and 14. you see a broadening out. following up years, you want to let your winners wright. unlike last year when in 2022, the s&p 500 was down 19.4%, history 22 buy last year's losers because the market rotates from first history 20 you to buy last year's losers --

-- history told you to buy last year's losers permit we got communications, services, consumer discretionary and tech. but following an up year like this year, you tend to let your winners ride. maybe. if you want to look at financials and industrials, they are showing improved relative strength and they to do this would be good candidates for the coming 12 months. sonali: what about the risk factors? they use -- their still so much exuberance. where do you think the market has gotten ahead of itself? sam: we are a bit pricey, about 25% premium to the average p/e ratio on forward 12 month earnings over the last 25 years. so that could be a concern. at the same time, even though there has been very attractive

valuations overseas trading at about a 20% discount to its longer-term average, nobody wants to be venturing overseas quite yet. that will be an area that shows better performance in 2024 just as we are starting to see an improvement in mid-caps and small caps, which are still trading at about a 30% discount to their long-term relative p/e ratio. i don't think investors will be giving up on equities. they will just be shifting their focus. vonnie: we have seen shrinking central bank balance sheets not just in the united states, but in many parts of the world, but particularly here it has been a concern. that will have liquidity implications. is there anything about this market you are concerned about in terms of liquidity or any kind of shock that might topple something or cause a ripple effects? sam: i think i am more concerned by geopolitical aspects about the widening of tensions in the

middle east, et cetera. not that i am expecting a cuban missile crisis, but in 1962, we did end up with a down year following a pretty strong 1961. primarily because of concerns from a geopolitical perspective. so, yes, there could be issues that are, in a sense behind the scenes financial structure in terms of the fed, maybe they will take their time in terms of cutting interest rates. we think they will not do it in the first quarter, but rather late in the second quarter, because, as they have told us before, they don't want to make the same mistakes as the 1970's. so we see three cuts in 2024, one in each quarter starting in the second quarter. sonali: how much of a desire to hedge is there at this point, given the still so much significant risk under the surface and such inmelt up in markets? sam: there is probably a desire

to hedge when things get a bit too exuberant, when the american association of individual investors tells us that their members are telling us that they are more bullish than they have been in the past two and a half years. that does cause you to wonder just how exuberant these markets are likely to remain. so as i have said, i believe we will move another 20 points and set a new all-time high, but large even numbers tend to work like rusty doors and require several attempts before finally swinging open. so i think 4900, 5000 will be big challenges, as we move into 2024. vonnie: do you have any thoughts about the financials in 2024? sam: we like the financials. from a fundamental perspective, we are expecting good earnings growth. from a technical perspective, our research group has the financials along with the

industrials as two groups that are seeing very strong near an intermediate-term relative strength. and in particular areas like the brokers, like the banks. they are doing quite well and they think they will continue to do well as we move into 2024 and certainly with an easy possibility of interest rate that could benefit the financials. vonnie: all right, sam, always a pleasure to speak with the, you are like a living, walking almanac. sam stillwell, chief strategist at cfra research. the s&p 500 is certainly showing that today, it is up another 0.4%, 20 points, 4775, looking to see if we close at a record or if the market will save that for another day this week. we have all the stocks in the philadelphia semiconductor index up today. the least of them up 0.6%.

the index as a whole up 1.9%. the nasdaq golden dragon index, that is down 0.7% since january 1 -- that is down 7.75% since january 1. there are other fund managers looking at other countries. sonali: contrarian plays, right? do you look where no one else is looking? interesting if you look at the past month, some things that have helped the s&p 500 were unloved sectors like banks and home builders. but today, to your point, even the s&p 500, it is the semis that have been keeping up the heat in the santa claus rally. vonnie: quite unbelievable, playing out exactly what sam stovall has been predicting. coming up in our next hour, we will speak with a red next guest and check out the market close. our guest will be a chief investment strategist at janney montgomery scott.

stay tuned. this is bloomberg. ♪

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the same for the s&p 500. inches away from a new record high. the nasdaq, closing up more than half of 1%. >> you might've felt the narrative would start to change but it doesn't look like it is changing the first trading day of the final week in 2023. the stoxx index, one of the high performers today. one of the reasons why the s&p 500 was up .4%. you look at grr, into the groups, the rent returns, the index is up 2.25%. semiconductor equipments, up. semiconductors up 1.4%. really the story of the day. the other story we have been keeping ioniq's oil, obviously up about 2% -- keep an eye on is oil, obviously up about 2%. also contributing to today's rally that i suppose you could call muted, but we are getting

there. we need to wait a little bit. anticipate a little more. >> also a lot of anticipation in the bond market, how it ends this year. the 10 year, roughly flat on the day. a two-year auction earlier today got more demand than initially expected. you are watching the two year yield up three basis points on the day. interesting to see how the yield story will start to compound with the equity story as we move forward. some of these pivot expectations start to get big -- get baked even more into the market. this santa claus rally, what do you make of it? >> it is delivering on

expectations for 2024. the first two trading sessions of 2024. you noted earlier we are inching toward that all-time high. at this juncture it appears it has a certain gravitational pull associated with it. market participants are willing to get at or above that all-time high. i suspect that given quiet trading conditions and no big news that should disrupt the directionality of the market at the moment, it seems like most likely the path of least resistance is for if not necessarily a march higher, a grain higher. nonetheless higher, building on the gains we have already seen delivered in earnest since those near term lows back in october. >> no big real economic surprises expected in terms of data. do you think this idea of the powell pivot party that has

driven the market higher for the last eight weeks, does that idea start to wane a little bit now? >> i think it certainly has lost a little bit of its viscosity, if you will. it really took another leg up higher in equity prices and all risk assets for that matter. you saw a melting of goldman sachs's u.s. financial conditions index. all indications the post fomc meeting presser and the summary of economic projections that accompany it really amplified what already had been expectations around perhaps a more dovish setting coming out of the federal reserve. if not this meeting, by way of no for the rate hikes. in terms of fed officials conducting open mouth policy. instead we got it handed to us at the december meeting. the guessing game was really off. market participants reacted rationally to the expectation

that not only will we not see further rate hikes, but in sep, we are no less than three coats, which is one more than was expected to be delivered, that came from the september meeting. a lot has been pulled forward into markets at this juncture. it seems to me that we are probably likely in a period post end of the year where the market needs to digest some of these gains and look to economic news, and ultimately corporate earnings that will be released, to evaluate the valuation that exists in the marketplace which is getting a bit rich. >> exactly. i'm curious which parts of the market will come meet the others. >> much has been made of the fact that the magnificent seven has been a remarkable performer, triple digit gains across the seven company enterprise. notably over the last couple of months, working off the intermediate low from october,

are the gains developing -- starting to develop in the other sectors. whereby by the equal weighted s&p 500 and the russell 2000 index have made tremendous strides. not necessarily enough to close the gap to the s&p capitalization weighted index, but broadening them nonetheless. that narrative has become some census -- become consensus. if the stuff and then continues to be supported, the place to be might not be the same as less they are, tech and consumer discretionary, but rather some of last year's laggards for growth, may be health care, materials and industrials. vonnie: you are echoing what sam sobol just said to us a few moments ago. he likes industrials and financials.

is recession a live risk for next year still, or no? >> we have a constructive forecast for 2024. building on what we think are nontrivial odds that we do experience a mild contraction in economic activity some time mid year or in the second half, predicated upon the lagged effects of still elevated inflation and probably more so that of the federal reserve rate hikes they have undertaken. a consequence, too, of the decline in savings that had accumulated during the pandemic which are near exhaustion at this point. a lot of heavy lifting from the labor market, job gains. we expect to see again a decent year of stocks. nothing that might replicate this year's returns. nonetheless still i think there are returns to be earned if not in the same linear fashion as they were delivered

in 2023. vonnie: there's been so much attention paid to the impact of rates on the market. what about the commodity markets? you mentioned inflation as a potential risk. to what degree are you concerned volatile oil prices given the concerns we are seeing across the middle east will spill into broader markets? >> that's a great point. the decline in oil prices, the most recent steadiness have contributed to improving sentiment among consumers which drives 70% of economic activity in the u.s. that factor is very important. by way of the michigan consumer sentiment survey, that survey tends to tie closely to inflation expectations, and it's improved quite a bit, expectations going forward have come down largely because of the cooperation we have seen in gas

prices, due to falling oil prices. having said that, something that would be disruptive or interruptive in the middle east that would emerge in some kind of a rise in oil prices, a spike, if you will, if not sustained but enough to spook markets, that could be sufficient to have consumers retrench a bit which would obviously threaten perhaps the economic vitality that we have coming out of the end of 2023. sonali: when i see a lot of herd mentality going on, i need to poke a little hole in it. almost nine weeks, we are in the ninth week of a rising market here. you have to wonder whether the herd is getting in a little late with the risks under the surface. how do you balance that with investing right now -- how much risk to the pullback is there and how do you balance that with investing right now? >> just to be nimble and not overly dogmatic, taking the

other side of that. i concur with your sentiment, the consensus right now is that we have this so-called immaculate soft landing scenario in which inflation dissipates while the fed can begin to cut interest rates soon and by quite a bit according to market participant expectations and allow the loom or -- the labor market to stay tight, enabling demand to stay strong. i'm not going to suggest that is impossible. but yet at the same time, history will tell you that's not been successful more often than not. the preparation around perhaps a recession that would be more severe than expected, not a base case so much has perhaps re-acceleration due to an overheating of the economy because the labor market does stay surprisingly strong and inflation does re-mount if you will and bring the fed back into

the game of having to worry about hiking interest rates or taking a more hawkish posture and surprising markets with that than what's currently becton. valuations that 19 -- valuations that 19 times plus for 2024 be a red certainly there is an air pocket in those valuations should equities be the raven. that could surprise investors. that might not be overly bearish in terms of a 20% or 30% decline but take 5% or 10% off the market pretty quickly. vonnie: that's one scenario. there's another where we see this disinflationary trend. how does that impact corporate margins and the health of earnings? does that keep you awake at night at all? >> it is, only in the sense we know corporate margins have been remarkably resilient. everything that's been thrown at them so far primarily because

corporations have been very successful in having pricing power and pricing along higher input costs to the consumer, which has been willing so far to absorb those particularly due to once again the abundance of excess savings. we see that dissipating rather quickly now. those same corporate margins that are above historic trends at this point in time, down a little bit from their recent peak about a year and half ago but helping to produce this decent pattern of corporate profit growth in the expectations going forward. it could come under some pressure if in fact we see any preparation of that pricing power while at the same time consumers even marginally retrench. highly predicated on the prospects of the labor market. that would be enough once again to influence i think negatively placing an impulse if you will into those valuations that certainly would be unlikely to

expand further in that environment and may be more subject to compressing -- which once again may not take the market down significantly in and of itself but may be enough to work counterproductively to what otherwise might be a path of still positive earnings growth, just not the double digit gains currently expected according to the s&p 500 consensus estimates. vonnie: an optimistic view. thank you so much for your time. both mark and sam who studied this market for decades are pretty confident the past will tell us a little bit about what's going to happen in the future. we may not see massive declines unless the market rerate's. sonali: it certainly seems that investor biases toward the outside but what worries people is how prepared are investors in the event of another negative surprise?

we are still near record highs. something interesting is we are still waiting for 2024. just a couple of days away. jim bianco is tweeting voraciously here about how many traders are waiting for the 2024 set up. this is a great week for us to help investors figure out what that set up could be. vonnie: also may be grab a couple few extra basis points if that's what you are thinking about. [laughter] you have three more sessions to do it. we are a third of the average volume. coming up, apple, taking action to tackle the u.s. ban on the sale of apple watches. but coming up here on bloomberg -- that is coming up here on bloomberg. ♪ that first time you take a step back.

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vonnie: i'm vonnie quinn along with sonali basak. the white house has refused to

overturn a sales bound on apple's smart watches in the u.s.. this follows a ruling from the u.s. international trade commission in october saying that a sensor in the watches violated two patents. they are seeking relief in federal court. for more, we welcome and mark gurman -- in mark gurman, chief technology correspondent for bloomberg. it is a crucial time for them. what kind of money are we talking about, what mr. revenue could apple be looking at? >> certainly the apple watch is a decent sized business for apple. it generates about $17 billion annually for the company. to put that in perspective, that is a very minuscule amount compared to what the iphone brings in, north of $200 billion. this is not great for apple's marketing image. people are asking, why is my apple watch being banned? can something harming

with my watch -- harm me with my watch? what is wrong with apple here? but i don't believe you will see a material hit on here. what we learned today in a filing from apple to the federal court circuit is there's a january 12 hearing date for the u.s. customs agency to review and determine if a software update apple has developed is a sufficient fix to bypass the infringement on the patents. it's possible it's game over january 12. it's also possible the software update is rejected and this lingers for 2-3 months. maybe this ends up being a hardware thing. sonali: what can you tell us about apple's ability to defend the business? this is a tech giant, will and to fight the -- willing to fight the ban. what's the game plan here? >> the game plan should have been figured out long before the last two weeks. this is true for myself

and i'm sure many people that apple -- when this watch ban was put in place in october, many believed this was not going to happen. they have been many times where apple was under the gun here with an issue like this. where they have been able to get their way out of it. whether that was president barack obama getting apple out of an injunction on the apple and the ipad caused by infringements on samsung. plenty of people thought that there was no way apple was going to win that. this is something that happens over history where apple gets its way. it didn't happen this time. this was a shock to me, the market and the company. they still have some egg on their face here. they've known this was a strong possibility. there should have been a

settlement long before this became part of the public discourse. sonali: this is regarding the tracking feature that is in certain watches, not every watch -- how important is this? >> the future is one of several health features they have, the blood oxygen feature. they created blood oxygen sensors that can work while your hand is moving and get a really accurate picture during motion. that is the crux of the issue here between apple and mossimo. vonnie: very much appreciate your reporting on that, mark gurman. lifestyle influencers have entrenched themselves as a moneymaking powerhouse driving billions in sales for social-savvy brands. emily chang checks in with ltk, empowering creators about what's next. have a listen. >> ready? ok. all you, girl. >> have a very exciting

outfit of the day today. have a very special guest with me. emily chang from bloomberg is here. ♪ what do you say to people that think that influencers don't have real jobs? >> that's a really popular sentiment. i feel like it's 24/7. i was doing it as a side hustle for basically until this year in february. i was laid off. i took a month to think about, am i going to do this full-time? am i going to give this a shot? it was through encouragement of my audience that i decided to take a risk on myself. >> the concept of someone recommending for you to buy is not exactly new. but the professional lifestyle influence or you have undoubtedly seen online has only existed for the last 10 years or so. that is thanks to tech savvy affiliate networks like ltk.

in 2022, $3.6 billion worth of merchandise was sold through ltk's technology alone. >> i was a 22-year-old girl who had a personal shopping business. living at home eating my dad's serial. i had about 260-ish dollars in my bank account. it was up from there. i very much needed this platform to work. when we launched ltk, it was all about monetizing blogs by taking people shopping. we have creators who talk about brands on our marketplace. and the consumers who come shopping. if you are accepted, you are immediately in a commercial relationship with 7000 brands. everyone from the big french luxury brands to your corner market store. > they estimate the amount paid to influencers in 2022 hit some $16 billion last year.

that's because brands have found that some consumers are more willing to make purchases from someone they follow online versus being compelled by a traditional ad. softbank is betting big on ltk's approach. boring $300 million into the company in 2021. >> every morning, i checked my analytics. you can see how many times an item was clicked on and how many times someone bought it. what the conversion rate on that is. the brands will have access to that which is cool. you can look at monthly analytics, year-over-year, to see the growth of your business. >> the biggest development is what we are able to do with ai. they're uploading content they have created. original content. they are captioning it and sharing it out.

we are notifying them the purchase was made. creating more content targeted to with their customers want from them. ♪ >> i've always wanted to have my own business. ever since i was a little girl, i wanted to have something. i feel like i have so many different things -- had so many different things that went nowhere. but i'm all about failing forward. >> you see women dominating and it is such a beautiful thing for me to look across the room and see other women providing for their families, creating content helping other women. it's a beautiful thing. >> ltk now has to compete with other networks like shop style and share a sale and even companies as big as amazon which has its own influencer program. so, how does ltk stand out? >> there are two words i want you to leave with this

conference thinking about -- the first one is community. the second is correction -- is curation. >> while there are people who do pieces of the ecosystem we provide for a creator, maybe they have some brand campaigns or a social element, i always tell creators, you are building an e-commerce empire on your own. >> now the algorithm is honestly ever-changing and it can definitely take a toll on you, feeling out of control of how many people are viewing things that day? how many views did you make it on a post or video? you have to think of a way to continue posting and continue getting your content out there. >> is there anything you would like instagram to change? >> i'd love them to go back to their old algorithm. [laughter] i feel like i could do a cute outfit with this plaid coat and the moody's. -- and the booties. ♪

>> our thanks to bloomberg's emily chang for that report. if you thought the s&p 500 was exciting, look at bitcoin. up 155% on the year. we will talk about it with nick carter. we will talk about that, a potential for an etf, the regulatory landscape ahead. it is all the alt coins driving the market even more than the rise in bitcoin. this is bloomberg. ♪

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>> -- sonali: this is bloomberg markets. i'm sonali basak with vonnie quinn. vonnie: we didn't quite reach the record for the s&p 500 but we are inching there. within sniffing distance of those records here, 4774 is where we are at. up 20 points today. maybe we just have to wait another couple of days. but it looks like this market wants to go there. the 10 year yield, below

3.90. the vix is just sleeping through all of this. it was higher earlier, but still a level below 13. waiting for that to be replaced or move next year on all this volatility. sonali: the nasdaq 100, the semiconductor index, all the stocks in the green, the russell 2000, getting a lot of love. but no market with more love this year than bitcoin. we are looking at bitcoin having 155% rally on the year after a significant crash into last year. now it is days away from the end of 2023. still no approval on a bitcoin etf. the market has rallied higher here. we will talk about it with no caps on love castle -- nick castle of castle island ventures. when you look at how much

bitcoin has rallied, how much is the etf price to net how much more can future catalysts like a having -- a halving add to the price of bitcoin in 2024? >> the market is almost certain at this point that we will be getting an etf in the coming days. most analysts think it's likely to come before january 10. i think it's likely to come on the 8th. so the near-term price certainly reflects that expectation. we may even see a new selling event here. in the medium-term, the etf unlocks a whole new -- unlocks whole new classes of capital that would not be able to enter the market, that have not been able to allocate to bitcoin. so you will see structural flows that will be positive for bitcoin. the halving makes a marginal difference. you are only seeing a small

effect on supply in terms of marginal supply creation. so thehalving is less of an exciting development. but the etf is something we have been waiting for for literally 10 years at this point. so you can see that excitement expressed in the price of bitcoin in recent months. sonali: you mentioned the potential selling of it. what would cause investors to take profits or get out of certain crypto assets at this point? >> of course, tax selling potentially to end the year. you've seen the market give up some of those gains. fundamentally it's about expectations versus catalysts. the market at this point thoroughly expects the etf. and the big rally we have seen from the 20's, low 30's into the mid-40's, for bitcoin, that is almost entirely etf-based. on day of, it might be a bit of

a pop, but the effect might be muted. i expect to see the price developing medium-term, that is where i'm excited. that is where you see other financial entities that previously were not able to recommend bitcoin to their clients get the ability to do that with the etfs. . we will see a marketing rampage from some of the largest financial institutions in the world and that is when this thing really takes off throughout 20 24 -- through 2024. vonnie: the founder of grayscale is now gone and will be succeeded by the chief financial officer of dcg. the president, mark murphy, of dcg also resigned from the grayscale board. they did not cite a reason for the changes but they are effective january 1, according

to a filing with the sec. we are just learning that today. does that provoke anything you might want to share with us in you? >> as of right now, they have not said anything about the resignations. he is a character in the crypto markets. he built the largest conglomerate, one of the largest successful businesses in crypto. it is a shame to see him step back. it's ultimately a shame to see the dire straits the dcg has found itself in. we don't know it's related to the departure. it could be something as straightforward as the sec asking grayscale to have barry step aside to sweeten the deal for their pending etf application. if i had to guess, that's what i would list as the most likely

cause of his departure. but ultimately it's interesting virtually every single main character so to speak and the crypto space over the last two years has now left or ended up in prison, in some cases, or b een forced to sell a business. the lesson is never be the main character. vonnie: does it make you think any differently about the underlying asset or about these etf's and the potential for approval? given that we know there have been discussions between grayscale and the regulators asked to -- as to redemptions and what that would look like and how that process would work. it's different for grayscale than other etf sponsors. >> i would say grayscale has a straightforward path to the etf here although their victory in the courts was the main catalyst of this whole wave of etf's being approved. the jury is still out as to

whether grayscale itself will be in the first wave of those etf approvals and how exactly that gbc conversion will occur. i think very's departure -- barry's departure is part of a sweetener in order to make that process smoother effectively. the jury is still out on whether qvc itself will be in that first wave of approval. with 13 sponsors currently pending in the replications -- with their applications. sonali: it's not like the industry itself has been without its challenges. significant regulatory hurdles. you talked about the one seen by dcg, barry silbert, at binance, for example, as well. if you are speaking to a group of investors, telling them how to perform due diligence on counterparties and places to invest, how do they take these

issues into stock? >> binance gradually losing market share, which i think they will, is positive for the development of regulated spot markets on the u.s.. it was the last kind of grey swan hanging over the industry. i think we are looking at a more mature, more regulated, more surveilled, and more domestic market for the bitcoin for the asset, which is positive, and i think that was the last barrier left to fall before we got these etf approvals. in terms of looking at these exchanges, one phenomenon we see now emerging at the industry level and policy level is the notion of proof of reserve, which is accounting and cryptographic procedure to prove the exchange has the assets they claim they have. if these had been in place during debacles like ftx

or previous exchange insolvency's, investors would have been armed with more information. i would be looking to these changes of proof to reserve, or asking of these exchanges to do that. undertaking new work, more modern practices like segregating custody and exchange , which is obviously the way it's done in traditional markets. overall i would say we are seeing a more mature market. these exchanges develop alongside the way they look. overall a very positive development for the industry. sonali: what about outside of bitcoin? we talk so much about bitcoin and the rise it has seen despite these regulatory and legal issues and exchange issues. soana, a serial, a lot of -- ethereum, a lot of conversation about the other assets. where are you on those regulated spots?

>> it's also been solana's here, they have recovered from that dark cloud that was hanging above them. they have moved on from that hang over and am tremendously well in recent months. we are seeing a de-fi system emerge which people are excited about. ether is caught in the middle. they are pursuing a more challenging scaling approach. focusing on rule ofs and -- roll ups and l2's, which is difficult. these are still higher -- fees are still higher. most investors are now looking to see how ethereum reacts to the emergence of competitors like solana in 2024, how they are going to execute on their roadmap. whether they will seize the narrative back from some of these were competitors like

solano. that's the big question that's hanging over these markets. i'm optimistic ultimately they will be able to do well. . from our perspective, we just look to the entrepreneur so tell us where they would like to build and we see founders building on an array of different blockchains. certainly solana has a lot of hype and excitement right now but it still remains ethereum. still optimistic about that blockchain long-term. vonnie: it's not quite up to its 2021 hype your minutes got a long way to go for that. we have no idea if one etf will be approved. two were three or zero. which one would you recommend? would you recommend all of them equally? >> i am a fidelity alum. of course i have to be faithful

to my colleagues and peers at for allegedly -- and peers at fidelity. ultimately, i think we are just excited to see this major step being made. this is the most important development in the history of bitcoin. we have been waiting for literally 10 years. regardless of which one does well, the whole industry benefits from investors being able to get more efficient, more direct exposure to the asset and getting these investors like the blackhawk's of the world. can't say i recommend one. but really excited to see this development. vonnie: it's funny you say direct. because it is in a wrapper. this was initially an industry that was in the face of finance. why buy an etf when you can buy bitcoin? >> incumbent etf's are futures

based and less efficient in terms of the exposure. you are right. there is still a role for spot exchanges to play. we will see the spot exchanges challenged by the low expense ratio etf's. allowing people to easily allocate to bitcoin with a brokerage instead of signing onto an exchange. the other thing we have to look at here is how did the incumbent exchanges react. do they have decompression as a result of etf's? it is a role for people to want to have to get access directly. bitcoin itself has the unique qualities that people want. not necessarily just the financial exposure. vonnie: anthony scaramucci said is going to happen this week. you sent january 8. we know the deadline is january 10. why january 8? >> it is a monday. [laughter] it just makes sense. stay tuned. keep your eyes peeled. we are all very excited.

vonnie: it's funny how so much makes sense in the crypto world. thank you so much for joining, nick carter of castle island ventures, joining us there. i think somebody has said every day now or between january 10th. sonali: it's going to be an exciting year. vonnie: is going to come -- it's going to come. sonali: it was not on my bingo card for 2023. vonnie: it is interesting to consider if today's downturn was because of the barry silber news or as an extent a little bit of profit-taking. coming up, we will talk to terry haynes of pangaea. this is bloomberg. ♪

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vonnie: as we approach 2024,

negotiators from both political parties are reportedly working to come to terms with the big issues that divided them at the years and, notably funding for ukraine -- end, notably funding for ukraine, the border, israel and taiwan. terry haynes, the pangea policy founder joins us now. there are immediate problems that have to be dealt with and medium-range problems. supplemental war funding, when does that get done? >> i believe it probably gets done at the end of january, beginning of february. the reason i say that is, what you have here is essentially a movement on the progressive wing of the democratic party, republicans have wanted border security improvements, substantive improvements, apparently biden does, too, otherwise he wouldn't have put that in the table in mid-november as part of the overall deal here. what you've got is the white house and the republicans kind of working together in a

stealth way to push progressive democrats along on all of this stuff. i think that takes a while with additional complications. it is almost certainly to be done. the additional complication is we've got a couple of funding deadlines in mid january and early february. i think this all gets balled up together. i would look at the early january -- end of january, early february timeframe for the deal. this also gives negotiators another 3-4 weeks to finish things up. despite the urgency on the aid and the urgency on the border, this is going to take a little bit longer, but i do think it gets done. frankly it is in bidens interest as well as the republicans' interests. vonnie: it didn't get done until now, what will be the stumbling block -- the

stumbling block in the resolution of that? >> there will be plenty of stumbling blocks. the markets are used to looking for volatility from washington. they are going to get it. the stumbling blocks are likely to be the partial funding shut down deadlines in late january -- mid january and early february. there will also be a lot of back-and-forth pushback within the democratic party. as they try to figure out what exactly they are willing to agree to. so this is all going to take some time but i do think ultimately it works out. sonali: what is the market not seeing as a problem yet that could become a problem to your point in the middle of january and february? >> remain just on these issues? sonali: or in in terms of funding, good anything introduce new volatility? >> i don't think it is so much the funding. i think what it is is the

thing that markets i think we'll get concerned about and may react strongly to is the possibility that the funding for ukraine and the funding for israel and the indo pacific, for taiwan, do not get done somehow. the implication then would be that american foreign policy is giving up on its internationalist interventionist stance that it's hard for its less 60-80 years, and that will cause a negative market reaction. i think markets feel this is going to get worked out. and there really is no problem with any of this. but should it look like there is some significant pushback on any or all of that, i expect markets to react badly to that. sonali: let's do a thought exercise for a minute. if you have a market that believes the fed is going to pivot, and coming into this quarter you had a market that was very concerned about the u.s. financing needs broadly, particularly the cost of interest payments ballooning to

historic levels here, more than what we pay for most things in this country, does a decline in rates start to help this story out? >> a, little bit yeah. i will say first that markets are very good at convincing themselves of things that are unlikely to happen. my view of the last year plus, i thought the fed wasn't going to get as hawkish, as a serious on rates as they did. and know that they are hawkish and serious, markets are still trying to talk themselves back off that and think that the happy days are here very quickly. i dispute that firstly. secondly, markets think that things are generally ok butthere are some real concerns underneath the short-term concern -- there is real medium and long-term concern about the ability of the united states and western governments to be able

to control their fiscal spending and right the ship. there's no evidence in the united states that's going to happen anytime soon. there's a little whistling past the graveyard here on that. . in the middle of all that, what you've got is you've got a situation where washington will ultimately come together on some deal for aid that also makes substantial border policy improvements, markets will generally see that as positive, and we will see that as more business as usual, when in fact it might be the last gas both for israel and ukraine particularly. and beyond that -- sorrow to filibuster here. but beyond that there is a situation where the highest geopolitical and u.s. domestic political risk in 50 years,

really, ever since the early 1970's, when you get into that sort of situation, it's not going to take much to shake markets up. they don't feel shaken so far but it won't take much, if something starts to go south, in any of the battlefields, chinese economy, loss of touch points. vonnie: you said domestic. do you mean the d.c. circuit, january 9, the hearing about trump immunity, or something else? >> all of that, vonnie, there are many, many events that are going to happen this year. the presidential primaries, the court hearings and the like, all of which will be digested, interpreted, and i think in many cases, over interpreted by markets to say, well, we feel now that trump is likely to become president were we feel that there is a surprise in iowa -- the situation gets shaken up in different sorts of ways.

or there's a problem in the white house of some kind, whether it be the president's health or a third-party rising challenge in the late winter/early spring, all kinds of political events that are going to contribute to domestic political uncertainty, that is on top of the geopolitical. vonnie: for sure. nikki haley, how does her candidacy need to change if she wants to be the nominee? plenty on wall street are donating to her. >> what has to happen first look for nikki haley -- firstly for nikki haley is that trump needs to underperform in iowa. when i say underperform, the expectations based on polling in iowa and nationally is trump will end up with something like 50% of the vote in iowa. but if he significantly underperforms, and one way you will know that is simply that if, say, 20% to 30% of the vote

in iowa peels off from donald trump go somewhere else, whether it's nikki haley, ron desantis or a combination of the two, the storyline will become quickly that trump has underperformed and haley and desantis are more viable candidates, and we've got a few weeks before we got a few weeks before we get into the new hampshire primary, and all of a sudden the race is going to look very much open and very much like it might be anybody's race. so, you know, wall street's betting predominantly on nikki haley at this point. we will know in three more weeks whether those bets are well-placed or not. vonnie: sonali: looking forward to -- sonali: looking forward to setting up 2024 with the up your but it's going to be a busy primary season. terry hands with pangaea policy, thank you. that does it for our day of markets. it's been another day higher. we are on the ninth straight week of gains so far. let's see if it holds. vonnie: certainly didn't disappoint, this equity session.

nor did the bond session, either. a couple of basis points lower in the 10 year yield. places climbing higher -- prices climbing higher. a very strange rally these last couple of years. sonali: you look at the bond market, we even had a successful two option today, ending strong. everyone is pretty tired of how volatile this year has actually been. vonnie: exactly. sonali: they are hoping for relative calm before we start back up again in 2024. vonnie: plenty of foreign demand. people are stirring. [laughter] sonali: absolutely. we will look forward to doing it again tomorrow. vonnie: we are only a few points off, aren't we? is also the potential sec decision on the bitcoin etf. sonali: we will be back with more markets coverage tomorrow, the bond markets, commodity markets. see you then. stick with us the rest of the week. ♪

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