paul: good friday morning from the bloomberg radio stadium to our worldwide audience with kailey leinz, we are simulcasting again on bloomberg radio and tv. we are up fractionally on the s&p, stocks a little bit higher here. 10 year treasury at 3.86%, gold is slower 2000 and $63 per ounce. we will get the latest reporting on the tensions in the red sea and the impact on global oil and then we will get the information from catherine avery.

welcome abigail doolittle. abigail: i was thinking of all the ways we could characterize the year that was. we were sitting here this time last year that the mood was dour. but the santa claus rally had started to develop. in some ways, the big rally we have seen should not be surprising. one thing that could be surprising is those stocks and bonds rally together. commodities are down 10% in the dollar is down as well. but stocks, up 154. s&p is up 25%, stock is up with their best year since 2009. even the russell finishing off greater than 15%. two indexes that are down, the

kp w bank index in the nasdaq golden dragon tech indexes down for a third year and row. it will be interesting to see if china can participate in this rally. paul: you have to see abigail securities monitor. there are five facing -- 5000 things on it. she has everything in front of her. abigail: the truth of it is i have to de-clutter, the old takers would be there two years later. i have to do that right now.

kailey: you know in st. louis they still call it the st. louis bread company. you were just talking about china and how people got the china call wrong. they thought there would be a rebound consumer story that did not materialize. when we look at the rally knowing you don't have a wonderful securities monitor but pay attention to technicals, do you see overextension? abigail: there have been signs of overextension. in terms of the nasdaq 100 up 54 percent, best year since 1999. correlation does not mean causation but is suggest the nasdaq 100 could be a little overdone. the big question is being overdone and needing to

consolidate turns into a correction? commodities down on the year, vincent piazza or is it might be outside? no that's a former met. they both noted that commodities could be a sign of economic weakness. because the rally has been so impressive. this was the year that the economy and consumer stayed strong and effective it help stocks. if there is a dearth of global demand for commodities in that signals a recession, next year could be surprising. does that mean this overextension turns into a correction? this last fed pivot rally, tactically this was working good from a technical standpoint and

went the other way. we need to see resistance, the all-time highs, or if we go back down and range it could be a headliner. kailey: abigail doolittle monitoring all securities. we want to get more on these markets with catheriney everythg abigail was running through. what is your base case for 2024? catherine: we are expecting that 2024 is going to be a pretty good year for the markets. we are not seeing a recession next year, nation will be tame and at the same time you have an accommodative fed. earnings recession is finally

over. as is a presidential election year and most importantly, we had a trillion dollars that left the market and went into money market funds in 2023 and we are finally starting to see some of that money come out of money market funds and ends in the market which is helping to fuel the advancement we've seen. the market has the window back. paul: the rally we've experienced since october is due in large part to the fed pivot. a lot of folks asking the question have we gotten too far over our skis? how do you feel about that? catherine: quite possibly. the market is trading at a multiple of 22, remember markets

can be overbought and stay overbought for some time. i'm not sure the euphoria we've seen has settled down. we will see more broadening outages sectors that didn't participate as much as 2023. the energy and health care sectors have pretty decent growth, were starting to see some of the names have an expansion in december. there will be a lot of stable tech, robust cash flows, giving back to investors. looking at sectors like the industrials versus the consumer. you have government spending, capex, a defense sector that is starting to run low.

there is some wind at the back for the industrial sector as well. kailey: if we could dig into the tech sector given to the extent it led the charge for a great portion of the year. i feel like there are two arguments protect. if you think it's going to be a soft landing you don't need defensiveness but on the other hand, if the landing is soft and borrowing costs are going down it can support some of the richer evaluations. how does that work out for tech going forward? catherine: tech is here to stay it's a staple in our lives. a lot of the mega cap tech names have run so much this year that you're looking at valuations on average in the high 30's. i think they are getting a little tired so it is time to start broadening out and looking to those names that are going to participate in the upcoming trends intact.

like ai, but they set out on the fringes. the witches that make ia work, software, things like data centers, the ibm and broadcom's of the world, oracle. names that can support technology but were not worried about that being overbought because of valuation. paul: i would like to think earnings still matter, not just the federal reserve driving the market. does that seem reasonable to you? or do you think it's something to worry about? catherine: a lot of what we will see in 2024 is a decrease in cost pressures that a lot of companies faced in 2022, 23.

we will see bottom line expansion, top line expansion may be a place that's strictly for earnings. you still have a lot of productivity enhancements that they could take advantage of. kailey: all of that is in the equity market. if we look at other asset classes, where are you seeing opportunity? fixed income, foreign exchange? catherine: the weaker dollar and commodities as well. they haven't really participated in 2023. i think we are going to see more people coming to these markets. paul: as we think about these markets, when you talk to your clients what are you trying to tell them about the next couple of years. if i think a little more longer-term i have to be

overweight tech, maybe health care. i don't feel the need to be defensive but in the short term, people are still saying you need to be defensive. catherine: it depends by what you mean by defensive. if you mean keeping all of your money in fixed income i don't think that's a good long-term move. if you need money for the next one-three years we will keep it on the sidelines and in fixed income instruments. we are looking for markets in the next couple of years to look to more normalized returns. not the growth we have seen a markets 25% markets. we are not going to go back to the zero interest rate environment. you will still need some of your money in the market, you don't

want to become to defensive. kailey: you say we are never going back to that zero interest rate environment. where do you think we'd end up settling out? do they stop because the new r-star will be higher? catherine: i think they will stop at the 2.5-3 range. paul: catherine avery, thank you so much for joining us. the ceo and president of catherine avery management joining us from sarasota, florida. looking at the 10-year treasury yield. it really spiked in the 80's but they were relatively low interest rates right here.

i think a lot of folks feel comfortable with this leverage. i'm looking at the 30 year contract mortgage, 6.83 percent. that is better than close to 80% but boy, it's a lot higher than 3.25%. kailey: it is probably still too high to unlock the housing markets in the chokepoints with people not willing to let go because they want to keep their low mortgage rate. where decide equilibrium fall? paul: former president trump will file a legal objection after mean arson from the primary ballot. looking at these markets unchanged across the board in terms of the main equity indexes. yields are just slightly higher, we will have more of an we come back. this is bloomberg. ♪

kailey: welcome back to

bloomberg markets i am kailey leinz alongside paul sweeney as we simulcast live from bloomberg studio in new york city but news from the states is in maine where they ruled the donald trump cannot be on the ballot in the primary election. like the colorado supreme court it centers around the 14th amendment that bars anyone from holding office who has engaged in insurrection or rebellion. saying i do not reach this decision lightly i am mindful that no presidential candidate has engaged in insurrection. the trump campaign is found to challenge this decision. joining us now is jordan fabian who covers the white house.

where does this go next? jordan: all signs point to this the supreme court just like the colorado decision. this will cause a lot of havoc and chaos in the lead up to the primaries. there is legal uncertainty if donald trump can be excluded from a primary or general election ballot. there will be a lot of pressure to have a quick ruling here as we go forward because primaries are starting in just a couple weeks in state and local officials want clarity. paul: what if we heard about their willingness to hear this case and the timing? jordan: we haven't heard anything yet about whether they will pick up the case. the colorado case would be the first of, the colorado

republican party has already appealed to the supreme court. we will know by the new year if they decide to pick this up. kailey: while we await a decision out of the highest court in the land, the trump campaign and the former president are very vocal about what's happening here alongside the other indictments he's come under. he says this is election interference and he's being persecuted politically. does this have the effect that all the other legal decisions but only make is face stronger? jordan: after each of these indictments whether it's january 6 or the classified documents or business fraud. the republican voters have rallied around him. and not to mention his own opponents of come to his defense.

ron desantis, nikki haley say that with the ballot challenges, they want to beat him fair and square. that all has the net effect of making these legal issues into a net positive for donald trump. whether that is the case with general election voters. whether they see this chaos and hand him a second term, i have my doubts about that. but in the primary it's helping him. paul: has any consensus emerged around what the law is here and how it should be applied? jordan: there's a lot of disagreement around this issue and it centers around section three of the 14th amendment that those engaged in insurrection should be able to run for office.

there is disagreement whether they need to be found guilty of a crime or the conduct was observed and they are now banned. the question is who gets to decide if someone engaged in that conduct? in colorado the state supreme court made the decision. one thing they would look at is who gets to make the decision whether they engaged in insurrection and therefore ineligible to run for office. kailey: interesting the judicial branch which is supposed to act as a check and balance should play such a pivotal role in who gets to help that branch of government. what if we heard -- what have we heard from the bidens white house? are they trying to distance themselves from this issue are trying to seize on it?

jordan: the white house staff aside very little about this. they are cautious about wanting to speak on legal matters. but the president has commented on this several times, he sat on a trip to wisconsin, this question of the 14th amendment is up to the courts to decide. but if the question is did he engage in insurrection and his view, yes. he is responsible for the chaos and violence on january 6. it's not surprising because president biden will want these issues of democracy and the threat trump poses to it at the head of this campaign. it is surprising from the perspective that this is an ongoing legal matter and they

are cost of speaking about it. paul: jordan fabian, a reporter based in washington dc. a lot of folks are flying all over the place during this holiday season and there is a story that bloomberg is been following about fake parts within airplanes which sounds like a big deal to me. i want real things in airplanes that i fly in. kate, what is the latest here? fake parts, can you give us the background? kate: the last big update was in early december when the fraud office announced they raided and address and arrested a suspect. they have been accused of issuing fake aircraft parts.

bogus certifications in the u.k. and across the world. an investigation was launched into this company supply of plane parts and what we are seeing now is the industry is grappling with the task of adapting paperwork of hundreds of millions of components into digital documents instead. this structural reform could take years and it's of growing importance because as we've seen recently over the past six months, it is a significant issue. kailey: this is 2023, almost everything is digitized. you would think there would be an easy way to do this for an industry that prioritizes safe the. what is the hurdle here? kate: at the moment, there is no

central electronic database for electronics so they don't have traceability as the system is paper-based. this makes it more complicated. the fact that these parts are produced in bulk and there are so many around the world, it will take ages to trace these parts and put them in one digital system. we are all waiting to see what will happen. paul: he was responsible for digitizing all of these parts? kate: there are parts distributed, there are different companies that play a part in this. regulators are involved as well. it's not even just one person

that should be doing this. this is a worldwide thing and people need to come together. airline manufacturers are selling aircrafts to different companies across the world. it makes more complicated. kailey: complicated indeed although you would think there would be an easy way to do this in the 21st century. kate duffy thank you for your reporting on this. i feel people assume that the planes are safe and you know where the parts are coming from. paul: maybe that assumption is invalid overall? kailey: we will go from air transport to sea transport. the latest in the red sea and what that means for energy. rebecca babin is joining us next. this is bloomberg. ♪

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kailey: welcome back to bloomberg markets simulcast on both bloomberg television and radio. i'm kailey leinz along paul sweeney. as we are closing out the year in financial markets. it's been a wild year, including the eruption of conflict in the middle east and disruptions we are seeing currently to trade as a result of these issues. we want to go to braden murray

here at bloomberg news for the latest on what's happening in that region. we know many ships are now avoiding the red sea entirely going the long way around the coast of africa. are there any signs that things are normalizing or are things going the other way? >> it looks like the situation has stabilized and is a confidence game. the u.s. military has tried to assure that their ships are safe . but it is the exception that container ships moving through this area than the rule. hundreds more are going around and taking the long way around africa. i can see 10, 15 container ships, maersk, and others

moving their ships through the region but taking it on a case-by-case basis. paul: i'm using the map and go function that's great on the terminal. i see ships making their way through here. i guess the question is, do we have a nuisance that the u.s. military presence is having a calming effect on some of the activity there? >> they are putting out pr ess releases saying they shot down a drone in this area or intercepted a missile liver here. the attacks are happening in the defense system that the u.s. led coalition is setting up is having some success but until that becomes a nonoffensive --

that's an offensive posture. i don't think ships will feel confident going through these waters if drones are still being launched from yemen. kailey: it's a question of when people or companies will feel secure enough in making these decisions. where do we expect the real messaging is going to come from on this? is that the u.s. saying we can guarantee their safety? is it from this coalition that speaks for that coalition? others in the region, saudi arabia? who is leaving this? >> it sounds like the shipping industry is trying to have its voice heard more and more through the governments where these companies are based. maerks is in denmark, cmbc is

in france, the you would think they would put pressure on the military presence to secure the ships or do it themselves of possible. is the industry speaking through his government's to try and put the pressure on and get this passage secured. paul: are you hearing anyone whether it's a shipping company or an economist looking at this and saying this will have an impact on the local economy or are we too early in the process? >> bloomberg economics thinks at this stage it will have a limited economic effect broadly. shipping costs are relatively tiny portion of the overall cost of a consumer good.

it would have to spike a lot higher than they are now for that to feed to inflation. we are only 10 days, two weeks into this. if it is resolved in less time than that then were looking out a blip on the economic spectrum. if this drags on for weeks or months, we could see shipping rates continue to rise and that could take a bite out of producer and consumer prices. >> we thank brandon year for headlining the helm on this friday before new year's. i am looking at crude oil here at $72 a barrel. rebecca babb enjoins us -- ba

bbin joins us. we seen geopolitical news first started the ukraine and now the middle east. what are oil traders telling you about what's going on with global loyal? rebecca: two things, they don't chase geopolitical rallies by softening fundamentals which is where we are right now. were looking at a supply situation where there is plenty of crude oil available in the world. opec-plus has pulled millions of barrels from the market to keep prices stable. it is less about is their oil available versus how long does it take for that barrel to get where it needs to go and how much does it cost? it probably adds a couple of

bucks to get the barrel where it needs to go. at the end of the day, the barrel is there. when we look at 2024, crude traders are looking at the supply/demand imbalance in a market that is slightly oversupplied to very finely balanced even with the opec cuts in place. and that assumes opec+ will comply. the crude market is less concerned about is the barrel there and looking at how long does it take, does it have a cost? 2024 does not look like a gang buster year of demand growth. they say they are not willing to chase any of these rallies, i'm more likely to take profits. a lot of that is reflected in positioning that remains very low from a net length

perspective. kailey: if this is about supply being too plentiful. the power of opec as a price setter is waning because you get too much production from countries that are not in the cartel. rebecca: as soon as you think u.s. production will not respond to price increases and they can be controlled, you are wrong. opec is learn this lesson clearly this year. there is this expectation that u.s. supply growth would be 600, 700,000 barrels and it came closer to 900,000. every time they dug the deficit, supply was there to fill it. whether it was the u.s., iran, brazil.

opec has to realize the ability to stabilize the market is there but it will take much longer than they anticipated and that will take a lot of negotiation from the opec+ groups to keep members happy. the input has shifted down from 70 to 65. i do think the market is looking and everything through this bearish lens at the moment and we could actually see the market perform better than expected because everybody is thinking the worst is to come. their thinking opec as i cannot hold it together. demand growth is going to massively underperform because of china. when i see the market focused on one side of the equation i

started to say, what could go right? there are a couple of things that could go right and i think the market is set for a little bit of a rebound. paul: you mentioned china and that's where i go. the softest global energy market, they don't think china is coming back in 2024. what's the call on china? rebecca: we are expecting demand growth to be 1.4 million barrels a day. china makes 600,000 barrels. they are critical for us to meet that demand number. that comes from jet fuel, there is still room for pent-up demand to follow through.

the headline macroeconomic nurse coming out of china, this is not going how we planned and that numbers a question. if you see demand numbers ratcheted down it will be from china and that's what people are most focused on. i tend to think the market is ahead of where the analysts are in terms of ratcheting down that demand growth. the market is already saying i'm not sure they'll be able to meet thought. the expectation is already there but obviously china remains one of the most critical data in the crude market. kailey: will be think about china and the story has not materialized in the way people thought it would despite supportive policies where times

u.s. policy is not been supportive. when we think about how policy could change going forward. if we have a federal reserve cutting rates and leads to a weaker dollar, how will that filter back into prices for oil and commodities? rebecca: the weaker dollar should be very bullish for crude oil. it's been weak and we have not seen that relationship layout so far. like many things we thought would happen that weaker dollar story has not helped crude all that much. i think it helps much more in 2024 when we come back to this normalized economy after this covid reemergence trade has played out. i think it absolutely should help demand and any emerging market plan. if you get that weaker dollar, it will lower your costs and

help spur additional demand. it is not played out in the way we would've expected but some of those traditional relationships will come back in 2024 and the dollar should be a tailwind. paul: where is russian oil going? is it on the global market? rebecca: when we talk about the red sea, almost half of the crude oil flows are russian flows to india and china. when we talk about rerouting that trade i think russian barrows will continue to move through the red sea. they are not a target of the houthis. they are willing to take that additional risk. russian crude is readily available and on the market. it's making its way to india and china. that's rerouted some of the crude to fill the gap. the market has been efficient and being able to handle

disruptions and finding a way to getting the crude where it needs to go. that continues to happen and part of the reason why the events of the red sea have not had as dramatic of an impact as it looked like it was on the headline level. kailey: rebecca babin, thank you for joining us. as we talk about oil prices and how they have been relatively depressed, maybe that's empowering the consumer to keep spending money on other things. we will get more of a read on the consumer, how they are grappling with the inflation a what's ahead in 2024? william blair's sharon zackfia to look at thought sectors, restaurants in particular. stick with us. this is bloomberg. ♪

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paul: one of my favorite functions on the bloomberg terminal is rich go, a definitive analysis of some of the wealthiest persons in the world. elon musk topping the list. it was a good year to be elon musk. elon musk is back on top. >> it feels like a long time ago where he was not in the number one place on this list of 500 people in the world he was a second-place after bernard arn ault, and that was because of the tech roast in 2022. it hit tech billionaires hard.

but what we saw this year was a rebound in tech stocks. it got the tech billionaires back on top including yvonne back on top. in total 1.5 trillion was added to their net worth. it really shows the research and of tech stocks in the nasdaq has helped those billionaires. kailey: tech billionaires saw their wealth grow by 48%. if it was a story of the tech billionaires in 2023, who will be the ones to watch in 2024? is it the same individuals or are there new ones we should keep an eye on? >> elon musk is someone to watch

but it's hard to say for sure. i don't think anyone would have foreseen the way this year played out if you would ask them one year ago today. there were still fears of a living recession and rising interest rates. a bunch of geopolitical factors that came in the place. no one could have foreseen that these billionaires had added as much wealth as they lost in 2022. looking ahead to next year, it's hard to say for sure what's going to happen but there are key names to watch. a couple of women, the heir to the l'oreal empire in the first woman to hit 100 billion. she

has been the beneficiary of l'oreal stock hitting record high this year even though luxury stocks as a whole have struggled because of consumer spending, the chinese economy has not been as strong post-covid. l'oreal has product diversity and its helped her net worth. another woman to watch is miriam abelson. she is the majority stake in the dallas mavericks in the first woman to own a sports team. she bought them from mark cuban, and ramping up her public profile. kailey: really fascinating

individuals to watch as we go forward into 2024. must be nice. thank you very much and be sure to check out that story on the terminal to get a look at the real numbers. these are some very rich people. she was talking about some of these names are the heirs of luxury companies. that gets us to a conversation around the consumer. not just when it comes to the luxury and retail story but other sectors as well like restaurants. we want to bring in sharon zackf ia, thank you for joining. if you look at the performance of restaurants, it wasn't too bad. gained about 12% but underperformed the broader market as a whole. will that improve in 2024? >> i think the restaurant space is well-positioned for next

year. we see resilient sales trends which is encouraging. the consumers seems to be referring an experiential spend. restaurants have led the retail sectors in terms of growth and we have seen multiples contracted normalized. i think that positions the sector well for next year. we have a tendency to prefer and service restaurants because that's where those shares have shifted within the past few years but casual dining can do well. paul: that's where i want to go because we see the consumer weakening, still strong but weakening. are we seeing that in restaurant trends? maybe trading down a little bit? sharon: it is always hard to prove trade down and we don't have great insight into the customers who don't show up.

but limitless services have been doing better. that's been the case for the past 20 years. it's hard to say that is straight down. we also tend to like names that promote loyalty. that was a lever that they did not have during the great recession. chipotle and starbucks have robust loyalty programs. we think that's a tool if the consumer should soften further. kailey: on that note, if we are thinking about a consumer that is softening if not outright stopping their spending, what does that mean for their pricing power? knowing the degree to which many have been able to exercise it and those who have struggled in that department as we have faced higher input costs. how do you see the ability to

continue to pass on on? sharon: i think pricing power is an absolute necessity. we saw unusual commodity inflation but labor only goes in one direction and this is a labor intensive industry. we have seen commodities rollover, labor has become more benign, primarily as a function of what the fed is doing. we saw material restaurant expansion next year. next year i would expect more moderate margin inflation but we expect margins to go up in the restaurant space. in many cases, achieve all-time highs. paul: i am looking at your coverage list and i don't see cracker barrel, my all-time favorite.

i'm a huge cracker barrel band, what your topic in the restaurant space? sharon: we really like chipotle. it has a lot of those aspects that were looking at. a great loyalty program, 30 million members. when we do surveys it always ranks very high in perceived value. we have seen traffic trends stabilize or improve as the year has gone on. we think there is high visibility there on the sales trends and frankly, it is a very growthy name. with the drive through, that is also positive to the margins. all of the arrows are pretty unilaterally positive. paul: sharon, thank you so much

for joining us. i could be a restaurant in the list because i go to so many. we are talking about restaurants today and she covers a lot of the consumer space in one of the key issues i remember from the pandemic is labor. they could not get labor. even the chipotle on 3rd avenue, some days i couldn't open because they didn't have stopped. aff. kailey: but as she said, labor only goes in one direction. how long will we see continued tightness for service sector workers? where is the nearest cracker barrel? paul: it's in new jersey. i just go 20 minutes west and run into one. all cracker barrel's are within

a mile of the interstate. i get a country boy breakfast, loosen the ball and sit down. went to my first cracker barrel in tennessee, they know how to do it down there. the s&p off of a quarter of 1%. this is bloomberg. ♪

paul: welcome back to bloomberg markets. kailey leinz and paul sweeney. we are broadcasting from the studio simulcasting on bloomberg radio and tv. stocks trading though here.

the s&p 500 about -- off about 2%. on this last day of trading. it feels like when the fed made their pipit move weeks ago now the whole market changed. equity markets, fixed income markets. economic calls seemed to moderate as well. you want to check in with somebody who follows this stuff, who gets paid to be right, torsten slok, the chief economist at apollo. it felt like that soft landing discussion went from the back burner right to the front burner, and that kind of feels like it has become the consensus view. as the market gotten ahead of itself do you think? torsten: i do think it has. if you think about the market interpretation of what the fed was trying to tell us, it has been very one-way, meaning that the market is clearly now, as you are saying, latching onto every indicator that suggests we will have a soft landing. but there are still a number of

risks to the dual mandate. there are risks to inflation. it was also risks to growth. most important, we are beginning to see a recovery in the housing market. member, housing makes up 40% of the cpi. up 5% year-over-year. if we do get another boom in the housing market, if rates are going down, if credit spreads are tightening, if mortgage rates continue to decline -- now at the lowest level since may -- if that creates a boom in housing, that will create a boom in inflation. it is premature to come to the conclusion we can declare victory over inflation here. kailey: it is interesting to hear you talk about upside risks to inflation, because i feel like after the last few prints we have seen, and when you look at the fit -- at what the fed's preferred gauge has done, people were talking about whether the fed could end up undershooting 2% target. you don't think there is a real risk of that? torsten: that is a good point,

but i still think the market is too focused on three-month changes, four-month changes in inflation. this look at inflation the way the fed looks and inflation, namely the 12-month change. what they would have said six months ago when the three-month change is a lot higher, it really is cherry picking to look at 2, 3, four-month changes in inflation. we have to look at the big picture, and a lot of indicators the fed creates, they still show we are not out of the woods. just look at core cpi. it is at 4.0%. 4.0% is not 2%. that brings us to the conclusion that it is moving in the right direction, but it is absolutely the case that it is premature. members have subsequently come out and said it is premature to say we can declare victory over inflation here. paul: we have several guests who say the exact opposite. as recently cam harvey at duke

university said basically -- and his theme has been if you look at the real-time inflation data, not the backward-looking inflation data the fed uses, inflation has been whipped and has been for a while. in fact, the fed has been late to cut rates. how do you answer that? torsten: taking aside all of the arguments i made for why you should look at it the way the fed looks at it, let's look at the argument that inflation is falling a lot faster. if inflation is falling faster the economy should be falling faster, otherwise why would inflation come down so quickly? the conclusion is the economic indicators are not falling so quickly. if you look at the expectations, if i look at my bloomberg screen at nonfarm payrolls, it is 168,000. in other words, the economy is still doing ok, so the conclusion is certainly there is

low hanging fruit that has been picked, but it is true that the last mile is going to be the more difficult one, because now we are generating with a fed pivot, a boom in the housing market. if housing i was beginning to recover, which it is, then they will begin to put some upper pressure on inflation. if something that weighs 40% of the cpi is going to move higher, that will create some problems for the fed and the pendulum will have to swing in a more hawkish direction. we have a more bumpy ahead -- more bumpy road ahead of us. kailey: as we know, there is a big difference between stopping the hikes and starting the cuts. it potentially could be a good deal of time in between. this is something we have heard from the fed as well. the idea that they have not heard the full and -- have not heard the full effects of their tightening hit the economy. it is not sure where everything kicks in. how are you thinking about it?

kailey: that is a good point -- torsten: that is a good point. that is why they did back off with saying no rate hikes and the next move will likely be a cut. jay powell went out of his way, and we have had a number of fomc number -- members saying, hold on, let's wait and see. we are not there yet, so i think the main conclusion for markets is that rates have gone down too much, both in the front end and long and. this is not what the fed intended to communicate. the market may turn out to be right eventually, but we certainly also have some very strong arguments for why the market could be wrong and why inflation is not going to come down so quickly. so, the jury is still out on this discussion, and it is not a one-way street where we can all say inflation is no longer a problem, covid is behind us, and therefore everything is fine. there are still a lot of bumps on this road ahead of us on the macro front. paul: can you give us your

thoughts on the labor market? that has been one of resilience all throughout the last several years here. i'm not even sure what labor hoarding is. some people say that is a contributor. can you give us your read on the labor market today. torsten: the unemployment rate fell to 3.7 percent in october. of course nonfarm payrolls, 199,000. there were some pictures with the uaw strike, but you still had a reasonably solid 140,000 jobs created in november with a consensus expecting that we will see roughly the same amount here in december. i do think the labor market is still doing surprisingly well, and in some sense to the debate we just had, this is actually telling you that maybe we are not out of the woods, because wage inflation, if you look at average hourly earnings, is still growing at 4%. if you look at the nif be they ask firms, are you planning to raise cash raise wages for your

workers? that has been moving up very quickly in the last six months. there is a number of indicators that point in the direction of the fed pivot, combined with the easing in financial conditions could create a boom in the economy, and therefore complicate the last mile of getting inflation back to 2%. so the labor market still being tight is a double-edged sword. it is good that the labor market is still good, but it is not good for the fed because wage inflation is still significantly higher than where it has normally been when the fed has had inflation at 2%. a tight labor market is also something that the fed needs to work with where they need to get to the goal of getting inflation back to 2%. yes, things are still fine in the labor market, but the key question going into 2024, can we get inflation down to 2%, or does it require that we get more bumps on the road? i think the pendulum will have to swing back in a hawkish direction for the fed, and therefore for equities and credit spreads we have a more rough road ahead, relative to

how markets are pricing at the moment. kailey: if you like this is the debate we have been having for the latter portion of this tightening cycle. does the fed need to cause a recession? does the fed need to break the labor market in order to actually the job done? do you think time will prove out that the answer to that may have been yes? torsten: absolutely, kailey. there are people in the soft landing camp that are running victory wrap -- victory laps. i think that is premature. i think we get inflation down to 2%. let's get to having full employment and inflation at 2%, and then we can come with an evaluation, whether this exactly was a soft landing or not. another way of saying this is if the fed pivots in the easing in financial conditions, if it does create a boom in the economy, which is what you should expect, a boom in the labor market, the housing market, services, goods, why would that not in create

renewed upward pressure on inflation? in that sense so far so good. on the last trading day of 2023 it does look like so far a soft landing. but we are just not there yet, and i think that is exactly what jay powell and several fomc members have tried to tell us in the last two weeks. we are not quite there yet, so it is too early to take the champagne bottle out. even getting to the last day of the year. paul: the world interest rate probability function on the bloomberg terminal, used by a lot of people, referenced by a lot of people. i have kind of lost some confidence in this thing, but it is telling me multiple rate cuts next year. be as many as six. what is the market seeing that maybe you are not seeing, and maybe some other economists are not seeing? the market feels pretty aggressive here, pretty dovish. torsten: that's right. let's compare that to what the fed is saying. the fed is saying we will have three cuts. the last few days we have been

going up and down between six and seven cuts pressed into the market. futures have clearly been pricing in that everything is fine, we have arrived, and nothing to worry about anymore when it comes to inflation or the economy. but the key issue still here is, if all of these easing in financial conditions, if this continues into next year and there are good reasons to expect that we should expect to have a rear acceleration in economic growth. therefore the conclusion still is for macro investors that we should still continue to just hold off a little bit here before we start celebrating. it is still too early compared to some of the risks that come along with now financial conditions easing so much, because easing conditions means a booming housing market, a booming labor market, things that are at risk of creating more inflation. kailey: we have talked with you a lot now about monetary policy, but i'm usually down in them washington, where my focus is on fiscal policy. what about that side of the

equation as we get into 2024 there is going to be a huge conversation being had about spending cuts, or potentially could be a government shutdown. how much does that matter to the economy right now? torsten: that does matter a lot. this was one important reason why the economy did so well in 2023. as you have talked a lot about, we have three different proposals that are still tailwinds to the economy. these initiatives that have been in place for quite an extended period, of course the chips act, the infrastructure act, and the inflation reduction act. those are longer-term policies, but very important tailwinds, and very important reasons why the economy has done better in 2023 than what most people expected. fiscal policy in particular, those three initiatives that are working as we speak in providing a tailwinds to economic growth, of course, in every area. also chips manufacturing, and on the infrastructure area we have

seen a significant tailwinds, and that tailwind is going to continue into 2024. from that perspective it is true there is debate about whether we will get some cuts or what might happen and what might happen in november, but the reality is that the tailwind from fiscal policy in 2023 has been strong. paul: thanks so much for joining us. torsten slok is the chief economist at apollo. in the radio studio we have a wall of video monitors for all of the various cable networks, just to keep up on the news. one of them had a graphic that said one million people are going to come to times square on new year's eve. kailey: oh my god. paul: have you ever done that? kailey: i have not, and i'm not sure i ever want to. paul: i did a very early in my 10 year in new york, in the 1980's. it was fun, but it was definitely bucket list check. kailey: but was the temperature? paul: it was very cold.

it was pre-9/11, so there were like, three cops there. it was tame, relatively. the usual knuckleheads, but now it is so highly controlled by the nypd, for good reason, i guess. kailey: you have to wait out there all day. paul: we were kind of partying. got to maybe 46th street and were like, ok, saw the ball drop and said, we did that, don't have to do that again. anyway, a million people in times square for new year's eve. good luck to all of you. s&p 500 off 310 -- .3%. the nasdaq off about .7%. we'll have more coming up. this is bloomberg. ♪

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kailey: this is bloomberg markets. i'm kailey leinz alongside paul sweeney as we come to you simulcast on both bloomberg television and radio live from bloomberg's radio studio in new york city. we are closing out 2023 here, and a new year will bring many things, including a change at the top and stanley.

early in 2024 james gorman will be stepping down as ceo, being replaced by ted pickett. this is after a 14-year run has gorman at the top of the bank. sonali basak actually stepped down with him and 10 paper earlier this fall and talked about what is next for morgan stanley. take a listen. >> organizations grow because you have change. were not going to grow by doing the same thing again and again. i feel like we set this up several years ago with the board. we have had a very intentional process and we ended up with a phenomenal outcome, which is teddy, and we have other unbelievably good executives taking leadership roles as copresidents. andy and dan. it is sort of what you hope for. try and drive strategy, you try to put together a team, try and deal with the inevitable knocks you get from the market, and the disappointments that come in any complex business. but at the end of the day you

are also trying to hand it off for the next generation. it feels great and right. sonali: you have been rumored to be a ceo contender for so long. how does it feel to step into the role next year? >> morgan stanley was the first place i worked out of college, and 33 years later i'm sitting next to mr. james gordon. it is the thrill of a lifetime. i'm so excited. sonali: you have really inherited a gift, a massive transformation of her 14 years. one of the best valuations in global banking, but there are investors this -- that are worried this is as good as it gets. what do you tell them? >> there is more to come. we look at the five-year chart, the 10 year chart, the 15-year chart, the weldon asset management businesses have these durable earnings. the global investment bank has lots of miles to go, so we are thrilled about the business strategy we have in place, and it is going to continue to deliver long-term value for shareholders. sonali: we have been in such a prolonged bull market that has

had volatile times. do you expect the next couple of years for morgan stanley to be more choppy? >> i don't know. i thought this year would be tough, and it was. a lot of what is going on in the market conspires against our particular business, makes some of the more commercial retail mortgage banks a very different business model. but out-earn will come. i think the u.s. has dodged a recession. i think the fed is very close to being final, within probably 25 basis points. we are starting to see activity. look at the chevron deal. phenomenal. we are seeing activity in different sectors. his coming alive. i think the next couple of years will be good. but what i care about is over the really long run. when we set about on this journey we were not focused on a quarter. if the stock takes a dip in a quarter i would say that is good news because we are buying back stock. every show you buyback you are retiring a dividend. shareholders who hang tough and

getting a 4.5 percent yield and buying back stock in the stock is cheap, it is kind of a good situation to be in. but medium-term know, i think the firm is going to do great. sonali: what are the biggest challenges for you as you navigate this environment? >> we are in a new paradigm. interest rates are going to be higher for longer in the world has gone smaller, which means the clients need advice. he needed in the institutional space. our corporate clients. we are going to have lots of activity around those clients. i just want to make sure that we are completely aligned with the business strategy we have in place. it is something james has painstakingly put together for 14 years. the market knows what we want to do. i'm incredibly optimistic over the next couple of years. paul: that was sonali basak sitting down with morgan stanley's outgoing ceo, james gorman, and incoming ceo, ted paik.

sonali basak joins us in our studio. excellent interview. it really feels to me that this is about as good as a succession plan can go. i mean, i was deeply involved with the disney succession plan. not good. sonali: it has been messy across corporate america, but for morgan stanley this has been very orderly. you have to think back in the last decade of all of the succession races on wall street. even at morgan stanley. remember, there were a lot of people. even from john mack to now you have had a lot of talent at the top of morgan stanley. you think paul taubman, who went around and instead created his own firm at agt partners. you have greg fleming, who has created rockefeller capital management. so, there were a lot of people at the top of that firm in this succession race for years and years, but ted paik, you heard it yourself, he had worked there since college. he has long worked at the farm -- at the firm.

importantly to the previous president, so really, deeply trained in some of the things that really make morgan stanley what it is, particularly came out of the investment banking part of the world. a lot of capital markets activity. as well as institutional securities. it really as we know, morgan stanley, more recently has done a lot of its gains from its wealth management unit. in the question of what that looks like in a higher interest rate environment, james gordon had the benefit of low interest rates for the last many years. so, will this be the case that investors, wealthy clients of morgan stanley, will they be putting money to work pending on how high interest rates stay? moving out money out of cash into the markets? at what pace and how does morgan stanley put money from that business continually? kailey: this gets us to the question of more widely the environment for these big banks going forward. knowing they have been grappling with the rate environment this year that looks like it could change in the not so distant

future. also dealing with what has been, you were speaking with investment banking, a shortage of those activities. what is the picture looking like as we head into the new year? sonali: the competition is stiff. we are looking at the last working day of the year. you have goldman for the seventh year coming out on top. seven years in a row. that means in 2016 you had morgan stanley on top. how big is that disparity? look at the third quarter alone. goldman's advisory fees came up above $100 million. morgan stanley is not only came in below, for the first time ever -- you could check me on that -- but they were surpassed by evercore in the third quarter. it is the first quarter i have seen a boutique or independent investment bank as one of the top three investment banks by revenue. in advisory fees. the competition is stiff among the top three investment banks. now you have these incumbents,

centerview, evercore fighting really hard. privately what bankers tell me is, you know, they are getting a lot of competition in these boutique banks that are able to pay these bankers a lot to come on board. cannot be sustainable into next year? rate the his firms are paying top dollar to steal bankers out of the likes of goldman sachs and morgan stanley? paul: one of the more amazing stories that came to life in your world, investment banking, has been the continued growth, abd explosive growth in private credit. i always say jokingly if i were to come back on wall street as a young banker i think i would look at private credit, because so much capital is flowing there. that is business being taken away from the bigger banks. what do the jamie dimons of the world say about private credit? sonali: publicly they say private credit is a matter of higher regulation, tighter regulation on the banks, regulation we are going to see more of. then you have this reaction function, where jp morgan and other banks are really looking

at private credit partnerships. goldman is boosting its own private credit division that has been in its asset manager. you see them warming up to the private credit industry, turning around and saying, let us work with the banks. privately it looks messier. as deals start to come back there is a question on how these big banks that might be advising on these mergers and acquisitions, how they might react to the sources of financing that would come from the private credit universe. interestingly enough, even the private credit has been a booming landscape, really these mega-deals, $5 billion or so have only been seen for the first time this year, and you have warnings from rating agencies saying deals that they could pose a much bigger risk to markets. can they keep doing deals that big when the number of actual large-scale private credit players writing checks that large, paul, can really be counted on less than two hands? paul: that business has been

extraordinary, and the capital flowing there has been amazing. we have a lot of these private credit folks come in, and they say it is a booming business, very profitable, and they are taking business from the middle sized banks in particular. sonali basak, thank you so much. we appreciate. outstanding interview earlier this year with the senior management at morgan stanley. management change taking place at the highest level, as mr. gorman steps down after what i think most people would say was a very, very good run at being the ceo of morgan stanley. you will have more coming up. this is bloomberg. ♪ -ten real estate manager, we harness the power of a 360° perspective, delivering local insights and global expertise across public and private equity and debt. our experienced team and vast network uncover compelling opportunities giving our clients an exclusive advantage. principal asset management. actively invested.

paul: bloomberg markets, back with you. kailey leinz, paul sweeney. we are broadcasting on bloomberg radio and bloomberg tv. we are in the studio here cruising. i have never been on a cruise. kailey: you are missing out. paul: but, kailey, you are an average cruisee. kailey: i am a multi-time cruiser. i have been on many cruises. paul: i have never been on a cruise but i am fascinated by the economics of the cruise industry. and kind of what makes the revenue go, what is on the cost side. what makes a more or less profitable cruise. , no industry was hit more immediately from the pandemic than the cruise industry, and what i remember vividly as these

companies, literally in the earliest days, the first week going to the bond market and raising cash, because they knew their boats were not going to be sailing, they were going to be docked for who knows how long and they did not expect there would be that long, but they said, we're going to need cash. but the good news is, the cruise industry is back, baby. we spoke earlier with carnival ceo josh weinstein, talking to us and giving us the update on carnival in the cruise industries. take a listen. >> 2023, and we rapped on november 30, and the one word we like to use as a summary is record. we had record demand. record yields, record pricing, record bookings, forward bookings, record on board spending levels. really across-the-board our business has thrived in 2023, and we expect more in 2024. >> u.s. such a great gauge of how customers are feeling. but they continuing to spend? are they continuing to advance

bookings? and once they are on the ship are they continuing to spend as well? >> that is what we see. our q4 was from a pricing standpoint the highest all year. so, it is accelerating, not decelerating. when we look forward we are actually two thirds booked for all of 2024 already. >> that is nice visibility. >> it is not bad. we are about 10 points higher than we were last year, and on top of the ticket bookings we have actually started pulling forward on board spend. so we have more or less about one third of our on board spend being prepaid in advance. so we have a really good amount of visibility. those booking trends have not slowed down. every quarter this year, you know, people expected it's got to slow down, it's got to. we are going to see something, the consumers is going to get impacted. the fact is, with our business we have not seen it. it is record after record. as a matter of fact we just ended the two weeks of cyber

monday and black friday at more records. and it is not just coming from one brand. it is not coming from the united states. it is global. it is with our global portfolio, which is really encouraging. >> good morning. you think we are moving from many ceos similar to yourself that run global lines and businesses have said, we have lived through a period of reprints tourism, we were all locked up? we had this parabolic reopening and you had a parabolic rebooking. we evolving into some kind of new cycle? you said there is no end in sight in this demand, so if we have ended revenge tourism, i do you describe the next evolution? >> that is a great question. we don't think this is revenge. it is two years on from when we got back in full as a corporation. this is people who have decided what is meaningful for them. how do i want to spend my life and -- and experiences are what they are looking for.

unforgettable memories and creation with friends and family. that is exactly what cruising has to offer. >> i sat down with the accor ceo and he said i haven't got enough hotel rooms and high-end staff to help me run this business. which takes me to the cruise is the high end hotel, but to what extent are those packages off-ship and on-sure, those additional spins? are they critically important to the expansion and turnaround from the loss you have had? do they add incrementally or significantly? >> meeting about our business we are different than from when you're looking at hotel companies. i'm staying in a hotel in new york, and i will tell you the service is not very good. we have learned how to live with that as a society. we should not. the cruise industry, our brands did not deviate from surface level. our guests have high expectations and we aim to exceed them. we do not close off floors.

we do not shut areas down. do not skimp on the services we used to offer. it is full steam ahead, and that is what people expect. that is what they are willing to pay for. that is what we are seeing. >> that was josh weinstein, the ceo of carnival cruise lines -- talking about the real demand. it might not be coming from paul sweeney, but clearly people are taking advantage of the all-inclusive drink packages. >> charlie pellett is a big cruiser. kailey: i think more people should be. i have not been on a cruise post-pandemic. all of my cruising was pre-coven and i have not seized on that part of the ridge finch -- the revenge travel yet. joining us now is the points guy, brian kelly. very nice to have him on the program. ryan, obviously we are coming out of the holiday travel season for 2023, we are coming out of 2023 as a whole, and when you're looking ahead to 2024 how much is that travel demand going to

be resilient? the ceo of carnival suggested this is no longer revenge travel that we are seeing, but that is over and demand is sticking around. how do you see it? brian: i see at the same. revenge travel was people were paying ridiculous amounts of money to go to miami. and i think now consumers are much more screaming at them. they want better experiences, so we are seeing a big shift into adventure travel. on hotels.com, pulled in a bunch of data recent. people are looking to stay at really unique accommodations and going to morocco and staying in riyadh. i think consumers are spending, they just don't want to get stuck in that pandemic habit of overpaying for moderate hotels. paul: so, brian, we just heard the ceo, josh weinstein, the ceo of carnival mentioning he was in

a new york hotel and not having a great experience. some of the services maybe have been cut back. initially when things were opening back up hotels would say, we are not going to make your room everyday, we will make it once every two or three days. we did see some service issues as that industry did try to get back on its feet. where are we in terms of the hotel industry and staffing and service levels? are we back to pre-pandemic levels? brian: we are not a pre-pandemic levels. in the mid tier they took the pandemic as an opportunity to rollback room service, cleaning. you kind of still have to argue at some of those midtier properties to get those same perks back. i think on the luxury side of things the luxury hotels are now competing like never before. i think the service levels are back. at the high-end of the spectrum. but in general a lot of hotel chains took this as an opportunity to cost cut in the name of safety. and then really take it back to where it was. kailey: you talk about the

high-end of the spectrum. what is the difference between the luxury tourism and travel now and those seeking deals? are they are still good deals to be found? and where are they? brian: there are good deals. airfare has come down. there is a positive outlook for travelers in 2024. the budget airlines are actually struggling because the consumers are spending on these bespoke experiences and spending first in business class. i don't know if any of you looked at flights to europe this past summer, but i was absolutely shocked. $8,000 to go to paris from the u.s. so the airlines are making a fortune. united has a big that on the pacific. they just launched a new route to christchurch new zealand they are seeing strong bookings. asia is not quite back to where it was, but increasing dramatically. so gains in travel i think our international and luxury. jetblues and spirits of the

world have a less rosy outlook. your question of where to find the deals? google flights. google.com/flights. that is where travel experts go to search airfare. they have a feature called explore. it will say flights, click explore. you can type in new york, say, caribbean. say you want to go for a week in march, you can basically reverse engineer. this is what i'm telling people. there are deals out there, you just need to know where they are. you can see where the cheap flights are. that is how you find comparison these days. kailey: you have me on google flights right now. paul: i will take over. my personal flying policy these days is i only fly when i get paid to fly, with a couple of exceptions coming up. where is the airline industry in terms of capacity today? can they handle these record flights and record number of flyers we are seeing? that includes the whole tsa folks. it is our system these days? brian: you are reminding me of

naomi campbell. you only get out of bed for $10,000 or more. i like that. capacity is an issue. there still are strings on air traffic. the faa opened up new lanes along the east coast to allow more planes to fly, but our airports are congested, especially in new york. and while there are some renovations going on at jfk and some of our nation's biggest airports, it is not really going to create the capacity we need. there are issues, airlines cannot just expand and add tons of new routes, especially to places like london. we have seen jeff lu try to expand to amsterdam and london. they are getting a second-tier airport. these airlines are struggling to grow, and running into a lot of challenges. so, they need to figure out how to maximize the revenue up what they have today, and that is why we have seen airlines charge a premium. and customers are paying for first class. 10 years ago 80% of first class

seats were given to elite members for free. now it is flipped. 80% of people are buying first class and 20% are going to elite travelers. so, the airlines are doing whatever they can to maximize everything on board they have today. kailey: i recently went to europe, and to your point, the actual business class tickets where you get the flat seats and everything were wildly expensive. i did premium economy for the first time. paul: how is that? kailey: pretty nice. it definitely made a difference. paul: i couldn't do that. please. kailey: ok, not for everybody. hafnium google flights now. $67 round-trip, new york to miami on frontier. paul: ok. kailey: maybe paul would not be flying frontier. you were talking about how airlines were able to maximize that stuff, getting people to play -- to pay for first class. that brings me to lounges. it feels like everybody gets to get in the lounge now and they are starting to pull every thing back.

how much more restriction in that are we going to see? brian: the airlines need to make more money out of what they have today. adding tons of new planes and routes, they cannot even buy new planes. there are backlogs. what they are doing is turning to loyalty. all of the major airlines, they are making billions from their credit card partnerships and they are doubling down. so what we are seeing now in terms of lounge access, you know, delta really is pulling back next year and especially in 2025. american express platinum, used to be able to use that to get into delta lounges. now they are making you spend at least $75,000 on the card to get a park that used to be for free. so, it is brilliant business when you think about it, because every time you use a credit card that airline is making money. so they need to figure out how to take their customers that fly a couple times a year and get a piece of their spend every single day. that is the trend. these frequent fire -- frequent

flyer programs are now frequent buyer programs. paul: what is a wellness resort? it doesn't sound like something that is down my alley. brian: yeah, yoga, and milwaukee hall. actually, some of them have alcohol. miraval. but, you know, that definitely is a trend. people wanting to escape and focus on wellness. paul: i like the escape part. i'm not sure about the wellness. you very much. brian kelly is the points guy. we always learn something every time we speak to brian. he is the founder and ceo of the points guy. if you are good at it -- and my daughter, who is very good about maximizing value on points and getting deals and getting all of the place, why is barcelona the place where the kids go? kailey: clubs. paul: clubs? don't we have clubs in new york? kailey: tapas and fruit. paul: every late 20's person i

spoke to, barcelona. kailey: it is the hot place. paul: it feels like it is the paris of my generation. paris was the exotic european place to go. maybe now it is barcelona. anyway, the points guy. kailey: you can take a cruise to barcelona, you know. paul: s&p 500, we are trading off today. we are mixed right at the opening, but the s&p is off by about .5%. the nasdaq off by almost .9%. the russell, which had been outperforming, it is off 1.3%. you will have more coming up. this is bloomberg. ♪ ♪

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kailey: welcome back to bloomberg markets. i'm kailey leinz alongside paul sweeney, simulcasting today as we round out the year, 2023. it is indeed the last trading day of the year. of course 2024 is going to be a doozy. for many reasons.

there is a lot of questions for financial markets, but a big one surrounds political risk. 2024 is an election year. there has been some developments that pertain to the election cycle. main overnight, the secretary of state ruling that donald trump should not be on the primary republican ballot in that state on the grounds of the 14th amendment. very similar to the decision out of the colorado state supreme court that also ruled against trump in that area. it all comes down to his actions on january 6 and that idea that he engaged in an insurrection. what the reality around all of this is murky. luckily for us we have legal expert david westin with us here in our radio studio. i know you have looked at this case, i have spoken with people who have said if you read the text all it says is engaged in insurrection or rebellion and you don't have to be charged with it, even found guilty for this to be used against you. what is your read on this? brian: as --

david: as you know in law it is not what the language says, but who gets to decide. who determines that? this is a fairly important question. who gets to run for president of the united states? sure, the language is clear to some people. clearly what donald trump did was engage in conduct that is prohibited. different people have a different point of view. are we going to leave it up to a democrat who is the secretary of state to decide? that is the issue, who gets to decide? paul: it feels like the supreme court is going to have to decide . is there a sense of, is this something the supreme court will have to deal with? if so, when? david: first of all, the supreme court doesn't have to deal with anything. they have discretion. i would be surprised if they punted on this one. it is too important and we have the colorado decision, of the colorado supreme court that

keeps donald trump off of the ballot. i would be surprised to see the supreme court decide they are not going to take the case up. there is also a conflict in the lower courts, which usually triggers review. more than likely we will hear from the supreme court on this subject. kailey: you have first-hand experience with the supreme court. you clerked in the supreme court early in your career. how much awareness is there inside in that institution of the political implications of the rulings they are making checkup knowing that there is a way to read legal text and in theory this is supposed to be done in a vacuum, but these are people. can you bring us inside on consequential decisions like this? david: on the one hand they are appointed till life, which gives them some immunity. they don't have to worry about elections. it is a fairly insular place. it is a small place inside those marble halls. it is just the clerks and messengers and some support staff and the justices themselves. they do read the newspapers.

do watch the news. they know what is going on and they are aware of the political consequences. the question is, what did they do with that? and i there -- which it was a long time ago -- they took a great deal of pride in saying, we are the court, we are not influenced by politics. you can ignore it. let's be honest, the supreme court has dealt with very highly-politically charged issues before, including back to richard nixon and the nixon tapes. we had a more recently in bushby gore in 2000. -- bush versus gore in 2000. paul: going back to the timing, is that there decision? and if so -- it feels like some experts are telling me this needs to happen in the very early part of january. ideally. david: first of all, they are not going to get rushed. more than likely people will for expedited review.

go back to u.s. versus nixon. that was decided over summer, and they decided in late july. bush versus gore, by supreme court standards it was very fast. it was a matter of a month. we may not think that is fast, but they will take it up fast enough. leave me, the parties will make it clear to the court what the timing is and why it is important for them to decide something fairly quickly. kailey: obviously there is a lot to come in 2024 in the political universe, but there is more expected in their financial universe. this is a market adding the fed is going to be aggressively cutting interest rates in 2024. that surely is going to factor into the election, as so much is about the economy in some form. i know this is a conversation you are having the flurry summers earlier today, the idea of, what exactly the fed is likely to do. maybe the market mispricing them. it's take a listen to what mr. summers had to say. larry: basically got an outcome that was closer to team

transitory's prediction. inflation came down. in policy, that is what their opponents were insisting on. interest rates far beyond what they were recommending, far beyond what the fed was predicting as of almost any date in the recent past. so, the record is a bit ambiguous. i'm not sure we are a 2% target inflation country in any durable sense. kailey: he thinks the market is underestimating the inflation risk still out there. what about the growth risks? knowing 2023 was a year that many said the recession is coming, softening is going to come, and yet we have not actually seen that materialize. david: one of the starting point is how modest we should be about hours per -- our ability to predict anything. the fed did not predict they would end up here. the markets did not predict we would end up here. 2020 three was full of surprises, including for larry summers.

and he admits that team transitory, as he calls it, their predictions were closer to right than he would have expected. he says it is because what the fed did was more aggressive. we have to be modest about what you expect. he still sees a fairly balanced risk -- and this may be surprising -- between recession and inflation getting out of control. paul krugman has criticized larry on this. paul krugman says, our biggest risk is in session, not inflation. larry thinks there is still a significant risk, not least because of the anticipation of the fed cutting and what that has done to the stock market. he said that really brings inflation possibility back into play. paul: does larry summers think that the recession is still on the table? if so, is that a front burner or back burner type of thing? david: he says it is too soon to tell. he does not see us on a trajectory to 2% inflation right now. which raises questions for the federal reserve. he is not predicting recession.

he is just saying it is a more symmetrical risk between inflation and recession and we had before. because he does not think we have conquered inflation quite yet. kailey: i'm sure we will hear more of this conversation with larry summers tonight on "wall street week," which airs 6:00 p.m. wall street 10. how else are you looking ahead to 2024? david: we have to talk about china, given what we anticipate in 2024. we have mary lovely, who knows this backwards and forwards, was in china talking with economic officials there. china has rebounded, but there is what she calls a malaise, particularly in investment and consumers, and goodness knows in foreign direct investment. one of the things that happened in 2023 was that attack by hamas on israel and the war that ensued. that has exploded and a lot of places in the world, and on college campuses. have on scott bock of greenhill,

who until recently was the resident of the trustees at the university of pennsylvania. you recall that mark rowen demand he resigned. he did end up resigning. we have him on to explain what went on inside penn, and why did he step down, ultimately? paul: there is still pressure on the president of harvard at the moment. have not seen any change there, but that is amazing. he reminds me of the late 1960's and the unrest on college campuses, administrations and leadership under pressure from lots of different parties. then it was the students. now it seems like it is the alumni. david: it is interesting you say that because that is one of the analogies or contrasts scott bock draws. he says this is not as bad as it was in the 1960's. either way, i went to college during the 1970's. [laughter] this is true. it was really widespread at college campuses, like the university of michigan where i was. he said this is a relatively few

number of students and faculty members involved, and he said we have had it so quiet for so wrong we are overreacting now. let's not overreact, because it is a relatively few people and we just don't know whether this is going to end up. he said this is not like the 1960's and 1970's, in his view. paul: "wall street week," one of the iconic brands in financial broadcast journalism. it was the go to place, and now david is reviving it and has great guests. david westin, thanks so much for joining us here on our bloomberg radio studio. s&p 500 off .5%. nasdaq off about .75%. yields coming in a little bit. wti crude oil pretty steady here, $71.65 a barrel. we are going to have more coming up. this is bloomberg. ♪

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paul: welcome back to bloomberg markets. caroline hyde is here and we have her for the next two hours. ready to start her new year. looking at these markets, it is interesting, a little bit of a selloff it is so friday and the last day of the year. but boy, what the year it has been. caroline: a record couple of months for the bond market. stocks were at a record high, this is the first time it will see the nasdaq down 5.5% on the s&p 500. it is still clinging to gains but not so much for the tech

stocks. 10-year gilts is flat, 3.85. it's been a complete round trip for the year. paul: why do we even do this? caroline: there was lots of money to be made and lost within that year and both taken to crypto and both taken to crypto in a little bit. just to tie up this year and about in the stocks that have been on a tear this year that have driven us higher in the tech space. a bit of a doubt squib on friday. abigail: nvidia more than 240%, met up, tesla double-digit gains. here we have the final friday and you have the bears taking it. there is a bearish pattern that started to form last year called

the diamond top. it's morphed into a different pattern but we don't know if it's going to confirm but i'm not surprised by today selling. if the pattern is to work we will have selling actions next thursday, friday. here we have it in these big tech names, the top eight big laggards for the s&p 500 all down 1.5% or more. this time last year everything was in the doldrums, we did have a santa claus rally. the last five trading years in the first two were up and there is a january, february calculation there is a big rally. last year people didn't make much of it.

but there is a santa claus rally but of today selling action we are up over the past three days. it will be interesting to see how the first two trading dates open. paul: one of the aspects of this rally has been the first nine months of the year there was poor breath in the market. but we have seen that fan out? abigail: the small caps were down on the year. abercrombie & fitch has risen even more than nvidia which is incredible for a retailer. small caps of 70%.

from a sector standpoint, utilities are down 11%. energy is down 5% and consumer staples down 2.4%. two defensive sectors are down and then health care up slightly, real estate and materials and make it tech sectors are up 41% or more. that seems absolutely ridiculous but more sectors are higher. if you looked at the section factor a few months ago you would've only seen those three sections. caroline: let's keep the conversation going with the santa claus rally. we have christina hooper joining us, chief market strategist at invesco. it's always good to have your voice.

christina: what i would anticipate is as we head into 2024 were likely to see markets discount and a re-acceleration in the back half of 24 which should benefit small caps and the most. we've already seen a preview of that rate -- late in 2023. markets. the early part of 2020 four is likely to be positive. there is still some confusion around fed policy given the fed does protest too much. caroline: will dig into where the fed is going to go. will they cut as much of the market thinks it well?

kristina: i think the ultimate will. i think their goal is to tamp down in easing the financial conditions. that is why they see only 75 basis points this year and the hawkish language we've heard recently. i think we will see anywhere between 100-150 and cuts. because where monetary policy is is quite restrictive. paul: i found a juicy nugget in your equities outlook, we see potential in the emerging markets. kristina: emerging markets are likely to perform well. historically they have when the dollar has we are seeing that.

i think it will continue in 2024. emerging markets are well-positioned. we saw some emerging markets central banks pockmarked quickly so they are in a better place of stabilizing monetary policy. we are likely to see asia em perform quite well this year and that is going to be one of the key stories of 2024. paul: i like that one. i'll circle back to that. i look at my bloomberg index browser which allows me to see total returns of fixed income and the good news, they have positive returns of 2023 verses brutally negative returns in 2022. what is your fixed income outlook after 2023? kristina: investors went through a lot of pain in 2022 and sought

a better environment in 2023. fixed income is well, yields are higher. my expectation is that investment grade bonds are going to be an area of particular opportunity. i don't anticipate a soft landing as much as a bumpy landing and i think the sweet spot for the economy will be investment grade corporate's. also excited about emerging markets. we want more waiting into emerging markets. in terms of duration, longer duration. we think going on this important. ultimately, when we look at past cycles it has been a good time to go long duration. caroline: one interesting point is alternative assets.

within their, commercial real estate. you like it? why and what part? kristina: commercial real estate covers a large territory. office spaces only a relatively small portion of the commercial real estate picture. even with an office space we have seen the worst in terms of occupancies. the key is that rates are coming down and that has played such an outsized role in pricing for real estate. i think 2024 represents opportunity for commercial real estate if it comes down, it could be an attractive environment. paul: discussing emerging-markets it makes me

think of china. it was a disappointing story for most investors in 2023. the economy did not rebound us much as people thought. how do you view china in 2024? kristina: china is an interesting investment landscape because there was some level of disappointment in 2023. the economy had a nice reopening but not as strong as many anticipated. if we were to dive down, services did a lot better than manufacturing and i would argue manufacturing disappointment was largely about decrease global demand. there were issues and i think they were largely around consumer sentiment and china. a view that there was a need for more stimulus.

we have seen in the back half of 2023, a rollout of policy that has been quite targeted. if we see a continuation of targeted stimulative policies coming from china it could be quite a good year for consumer spending. caroline: if we think about this time last year, we thought china was going to do well. we thought the u.s. would dip into recession. what out of all of this viewpoint in terms of reaffirming and china, what are the risks to that? kristina: i think the greatest risk facing investors is that we see a hard landing for the economy. i would assign that a low probability, but i do believe when you have an incredibly ingressive monetary policy, that

is the single biggest risk. that could take down the stock market that has a very different expectation for the economy. i would say that is a very low risk. in terms of which markets are going you perform better than others, i think because we are going to see that weakening of the u.s. dollar and i have a lot of conviction and not call, that should bode well for economies outside the u.s.. i think there are other factors at play as well. at the end of the day, we can be wrong when it comes to tactical allocations. thus the importance of being well diversified. paul: thank you so much for joining us. we are smarter after spending time with you. she is one of the best, covers everything with a nice, clear

opinion on so many asset classes and ties it all together. i always feel smarter after chatting with kristina. caroline: i'm also glad she got our hair memo, we are coordinated. paul: looking at these markets here, the last trading day of the year. it does not look like we're gonna hit the all-time high today. s&p 500 off about .5 and nasdaq off .8 in the russell three point 1%. but that has been a positive story, the russell are performing s&p. that's a good sign as to the health of the underlying market to see greater participation in small-cap stocks. we will have more coming up, this is bloomberg. ♪

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paul: welcome back to bloomberg markets, caroline hyde and paul sweeney we are simulcasting live from her headquarters in new york city. looking back at 20 23, geopolitics was front and center. first the ukraine and now the middle east flaring up again. you have to factor that into your investment outlook. that is why we are happy to speak with whitney schuller. professor, thank you for joining us. i want to start on the domestic political front. there are a lot of states questioning whether former president trump can even be on the ballot. what do you make of what is happening here with some of the states? >> we have had colorado and the supreme court rule and main in

the secretary of state and the issue is did donald trump commit insurrection and citing january 6 riots but also trying to undermine and change the electoral results in 2020 with the electors schemes and all the claims that were thrown out. but he was never convicted of insurrection which is an important part of the 14th amendment. if you took up arms against the united states you were considered and insurrectionist. but jack smith is not charging him with insurrection. it is a wide application of the 14th amendment were someone who has not been convicted in a court of law of insurrection. caroline: does it set the stage for a constitutional showdown?

does this go to the supreme court? >> the supreme court does have to decide, the colorado decision is a path. this is the state question. what gets on the ballot is time, manner and place. we don't have massive federal law on ballot access. the supreme court has to decide are we going to planted, this is a state matter. or will they say, this is a misapplication of the provision of the 14th amendment and get involved. now that there is a second state involved i think more pressure will build on them to hear the colorado case. caroline: meanwhile many anticipate he is the front runner and he will be against

president biden. president biden has taken to the airwaves talking about a russian attack against ukraine. all of this while president biden tries to take on support for further aid to ukraine and israel. how much is thought likely to be passed in taking up the headspace of the administration at the moment? wendy: the deadline for refunding the government on january 19 and february 2. the house of representatives is a place to watch. mike johnson from louisiana thinking about the speaker, thinking about whether the caucus can hold together. there is a strong opposition on

behalf of ukraine. there is only 14 billion up for israel. democrats will have to come to the rescue. israel has become very controversial for democrats. the appetite for sending more money to oversee countries while fighting about cutting the u.s. budget, that is an incredible bay until walk for a speaker in a divided caucus. paul: one of the strategies is to tighten any aid to ukraine and israel to border security and border policy. what is the status of that? wendy: that is a win for the biden administration. if they are forced to accept more aid to reinforce the border that means they will reinforce the border and diminish the

vibration happening which is a soft spot. if he has to compromise it is something that is in his favor because it insulates him on charges at the border. we saw the secretary of state go to mexico to find out how mexico can help with the border. he realizes this is important going into the election. there is a balance between worrying about ukraine and israel and the order. i think it is a gift he will happily accept. paul: and when our friends in washington come back to work, they have a big to do list. at the top of the list is keeping this government opened and funded? but we just kick the can down the road? wendy: because of the debt ceiling negotiations it's difficult to kick the can down the road.

bigger cuts will happen in the summer which is closer to november elections. the problem for republicans is that donald trump may very well win the iowa caucus and then he is propelled into the new hampshire primary. he will be the spokesperson for the republican party. for some people that's fantastic and other people is chaos. if the republicans don't keep the government opened that's further chaos. that is what the democrats are counting on to push republicans to prevent any long-term shutdown. caroline: this takes us full circle to the election of 2024 in the front runner for republicans. nikki haley is getting some momentum but with an unforced

error, is she unlikely to win out? wendy: we have to look at iowa. trump is such a big lead in iowa , does it transfer into a win? if there is actually momentum. if desantis or nikki haley get 30% of the vote, that shows vulnerability for trump. in new hampshire, if she doesn't win but comes in a close second. then it is less certain that the party goes the way of trump. that is the big thing to watch in the next few weeks. nikki haley's remark shows the divide in the party. florida on the issue of revisiting slavery, discrimination, the legacy of the country. there is an appetite to move on

from that but the independent and suburban voters that can cross over and vote in primaries, they are uncomfortable with abandoning that and they don't like that side of the republican party. she is caught strategically in a difficult place in who she appeals to. paul: there are a lot of topics and i think we will be talking to you often as we think about domestic politics and an election year. wendy schiller, a professor at brown university. there is a lot of ground to cover in that discussion. caroline: we will keep an eye on what this means for the markets. we have been talking time and time again but we think about m&a, all of these are at the behest of the election. after the election they will probably slam shut. paul: it puts pressure on

companies and banks and markets to get a lot done in the first half of the year. we have heard a lot about ipo backlog on the street, a lot of them in a backlog. they think 2024 could be better with capital raising m&a, but not in the context of a general election in the back half of the year. caroline: it does way on an

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>> welcome to bloomberg markets live in our interactive brokers studio streaming, simulcasting, doing all that everywhere. looking at the markets, little set off today, not much on a friday before the holidays. s&p 500 off 610. nasdaq off 9%. the russell pretty closely over the past few months has been outperforming off 1.3% today. the fix at third -- the vix right at 13. yields higher on the tenure. gold a little higher 2060 six dollars to the ounce. wti crude oil a little higher, $72.14. a little selloff in equities today. caroline: mirrored in the crypto

market, off by 1.5% on bitcoin with profit-taking after some rally we have seen. a lot of the rally was sparked by optimism around spot bitcoin etf being signed off in early january. that's just one of the key dates outlined in a great piece we will dig into now. the key 2024 dates to get your personal finances in order. claire valentine, it's a great piece. let's start on what comes first. december 31 is when you need to get your tax harvesting done. january 8, 10, is that when an etf could be signed off? why is that important to a retail investor? >> this is important for the bitcoin industry and markets in general. a bitcoin etf has been in the works for a long time. bloomberg intelligence analysts think it will finally come around january 8-10 based on when the sec delivers of the ruling. that is big for retail and

everyday people because it makes it easier to invest in bitcoin. maybe if you thought about investing but it seems hard to set up a one u -- to use one of those crypto platforms, this could make it easier. caroline: january 8, 10, 1 to keep an eye on. meanwhile we have a little focus on taxation. january 16 is a tax deadline for the self-employed. take us to the eminent date, sunday, by which you have to get your own tax harvesting in order. what can we do in the next couple days? claire: this is for people taking an active role in their brokerage account. tax loss harvesting involves selling a security that has taken a loss of this year and replacing it with a similar one to maintain similar exposure. basically harvesting or booking the loss when you sell between now and december 31 could potentially lower your total taxable income. paul: i got that phone call last

tax year, for the first time of my life from my financial advisor. we need to get tax losses here. i had some gains we this year i did not get the phone call. so far so good. fed meetings come. this year will be presumably the fed watching for rate cuts. how do you think about that? claire: big dates, the first january 30-31. after that, there is one mid-march and at the end of april. those are really critical. to see what the fed does. hopefully rate cuts for your the market is hoping for that. they will be big dates for the financial industry as a whole. paul: i am looking at ira. i have been a big proponent of maxing out your ira. my kids in the workforce all max out. if i have done one thing right for my children it's to get that into their heads. now i have to start thinking

about how to manage the ira. talk about the dates. claire: april 1 is the deadline for withdrawing from an ira, called the required minimum distributions. it is when you turn either 71 north -- 72 or 73. they bumped it to 73 recently but there is some wonky stuff if you are around that age. basically you have to start taking money out by the time you are that age. importantly for people that maybe have not contributed as much to their retirement accounts as they hoped for, you have until april 15 to do that for this calendar year. you get a little extra grace before tax day in april. caroline: they max out 6.5 thousand, right? meanwhile if you are weighed down by student loans you had a reprieve the last few years. now that is coming to an end. there have been changes as well coming from the biden administration. tell us, if you are a student loan debtor, what are the key

dates? >> this could be a big year for student loans if some of the reforms from the biden administration go through. upon the calendar, at least now, and this could all change with the political wind changing, there will be new student loan rules in july. it could reduce monthly payments for people. right now, monthly payments are 10% of income above 225% of the poverty line. basically that helps make sure you are not paying more than you can based on your income. caroline: in the income it is all -- u.k. it is all completely means tested and it's mind-boggling that that is not the same. claire: here the biden administration will reduce that 5% of your income. theoretically that will cut student loan bills for a lot of people and that is what he helpful. that said, the downside is coming in september 30 the

leniency for making student loan payments ends. basically, required monthly payments start back up around october 1 of this year. the biden administration allowed a one-year leniency program. that meant people that did not make those payments were not reported to credit agencies and did not have the worst effects. that will be over september 30. caroline: brace yourself. paul: one of the many reasons i like having claire ballentine in the studio, top of the list, she is a duke university frederick. too many uva and unc folks. that's one of the many reasons we like claire ballentine with a great story on personal finance on the terminal. you have to talk about residential real estate and real estate in general because for many americans their home is their biggest asset. boy, we have had really high interest rates, a real shock to the system. now right or coming back down.

what is it mean for residential real estate? selma help joins us, a chief economist at corelogic. thank you for joining us. the key question for me is affordability. that is really a challenge for many folks out there. talk about where we are. selma: we are definitely seeing a lot of improvement in terms of and for that -- affordability simply because you are paying much more on the cost of home ownership, it is much more when declining mortgage rates. when mortgage rates were over 8% , with a decline at now to 6.6% over the last week, you are looking at savings of about $300 on a $500,000 mortgage. so, the more expensive the mortgage, the more savings you have. the issue these days is in terms of affordability, even when mortgage rates come down, it is

difficult in may ways to get a mortgage unless you are very credit worthy and you are also competing against people that have cash or are coming down with large cash down payments. there are many aspects to affordability. it's not just mortgage rates at the moment. paul: right. i am thinking that the key issue in the real estate market is nobody wants to move out of their house and therefore there is no existing home sales or they are very low. if you want a home you have to look for a new one. is there a mortgage rates, do you think, that would be a clearing rate where it would entice sellers to sell and buyers to buy? can you get a sense of appearing right? selma: that is a million dollar question this year. everybody is asking at what point people will give up that inventory. there have been some surveys out that show 5.5% seems to be the magic rate.

it's really difficult to say that would actually happen, at least for sellers. because, the meaty -- the median rate is about 3.8%. people are still locked into that rate. they bought, probably, before home prices have gone up some 40%. when you think about how much appreciation we have had over the last few years it's been 40%. that's a lot to consider. it's not just mortgage rates you are giving up. you are also giving up the much lower cost of a home. so, that is what i think will keep people for a little while. caroline: what's sentiment like right now? coming to consumers out there think it's a decent time to buy? >> not many. sentiment has been in decline, at least, until we will see what happens next month or two with the decline we saw over the last

couple weeks. i think that will improve sentiment. the other thing is we are going into the spring homebuying season and that tends to see better sentiment. people can come out in a spring home buying season. last year mortgage rates peaked in november then declined coming into the spring home buying season. we had a really good season, at least, in terms of how many buyers came out. the problem was sellers did not come out so we saw a lot of home price appreciation. it may happen again this year. we will see more buyers than sellers and it will put pressure on home prices. that tends to challenge affordability again. paul: i know one of the challenges out there is homebuilder building company stocks have ripped in 2023, doing really well because of how much demand is out there. but i am wondering, what are they building? the next mcmansion around the corner, or starter homes that young people need to get into the market?

do we have a sense of wedding -- what is coming onto the market with new construction? selma: it seems like they are moving towards more traditional smaller homes. in the data recently the size of a home declined by some 10% for 2020 versus 2023. they are building's nejra -- smaller homes to adjust to her buyers are at the moment. caroline: while consumers feel like it's not a good time to buy, there are people sitting pretty that have looked at the value of their home equity and probably felt more boyette with a stride -- boyette with stride in their step. who are those people benefiting the most lately? selma: at corelogic we do a home equity report every quarter. in the last report we saw home equity increased to about $304,000 on average for mortgage

borrowers. that means across the country on average people have over $300,000 in equity. that is much larger in more expensive markets and markets that have seen more appreciation over time. one market that leads, one state that leads, is hawaii. that is over $600,000 on average in equity fund by california with about 580 sounder dollars. -- $580,000. particularly california, or washington state, those are also the markets where we see a lot of migration from. those folks not only have higher incomes, but more cash saved. so, that actually tends to feed into more price appreciation in other markets they are moving to. paul: selma, interesting development. a bill introduced in the house and senate would prevent hedge

funds from owning single-family houses in the united states. from your perspective, how prevalent has wall street and institutional investors been in it by my up residential real estate over the last several years? selma: more so during the pandemic. before the pandemic we saw about 18% of single-family homes bought by investors. that share increased to about 28% at the peak of the pandemic and remained there. the reason is, overall sales are up the so as does are up. -- overall sales are up, so as a share it remains elevated. it's mostly small and medium investors. large institutional investors that we are worried about comprised a pretty small share of overall purchases of single-family homes. caroline: it's great to have you chief economist at corelogic selma hepp joining us with all things real estate whether it is

hedge fund investors or mere mortals trying to buy a home. it impacts consumer sentiment. the five point 5% number keeps coming back. paul: it seems to be what folks feel like might be a clearing rate. i suspect we will get there sooner rather than later, at least based on discussions i've had with my mortgage guy. we will see. caroline: not that you are looking at refinancing? paul: i might be too aggressive. caroline: 6%, pretty painful. meanwhile, what hedge funds have been up to end of the venture capital within them. 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 paul: we are back. of with caroline hyde and paul sweeney simulcasting on radio and television. we are at the bloomberg radio studio. it's a phenomenal studio. thank you for that. my tiger global is not the type

of global of what is happening these days. mine was kind of julia roberts and and that kind of stuff. these are tiger cubs. there is movement going on with the folks at tiger global managements. sonali basak covers all things wall street and is on top of this. talk about what is going on at one of the bigger more well-known hedge funds out there, tiger global. sonali: remember, tiger global was once a $100 billion found in 20 21 -- fund in 2021 and they pushed heavily into private investments. hedge funds are known for creating, liquid assets, stocks, bonds, commodities, with leverage. now chase call tiger global have really done add scale with many others like liens, lianne maverick, what they have done is pushed so far into the private investment world. tiger global is really a behemoth in that world and you really saw a lot of those that

start to sour in recent years. what has that lead to? assets at tiger dropping down to 50 billion as of september 30, as of today's losses and evaluation cuts and a lot of its private investment portfolio. remember it pushed into more than 750 different startups since they began doing this. remember, they had come over 20 years, they had really solid wagers. bytedance, jd, other high flyers across the world of venture capital that became massive tech firms. the boom times over the last couple years post a large issue and now you have chase coleman, a tiger cub, ahead of the firm, really looking to turn that ship around. caroline: it's ironic. basically boom companies like tiger global are becoming these crossover investors coming in

writing enormous checks. they then did elevate valuations. that came crashing down when rates started to go up. what does chase coleman coming back to helm the vcr mean for investors? sonali: it's a big issue over the last couple years. remember, this went from $100 billion to $50 billion, this firm. scott schleifer was a senior executive at tiger global leading the charge in many ways. you even had chase coleman say scott really helped.

matter we should also say that tiger global has not where the venture investors land control of that. paul: from the reporting, it looks to me like tiger did the absolute right things structuring the business. they kept their venture business that has long-term sticky capital separate from their hedge fund and long only funds

that can be withdrawals quarterly or something. the only thing that is happening here is mark to market risk. everybody on wall street marking down 20 five. sonali: fine, may, sort of. what you are saying makes sense. you have to recognize that for many years, even heading into boom times, a lot of hedge fund investors were saying, do these guys know what they are doing? they are traditional hedge fund investors. should they play with private assets? i've equity and venture capital have different risks profile. in 2008 there was another flavor of a similar situation with a lot of hedge funds getting into illiquid assets and they were stuck with those when the market turns. it was not that severe this time. some of the markdowns are incredible. paul: i know. sonali: 90%-90% on some startups they bought that they have had to markdown. perhaps the structure was cleaner than pre-2008 hedge

funds doing illiquid investing, but there are still many questions about whether these are the right investors in that industry. you have a lot of traditional vcs that were all complaining that hedge funds are getting in driving up prices. paul: i remember that. sonali: i want to say there has not been warning signs heading into this last phase of the bubble. certainly people were concerned about the way the hedge funds have been crossing over. now, this leaves more existential problems. we were talking to him weinstein yesterday. the problem the firms have not been able to meet the high watermark over the last two years, and, yes, this year has been better for many of the firms, but the last two years were so bad that the one goodyear is not really making up for the bad here. the management fees are on smaller assets. there was less money to go around to higher star talent. this was the firm that has outbid everybody. >> they outbid them on

investment and talent. it is interesting that now they are looking for liquidity in the secondary market. we have been talking a lot about how the secondary market might be active in 2024. the ipo window does not seem completely set to open. mna is limited given regulatory oversight. you have been looking at mna winners this year. give us a snapshot of the deals that could not -- that could get done that were not cap botched, what companies did well. sonali: we used to talk about the tech industry being exciting and helping investment banks. but this year think about the top two or three deals. energy. exxonmobil, chevron, and has. that has been a big boon for goldman sachs. goldman sachs tried to build up its practices and it did around alternative energy. but in that time, in those times of hibernation, they held strong to their traditional energy

practices as well and that put them on two of the largest deals of this year, exxon and chevron. by the way, the chevron hess deal david solomon the ceo of goldman sachs was on himself. that made goldman the number one advisor on mergers and acquisitions by focusing on this out of fashion industry for a long time making them the number one advisor in mergers for the seventh year in a row. paul: i am a league table person. what i found really exciting gives we have two boutique firms, centerview and evercore in your top 10 list at number six and seven beating ubs and barclays. sonali: it is incredible, this rise. credit suisse used to be a top 10 firm day in day out. now credit suisse is no longer on the market and ubs absorbed

credit suisse. they have fallen down to number nine on the league tables. centerview and evercore are forms -- firms with a fraction of the employee count at goldman or j.p. morgan but they have more than doubled their market trade this year and that is incredible. i spoke to the evercore ceo john weinberg. his family ran goldman. he is saying now, listen, we have come in at number four in terms of revenue on merger advice for the last couple years. the last quarter they came in number three. can you imagine? they beat morgan stanley in the most recent quarter on the fees taken in by merger. you have boutiques fighting hard, hiring hard, paying top dollar for talent. now after a record year of hiring for evercore they are hiring more. so, remember, they hired a record amount of senior managing directors in a year where deal volumes were the worst since 2013, in a decade. if you thought this was a tough

market for wall street, yes, it was. there was still significant types of hiring. next year is certainly pointing to the chance for hiring to come back again. paul: if i am in mna banker and i don't want to worry about my bonus impacted by some knucklehead losing money trading the yen in singapore. these boutiques it is eat what you kill and focused on mna exclusively. for a lot of bankers that makes a lot of sense and we are seeing that in the numbers. good stuff. sonali basak covering all things wall street here bringing us this story on the year ended league tables. fees are down. but, they are down substantially. but, the bankers still fight for the league tables and the market share. it's good to see that reporting treated the s&p 500 off .4%. the nasdaq off .7%. we will have more coming up. this is bloomberg.

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p.m. delivering news insight and analysis live from bloomberg's washington headquarters. get the latest from and about politics biggest power players at the end of any debt every trading day. balance of power every day at 5 p.m. eastern time only on bloomberg. context changes everything. caroline: 1 p.m. the fine city of new york, it is the last day of trading before the new year. paul sweeney and caroline hyde going across platform as we simo taught -- simulcast between radio and tv.

we are bouncing off our lows. the s&p 500 is still up by 0.2%. that will make its ninth straight week of gains, the longest winning streak since 2004. everywhere else, it's a bit of a downer. the nasdaq is down and we're off the record highs in the nasdaq 100 as well as the dow. so a little bit of risk aversion as we creep into the end of the year. the russell is off by about 1%. crude is up to -- is up about eight dollars from the beginning of the year. i'm looking at a little tension creeping into the funding markets. this is the overnight lending rate, trying to see whether or not we have any tension in the overnight funding areas and we are at a new record high. maybe some concern about how some of these companies are trying to clean up the balance sheet to make sure they are in the right space in the right

spot before new year's day. paul: when we look ahead to 2024, we have the senior vice president at franklin templeton investments. thanks so much for joining us. i would like to stick with 2023 and ask your thoughts on what happened here over the last 8-9 weeks. what's your take on this market move? >> i think it made sense that we saw a rebound like we did. earnings surprise but continued to surprise to the upside. margins actually were very resilient and that was the marker because i was a bit bearish before the start of the last earnings season and then we switched to a more risk on stance and it was those test the margin resilience that helped us and we had some signaling and eventually the information from the fed that they are shifting

down from a more hawkish position to neutral and likely will turn dovish and i think that carried us through year end. not so much a santa claus rally, more a jay powell rally. paul: will he keep on giving and the new year? >> i think we are a little ahead of ourselves. you look at interest rate markets, we are projecting a full cut by march. i think we will have to wait a little bit longer until may and i think what will be critical for maintaining a positive momentum in the first quarter aside from earnings is going to be the fed really changing investor expectations gradually to get them comfortable with the fact that they will have to wait a little bit longer for the full pivot. caroline: what's so interesting about your own cv? you are on research and are

contributing to the global research. you are also driving the digital transformation of the business. you are probably the best to ask about digital transformation in equities more broadly. a lot of the market rally was in the tech world. are we likely to still's -- still cai and the exuberance of that driving equities next year? >> i am personally very bullish on ai. i changed my career for more of a traditional portfolio manager to someone who is more aligned with technology. with that, i want to say we need to see more of a roi on ai. i think the magnificent seven really rally because nvidia and other chipmakers are going to see increasing demand and that makes me t look atsmc and

samsung, ex china markets more favorably. when i look at the rest of the tech sector, there really hasn't been something that can show there is real revenue to be gained from ai near term. as we look 3-5 years outcome i think the changes but in 2024, i think there will be a disconnect the victims apparent to investor expectations and what companies have promised but haven't delivered yet. caroline: i like that you bring in the chipmakers that are asia and x china and the ongoing narrative was china-u.s. tensions in the field of technology and tamping down on ship exports to china. where do you see geopolitics playing into investment decisions globally speaking? is it still all about u.s. stocks? is it about equity distribution more broadly? is there an opportunity with valuations lower in europe and asia? >> it's a fairly complex

question. let's take a tour around the world. starting with the u.s., i think the u.s. remains attractive. i think there may be more opportunities for value to close the gap of growth especially some of those geopolitical flareups continue. we saw the fed stocks rally over 20% since october 7 once the conflict in the middle east broke out. geopolitical flareups are going to continue. we have lived in a peaceful time and we need to adjust to the fact that this is not the world we used to live in unfortunately. there are going to be opportunities on the investment side because of that. when i look at europe, it looks cheap on every measure. i think it's cheaper a reason. i do believe it's easy to get caught in the value trap there. christine lagarde is a very different central bank governor than jay powell. i think she will be more

determined and when we look at the earnings picture in q3, different from the u.s.. 10% decline in earnings with a lot of companies as shooing negative guidance so that doesn't look that great. when we look to asia, i think there are more opportunities there especially in countries that are responsible for a lot of the demand for chips. lastly, australia has seen a strong rebound. i don't know if that's going to continue into the new year. i don't see the commodity demand really giving them the breadth the companies there needed to do well. not when growth is slowing down across developed and emerging markets. paul: i'm looking at the s&p 500 earnings estimates and were looking for 12% growth next year. are you comfortable with that kind of growth or do you think there is earnings risk that could be a headwind for this market? >> i think there is earnings

risk. we always see pretty bewley and expectations when the consensus is a soft landing by a recession. i think it sort of similar to what i mentioned earlier about the fed were analysts start walking that back gradually, i think we can get through it with generally positive momentum. analyst continue expecting these abnormally high earnings, i think that will be a headwind to equities coming through. this is all to say is more uncertain than perhaps the consensus estimates lead us to believe into the new year. paul: i understand you are an amateur racecar driver. two questions -- what you race and where do you race? hopefully not the streets of san francisco. >> may be my younger days.

i race with the sports car club of america. they started a new leak so i'm excited for 2024 and hoping to get competitive and we will be racing across tracks around california from thunder hill to sonoma. paul: you should check out laguna seca. >> i just had a test day there last week and it was wonderful except when it rains. caroline: when you are not hurtling around corners and beautiful contraptions, where would you be if you had to pick one area to be allocating? no one would advise doing that because we should be diversified but you had to go over some particular area, where would it be? >> i had to go over, i would look at emerging markets. i think emerging-market equities in particular in the chipmaking regions look spectacular.

i also think the t-bill trade will be well alive. i have to be a little diverse by being a multi-asset investor so those are my two picks. paul: you are the second person that mentioned emerging markets today. how can you do that given the uncertainty in china and the subpar growth in china? how does that factor into it? >> that's a great question. we spent a lot of time on it and we found that when you look at the rest of em, it's become less dependent on china over the last several years especially post-pandemic. you can have a view that's positive on the emerging markets x china. you can look through some of that slowdown that we are definitely seeing in the chinese economy especially in the housing sector. paul: great stuff and we appreciate you taking the time

on the last trading day of the year. max is based in san mateo. who created this function? rich go. it lists the most wealthiest people in the world. what's interesting about this is the methodology. like bloomberg, everything is data-driven and i believe this is the best quality of data and the actual best calculation out there. it's become the default list around for most folks that look at this stuff. elon musk not surprisingly is number one on the list. $232.4 billion. that number is interesting. the other interesting number is what happened to him this year. he gained $95.4 billion. that's a good year. caroline: and remember at the

beginning of the year, he was poor sold number two behind bernard arnaux. he's back in the number one spot since the end of may. we don't worry about the money he seems to of flushed on x but 44 billion versus $95.4 billion net addition this year is significant. paul: perspective matters. caroline: context matters. what's interesting is jeff bezos still managing to be there like net can with ben arnaud and mark zuckerberg did incredibly well. these tech companies did well. the thing that gets me about rich go is there ain't many women on it so i highlight the few women who have done well and one of them has been making big moves in the world of sports, the dallas mavericks majority

owner by $3.5 billion. that's miriam abelson. -- adel sin. there is also the air for the l'oreal fortune. l'oreal has crested this year. -- has crushed it this year. paul: and some of the usual suspects, warren buffett is on the list at number 10, $120 billion, and the name that you forget about his steve ballmer. caroline: yes, microsoft. paul: he is number five. that's why santana della - satya nadella has almost flown under the radar.

he turned around a company that a lot of people had almost left for dead as a growth story. he just reignited it. caroline: he injected ai and got into cloud at the right moment and pivoted when many felt microsoft had missed the boat whether it was a shift to mobile or of these moves that steve ballmer had not managed. it didn't do so well this year. let's see how carl icahn improves for 2024. this is bloomberg. ♪ 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.

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caroline: welcome to bloomberg radio and tv simulcast. is the final day of trading on a friday. we aren't leading you up to the close. from a stock market perspective, not as buoyant as it has been. we are only off by 0.4% on the s&p 500 but that's nine weeks of

gains. extraordinary gains throughout the year and maybe a few people looking to put some extra money to work in 2024.we hope the cons resilient and we think maybe they spend on their vacation. do you have a vacation in january? paul: heading down to aruba. we found that last year we said we will keep going back. it's a little bit farther than a caribbean island but we feel it's worth it. caroline: people with kids like me don't travel that far. meanwhile, i drag my kids across the pond to the u.k. as i avoided a transatlantic trip for christmas but will do it for the mlk week. i'm not cruising. meanwhile, some people are and it feels as though we had the ceo of carnival join us and he is also the chief climate officer. i didn't know whether those two things were exclusive. paul: they are really trying to

reduce the carbon footprint which they admit is huge. caroline: the fact that they have a separate title under the same person is quite extraordinary. he seemed into on the direction of travel for him. it -- he felt people are living to spend in 2024. paul: revenge travel is over, this is real demand. caroline: people want to get back on those cruises. >> 2023, we wrapped in november on november 30 and the one word we like to use as a summary is record. we had record demand, record yields, record pricing, record bookings, forward bookings, record on board spending level so across the board our business has thrived in 2023. we expect more in 2024. carol: you have several brands but you really speak to the

everyday u.s. consumer. you just have a great read on it. are they continuing to spend? once they are on their ships, do they continue to spend as well? >> that's exactly what we see. our q4 from a pricing standpoint was the highest all year. it is accelerating, not decelerating. when we look forward, we are 2/3 book for all of 2024 already. we are about 10 points higher than we were last year. on top of the ticket bookings, we have started pulling forward on board spec as well. we have one third of our on lord -- on board spend in advance. we have a good amount of visibility and those booking trends haven't slowed down. every quarter this year, people expect it's got a slow down. we will see something. the consumer will get impacted

and with our business, we have not seen it. we just ended the two weeks of cyber monday and black friday with more records and it's not just coming from one brand. it's not coming from the united states, its global, it's with our global road test portfolio which is encouraging. >> do you think we are moving to a point where we live through a. of revenge tourism and were locked up area this is something, we had this parabolic reopening in a parabolic booking but we are evolving into a new cycle? you said there's no end in sight. if we've ended revenge tourism, how would you describe the next evolution? >> we don't think this is revenge anymore. this is not pent up demand. it's two years on from when we got back in full as a corporation. this is people who have decided

what's meaningful for them. how do i want to spend my life? experiences are what they are looking for, and unforgettable memories with friends and family and that's what cruising has to offer. manny: they haven't got enough hotels in height and staff to run the business. the cruise is a high-end hotel but to what extent are those packages off ship and on sure additional expense, are they critically important to the expansion? do they at incrementally or specifically. >> we are a little bit different from when you look at hotel companies. i stayed a hotel in new york i want tell you which one it is but the service is not very good. we've learned how to live with that as a society. our brands did not deviate from

service level. our guests have higher expectations of me aim to exceed them. we do not close all floors were shut areas down. we do not skimp on the services we use to offer. it's full steam ahead and that's what people expect. that's what they are willing to pay for and that's what we are seeing. katie: you are a global company that goes many places in the world. the geopolitical landscape is very front right now with two hot wars and conflict in the red sea. has that impacted where you can go in are you seeing any inflationary pressures from some things we are talking about here? >> the second question is no, we have not seen anything of note we pay attention to crude prices which is a good barometer of many things. with respect to the impact on our business, we had less than 1% of our business touching

israel in one way or another monotonous surly home porting but it might be one transit stop in a world cruise. we made changes sometime ago when we don't have any ships transiting the red sea area for several months. safety first and we will have mitigation plans should we need to adjust where those ships would be transiting. as of now, we are watching and will learn more. katie: let's talk about your bond book. just last week, the s&p came out and upgraded carnival not quite back to investment grade territory but you're getting closer. carol: two notches higher. katie: you think back in the chief financial officer of carnival said there is a real possibility carnival will come back to the debt market in 2024. what is your current thinking on that and what would bring you back? >> the only thing that would bring his back to the debt market is if there is opportunity to refinance on more favorable terms to lower rates.

we are not managing our maturities but we are not looking to lever up. we managed to cut down our debt load by about $5 billion so far. we expect much more of that as we go forward. that's priority 1, 2 and three when it comes to capital structure is deliver. carol: tying this together, i saw a story today or in the last 24 hours of the first domestically built ship in china is getting ready to hit the high seas but it's a joint venture and you guys are involved. i think about how important china is for you guys but also geopolitically, concerns about china and sit and -- and its ambitions with taiwan and whether there will be problems there down the road. >> we are very happy for the folks at the china jv. we unwound the jv earlier this year. we've been providing

shipbuilding expertise support for them and we are happy to do that. carol: the story says you guys are still involved. >> that could be how but from our expected, we have a portfolio of world-class brands all over the world and that's where focus is. it's great for the cruise industry that china has opened up and it will be opening up for international cruise companies. we will not be one of them that's going back in. we got our assets where we want them. we changed our asset strategy, we have moved ships to different brands to accommodate the change in china and they are doing very well. we will take away and see approach on that as well. paul: that was the carnival ceo speaking with the gang from bloomberg surveillance this morning. that's about as bullish and outlook as i've heard in a while from consumer driven companies. they are seeing record kind of bookings and that's what investors look for is bookings.

it looks pretty darn good at this point. caroline: this is why it is so hard to call this economy, call this market. every time we think people are depleting their savings from covid and their stimulus checks and affect the consumer will be in a tough spot and then you get carnival cruise saying we are at record bookings? paul: just booked a september trip to ireland. the week we wanted, we had to act now or we would lose it. that's september, that's the demand. caroline: in ireland? paul: this is bloomberg. ♪

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paul: welcome back to bloomberg markets. we are simulcasting on bloomberg radio and bloomberg tv. a rip roaring and to the year for sure. all the indexes look pretty darn good for 2023. you look back a year ago and we were reading all the outlook pieces coming off of wall street. there weren't too many people that predicted this. we wrote a story about it, wall street's best and brightest flopped in 2023. take us back a year ago. what were we hearing from some of the wall street experts about

wall street? >> the overarching view into 2023 was that a recession would be inevitable and everyone was game planning for that. it's challenging to be a market forecaster on wall street. anything can happen but particularly over the past two years in the post-covid economy that has defied expectations and all traditional models people have used in the past to make calls. the three big calls into 2023 were so u.s. stocks, the expectation of an economic downturn by bonds on the expectation that a recession would lead to her rebound of bonds from last year and by chinese stocks as their economy opened up after covid. that was expected to propel the nations stocks and none of those calls played out. when it comes to the equity market, the s&p 500 is now nearing a record. it's a little down today but still pretty close after more than a 20% gain this year. bond yields are set to close the your roughly where they were at

the end of last year. of course, chinese stocks experienced a route this year amid a deepening real estate crisis and fears of deflation. it's making life of very awkward for those who sell their calls to investors around the world. caroline: i've never seen the consensus is wrong as it was in 2023 is a great quote in your piece. to be fair, let's call out mike wilson who really came out on top for 2022 and that aeration is did not bode well 2023. you call out some others like bank of america got it wrong in terms of the bond yield and goldman getting the chinese asset call wrong. let's focus on those who got. right anyone who called some of this bull market right? >> some of the people who were seen as ever optimistic as permeable's, came out vindicated this year but they were wrong last year.

deutsche bank went into the you're expecting a big rebound in stocks. they said the kind of route we saw last year is usually followed by solid gains in the subsequent year. back in history, very rarely have we had two consecutive years of double digit losses in equities in the last time was 2002 and it's only happened five times in history. when i asked them what it is every one else got wrong, they say we usually get a rebound after what we saw last year. then you as some of the people who were wrong and they say no one could have anticipated the ai frenzy that fueled stocks this year. there were a lot of factors that people could not call. paul: in terms of fixed income, i called one year. compared to 2022 when double digit declines is torque declines across all fixed income, this year, mid-single digit positive returns. u.s. corporate high-yield is up

13% and i did not see that coming. a little bit better performance in fixed income. >> it would have been the third straight year of losses. caroline: when we are making any forecast but set us up for 2024. what are the learnings from 2023 into next year? >> it's been a year of reckoning on wall street. you've heard some headlines perhaps about firms coming out and saying they see the s&p rising to 5000 and short topping that, more optimistic than going into leicester but the consensus view tracked by bloomberg stands at about 4800 which implies little to no gains from the level we're at now. there is still some hesitation on wall street about turning to a fully optimistic view. many people say we need that landing and we need some sort of downturn to happen before it turns or we need a big growth catalyst for stocks before they can change their outlook.

caroline: ai will probably be there once again. good to have you with us. a great big take of the day of how to set yourself up into next year. we will keep the conversation going with someone who knows about for costing just about four -- forecasting. he's based in new york and is a full-service broker/dealer. great to have you in house. thank you for coming. >> thank you. caroline: do you want to try and forecast 2024? no matter what the recessionary outlook was for this year, we all got it wrong and we managed to get some sort of soft landing it feels like. >> it's a little early to say that we've had the soft landing at this point. eric take on the recession was that it was inevitable but it wasn't imminent. there are reasons to expect this

economy to have stretch. when you are wrong, you say what went wrong? there were reservoirs of support. one was the reservoir of excess savings and despite your comments earlier around the pandemic money, the stimulus checks are running out and have run out for many people. the savings rate is below where one would expect. that's one reservoir that stress at another one that stretches things out is this unprecedented pool of unfilled vacancies. that meant the labor market didn't lose traction. if people lost a job, they found another in a company thought of cutting someone and they said the hold onto people. that adjustment is taking place so that has pushed things out. to have gone from interest rate of zero 21 between 5.25-five .5%

to have inflation decline the way it has declined and if we avoid recession completely, it will be an unprecedented event. none of us want to forecast an unprecedented event. it's not untypical for people to forecast recessions to go back on the recession forecast and then for the recession to happen. there are indicators that suggest we may be close. manufacturing has been recession and chicago pmi continues to be in recession in december. the housing markets been in recession, the house president not decline the way that maybe some people had expected and partly that's because people have such a reservoir of equity and is very few distressed borrowers. everyone was locked in it very low rates. there are good reasons why things have been stretched out. i think it has been pushed into

2024. i don't think one can say the recession risk has passed at the soft landing because after landing comes a takeoff. i think there is certain parts of the economy that still have to adjust to rates. paul: what do you make of this labor economy? how resilient it's been this year and i'm not sure what labor hoarding is. i'm not sure any business is hoarding labor but maybe that's a thing. why has it been so strong? >> i think it's very easy. it's been the pandemic. just because the pandemic is behind us doesn't mean the effects of the pandemic are behind us. you had a lot of people left the labor force or said i will look for a better job. as a result, you had a buildup in a record number of positions

that couldn't be filled to the point where there was two unfilled jobs for people looking for those jobs. that was unprecedented and that's the result of the dislocation that has taken place. one of the remarkable things about the labor economy over the last 12 months is the labor force grew by 2.3%. in demographic terms, it should have been more like zero point 3%. caroline: is that women coming in? >> it's partly that, the ability to have hybrid working or do have employers being comfortable having a number of jobs conducted from home. it has been beneficial to women where they want to look after the kids and they don't have the time to commute. they can keep looking at the kids while they work. i don't think it's just that.

it's something it will take a while to look at how things evolve. if the labor force hadn't risen like that and job creation had been the same as it was, we would not have unemployment rate of 3.7% but 2.7%. that's a strong job growth has been over the last year. job growth has become increasingly narrow and is down to health care. all the private sector job growth has come from health care and leisure and hospitality. those are industries that will bear close watching. the narrower growth is the more fragile that labor market growth is. paul: has inflation been whipped? >> i think it's a little soon to say. we have projected to come down and it has come down faster.

we have to thank the fed for that on its resolve. we do have this challenge between the mark which would says the fed will cut six times this year. i think the fed had a communication misstep and suggesting they would take their foot off the brake a little bit in the market ran with that. that's another challenge to be faced. i don't see how the fed cuts rates six times this year unless the economy is actually in a recession. the markets have some sort of conflicted views. we say about corporate bond spreads on the other hand, you got a fixed income market that's pricing in rate cuts that we would only expect to see not from tweaking because of low inflation but because of an outright recession. caroline: do you see any threats from inflation coming from the current geopolitical risks? >> there are always costs shocks that can come from that.

you run the headlines about doubling wages on norwegian workers on these vessels but inflation is a monetary phenomenon. the inflation we experienced in 2022 may have been initially triggered by pandemic effects, supply chain effects. we also had the war in the ukraine those things were accommodated by the central bank. they got into parts of the economy that if it were just those shocks, you wouldn't have seen it. policy needs to be tight enough to take away from companies the view that they can actively manipulate the margins and use pricing as part of their margin strategy. that inflation psychology that had vanished from the u.s. economy and other western economies, it crept back in and whether we will defeat inflation for the longer-term term or not

depends on whether the fed stays sufficiently restrictive and companies don't seek to pass on those costs were fully pass on those costs. is it a threat? it's a threat to another cost shock. we don't know how that will feed through. 70% of manufacturing comes to the chicago region and they were paying higher prices and that was a significant step up. paul: we appreciate you coming into the studio. chief economic advisor at brean capital joining us in our studios. on the last trading day of the year, a very quiet day as you would expect. it was a heck of a year and a heck of a quarter. caroline: do you have any new year's resolutions? paul: apsley not because i broken them all. caroline: i've got a fun one. i started playing poker more in

2023. my resolution is to keep on doing it in 2024. we do mixed poker nights where we live and there is one woman out there who made a ton of money and options trading and fintech. her key focus is training women to be able to be smarter at the poker table and risk-taking. it's about negotiation, eq. we will speak with the one and only jenny just in a moment area this is bloomberg. ♪

caroline: bloomberg markets, the final block before the new year of our two hours of glory. we are writing into the close where the markets are a little bitmeh, down on the day across the major benchmarks.

we want to take a moment and think about where your focus his life or 2024. one of mine has been playing more poker. i got into that in 2023. it's something i think is becoming more mainstream for more diverse table to be set around. one person who has been a driving force behind that is a self-made billionaire, someone who has been at the cutting edge of options trading at fintech and jenny just cofounded her company in 1997 and you gonna to build businesses through venture and focus. also you are really a co-founder in poker power. it's a women led company teaching poker to those who identify as female and also teaching kids, young women to feel at home and comfortable taking risk and laying bets and reading people. tell us about it. >> we are super excited to be

here and thank you for having us. especially at the end of the year when it seemed like an exciting time to think about doing something new. poker power came about because of my daughter when she was 14. because of her tennis game, her dad thought she was not really thinking or strategizing about the player on the opposite side of the net. lo and behold, he thought about poker. ironically, the two of us were not poker players. this is despite doing a trading industry. we went through the exercise of teaching her and i learned. what i saw in her and what i saw for myself, i frankly was astounded. i was astounded at the confidence building it had for her and we talked to her friends as well. for myself, i saw my work, so what i do every day. i saw the negotiation. i so that meeting and i thought

here it is in a simple card game played out before me a way to practice doing those things that we do in business every single day, things we are not typically set up for from our hobbies or when we are young women. for my daughter, i was super excited because we were thinking about her sports. as it turns out, it's about any table she sits at in life, having the confidence and particularly the money table. caroline: you speak to ursula burns when she led xerox it said the frustrating thing was she didn't play golf. i would get jealous of my husband going up to you with our local friends but they were only guys playing poker and i asked why aren't more women doing this? he used to be in the finance area and he be off doing poker and i wondered how many women were invited. how much are you saying that

conversation change with more people feeling they can bring -- bring themselves into a more dim -- into a more male-dominated area. >> it's a real hurdle. what i love about poker is it's a really tangible thing where we can say here it is today like women and driving in the 20's and 30's and here's where we wanted to be. we know we want women to be equal ceos and we want them to be an equal percentage v ofc's being invested in or investing in others. we want these numbers because there is no reason why it shouldn't be equal. how do we get there? it was the same thing when you drove. it's not really about the cars, it was about getting to a job, getting to school. this is about having ownership and leadership at the money table. i will tell you through poker, it is a clear opportunity for us to practice and get better at

all of the things we are not naturally taught as a young girl. we are starting to see the first light at the end of the tunnel, certainly in poker as an industry. they've never seen that change in ovi in the world is ever figure this out. each women one by one, we can do this together. we are teaching corporate's, we talked over 250 companies which is incredible just in the last 18 months. they are teaching their groups or through their dei efforts, both women and male allies because it's such a skill building opportunity. but each one of those opportunities, people can teach their friends, they can teach their daughters and is this really interesting flywheel we are starting to boost through the companies even though we really wanted to start with the young girls. we know the more we practice, the more comfortable we will get. it's not even going to be a

question when i'm in my first job. if someone says you are ready and when amman wants to take that risk, he has 60% confidence and that woman feels like she needs 90% but she doesn't actually. she can now fear feel comfortable with less knowledge, taking more risk. those of the types of things that are taught at that poker table. we are starting to see the change. pretty soon, it will be 50-50 at the poker table. it will be 50-50 in the trading world, it will be 50-50 where money decisions are being made. it's a matter of time and we have every opportunity as a network of women and male allies to change things immediately. once this gets going, the hockey stick will be exponential. paul: the only professional poker player i know happens to be a woman, annie duke who is one of the best. in your industry you grew up in

the trading business, talk to us about women in the trading business. it's one of those areas that's been hard to break. how is that evolving? >> that's a tough one, tougher than poker. it's one we've been trying to crack for many years. we started a program called the women's trading experience. it's not about knowing anything coming in. that's the hardest part. it's about being smart, being curious and having a really strong work ethic. that's what we found but women just don't know about trading. it's not natural for them. once they start playing more poker, it will become more natural. i also think the growth in the fintech industry over the last let's call it 5-8 years has put so much more at their fingertips that they are curious about. why can't i do that? you certainly can but you just don't know that much or haven't been exposed to it. i think we will start to see more and more women.

i think peak six is the highest percentage of what i call capital allocators, women pressing the button. we are in the high 20's, low 30's we are lucky with our competitors if we are close to 7-10%. paul: one thing i know is important for many people is to be able to get that concept of financial independence and i guess poker light trading is a way to get there and teach you the value they are. is that how you think about it? >> that's exactly right. it's not ok to be conversational and money and the goal would be to be fluent in money and that takes time. one of the ways you do that is by taking a risk with money. there is no relationship in our life personal or business wherever it is that is smooth. women tend to think their money

should go in one direction which is up and to the right. guess what will happen with that? it will not go very high. it will not go very low and also not going to learn a lot. the earlier i take risk with money -- when we play poker power, we are not playing for money. we are playing for leadership and the chips. eventually, that will lead us to testing it out by trading, buying the first stocker first crypto or whatever it is we will go on a journey. earlier i do it, sooner i learned those lessons and it's like compound interest. it's compound experience. i need to have those experiences sooner. every hand is another opportunity for a risk. caroline: in 30 seconds, where do i go first to get more comfortable if i want to play tonight? >> poker power.com, you can see

everything we have to offer whether it is lessons for you sitting at your company or for you and your friends. secondly, poker power play, we have an app in the app store. the first gender neutral poker app on the market. you can join us and you can practice in their. can practice with botton yet five minute lessons and tutorials to get you started. those are the two best places we can offer. if someone in your family already knows how to play, teach the others in your family. it's a game for everybody. worst case, you will have a lot of fun. caroline: we don't need to play charades, get some poker in your life. jenny just, we enjoyed speaking with you. it's a joy to be with you, paul. paul: i had a fun caroline: caroline: time this week. we will see you, this is bloomberg. ♪

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caroline: for tv and radio audiences worldwide, welcome to "bloomberg markets". i am vonnie quinn with sonali basak on this final day of 2023

with trading. we may not hit a record today for the s&p 500 but we are up nearly 25%, really interesting data point today. this takes the 20-year compounded total return to 9.6%, which is below the long run average. sonali: how incredible. vonnie: that is incredible. sonali: if you look at the other industries, we were so excited to be entering into the santa claus rally. the santa claus rally is fading. i do not remember which part of the bet i had. i think i am losing. [laughter] vonnie: that is not true. i am sure you remember. [laughter] sonali: i said we would hit a record today. you said we would hit a record tuesday. you are looking like you are in the lead. you will get that peppermint latte on tuesday. vonnie: maybe wednesday. honestly, if we hit a record, i

do not mind selling out for these hot chocolates. [laughter] let's look at where we stand index wise. we are seeing a little bit of selling for the few people out there. sonali: the s&p 500 down 0.3% and the nasdaq 100 and dow jones, i am interested in those two. today and yesterday they hit records and now the nasdaq 100 down 0.3%. the dow jones down 0.15%. vonnie: let's look at yields. on january 2, the 10-year closed at 3.8748. today, 3.9741. i find it completely fascinating we are nowhere having gone through all the volatility this year. the two-year yield closed 2023 at 4,4258.

it is more susceptible to the idea of inflation or lack thereof. it is worth pointing out we are getting a couple of warnings today. rbc saying the risk of recession has gone down modestly but the market is pricing it has gone down remarkably. larry summers saying investors are probably underestimating inflation risk. plenty of people still warning not just about inflation but recession. sonali: while we have fears about potential recessions in the future we also have market shares underpinning these somewhat calm markets. a lot of volatility in the repo market. the era of calm is over. the secured overnight financing rate has risen to the highest level since it was introduced over five years ago. repo rates really underpinned the entire financial system. we have seen hiccups in recent years. it has caused federal reserve

intervention, a resumption of the bond buying programs, particularly in 2019 when we saw the year end pickups. now the issue is underpinned by quantitative tightening. of course, we have not seen the brunt of that pain. vonnie: no. the fed's balance sheet started at $8.5 trillion a year ago. it is now $7.7 trillion. we have seen quite a bit of tightening. there is more to go and estimates range from late next year to mid-2026 for when it will really come into effect. particularly the system of market accounts. we are not quite sure what that could shrink to without putting a lot of pressure on the system. so far, we are seeing a little pressure on the system. sonali: and pressure that has not cascaded into other asset classes. even the two-year has been calm this week. seven basis points top to bottom, give or take.

if this goes into next year, at what point do we see ripple effects into other markets? vonnie: joining us to talk about fixed income in the bond markets is joanne bianco, bondbloxx partner and investment strategist. you heard us chatting. the 10-year is back where it was at the beginning. the two-year a little lower. characterize the year. joanne: it ended up being a strong year for income investors across credit. the high-yield market had a fantastic year in terms of performance. strong recovery from 2022. and then you saw despite long treasury rates getting hurt in terms of total return performance earlier in the year, their backup in terms of positive returns year to date. everything is in the green in fixed income and it has been a good year across fixed income

asset classes. vonnie: looking forward to the first quarter how do you see the yield curve positioning itself? what changes? what shifts? joanne: it is possible we see more of a flattening of the yield curve especially as we see shorter-term rates come down, if the fed is at the end of the rate hiking cycle and starts to reduce rates next year. you could start to see more of a flattening. sonali: how do you think about the impacts of a potential recession on the riskier parts of the bond market? we have seen returns on high-yield in particular really shoot back at the end of this year. joanne: yes, that's true. well, you know what? the u.s. economy demonstrated remarkable resilience throughout 2023 despite a lot of expectations for a second half recession. and it has had enduring strength not only because of the u.s.

labor market and how that is translated into consumer spending and the health of corporations and earnings, but our base case view is the u.s. economy will continue to remain healthy in today's higher interest rate environment. it could experience a modest slow down next year, but we are not thinking that the current interest rate environment is overly restrictive in terms of its economic impact. even in our downside view, with everything we know, we are not forecasting a recession next year. sonali: does that mean you dive deeper into high-yield or have some of these gains been captured already? joanne: there has been some gains captured for sure. it has been a tremendous year led by ccc. single b's are up over 15%. tremendous returns. consumer cyclical and industries

is up over 16%. great returns. but we still are at elevated yield levels in high-yield. an interesting thing to note is if history is any guide, if you look at forward returns for high-yield, whenever the fed has paused in the rate hiking cycle, that has been able to generate the next years. it is the highest you can get in u.s. public markets. with less volatility than stocks. that is all, you know, what we think is supported of continued strength. vonnie: it is fascinating. you mentioned you are not forecasting recession in 2024 but you see downside risk and rbc saying the risk is down modestly but the markets are pricing as if it has gone down remarkably. what could go wrong?

i want to point out we just got data from the fed half an hour ago, the three-month indicators that showed there are more states experiencing economic -- i don't want to say contraction -- but difficulty or less growth. 21 as opposed to 16 the last time this was done. we are seeing a little bit of creep. joanne: that is definitely factored into our forecast. we could see softening but do we see the potential for a full-blown recession? no, we do not. sonali: what are some of the picks you would make outside high-yield, for example? there are people pitching duration at this level but we have seen the 10-year make a full circle. a lot of people get burned on the trade. joanne: yeah. they are recovering now. we still like short, intermediate term treasuries. elevated yields available in

short treasuries and low volatility but extending in duration is something we think is a good idea in terms of the potential tailwind you would see in terms of total return performance if rates start coming back down. that would have a more pronounced effect on the long end. we also like bbb corporate exposure as well. the fundamentals are very strong and we are at yields that we have not seen since the great financial crisis. those are some of our other picks. sonali: what are some of the risks, especially when you think about the duration trade? there is a ton of issuance we are expecting from the u.s. treasury department and federal reserve. do you think this issuance is going to make it difficult for investors to really handicap the demand that is in the market? you think about the long-term problems.

we were talking about quantitative tightening and the lack of control at the long end of the curve. joanne: those are certainly all risks. we have to see how it is going to play out. there is going to be -- we still think the trend toward lower rates is what we are anticipating. vonnie: high yield is your top pick for 2024. do you anticipate that switches during the year or is it too early to say? joanne: it is our top pick for next year in light of the -- we are basically -- we started this interest rate rising cycle with really strong fundamentals. fundamentals that, to be honest, in all my history, i have not seen such a strong starting point. you did not have one particular industry that was at such a risk that it could end up re-pricing

yield and causing a spike in defaults. we are not at that point. it is not to say there could not be something unforeseen that happens and it changes, but we think valuations are supported by the fundamentals right now. sonali: joanne bianco of bondbloxx, thank you for your time and what has been a carnival for bond investors. so many of these gains only happened the last couple of months. vonnie: exactly. if you just got in, in november, you would have seen 14% return, assuming you're in the market today. but if you had sold in january of 2022, you would not be hearing this debate. that is the other way to look at it. it is relative. sonali: and so much of this was predicated on this idea of federal reserve rate cuts. my wonder is what happens of the fed does not cut as deeply as investors are expecting? do these gains begin to unravel? vonnie: or as -- many are

expecting the march rate cut and that is three months worth of data, which is a lot of data, and we are seeing the glimmers of a downturn. the indicators showing 21 states have a decline in economic activity in the three months through november. that is not a great signal and the fed comes out with great data. we will be watching that because the previous reading was 16 states. we do not know if this is going to be broader based in the next three months. perhaps this extends to geographies as well. sonali: it makes you realize perhaps it is time to look at what is happening inside different sectors, different industries. the move index has been more volatile than the vix for so much of this year. does this start to reverse course into next year and we see that volatility come into the bond market, or the stock market rather? vonnie: i was looking at the

graph before we came on. it is pretty -- it is 113 -- but it was at 200 during the banking almost crisis. remember back in march, april when we did not know how that was going to pan out? sonali: we are going to switch gears. we are going to talk about the real estate world. we head to sin city and talk to jeffrey sofer. this is bloomberg. ♪

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at&t business. sonali: welcome back to "bloomberg markets". i am sonali basak alongside vonnie quinn. after nearly two decades in the making the fontainebleau las vegas is up and running in time for new year's. the luxury real estate and hospitality brand has been a staple of miami, florida and is

building a new legacy in the southwest. we bring in jeffrey soffer, chairman and ceo of fontainebleau development. he is joining us from las vegas. out of curiosity, how much more potential do you see in las vegas relative to miami? miami has been a very hot destination in recent years. jeff: it has been a very strong, robust market. the numbers are record-breaking last year and the year before. i think, you know, people have discovered las vegas in other ways from a family aspect. it is really a major resort and vacation and business town as well. sonali: one thing a lot of people are worried about is the consumer might slow down. you look at what this year looked like and people were so excited to get back on the road, to get back to destinations, go to places like las vegas, spend

money. now you are watching consumers starting to get more strapped. what is the type of consumer you are looking out for an do you think certain types of customers might start to pull back into next year? jeff: look, that is out there but the way las vegas -- it is a town that has so much to offer at so many levels. whether it is the meetings during the week or citywide conventions or the tourists coming in on the weekends. it is definitely -- it has proven itself over time that it is held steady. you could see exorbitant spending slow down, but right now, our bookings are strong. our convention bookings are strong and we are growing every day. we are excited. vonnie: cover graduations --

congratulations. it has been a 23 year journey. it must be amazing sitting there and watching it be open. 67 stories. tell us about what you have to offer at fontainebleau in las vegas. jeff: we have a lot of different food venues, different vendors from food promenades to signature restaurants. we have a theater. a 3700 seat theater. we have post malone playing over new year's. it is a high end luxury resort. 58,000 square-foot spa. major meeting space and convention space. it has a mix of everything and it is new in its design. people will know the brand but i think it is a departure of what is typically built in las vegas. it is really designed and a lot of elements came from fontainebleau.

it is uniquely designed relative to the movement around the hotel. definitely a different product than what is in this market. vonnie: it is the tallest occupy able building in devout a right now. that must be some bureaucracy you had to get through in order to build the tallest occupiab le building. it used to be the casinos that made the money and then it became the clubs. is it the conventions now? break up the percentages for us. jeff: i think it is gaming. gaming has gone from a dominant majority of the revenue to the minority. typically, they are around 25%. the upscale properties like this might do more. i think the big changer is this is a full-fledged resort. it offers more than a casino experience. from dining, to shopping, the

shows, and we went further with our spa and our gymnasium. of course, our gaming floors and the type of product we have in our upscale rooms on the top floor. the fleur-de-lis is the mansion in the sky type product. we designed this property after that type of market. again, the market -- the reason it has exploded is because the group business has gotten bigger and bigger here. companies like coming here for meetings and that gave a great foundation. that is why you are seeing some of the records you have seen. sonali: how important is it for las vegas and its attractions to be diversifying away from just gaming? jeff: i think it is extremely important. we focused heavily on food and beverage. the type of restaurants we have in the venues we put in.

our meeting space configurations -- 550,000 feet of meeting space, which is a lot. it is an important aspect and being in proximity right next to the convention center gives us an advantage. it has definitely made a difference with the numbers you are seeing out of the other properties. sonali: what about new year's? right around the corner and a lot of people are looking forward to getting their celebrations started. what do you have in store? jeff: we have post malone playing. we have a bunch of different events going on through the property. we are new this year. we are ramping every day and the reception has been great. our numbers are better and better everyday. we are excited about the process and the progress we have made since we built this. vonnie: how important to the bottom line and the backing are partnerships? you are in partnership with

several others. jeff: live is owned by fontainebleau. it is actually owned by us. we have an operator that operates it. but it is important. all of these elements are important. the type of dj's playing in the day clubs and nightclubs, the types of restaurants, it is about curating the customers who to enjoy themselves. you want to keep them on property and the content you provide is very important to do that. vonnie: i am sure you have a spend per person or break even rate per person. there may even be different layers. take us into the nuts and bolts, if you could share that. what are you looking for from every person? jeff: we have our first year plan. we want to get to certain

occupancy and drive a certain adr rate. our gaming business we are taking slowly. we are digging through this every day. when you open a big property like this there are so many moving pieces. you hire so many people it is difficult -- in a restaurant, you could have training for three weeks and then open and be very close. this is such a massive building and property that you have every day making changes. the first year we took a conservative approach and we are building on it. we are focusing on the customer and we know we have a great product in what we built. but to sit here and say we are going to run the same numbers that some of our competitors are right away is not realistic. the property will do that over time. we think we will surpass the top of the food chain. vonnie: the very best of luck.

it looks absolutely beautiful from where we are sitting in new york city. that is jeffrey soffer, chairman and ceo of fontainebleau development. it is difficult, very much difficult, opening a new hospitality venue in las vegas. i don't want to say it is saturated because there is always room for more, but you had the sphere opening, the dolans got involved, and now fontainebleau is adding itself to the mix. sonali: you think about the adelson family and the mavericks and the potential larger casino enterprise. interesting time for casinos but gaming is big. you heard him say -- which was important -- this idea that gaming is not everything, even for las vegas. it is the restaurants. vonnie: 25%. sonali: incredible amounts. i am headed to fontainebleau miami at the end of january for a large hedge fund conference. it is that business travel that could be what lifts the boat. vonnie: that and the likes of

post malone. [laughter] they are trying to cater to all sorts of generations. still ahead, we get insight on what is ahead in 2024. our guest is will mcdonough, chairman and ceo of corestone capital. plus, we keep an eye on the market. the bond market is closed for the year. congratulations to all those bond traders gone home. the s&p 500 at 4.772. for all our bloomberg radio listeners and tv listeners, this is bloomberg. ♪

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vonnie: welcome back to "bloomberg markets." i'm vonnie quinn along with sonali basak who has a check of the markets know. sonali: everyone's been waiting for the s&p 500 record level, we are actually down today. on the nasdaq 100, down .4%. the dow jones, same story, down more than .1%. the russell 2000 which has recently finally been getting lucked out, down 1.1%. vonnie: we know the levels we are finishing out today and that is 3.8791.

that does not tell you the story of the year with all the volatility we saw in march, through the summer and beyond. on the two-year, crude oil, down about $.23, $71.54. gold didn't give up much ground. we didn't see that much selling today. 2065 an ounce, about $100 away from a record. sonali: in the world of investment banking, bloomberg is that with its top m&a advisory rankings for 2023, and in the most challenging year for dealmaking of the past decade, the bank coming out on top is goldman sachs. it grabbed the lead from j.p. morgan with a surge of energy and deals. remember what's fascinating about this story -- halfway through the year goldman was behind j.p. morgan and catapulted back up in front of j.p. morgan. the rest of the group is quite

interesting. you still see j.p. morgan, citigroup, but centerview and evercore have doubled their market share from a year ago. you have to wonder, the smaller investment banks, are they finally gaining share? do they have another super cycle ahead of them as we have seen weakness from large global investment banking giants, particularly the europeans? vonnie: is going to be huge for goldman sachs. it's a reputational thing to be top, particularly the investment banking lead tables. sonali: absolutely. this is the seventh year in a row they have nudged that number one spot here. you want to hear how they got it? vonnie: yes, please. sonali: they got it through those recent energy deals. so sticking to the energy sector. vonnie: back to their roots. sonali: they really were able to come out on top. i heard david solomon himself was even on a deal that involved hess. at every level of the from here, engaged to capture this end of your rebound. vonnie: commodities really helping goldman sachs this year

once again. but those huge profits we saw for commodities companies that happened during the beginnings and intermediate part of russia's war in ukraine we will see if they come back,. is that the big bonanza now over? sonali: they hope its private equity but we will see. vonnie: that is sonali basak's story. take a look at the lead tables on bloomberg. now to our big take, 2020 there was supposed to be a year when stocks slumped and rallied but of course it didn't play out as expected. what exactly that will stretch's best -- what exactly did wall street get right or wrong? a little bit of egg on faces or the strategy should have taken longer to play out? >> a lot of egg on faces. it's a difficult job trying to predict the markets' direction. but it's been hard in this

post-covid economy which has defied the odds. putting those tasked with predicting the market in an uncomfortable position. going into 2023, everyone thought there was going to be a recession. buy treasuries on the expectations we would see a rebound and bought -- in bonds from lester and buy chinese stocks because everyone thought avery opening -- every opening would propel those shares. all of them were incredibly wrong. particularly the stock rally that caught everyone flat-footed the seer. the s&p 500 is down today. nearing a record after more than 20% -- a more than 20% gain this year as the economy remains resilient. bond yields ending the year roughly where they were at the end of last year. chinese stocks experiencing this massive route this year amid a deepening real estate crisis and fears of deflation. a very confusing time for a lot

of the best and brightest minds on wall street. sonali: how is mike wilson feeling right now at morgan stanley? he's tried to stay bearish. the market has melted up quite meaningfully. what will it take to turn? >> he has become the face of the bears. he spoke to him at the end of last year and he won the top portfolio strategist, rightfully so. he was one of the only people to predict the stock market's route. but this year he was very wrong and failed to see the rally coming. it's a testament of how quickly fortunes can turn in this industry. he has gotten a little bit more constructive toward the end of the year looking ahead to next year. the fed pivot he cited as one of the reasons that stocks can continue their rally. but he says he needs to see some big growth catalyst or maybe some sort of landing if that is a downturn. his target going into next year on the s&p 500 is 4500, below consensus estimates. it really implies another year of losses. sonali: after a year like this,

is everyone remaining quite as bullish given they have missed out on so many gains? >> we've seen a lot of headlines come out about the s&p 500 hitting 5000 next year. bank of america, deutsche bank, capital markets are the firms with those calls. but consensus is still very wary. if you look at the targets tract by bloomberg -- tracked by bloomberg, it stands around 4800. there is still hesitation about fully turning on the outlook on stocks. some people think they missed out on this year's rally and next year could be more challenging but the view was that a lot of people will be looking to other corners of the market outside of the magnificent seven, small-cap stocks, some of the underperformers of this year. vonnie: goldman sachs, another one bullish on the year. it's becoming consensus almost. our thanks to alexandra s. great story there. let's focus on the markets in 2024 with will mcdonough. founder and chairman and ceo of

corestone capital. bullish or bearish going into 2024? >> i think it's going to be a tale of two cities in 2024. i think there's going to be a separation between the haves and the have-nots. some companies are very well. some companies have big balance sheets they can access the capital markets through. other companies are struggling and hoping to meet revenue targets, to have enough cash to survive. as we have seen in the last year with a magnificent seven versus the other 493 companies in the s&p 500, you will see a real separation between the lead dogs and everybody else. i don't think that's good for the environment. that the government has been aspiring to provide. vonnie: what would be wrong with the laggards picking up the pace at this point? >> i think is going to be harder for them to with high rates. it's harder to tap into the capital markets and harder for them to compete. if you are in m&a mode and you

are out there buying companies and competitors that are somewhat struggling, that's a good position, being a market like this. if you are traditionally dependent on the capital markets and having to go back out into the debt markets every year and are subject to this rate environment, that's going to be a really major headwind for you and therefore i think those smaller and medium size companies are going to have a harder time competing. >> we were talking about investment banking a little earlier in this segment. i'm wondering, do you reward m&a as an investor? or do you start to look at other uses of capital, buybacks, investment and otherwise as a better use? >> i think the math is going to support m&a activity in an environment like this because of what i'm saying and because of those smaller companies are going to be more honed in this environment. you will see the big guys gobble up some of those folks. stock buybacks would make sense,

if your stock was not trading at all-time highs. the magnificent seven with all-time high stock prices are not going to be buying back at those levels. the rest of the s&p if you will doesn't have that capital on the balance sheet and doesn't love it -- therefore they are not able to utilize any capital to buy back any stock no matter where it is priced. what that leads to his m&a activity with the larger folks being able to prey on the smaller folks. vonnie: i know there are trends you were looking at in particular. retailers on how people shop at retailers, being one. explain a little more, will. >> what we have also seen in this environment is companies that are allowing basically to finance purchases at point of sale, at zero rate. you have very high credit card level right now and

outstanding debt limits. you also have folks going to the register and able to finance those charges. what that is creating is a game of vacation at the register where the retailers are able to recognize profits in this quarter and say, yeah, that was a sale. i didn't receive the cash yet but it's coming because i have this promise from the affirms of the world kicking the can further and further down the road but it's not reality. unfortunately if you took that out of the market and if you took credit out of the market, i think the sales number this quarter would've been abysmal. all they are doing is finding new ways to gamma phi those numbers but that doesn't result in cash on balance sheets. vonnie: what about the streaming wars? he say they are ending and that might provide opportunity? >> i think that is an area where you may see m&a activity. i think it was kind of sexy for everyone to have their own streaming service. the economics of that have not made as much sense. i think we all during the holiday season have been

flipping on and noticing maybe netflix has more premium content than is competitors. i predict a lot of m&a activity amongst those second and third tier layers which i think is just healthy for the market and will end up providing us with better, more robust options in the long run. sonali: so much attention is paid to the magnificent seven. i'm curious about the more up-and-coming spaces course don't has looked at -- corestone has looked at like cannabis. how much love will those sectors get into next year? a lot of investors we speak to have a lot of uncertainty when it comes to the risk appetite you are able to take on next year. >> i think startups in all sectors will have a very hard time. we've been very active in blockchain since 2017. the bitcoin etf conversation occurring now -- i track that

space very closely. when those bitcoin etfs are approved, that's going to open up a whole new demographic of buyers for that store of value asset and i do believe that in a fixed supply, bitcoin's market place with that new entrance of massive demand, i think we will see really exciting price activity there the first half of the year and that is something that we are very long and very bullish on for 2024. the consumer goods thing is back to the haves and the have nots. i think you will have well-capitalized businesses do well. it's going to be really hard for start ups. we partnered with friday media, launching a beer here in the new year under their umbrella, which is now starting -- not starting from zero. we have some viral content go out, this guy, ronnie deutsch,

30 million views in a piece of content that we did not even pay for. if i don't have that type of support for consumer brands in 2024, i don't want anything to do with it. sonali: pour one out for the meme stock crowd. they're are in love with the beer brand here -- they are in love with a beer brand here. we will talk to you more in the new year about those risk assets. will mcdonough. the founder and chairman and ceo of corestone capital. fascinating. i have not had a friday beer. i know you have -- because i sit next to you all day. [laughter] vonnie: drink and work? [laughter] sonali: we like to go to the jeffrey. they have all sorts of craft beers. i hope you have a friday beer today, vonnie. vonnie: we will be talking wine and champagne and a little bit. sonali: we will. vonnie: it is a peppermint hot chocolate. sonali: oh, it's a peppermint hot chocolate. i'm very excited to find my favorite bottle of wine for i guess saturday night -- sunday

night, new year's eve. we will pick it up a notch further and -- for then. vonnie: a nice long weekend. have to get your resolutions. i haven't asked you. sonali: coming up next, we will switch gears and hear from larry summers, former u.s. treasury secretary, with ongoing concerns about inflation -- he's not the only one. he will talk about what to expect in the new year. this is bloomberg. ♪

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sonali: welcome back to "bloomberg markets." i'm sonali basak with vonnie quinn. it's time for our wall street week delay segment. the former u.s. treasury secretary, larry summers, joined david westin earlier to take a look back at 2023 on the predictions that were made about inflation. take a listen.

larry: we basically got an outcome that was closer to being transitory, inflation came down with policy that is what their opponents were insisting on. interest rates far beyond what they were recommending, far beyond what the fed was predicting as of almost any date in the recent past. so the record's a bit ambiguous. yes, absolutely, there have been important supply elements, i have always stressed that we never were an 8% or 7% inflation country, that because of bottlenecks, a variety of prices went up, adding to inflation, and they would then come down, subtracting from inflation. i am not sure we are really a 2% target inflation country in any durable sense. i look, for example, at the

2.5% wage increase. the federal government just gave its strike activity that is more than it's been in a decade at s till tight labor markets and geopolitical risks in commodity markets, at the fact that house prices have really started to turn back up, and i am far from sure where we are going to go on inflation, so to declare that proverbial soft landing to have taken place seems to me to be premature. so, i think we are still in an ambiguous situation. i've been saying, david, on your show for close to a year now that there are three possibilities, that the economy turns down quickly, that the economy achieves the proverbial soft landing, and then in a

sense we don't ever achieve a secure landing and inflation never really gets down to target and even re-accelerates. obviously we did not see the hard landing in 2023. i was never sure as many people were that would come. because as you also know, i've been arguing that neutral interest rates have gone up. so policy is not as contractionary as many people expect. and the impact of interest rates are lower than many people have expected. i'm not terribly surprised we have not seen a recession in 2023. and i think there are risks looking at the credit figures for the next while. we may achieve that soft landing. i certainly say it looks better and more likely than it did six

or eight months ago. i always said that soft landings were the hope over experience. but hopefully hope may triumph over experience. david: one of the big developments of 2023 was generated ai, something you brought to wall street with one chatgpt -- when chatgpt was first announced. what are the possibilities for generative ai in 2024? what should we be looking for and concerned about? larry: david, i think this is an immense development. i think that there's a ton of uncertainty about what the timing is going to be. i'm not sure it is going

to be quite as revolutionary for productivity as we measure it. quite as rapidly as some people hope. but this is -- people use the term general-purpose technology. i can think of almost no area of human activity -- almost no area of economic endeavor that is not going to be profoundly affected by these technologies. and i have no doubt that they are going to get substantially better. and here is the thing that i want to emphasize -- at the early stage of the technology, david, people always think about how it can do currently recognized tasks more

efficiently. but ultimately, it is the new tasks of which we have not conceived that is the larger effect of technologies. david: 2023 was a year of geopolitical strife. we started with the war in ukraine, we added then the attack of hamas on israel and the difficulty that's raised in the middle east for so many people -- and continued tension with china. as you look at the microeconomics of 2024, how do geopolitics fit in? larry: the post-cold war holiday from history is over. the world is once again a very dangerous place. with the prospect of war between major powers. the way in which the united states has conceived itself, in

terms of national security, is no longer viable. we are going to have to invest substantially more in all aspects of national security. that ranges from increased defense spending, well above current projections. to thinking about national security issues as we think about our educational system, as we did after sputnik, to thinking about our investment in connections all over the world. the idea that we can rely on a growing spread of democratic

oriented economies to usher in a the world is no longer valid. and that makes for a much more uncertainty and -- uncertain and dangerous world with the possibility of geopolitics at any moment bearing importantly on markets than many of us have become used to. worry about the possibility -- i worry about the possibility of conflict much more than i would have a few years ago. and i think that whether you are a student, a professor in a university or a worker in a business, a leader of a

business, i think the idea that we all need to think about our country and its responsibility to keep itself safe, and what it does in the world's capacity for the world's safety, i think back now to john kennedy's inaugural address about asking ourselves not where our country -- not what our country can do for us, but what we can do for our country, as again being a kind of theme that our leaders are going to need to strike, and our people in business are going to need to respond to. these are very, very serious times, david, in a way that many who are alive today have not

really seen or contemplated. vonnie: larry summers there. former u.s. treasury secretary. you can watch more "wall street week" tonight at 6 p.m. eastern. coming up here on bloomberg television, we will get advice on choosing the right wine, sparkling or non-sparkling, for the holidays. our guest will be zachary sussman. author of "sparkling wine for modern times." we are seeing some selling in the final session for 2023, down about nine basis points in the s&p 500, off our lives. volume, very low, 40% of the 20 day average out there. do continue to stay with us with our bloomberg radio and -- for our bloomberg rate on tv audiences. -- bloomberg radio and tv audiences. this is bloomberg. ♪

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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. sonali: for tv and radio worldwide i am sonali basak with vonnie quinn.

as we approach new year's eve, how to pick the best ones to celebrate? here to help us answer that question is zachary sussman, author of the book "sparkling wine for modern times." you brought want to talk about and they are under $20. zachary: inflation is something we are all facing and these are all below 20, some as low as 13. sonali: what are the options? if you want to buy champagne, you don't just buy champagne anymore to drink sparkling wine. zachary:s you don't have to spend champagne prices for excellent sparkling wine. the first pic is a cava from the catalonia region just outside barcelona. it is $30. it is remarkable you can get a wine from a historic region at that price. people are often familiar with

cava. you get limiting of send a lot of complexity. it's great with topless. with tapas and as an entry-level bottle i don't think you can get much better. we all love percent go. we have been living in the era of prosecco. we have two producers. these are both around $17. if you already know you like prosecco i recommend zardetto but what is new and refreshing is ro a stylese, created around 2020. the main grape is glera but they also have a little bit of pinot noir. it's amazing and versatile. you could do a spritz with

campari or aperol. vonnie: you try to so many for this book. zachary: hundreds of bottles during lockdown. it was a good time to drink a lot of wine. sonali: if you like red wine lambrusco is a good option. zachary: sparkling reds, a lot of people don't know that is a thing. this region specializes in it. it's great with red sauce, it is on your, spaghetti, whatever you want to do. vonnie: is there such a thing as getting tipsy faster because of the sparkles? zachary: i would say no. it's an interesting point. i think people tend to not eat with sparkling wine. there is the idea you are supposed to have it before meals. actually all the wines are extraordinarily food friendly. don't have them on an empty

stomach because they go great with food. vonnie: what about midnight when you maybe have had one or two so you don't necessarily need the best quality. i'm giving away a lot about myself here. zachary: you do not have to scan von quality. all the wines are high-quality and very affordable. if we want to talk about the final bottle, it's a really good value of about $20. cremant is made with the same technique as champagne but outside the region. it is the same real estate at a cheaper price point. it is so elegant. it approximates drinking champagne. if you want to give champagne a run for the money at like 50% of the price go with that for sure. sonali: we have talked a lot about luxury on the show. what about the high-end spender? zachary:z champagne historically was defined by the big houses

and names you probably know. those are perennial classics that are staples. they are great. they are expensive. what is really exciting to me and a lot of people i know is grower champagne, farmers that would traditionally sell grapes to big houses are now making their own wine called farmer for is. it is more artisanal, more reflective of place and that is motivating savvy wine drinkers. sonali: what makes a good gift? if you show up to somebody's house sometimes i get that anxiety. how much do i spend on a bottle of champagne? or, maybe sparkling line is it the better option at that point. zachary: everyone's budget is different. if you can show up with a bottle of champagne that is always a super classy move. you don't need to spend more than $50. if you are in more of a budget mindset, any option would be

pretty great. vonnie: why don't we see celebrities bringing out their own champagnes are sparkling wines when we see them bringing out liquor frequently? is it margins? zachary: really good question. there are certainly some celebrity wines, sparkling wines. vonnie: typically nonalcoholic, right? zachary: i'm less familiar with the nonalcoholic market. i like to drink wine with alcohol in it, sorry. vonnie: is there a variety of proof? zachary: typically sparkling wines will be lower in alcohol then red wine. none of these are above 12%-12 .5%. red wines can get to 14-15%. so if you want to drink with more moderation, bubbles are a good way to go. sonali: are they better than other types of just plain wine? how does this compare? we have talked for many years now of the expansion of the

alcohol category with different kinds of sparkling drinks, sparkling waters, seltzer's. where does this fall? zachary: in terms of alcohol content? sonali: in terms of consumer choice. zachary: white cloth and sparkling hard cider is a complete different market. i would not personally show up at a dinner party with a can of white claw. there is definitely a lot of competition from other sectors. if you are a wine drinker and a wine lever you will probably not bring hard seltzer. but there are really good non-alcoholic wine options out there with exploring. vonnie: brief rundown. countries and maybe a couple other names we should know about , countries beyond france, for champagne. zachary: i'm a huge fan of italy in general. not just prosecco but in the

north of italy there is an amazing region that makes champagne style wines with that method. spain is wonderful. portugal makes amazing sparkling wine. the thing about it today is wherever one is made somebody will make a really good sparkling wine because it's global now. sonali: if i were a celebrity attached to a wine it would be a cava. what about you? vonnie: i don't know if that would be my brand or product. sonali: i can see a friend champagne. vonnie: i would probably have a water. i feel like water sales more. sonali: especially when it is sparkling. thank you zachary sussman wine expert and author of the book "sparkling wine for modern times." carnival ceo josh weinstein spoke with manus cranny and carol massar earlier today. they ask him about the outlook for booking in 2024 and the

demand for travel this past year. josh: 2023 we wrapped november 30. we had record demand, record yield, record pricing, record of forward bookings, record on board spending levels. across the board our business has thrived in 2023 and we expect much more in 2023. carol: you are a great gauge of how customers feel. you have a great read on that. are they continuing to spend, to advance bookings? and once they are on the ships, are they continuing to spend? josh: that is what we see. our q4 was, from a pricing standpoint, the highest of all year. so it is accelerating, not decelerating. when we look forward, we are two thirds books for all of 4024 already. -- 2024 already, 10 points higher than last year.

on top of the ticket bookings we have started putting forward on board spending. we have more or less one third of on board spend prepaid in advance. so we have really good visibility. booking trends have not slowed down. every quarter this year people expect it will slow down, it has got to. we will see something. the consumer will be impacted. the fact is, with our business, we have not seen that. it's record after record. we just ended two weeks of cyber monday and black friday. more records. that's not just coming from one branch. it's not just in the u.s.. it is our global portfolio of brands and that is really encouraging. manus: do you think we are moving from many ceos similar to yourself with the global airline said global business is saying, we have lived through a time of revenge tourism after we were

locked up for a time. we had a parabolic reopening and you had a parabolic rebooking. are you evolving towards a new cycle? you said there is no end in sight for the demand. if we ended revenge tourism, how do you describe the next evolution? josh: we do not think this is revenge anymore. it's not pent-up demand. it's two years from when we really got back in full as a corporation. these are people that have decided what is meaningful for them. how do i want to spend my life? experiences are what they are looking for. unforgettable memories with friends and family. that is what cruising has to offer. manus: i sat down with the accord ceo and he said i have not got enough hotel rooms and high-end staff to help me run this business. that takes me to the cruise. it is the high-end hotel. to what extent are the packages off ship and onshore, those additional spams, are they critically important to the expansion and of the turnaround

from the loss you have had. do they add incrementally or significant? josh: when we think of our business, we are a little different from hotel companies. i am staying at a hotel in new york and i will tell you which one, but the service is not good. we have learned how to live with that as a society. it's almost tacit acceptance. the cruise industry, our brains did not deviate from service level. our guests have high expectations and we aim to exceed them. we don't close floors. we don't shut areas down. we don't skimp on the services we used to offer. it's full steam ahead. that is what people expect and are willing to pay for and that is what we are seeing. vonnie: carnival ceo josh weinstein on bloomberg earlier today we are let's look at where we stand. we are seeing some profit-taking but we are off our lows of the session for sure. the final session of the year. down about .2% or eight points

on the s&p 500. 4774. it looks like -- and i should not say this too soon because there are 48 minutes left -- but we will not hit a record at least based on the s&p 500 today. sonali: thank you for not rubbing it in my face and that i am losing my bed. vonnie: you don't know that. we might have to wait until tuesday and neither of us wins. sonali: what happens then? vonnie: we make a new one. sonali: sounds good to me. vonnie: the bedrolls. sonali: good times. we did see records and the dollar is weaker. 10127 on dxy and i could bode well for equities next year. sonali: it could be interesting for gold as well that has been on a rise for the last week or so. today we are also seeing gold pretty flat. it only hit one down day in the last five or six days or so. what is interesting here is also you are seeing belief in crude oil again.

almost half of 1% lower on the day and bitcoin taking a tear lower today once again. we have not seen the etf approval from the s -- the sec yet. vonnie: were shifting at coinbase. the head of custody has now moved to basically. is no longer head of custody. you have to wonder if these are changes being made in order for sec approval to come or is it as about something else. -- is about something else. coming up we talk about airports with air help ceo. stay with us on bloomberg television and radio. television and radio.

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are finally. it's an exciting end to the year. a lot of people are, yes, off, but a lot of people are daytrading at home. we were surprised with the s&p down with some any guests talking about the idea that people don't want to sell now. they don't want those tax implications. vonnie: they might want to sell for the end of the year. ins and outs are complicated. let's now move to air travel. we are getting a spate of exciting new developing for our trouble next year. a ranking by airhelp shows u.s. airports continuing to miss the marks, as do hubs in many of the most visited cities around the world. each year airhelp issues and analysis of more than 4000 airports in its worldwide data paid -- database to determine the best performers and worst offenders. the ceo of airhelp tomasz pawliszyn joins us now. what were your results this

year? the top three and the bottom three? tomasz: the top three is always difficult . we have surprises this year for sure. the bottom, i'm not sure i want to mention them because there were too many airports. we measure and let only 200 airports into the top three. but you can look at the map on the website for the article. smaller airports took massive gains this year. there was a little surprised. seeing cape town. and only on the fifth place, doha, an amazing place, of course. all of the big airports or large hubs are behind the smaller ones this year coming from a lot of nice. -- delays. vonnie: tell us what the delays

are? is a big airports more likely to automatically do worse? tomasz: we measure on-time performance, customer opinion, and food and shops. on-time performance was critical this year. we see a lot of large hubs perform poorly in this category and smaller airports gained a lot. of course smaller airports have less flights, less airlines. it's a little bit more easy to maintain a vertical score on performance. sonali: how much does a local carrier matter in this regard? tomasz: it depends a little bit. in europe, local carriers is a european carrier, not a country specific carrier.

i would say it makes it better or easier to operate. the big hubs have many airlines with a lot of complexity. i would rather focus on this than a local carrier. strictly local carriers, we don't see a lot of impact on this. sonali: it is worth talking more about travelers experiences. when they use a certain carrier, they are going to a certain airport. it could be far away and they have a layover. what are the rights customers have if flights are delayed or canceled, especially, knowing people watching this program might be on route to somewhere they need to be by the end of the weekend? tomasz: it depends where you travel. if you travel from the u.s. to europe or from canada to the u.k. or even to brazil or turkey, there are established passenger routes in case of delays, cancellations, or missed connections.

with food, beverages, hotel nights in some cases and also a compensation for mismanaged flights. many travelers, especially in the u.s., are not aware of those rights. if you travel within the u.s., and we know domestic flights in the u.s. this year exploded, there is not so much protection. today we know there is a new saa reauthorization coming, not next year. and hopefully some of the rights will come into shape next year. apparently if you travel to europe, the u.k., canada, brazil , turkey, even saudi arabia, you are protected with compensation. sonali: some people have to go through a credit card to cash in on some things you might need if you miss a flight or if a flight is delayed or if it is airline's

fault. the airline may not compensate you, but your credit card may. tell us a little bit about what happens at the better performing airports. for example, detroit metropolitan wayne county, minneapolis-st. paul, seattle, tacoma. they did really well. what are they getting right? does labor cost more because of that? tomasz: you have to understand airport performances, on-time performance is not just due to the airport. it is where the airport is situated on the whole ecosystem around the airport. a lot of time the location plays a big role. some airports in florida perform poorly because of whether. some airports are overcrowded because it's not necessarily the

airport itself, but the airline schedules are maybe too aggressive for the airport. and you have traffic control restrictions. so it's not just airport operations per se. it is what it is. passengers do not care as much. the performance is performance. these airports scored high and some of them very high in the usa. all of these conditions played for them well and the operational data as well. sonali: what about upgrades around the world for certain airports, certain terminals? how much of a difference has that made for consumers? tomasz: it depends a little bit. we have good cases and not so good cases. i just spent a few weeks in the new territory of abu dhabi.

it looks amazing, seamless, fantastic. it was so quick. very nice. in those cases, of course, the improvements, we see they are widely accepted by travelers. we see more than one of this forget we see newer terminals in doha, dubai, i would be. we -- of it already. those are highly regarded airports. there are also airports with much less traffic that are better operated. so technology helps. but it's not everything. vonnie: no. perhaps people looking at your list will be tempted to go to new places, seeing these airports. thank you for joining us airhelp ceo tomasz pawliszyn.

we appreciate it. the airlines are putting their post lockdown plans in place and some look interesting. they include shiny new airplanes, new seat design, and so much more. some new airport terminals will also change the game in a few regions in 2024. some routes and airplanes will be delayed because of supply-chain difficulties. i was reading on cnn earlier this includes lax. automated people mover will finally be in working order in 2024 bringing people from the airport to ride-hailing areas to their parked car and even the metro. that will really help at lax. did news for little planes. apparently they will get more comfortable too. sonali: everything from contest to japan airlines to india airlines making upgrades to different planes. as someone who just traveled. vonnie: india airlines? sonali: no, i flew qatar and it

was a wonderful experience. i thought or put 25 hours, it would be a miserable ride. i was very comfortable and it was very spacious. the woman next to me talk to me a long time about how much the experience has changed and that was not as fun. vonnie: may be the new doors on business class would be for you the next time. sonali: that's definitely the case. american airlines fascinating also. i got a very cheap upgrade to premium economy, have to say. we will talk about openai next. stick with us. this is bloomberg.

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♪ sonali: welcome to bloomberg markets. i'm sonali basak alongside vonnie quinn. we are about a half-hour from the close of the equity market. we are looking at a down day. we have seen the s&p 500 much higher on the year on all the indices especially the nasdaq 100. today we are down on the s&p more than .1%. the nasdaq 100 .3%. flat on the dow jones for now and down on the russell 2000. vonnie: a noncommittal profit-taking day. literally talking about fractions of a percent. it's not really a selloff. we are that much closer to

actually hitting a record financially tuesday. several stocks making 52-week highs, 30 including once again jpmorgan chase. tjx is interesting. i don't know if you saw earlier on bloomberg about abercrombie & fitch having a 300% gain this year. it would have better to be in ever capri and nvidia. that's crazy to me. there are companies out there that really did the work this year. in the bond universe we are looking at a 10 year basically unchanged, though not unchanged throughout the year. a round trip about five come all the way down to 38791. a two year yield started to get higher, 20 basis points higher than where we are ending at 2499 with the bond market closed still for the long weekend. crude oil off by about $.31, 7146. no problems for the federal reserve there. golda seems to be chilling at

$2000, 6550 an that the settlement off a record. a nice little goose to gold this year. sonali: chill sounds good at the end of the year. it's funny. just like an individual investor does not want to sell stocks into the end of the year do know who else does not? ceo's. we talk about how the rally in stocks has made a comeback this year for the world's wealthiest. the combined net worth of the 500 richest people surged by $1.5 trillion in 2023, fully rebounding from the war point that's $1.4 trillion loss to the year prior according to the bloomberg billionaires index. no one it did better than elon musk, who recaptured the title of the world's richest from french luxury tycoon bernard arnell. we will bring in jordan fitzgerald for more area -- more. how much was this just a function of the market? jordan: it depends on who you

are talking about. really, the 1.5 trillion was motivated by the tech markets and how ai has driven such success there. tech billionaires like elon musk read the most benefit. when you look at the top 10 richest people in the world on the billionaires index, jeff bezos and mark zuckerberg post raked in huge amounts of money this year and were really able to counteract last year's route. vonnie: bezos added more than $70 billion to his personnel that purse now find for second place. the biggest losers lost $37.3 billion. you would probably not notice if you look at his bank account, jordan. jordan: yes. adoni had a hard year. last january hindenburg research published information that tanked stock in the adani group. one day in january this year

alone he lost $21 billion. which for you and i sounds horrifying that he remains the 15th richest person in the world. vonnie: i remember that day. he still has an 11 figure fortune. thank you jordan fitzgerald. wonderful story. appreciate it. sonali: now we look at another hot trend, ai and see who the winners and losers are of 2023 with amy webb a ceo of the future today institute that joins us now. looking at your coverage around the ai space. one thing that does not get nailed down enough is the risk of ai power concentrated among so few country -- companies. what happens if it continues in this direction? amy: we have already seen what happens. the race to partner with generative ai companies.

the story we have heard all of 2023 is about openai. the reality is other companies including anthropic are partnering up with the largest tech companies that, by the way, are also cloud companies. any story about the future of ai necessarily means a story about cloud chair and there has been a race over the past few months. vonnie: a race as well to have a voice in what regulation will look like. how does that play 322 any for? amy: well, that eu is ahead of the rest of the world in the past year. the eu ai act passed, the first comprehensive regulation for artificial intelligence that is meant to cover safety and offer legal certainty for investment and innovation. it will all hinge on enforcement. as we have seen with other sweeping regulations around data and privacy in the past, these types of laws are very hard to regulate. and it is also really hard to

look ahead. regulation is inherently about addressing something in the past. very rarely does regulation address strategic foresight. that is intentionally planning for the very long term and making sure innovation is possible while we mitigate. in the u.s., on october 30, president biden passed an executive order offering new standards for artificial intelligence, safety, and security. again it will come down to enforcement. that is the critical problem we continue to see. vonnie: exactly. and who exactly will be the gatekeeper cuts on mark to -- gatekeeper? can it be the administration for the u.s. then someone else for europe? amy: i think that is the wrong move. in 2017 i proposed something like an iaea but for ai. this is not to equate nuclear

technology with artificial intelligence, but rather, way of having an independent authority that is able to audit the structures, the systems, the data flows, things like that. i have now been lobbying for this for several years. i gave it a different name. there is not a lot of oil to make something like that happen. in part because the future of artificial intelligence is very tied to each country's national security and economic stability. so, to allow an infinite third party in potential because some challenges. sonali: where do you think regulators have their eye off the ball when it comes to ethical considerations around how ai is developing, particularly, in the u.s.? amy: a lot of what we heard in the past 1.5 years were big tech giants lobbying lawmakers in washington, d.c. to please regulate them. it was smoke and mirrors.

it was not truly asking about regulation as much as it was trying to have a say in what regulation look like going forward so they can continue to grow. the challenge again with regulation is in the u.s. we don't have in our congress leaders that come from the technology sector that understand technology well enough to put something forward. i would argue we are about to live in the year 2024. our regulatory systems and structures, the way we make laws, that made sense years before we had autonomous systems. i don't think they make sense going forward. i think a traditional regulatory approach is not the right way forward. it will wind up in lawsuits. sonali: you think about the future a lot. what happens of things go unchecked here? what are worst-case scenarios of what the world looks like if regulators don't get it

together? a couple weeks ago at a bank ceo hearing in washington there was clear concern among lawmakers that lending will become very biased in the age of ai. amy: breaking news, lending is already very biased. what we are hearing people talk about is an apocalyptic hell scape going forward. we have heard that from elon musk and others. the true future of ai is probably not can a robots that take our jobs and murder us in our sleep. it is worth. -- worse. it is death by 1000 paper cuts. i know that does not sound very dramatic, but we have our eye off the ball. when i look at the ceos and some decisions they are making, everybody is looking at the bottom line. how can they use ai to eliminate headcount? that solves near-term financial issues, but it creates massive long-term problems. that is an example of a paper

cut. are plenty of biased problems. there are all kinds of challenges. they are not quite the existential sci-fi style horror movie depictions of anthropomorphized ai we have heard about. the longer it takes for us to get down to practically talking about ai, the worse it will be. vonnie: we were speaking with the deloitte chief technology officer yesterday asking him about jobs. he said you have to think about creativity. it not that it gets rid of jobs, it is that it boosts creativity potentially. is that smoke and mirrors? does anybody know what ai will look like within a company in five years? amy: i work as strategic foresight and my job is to take data, build models, and extrapolate data-driven plausible futures. i am very good at math. i can tell you that there is no way to predict the exact outcome

of ai because there are too many variables in play. all of the reports you see that promise x number of trillions of dollars will be generated or x number of jobs will be lost, it's very difficult to build a model that holds any weight right now. what i will tell you is this. we are a trenches and -- transition generation. this is not something most people are willing to talk about out loud. our generation will go through an enormous long-term transition. lots of jobs will be eliminated and replaced by other types of jobs. some of those jobs will be the wrong jobs and it will take a couple years to sort that out. 20 years from now the world will look quite different than today but in ways we cannot yet predict. what is best is to create a situation where you have a long-term view, again, using strategic foresight, on what the future could look like, and be willing to prevent and make adjustments in the present, relying on somebody else's model

of exactly how many jobs and where will be created or lost is a surefire way to make sure you miss what is actually happening. vonnie: are you concerned we are on the cusp of a different type of cold war when you think about how we are to -- doing it versus how europe is doing it, versus how china is doing ai. amy: we are not on the cusp. we are in it. we have different approaches to the development and treatment of artificial intelligence. i have been talking about this since 2015. europe has always led with regulation, which has positives and negatives. the united states has always been sort of hands off in the space allowing the largest technology companies to grow and make decisions and ask for permission or forgiveness later on. china has a very different approach to data collection, data use, and that of element of these tools for any number of purposes. they are also highly motivated to make sure ai is front and

center in the countries develop it. -- development. there are a lot of people there in artificial intelligence along with other critical technologies like synthetic biology, biotechnology, and quantum computing. these are all adjacent ecosystems and when one succeeds it helps the other. this has been part of china's five-year plan the fast -- the past few five-year plans. europe and the u.s. arctic to the party. no one ever talks about the global south. there's a lot of people there as well. i am concerned we are approaching this core technology that will change so many things in some a different ways with different end goals in sight. vonnie: it's a shame to end on that note. but that is the truth of it. amy webb thank you for joining us. amy webb is the ceo of the future today institute. coming up, we count down to the closing bell speaking with

zachary hillhead of portfolio management at horizon investments. we have about 17 minutes to go before the final closing bell of 2023. there are a couple days in the year, just not trading days read the s&p 500 down 10 points, the dow down 20 points, the nasdaq down 66.4% and dxy up .6%. for bloomberg tv and radio audiences, this is bloomberg.

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anyone can become an agent of innovation with invesco qqq, a fund that gives you access to nasdaq-100 innovations. i go through a lot of pants. before investing carefully read and consider fund investment objectives, risks, charges, expenses and more in prospectus at invesco.com. vonnie: welcome back to bloomberg markets. i'm vonnie quinn with sonali basak. 15 minutes from the final closing bell of 2023 joined by zachary hill head of portfolio management at horizon investments. it's been a great year for anyone invested in equities or

bonds as long as you got out and in at the right time. essentially major indices or -- are close to or hitting records. yet, there is still the possibility of recession in your book. if that happens, do we see a meltdown? zachary: it is great to be here and close out what has been a truly epic year for investors and the economy generally speaking. as we look forward i think there's a couple things. recession is not our base case. we think that in this type of environment with what consumer balance sheets look like, we had a recession in covid and on balance everybody became more wealthy and debt service went down as a percentage of income. that is not typically happen in a recession. typical business psychoanalysis has been challenged. as we look forward we don't see that recession coming.

that would be the same -- thing that gets the market to come down next year. we have policy tailwinds for the fed. it will be about earnings and the economic outcome. vonnie: if you are not base casing recession, what are you looking at for equities? plenty of people are bullish for next year raising price targets into the 5000 range to 5400 and beyond. i know you do not do price targets, but are you looking for a decent upside here? zachary: we don't do price targets but it's a year when you want to be in the equity markets. if i would rank semi-would say stocks over bonds over cash in 2024. that is challenging for some people considering we are about 1% from all-time highs. i think that is the way forward. with the no recession situation, with earnings strong and continued tailwinds from the ai

seem, that we think is early doors now. putting that together, we think it's a positive market environment. sonali: stocks over bonds over cash it's a very controversial view. a lot of people have been on one side or the other of that crate going into next year. can you explain what you think equities would do better than fixed income in 2024? zachary: a couple things. one, fixed income first. we have about six cuts priced for 2024. that seems about right west. if we get any more than that, it is likely to be in a situation where we are in recession. then it will be fixed income that you want to hold. we have about six cuts in the curve. the term reading is flat to negative. so you aren't getting paid a ton for locking your money up long-term with fixed income. think of it more as you see cuts in the curb and then you kind of get your coupon.

that's not bad. bonds are more attractive as an investment and they were a few years ago. that is not something that screams, like, by with both hands in our view. i think to do that you need to see that kind of recession start to unfold. we are just not there yet. also the curve is unfurled it. it takes negative carries do that. on the cash side, while i think we will be seeing 5.5% rates that everybody likes in key bills and money market funds, they come down materially first quarter of this year -- or committed to your rather. they are putting all that together as where does the marginal dollar go? you still have continued strength in the economy and in earnings. the resiliency of corporate america over the last few years has been truly remarkable. we think we will have continued flows into stocks that will support them over bonds and cash. sonali: how much belief do you have in the laggards of the industry -- indices?

the financials, the housing stocks that have seen rebounds more recently? zachary: great question. the market has been debating that for some time now. we are not long-term goals with the laggard reversion trade. we think you need to go where earnings are and where the future is. so, that will continue to be some of those names and sectors that lead the market in 2023. we are likely to see a few names shift. we will probably get a fresh new acronym. the overall just is, do not -- we are not in the camp that you need to wholeheartedly bile the losers. we have been involved in some reversion trade towards the end of the year. small caps have been our vapor play there. that is something we are looking to rent, not own, long term. that is how we think about that. we think there will be a couple opportunities. some defensive sectors, interest-rate sensitive sectors,

they have had a difficult time in 2023. we are looking for potential spots there as we enter 2024, especially if rates continue on a downward trend. vonnie: we talk a lot about the s&p 500 25% gain. around the water there have been lovely gains in other countries as well, countries that might not be used to them typically. for example, the msci japan index was up more than 26%. we had india of more than 20%. korea up 24%. china was down. i think we all know the history of the year for china investors. it was down more than 13%. are you looking beyond the u.s. at all? are these run ups deterring you? zachary: the main argument for embracing non-u.s. stocks is purely valuation. people have been making those arguments for many years. what we are looking for internationally is for positive

stories, for reform, and for where the growth impulse is coming. we saw that predominately this year in japan. as we look forward, that is the primary area we are looking for as well. we have eyes on china, like everyone else does. that has been a very frustrating trade for investors and it has really called into question whether the administration is looking to support the real economy or support shareholders. those are two very different things that people often forget. the last thing i would say is in europe, look, there is less of a good trade-off than the u.s.. that is an area not just in terms of what their equity market is made of, but the growth profile. it does not look as attractive. putting those things together we want to be selective internationally and will likely pick spots more in the u.s. that overseas. vonnie: fascinating.

how much does oil at $70 per barrel mean for your investments? if we were to see a supply shock or other shock that said oil 10 or $12 higher would that make much of a difference to your outlook? zachary: it would definitely change the inflationary outlook. we could dust off playbooks from 2022. for think about how that would play out. i would like to see a stronger dollar. oil would have a difficult time. also places with more energy dependence like europe will have a more difficult time as well. that is something we are watching. more broadly not just on oil supply shock. one thing that is on our radar back half of next year is we are having interest rates come down meaningfully in the u.s.. we have seen major slowdowns in interest-rate sensitive sectors like housing. do we see that we accelerate?

that is very much not on the market radar and it's not our base case by any means. but, those are areas where the market tends to be surprised whether thinking about something potentially happening. that is something that is on our radar, not just a supply shock, but how the u.s. economy reacts to lower interest rates. sonali: zachary hill of horizon investments, thank you for your thoughts at the close of a very busy year with a stark run-up in markets. vonnie: it seems like we would get another week of gains for you die think today's decline, given . it would have been nine weeks of the run-up if that was to be the case. at think we are still positive. we were .2% positive with the s&p down a few points. we are down .4%. i think that puts us in negative territory. sonali: for the week. vonnie: just the week. sonali: we have five minutes to

go. what is interesting is not just the index overall, the sectors within them. while energy was the big gainer of 2022 it is a loser of 2023. 2024 has a lot of surprises. vonnie: i stand corrected. we are still positive. sonali: positive news. coming up we talked to matt stephanie of northwestern mutual the chief equities portfolio manager there of how to position into the new year as of market closes. we will end in the green, but down on the day. this is bloomberg.

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vonnie: back to "bloomberg markets." that is the closing bell ringing at wall street. here's how markets performed on the day. we did see the nasdaq, the s&p and the dow all in negative territory. i guess we have to have that one day, right, that makes us grateful for all the others this year.

the nasdaq 100, rising 54%, close to it. the s&p 500, rising 25%. 2023 is one for the books. if you were in the s&p 500 hoping to make an 8% return which is the typical return a bond manager would expect, you've already made your next three years return today. 4769.89 is where we ended. the nasdaq, 15,011. sonali: the nasdaq 100, 54% surge, the best year since 1999. that was indeed the dot com bubble. 2024 sets up quite interestingly. let's talk quickly about the sectors that did well today. how did we end the? we had internet stocks -- how did we end the year? some of the internet stocks, the names getting up rally once again.

we are waiting for the breadth of the market to broaden. vonnie: there's a tiny bit of fatigue out there and profit taking. what will the magnificent seven continue to perform next year even as we start to get rate cuts, assuming that we do, or do the laggards start to perform? we did see 30 stocks make 52 week highs today. it is narrowing just a little bit. it's impossible to say it was going to happen. sonali: it is impossible. you did say today lots of reads negative on the day. the real estate sector, that's another place where there is still concern. it depends on how fast rates fall. vonnie: and when they start the drop, and if inflation rears its head again, there's a scenario where the fed lowers rates but has to raise them again. that would be very outsider. sonali: a lot of scenarios. let's go to the northwestern mutual chief equities portfolio manager, matt, how do you feel

about this idea of a market broadening into next year? do you feel like people have squeezed out the gains they were going to get or do they find new places for yield? >> thanks for having me and happy new year. our outlook for 2024 is still one of a little bit of caution without portfolios. thinking outside of the equity space, we still really like high-quality intermediate fixed income as a place to overweight in our portfolios. that's predicated on the simple fact that we still think that risk -- the risk of a recession is elevated into 2024, and the environment of fixed income looks quite attractive to us. vonnie: be a little more specific when you say fixed income. many say look at duration but at the same time there are arguments for other parts of the curve as well. >> yeah, you know, we prefer the middle part of the curve, 5-6 years.

we are a little cautious on the credit outlook as well. we would rather be in investment grade government securities. they don't have a lot of spread risk behind them. that provides to us a nice correlation benefit to other parts of the portfolio that obvious they are going to ebb and flow with the macro. namely equities which have had a tremendous 2023. as we think about 2024, we might be in for top your waters. vonnie: that's for sure. -- choppier quarters. vonnie: that's for sure. does that mean that we set aside the u.s. and place equities elsewhere? >> we prefer international equities. if we are correct about our call for a mild recession to the front half of 2024, that tends to mean that there is likely to be some sort of bid or flight to quality. in that environment from a currency perspective, we think

the flight to quality ends october the u.s. dollar which really hurts the international part of the equation for investors. so, within the u.s., there are still pockets of value out there, and asset classes that we think have discounted some of the weakness that we expect from a macro perspective -- specifically u.s. small cap in u.s.-made cap, where earnings estimates have been reduced in the mid teens for these asset classes and the against these reduced estimates we are paying pretty pedestrian multiples unlike the s&p 500. it's kind of a barbelled approach with fixed income being overweight in our portfolios but not completely playing defense with healthy allocations to u.s. small cap and mid cap in our allocations. sonali: speaking of pedestrian multiples, very un-pedestrian multiples and the nasdaq 100. trading at around 25 times a 12 month earnings above its 20 year average. how do you feel about that? >> it is something that from

our perspective has just been the prime beneficiary of elevated sentiment throughout 2023. thinking back to the beginning of this year, i think the recession risk in the mind of the investor was certainly pretty elevated. you saw with the aaii bullish sentiment reading which was in bearish territory for almost a year from 2022 to the front half of 2023, that flipped in the middle part of this year and started to rise as investor hopes for a softer landing started to elevate with the assumption that the federal reserve was going to be done hiking interest rates. to us, some of those longer duration parts of the market like the nasdaq are the big beneficiaries of that rise and sentiment levels and one of the reasons we think they have done so well this year. sonali: where do you start taking profits? investors have been reticent to sell into taxis frankly, when do you start taking some

profits and where do you take them? >> now's a really good time to reassess the portfolio if you are investor. -- are an investor. look at where the portfolio drift is taking your portfolio and look to reallocate the overweight adrift allocations to high-quality fixed income again. that's what makes the most sense this time of year. within the equity market specifically you mentioned the nasdaq and how well it's done. to us, with elevated sentiment levels comes a -- comes elevated risk. vonnie: tell us more about your expectation for the fed, you're one of the groups looking for the fed took on more than 25 basis points when it goes, what's the thinking behind that thesis? >> typically what we see happen whenever the federal reserve cuts interest rates in response to a recession, they don't go 25 basis points at a time.

the recession is our best case -- base case forecast for the fed hiking that they've done from the middle part of 2022 until the back half of this year. the response to -- and the response to a recession, the fed doesn't cut 25 basis points. pickup pretty aggressively. we wouldn't be surprised -- they cut pretty aggressively. we wouldn't be surprised to see 200 basis points worth of cuts. so, this might be a scenario where the market is predicting cuts and we get them for the wrong reasons. vonnie: that's fascinating. does it come out all at once, this recession? is it going to suddenly come upon us next year? >> i think it's one of those things that's been gradually building. it's been delayed certainly. the economy has been much more resilient than we expected in 2023 from where we first started this year. but there are cracks forming in the labor market, in the form of

the higher number of people that are unemployed today. if you look back in april of this year, the unemployment number has risen by a million people or so. if you're looking at the brats of industries that are hiring today, at the maximum level back in 2021, 80 5% of industries were hiring workers. that's drifted down to 55% or so which is near the trough levels before we enter in recession. there's never a ringing well for one a recession starts but it's a mosaic of different indicators we are watching that are giving us cautiousness to were 2024. -- toward 2024. sonali: when you think about the labor market tied to the consumer story and there's a lot of conversation about consumer debt for example rising to a trillion dollars worth of credit card debt, stimulus starting to wear off, the excess savings. if you look at the first quarter of next year, how levered is the

equity market to a weakening consumer and are investors prepared for it? >> the equity markets are going to be tied to profit growth for the company's in the index -- companies in the index. profits and employment are tied together. unfortunately we disagree with the consensus building in 10% profit growth for 2024. as inflation is coming down, the companies' pricing power is also coming down. that's having an effect on the margin structure of the economy. what i mean by that is wages are still running hot here at about 4.3% year on year. they are fairly sticky. dwindling pricing power was still -- with a tight labor market says risk around profit margins which means pressure on the labor market which then leads to some

pressure on the consumer. that's kind of the central risk case we are outlining right now. sonali: it's kind of a self-fulfilling prophecy, bad news leads to more bad news. when you think about the weakening consumer, we were joking around and the commercial break, nvidia up 240% this year and abercrombie & fitch up 300% this year. these retailers that have held up really well this year, if the consumer starts to weaken, does that story start to turn? what about the retail sector more weighted to the consumer than many others? >> that would be a primary risk, if the employment market starts to subside as we move into next year. first and foremost, a lot of these categories are discretionary purchases. they have been leaning pretty aggressively on pricing to grow. as the consumer starts to weaken

in 2024, they are likely to see pressure on both units as well as pricing. let's just a better equation for any retailer out there. sonali: energy was such a standout story last year. it saved a lot of investors. this year is actually down a little bit, the sector as a whole. how do you think about energy moving into next year particularly given so many massive mergers? >> energy is interesting to us. on the one hand, any kind of cyclical sector like energy could be at risk if the economy does move into recession. but also it tends to be correlated with other equity sectors and that is kind of interesting for portfolio construction purposes. lastly there's that nice hedge against geopolitical risk that energy can provide to a portfolio. and so, while energy returns in 2023, we wouldn't move away from that sector.

specifically because number one you also get that diversification benefit that i just outlined but from a valuation perspective, this is a pretty cheap sector with pretty robust free cash flow yields that we think are pretty attractive year. -- attractive here. sonali: we have to leave it here. thank you, matt. hedges in very unlikely places. vonnie: guests over the last few days have been pretty bullish into next year. not that matt is not. it's just bullish in a different way. the best case of a recession is not something we are hearing as much at the moment. but people are forecasting we might actually avoid this recession for the most part. sonali: nice breath of fresh air, after we have seen such exuberance and highflying indices, was on the nasdaq 100 down today -- we saw the nasdaq down today but it hit a good level. vonnie: very good bobby,

a little bit of profit-taking -- very good volume, a little bit of profit-taking. but nothing moved that much. bitcoin did move a little bit. we did see some movings at coinbase, the custodian, the chosen custodian for some of these etfs, if not happens. we have to watch that space. sonali: we will talk about states that have considered borrowing from from another presidential election, we will dive into the politics, next. this is bloomberg. ♪

vonnie: welcome back to "bloomberg markets." i'm vonnie quinn with sonali basak. maine has blocked donald trump from the 2024 gop primary ballot, as pressures mount on the u.s. supreme court to decide whether states have the ability to bar the former president. for more, let's bring in bloomberg's greg recorded, still

on the colorado ballot, back on it, and he remains on the california and michigan ballots. this is a lot of turmoil, as we head towards the iowa gop caucuses. gregory, i will he play out -- how will it play out there? reporter: this is unprecedented. it remains to be seen. the constitution has been around for 155 years and was really overlooked even by constitutional scholars for many years because we have never really had a president before who was engaged in the kind of things that president trump has done. what is at issue here is the provision of the 14th amendment that says anyone who has participated in insurrection or rebellion against the u.s. is barred from holding federal office in the future. of course this came after the civil war. it was intended to be used against confederate members of congress. but now there is an argument that should also be applied to donald trump for his ax on

january 6. -- acts on january 6. the amendment is not self-effectuating. it has to be and forced by somebody. the question now after colorado and maine that will likely go to the supreme court is, who has the power to decide whether former president trump engaged in insurrection? does this amendment apply to him? if so, can he appear on the ballot both in the primaries and the general election? vonnie: are you expecting decisions from other states as well? >> i think obviously there are a lot of states that are looking very closely at this colorado case, if the supreme court decides to take it. and depending on what decision the supreme court has for us on this, there's about a dozen states, as many as 16 that have had challenges to his status on the ballot. either brought by individual plaintiffs or secretaries of state might decide to look into this, or governors.

they are also looking for guidance from the supreme court. if they say yes, the amendment doesn't apply, then certainly the gates would be open for every state to decide potentially whether trump can appear on the ballot or if we get a sweeping supreme court decision, which i'm not sure we are expecting, it could be the end of his campaign entirely. sonali: it is worth talking about the timelines moving forward here and the expectations on how these legal matters would move forward particularly as it pertains to the supreme court. reporter: yeah. remember president trump also has four different indictments and courts over the course of the year. if nothing else, this is a distraction to him when he should be out on the campaign trail, adding an illegal front to that. this should -- adding a new legal front to that. this should get decided sooner than later, as early as next week possibly, when

the supreme court gets back from the holiday recess to decide whether they should take this case and decide on whether they will expedite arguments on this. because obviously if this is going to make -- make a decision for the primary, has to be decided sooner than later. the cap wait until -- they cannot wait until they usually would, the next session in the fall, to take on this case. it has to happen quickly if it will impact the election. sonali: how much of a distraction is this given that just even the republican field that we are looking at is getting quite crowded ahead of next year's election? reporter: it is certainly a distraction for president trump but also it's been conversely a boom to him in a way because republican primary voters do not like this idea of ports deciding who they can vote for.

every time he's gotten indicted, there's been a small but noticeable -- also it should be sent temporary -- bump in the polls for the former president. i would expect to see the same here. there's a certain rallying around trump that happens every time somebody tries to take him off the ballot or haul him to a courtroom. it will have to be seen -- it remains to be seen how the republican voters will process this information. no more states joined the fray here, the more this becomes an issue, certainly the other candidates in the republican field, ron desantis and nikki haley and chris christie are hoping the voters will say, look, we cannot afford to nominate someone who might not be able to be on the ballot in november, maybe we should look at other options. vonnie: that's a lot of thinking, though, gregory. we have the iowa caucuses literally january 15th coming up in a couple of weeks. dates have been moved around but in terms of a well weather for the gop primary, will the iowa caucuses be one?

reporter: the traditional thinking about the iowa caucuses is there's three tickets out of iowa. it's not really a kingmaker. it does not anoint with a party's nominee is but it can eliminate some lower balding candidate -- polling candidates. trump is such a far and away favorite nationally, that the other candidates in this field, especially florida governor ron desantis and nikki haley need to make an especially strong showing in iowa to prove that they are in this race, and then go on to new hampshire two weeks later, there, chris christie is also in the mix, and one of them really has to emerge as the single challenger to trump, if they are going to go further into this republican contest and solidify themselves as the alternative to trump. right now there's three alternatives to trump. the anti-trump vote is split three ways. if that remains through the nomination next summer, trump

can basically walk to the nomination. vonnie: what's the thinking in washington about when the first supreme court decision will come? and what that will relate to, whether it is an appeal on one of the state decisions or one of the other cases? >> i think the supreme court comes back from their holiday recess next week, they have a private conference where they sit in a conference room and take all the petitions that have come to them in the past few weeks and see if there is anything that they have to immediately look at. there's is now a pending appeal from the colorado supreme court decision filed by the public and party asking them to overturn the colorado supreme court decision that trump can be on the ballot. president trump himself, his campaign has not filed this appeal. the colorado republican party has but we are looking for

the trump campaign to file its appeal as well and then all parties will be engaged and we will have to see whether the supreme court takes it. this meant decision that happened yesterday by the maine secretary of state to keep trump off the ballot there i think increases the stakes for the supreme court. the supreme court has to know if they don't take this case, there is some case coming from some other quarter is going to make this a real issue in this election, they will have to take the case. then have to decide how broadly a ruling they want to issue on this, whether it's going to be a narrow procedural ruling or issue a sweeping decision on the breadth of the 14th amendment. sonali: when you wait to cover a potential appeal here for the colorado case from the former president, how do you describe his legal strategy moving forward, particularly into primary season? reporter: his legal strategy and his political strategy are increasingly one and the same. they are hard to differentiate at this point.

if you listen or watch any of his rallies, what you will hear is a lot of talk about how the department of justice has been weaponized against him, that democrats are behind every one of these court cases, that they are trying to keep him off the ballot and they are trying to take away the choice of the republican voters. that's his political message as well. every time one of these legal challenges pops up, he actually does a little bit better in the polls. it's a short-lived thing but every time he can stoke that grievance, that he is being picked on by either democratic prosecutors were the department of justice or the democratic secretary of state in maine or democratic-majority colorado supreme court, that plays well with republican voters. there's not much of a distinction between his political strategy and the legal one. sonali: our thanks to gregory c.

a landmark day ahead of a potentially landmark supreme court case we may see regarding the former president. we will talk to matt tool ahead, from the london stock exchange group. certainly an interesting time for that market. vonnie: how many ceo's have been promising the pipeline is full and we will see dealmaking come back into the session come if you want? -- come q1? sonali: i will believe it when i see it. stick with us. this is bloomberg. ♪ we all work differently now. so cdw helped us deploy mac, supercharged by apple silicon. ♪♪ built-in security protects me from malware and forgotten passwords. i've got enough battery life to get me halfway around the globe. and lower overall costs leave more money in our budget. for more practical furniture? this was supposed to be hip. no. can you help me up? with mac, configured by cdw, a solution that works for everyone isn't just possible,

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sonali: welcome back to "bloomberg markets." i'm sonali basak with vonnie quinn. some of america's best-known brands have declared bankruptcy this year. after years of keep borrowing, the feds's push to curb inflation also pushed up interest rates. it made the price of debt more expensive. for a closer look at what it means for the economy in which industries are most at risk -- >> debt is piling up. >> companies are filing for bankruptcy not the fastest rate since 2020. the surgeon interest rates is at the root of the issue. they've borrowed more than $500 billion of investment grade debt since the fed rate hikes began in 2022. the vast majority of it was heaped onto balance sheets. despite the high borrowing

costs, debt continues to grow. >> it's been building over the course of the last year. they have increased. cash flows have declined. >> borrowing costs rose by more than doubled to an average of 5.6%. junk rated companies were paying 8.7%. >> the problem is in part this is a little bit by design. the fed wants to slow down inflation. interest rates were kept longer than economists and people on wall street expected. sonali: this environment created a mountain of distressed debt. since 2021, the sort of debt owned by riskier less credit where has jumped around 400%. >> for consumer facing companies and those upstream supplying them, that will impact their businesses. those can be pretty difficult. particularly if they have a lot of space. the appetite for risk has declined a bit. there is less capital available to companies. particularly those growing.

sonali: from the postwar economic boom in the 1950's to its high point in the 1980's, interest rates have always fluctuated with the times. but the near zero rates the last 15 years following the great financial crisis have hardly been the norm. the problem is -- when companies are not put off by higher rates and keep borrowing, it may be assigned that the fed still has more work to do to bring down inflation. which increases the odds that someone will get caught off sides and left to take the hit. vonnie: the stress that is not the only challenge for the year ahead. dealmakers are going to the end of their worst year for mergers and acquisitions in a decade. for more insight, let's bring in matt toole of lseg.

the london stock exchange group. we have had several ceos promise us the pipeline is more full than it was and we will see a good couple of quarters. what's the outlook from where you stand? >> looking at the fourth quarter numbers, we are 28% ahead of where we were in the third quarter of 2023 with over $880 billion in transactions announced. we are seeing a little bit of an uptick. although we are at a 10 year low and the first time we are seeing m&a below $3 billion since 2013. some of those green shutes was over the summer and into the fall have certainly come through. we saw large oil and gas transactions in october and the bios like a flurry on bio -- and a flurry on biotech. there is a still a lot of question as to where buyers and sellers come to agree on price. whether a buyer is looking to pay a certain amount and how

they can get the transaction done. whether it be with the debt market or stocks. a lot of conversations are happening in the advisors are busy with corporate mapping out strategies for what 2024 will look like. there is a lot of uncertainty as to what the year will look like. vonnie: on that note, plenty of energy deals got done partially because there was such a whirlwind of profit rewards for energy companies for a few months. it stood the test of time. they put the cash to use. that changes now. the magnificent seven have raked in the cash. are they the places we should be looking now when it comes to deals, health care? where should we be looking? reporter: -- >> technology has been sidelined over 2023. m&a down 40% -- 48% for technology. the number of deals is flat. over 12,000 deals in technology

announced this year. it's not those big-name transactions. a lot of scrutiny and regulatory oversight and certainly the risk of doing those large deals, we saw with microsoft and activision and others which have taken over 200 days to complete, which is a real risk for boards and for stock prices and ceo credibility. technology will be looking for ways to grow in m&a and certainly they have a great commodity and stop -- in stock and cash. i would potentially see that return in 2024. health is another one where we have seen a number of deals. it was a decade ago where pharma and biotech, a frenzy of dealmaking brought us into this new era of m&a post financial crisis. now 10 years later, 12 years later, we are seeing the same dealmakers back, some of the big biotechnology companies, the big

pharma companies looking to make deals. that's where we are seeing a lot of big pharma out there looking for a pipeline and new areas of focus. also industrials and materials as well as an important part of the market. sonali: you can appointed to the concerns around real closing regulatory risk around the deals, some of these have gone through. you think about microsoft, activision, eventually clearing the hurdles. but others have faced more scrutiny. is there is sort of trend here? are there certain industries and types of deals that are more or less immune to that type of scrutiny? you think about the international buyers like saudi arabia's interest in golf here. where can u.s. lawmakers take note before regulatory risk starts to hit? >> community is pretty hard to find in this market particularly with some of the kind of broad

statements and the lawsuits we have seen. even lawsuits that have not been successful. i think the view from the justice department and the ftc has been looking at these transactions a lot more closely than there has been over the course of the last 4-8 years. even seeing some of those transactions that were rumored, well reported conversations happening deeply among boards ncos, not going forward -- and ceos not going forward because the regulatory pressure was too risky from a shareholder and employer perspective, and the long haul of having a very large transaction. no one is immune. there's a lot of uncertainty as to what the political landscape will look like into 2024 and beyond. many are certainly watching to see what the overall regulatory regime will look like as we move into the latter half of next year.

sonali: that implies the election cycle. one thing i'm wondering about is say there were change in administration and a republican president the next cycle. does that change the equation on antitrust especially given republicans were very upset about some of these deals we are seeing? >> i don't think it changes the equation. it does change the types of transactions that might happen, whether it be cross-border or some domestic players. some of the sectors that might be more comfortable. certainly private equity. there's a lot of focus on the elections all around the world. many elections happening over the course of 2024. the u.s. being a large driver of m&a. inbound, outbound, domestic transactions. it will be watching the pulse of the regulatory environment depending on what the

administration looks like but it's not a safe bet on either side. there is certainly pressure for some of these larger transactions and certainly most big companies are looking at that. you talked about the idea of the structure of these deals being talked about in corporate board rooms. that's partially because no one knows exactly what the federal reserve will do or how the economy is going to play out in terms of recession risk and sticky inflation risk and so on. the ramifications. what happens of the fed doesn't cut for a wild and deals get put off? >> i think certainly in the middle of last year when the fed began to very aggressively raise rates, we saw m&a drop at the larger six month decline we've ever seen in the 40 years we've been tracking data. the second half of last year fell in such a very dramatic degree because of the rates. having seen pauses and signaling rates have been coming down, that gets people more kind of

looking at the debt package. what might be used to finance the transactions. it's much more expensive. it will have to look at the calculation of the transactions. are different than they were in 2020-2022. not component will have a major impact certainly on private equity buyouts and activity but some of the large transactions are going to need that component and have a strong balance sheet, that can be a different equation then some of the other names that might be in the mix. certainly all eyes are on the fed on what that looks like. sonali: when i speak to bankers across the industry, they hope the private equity world will save them next year. that the buyout industry will start to get moving again. given where volumes have fallen this year, do you think the jump that can be significant enough to really propel the deal market? >> we are seeing down 30%

private equity buyouts this year which is the lowest since 2019 but still accounting for about 20% of activity. there is activity happening. capital raising has not stopped. the by out component has been a huge part of the last 2-3 years. private equity firms need to begin to sell some of those assets or exit through m&a or ipos. certainly some of these holdings are getting past the normal horizon that we have seen historically for private equity. some of the selling private equity might do and some of the buying will be a big focus. looking at the capital rates we have seen over the last years, private equity will still be a component with the new debt scenario, whatever that might look like into 2024. sonali: a whole lot of recalibration. thanks to matt toole of the london stock exchange group.

happy new year to your pyramid a new year means a new year means in your chance to get your finances in order. i'm working on it myself. bloomberg has compiled a list of key dates you need to know. here are the first few to keep in mind. january 8-january 10th, they could be a decision on the sec's approval of a bitcoin etf. a massive run-up of bitcoin into that decision. investors will be listening closely on january 31 for the latest announcement from the fed. think about that bitcoin run-up. you also have a big run-up in bonds. who could forget the tax day, april 15th? it falls on a monday this year. do not get blindsided and spend your last weekend preparing for tax day. vonnie: do you know the amount of events that will happen between now and april 15? sonali: no. vonnie: there are so many. sonali: it's exhausting. vonnie: that's the least of my worries. sonali: i do my taxes really early. [laughter] vonnie: that's a good point. i do, too, i guess we are

lucky that way, we don't have a complicated financial life. [laughter] so, if you don't, you can do a pretty early -- you just need a couple of forms, i guess. all i want to know and all i need is, when is my credit card due? that is was going to come up first january from. sonali: and on top of the student loan debt, it's a complicated equation. this has been a tough year for jobs and it could be a tough year for bonuses. january and february will be -- a lot of talk about financials. vonnie: the run-up of the s&p 500 is half of the run-up than the nasdaq 100 for the year but so many people have not been able to participate even through 401(k)'s, at all, so that wealth is only for a small portion of the population. lots of retail investors but it does not mean that your growth bill is going to --

grocery bill is going to get easier january 2. sonali: there is still inflation even though it is cooling in a lot of places. and hedge funds, even with their run-up, a lot of investors have not met their high watermark from the losses of the prior year. coming up, we will talk about sports. we will talk about a pickle ball competitor. we will catch up with investor and executive way in which -- wayne boich to talk about paddle, the new sport for all the bruise on wall street -- bros on wall street. [laughter] we will talk about it. this is bloomberg. ♪ hello, brent. hi? if you had to choose, would you watch paint dry or compare benefits plans? compare benefits every time. come on, you know how complicated benefits can be. well, i run payroll with gusto. they make it easier to find benefits like medical, dental, and vision for my whole team. man, i think i'm going to need new glasses. don't worry. i've got you covered. yes! choose benefits without the mess. that's working with gusto.

-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. sonali: welcome back to "bloomberg markets." i'm sonali basak with vonnie quinn. a sport is gaining popularity across the country and that is not pickle ball -- it is paddle. it is garnering celebrity investors were also carving out

a niche in the luxury sector. one person behind that trend is wayne boich, chairman and ceo at reserve battle -- founder and ceo at reserve paddle. we have been talking about this sport gaining so much popularity. maybe you can give us even just this year alone in the u.s. where it has more recently come to, how successful is it? >> when i started playing, there was nothing in the u.s., about 10 years ago. a couple of years ago, i did a tournament. there was about 100 courts in the u.s.. there's like 18,000 courts in spain. arguably the fastest growing sport outside the u.s. we started a reserve about -- our reserve about 18 months ago. built a couple of clubs this year and started up a court, making joint venture. earlier in the year, it was about 200 courts. we put in about a quart a week -- court a week this year.

it's amazing to see. it's a testament to the racket sport growth in general and paddle specifically. it's very dynamic. many people are playing that are 10 years old, 70 years old, women -- and at the highest levels, the athleticism is amazing. when you witness the pro level, particularly live, you get an appreciation for how athletic these people are. sonali: talk to me about where some of these successful courts really are right now, hudson yards for example has one. are you in regions that are kind of already more into the squash/pickleball kind of player? >> i think for paddle, pickle has become so big. we owe pickle a thank you, and their community. to bring people to paddle in a way. but in miami, given the community there, the latin

american and park community and paddle being big outside the u.s., it kind of was a natural. miami is the center of it. we opened our first club there in miami. in new york, we were fortunate enough to open court groups property in hudson yards as you mentioned. it quickly became kind of a thing in a place for a lot of folks to play particularly in the finance space. we hope to grow in 2024 and open more clubs in the city. obviously hudson yards reserve facility is the first paddle facility in manhattan. so we are proud about that. i think over time, miami and new york and l.a., austin, those are the cities we are trying to attack first. we think it will be successful. vonnie: how much does it make a difference to the popularity of the sport that it is not a solo sport? you need at least a partner and two people to face off against?

has it something to do with the coronavirus and finally coming out of it? >> i think all of these sports, the camaraderie of paddle, it is 33 feet wide by 66 feet long, surrounded by glass, you can play off the glass if you would like or you can take the ball and hit it against the glass, it is like tennis, easy to learn, you can play slow or fast. when you learn to play with the glass, you feel like you are always in the point. so you see that people feel very athletic very quickly and that is enticing. i think the camaraderie and hanging out together, playing doubles as exciting. -- is exciting. one of the most common comments that i got for -- that i get from folks that come for the first time is when they are outside of the court, they really feel like they are part of the game between running with the glass and off the cage sometimes, you have the wired mesh, the points are very long. when you are that close

together, when it is exciting points, you are really moving quickly. that is just amazing. i love tennis as well but it is a more elongated game. this is a little more condensed. so i think it leads to a lot of excitement and it is a very social game. vonnie: talk to us about the financials. what are you planning for this? now is your moment. who knows of this will be as popular in five or 10 years and you are gaining traction -- what is your next raising goal, where are you looking to do that? >> we have not raised yet, this was born out of fashion for me. i didn't think i was going to be able to necessarily a look at the time necessary. but in the end, we are making it happen as a team. we have opened our first two clubs this year in hudson yards and miami, we are opening in austin with one of my development partners. we are opening second club -- we are opening a second club in miami which we think will be

a great kind of center club for paddle. it will be 10 courts, some indoor, some outdoor. we are close to doing a deal in l.a. our model of building on high-end clubs as reserve is -- everybody can come to it, we want to offer best in class from the amenities to the layouts, we are very fortunate to have brought on what many think of as the roger federal paddle. -- roger federer paddle. we think is want to be hopeful developing the business. we have great partners. like discovery plan company and mike feldman -- mike m. we will keep putting him in spots like those,developing of the program . we have an apparel company that's taken off nicely. we want tentacles in the u.s.

people associating best in class, a lot of different verticals with -- sonali: just about a minute left here, you were playing tennis in the past. as somebody who is a tennis player, how do you feel about all of these other racket sports? i know that you run a paddle company now, but what's the change been like? >> listen, i was never in the tennis business other than from age eight to college i played every day and it helped forming in my life, so i will always remember it fondly. with paddle, it is not an either or, pickleball can be very successful in the u.s., it already is. paddle offers a similar yet different experience for people watching it and playing it. it's not one of those where -- they are going to play tennis and not paddle. they are going to play pickle and stop playing tennis. i think there's room for a lot of us and the world changes and i think there will be more people in general playing racket

sports. i think paddle definitely has its place. and i am excited to help bring it more and more to america. at all levels. including tournaments. can hopefully soon we will be announcing something the next week or so about an invitation we hope to do in 2024 at our place in miami which will be the pinnacle of paddle in the u.s. to date and something we can all be very proud of to help push paddle off the ground to people in the u.s. vonnie: we are certainly looking forward to that announcement and congratulations on all your success so far and going forward. that is wayne boich, founder and ceo of reserve paddle. david beckham's holding company more than doubled its revenue last year. the soccer legend's benefit of licensing deals and partnerships with the likes of sams, maserati, panini and so much more, that controls a sprawling business empire as we know, which stretches from e-sports to

media and the mls club enter miami. i would have to suggest, sonali, even seeing revenue doubled, that was not as big as his biggest win this year, getting messi. sonali: which will take care of the revenue by itself. as a businessman as well as an athlete, he's done a really interesting job expanding his portfolio. sports has been a huge asset class. everything around sports is what david beckham has been able to master. the last year he sold a majority stake in db ventures which oversees his brand to authentic brands. i'm interviewing the ceo about antic brands next year to talk about how much money david beckham is making him. vonnie: it's fascinating because victoria beckham's line has been around for a long time, her company's been around for a long time and she is also a very famous face -- not in the sports world but having come from the pop world, a fashion sensation, and her company is still losing money.

it is interested to see the dichotomy. not that -- sonali: you think it is a competition at home? [laughter] i haven't seen the necklace show yet. -- netflix show yet. vonnie: i'll probably watch it, if i'm honest. [laughter] sonali: happy new year to you. vonnie: we know it is all staged. i think everything is a competition for david. probably not for victoria -- maybe for her, too. sonali: it is a power couple. everything would be a competition. vonnie: not between each other, between them and the outside. sonali: between them and the world. how romantic, vonnie. on that note, it's been quite a year in markets. vonnie: here is your 24 and a quarter percent. sonali: we will be back with more markets coverage in the new year. we are excited to see you then. let's see if we finally encz that record -- and that record -- finally inch that record for the s&p 500. this is bloomberg. ♪

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