>> welcome to bloomberg markets. >> we are on a down day on the first day -- first reading day of 2024 pair the s&p 500 is down half of 1%. the nasdaq 100 which days ago had a fresh record is now down in .6% on the day. the two year yield, the bond market seeing a six basis point, nearly seven basis point rise in the two year yield. rent crude fascinating down

negative on the day down almost 1% -- down to 7631. this had hit more than 79 earlier in the day. we will talk more about some of the tensions in the red sea. jon: certainly we will keep an eye on that. a lot of analyst commentary as we get back to business on wall street. that is helping certain stocks including but during the which had its fair share of struggles in 2023 but oppenheimer likes the product pipeline and the outlook from that analyst is boosting shares to 15%. speaking of stocks higher on analyst commentary, a wall street veteran of wells fargo's fields good about the prospects for citigroup. things the stock could double over the next three years. everyone continues to track the story of bitcoin and we will await more details on the etf front. as the currency is climbing, stocks have been gaining ground.

that includes microstrategy up today. another 10%. moving the other direction is rivian. a lot of ev related news. fourth quarter deliveries from tesla. those came in stronger than expected. the company trailed china's byd in terms of overall deliveries i the fourth quarter. in the case of rivian, they missed estimates and wall street never likes that kind of development. shares down 10%. sonali: we are going to talk more about the commodity soil. -- 20 story. oil is paring its gains. attacks on merchant ships have led to the rerouting of everything from container ships to gas carriers. as discussed those risks. take you for joining us today. any energy we did see this spike higher and no lower once again. how are traders factoring in the grave threats we are seeing in the red sea? >> right. half of the fleets going to the

red sea are being rerouted. we are seeing them go through the cape of good hope for example. traders are taking this too seriously. there been a lot of headlines the past few weeks. the risks we are seeing in the middle east, -- i'm sorry about that. the risk we are seeing are the middle east, a lot of headlines are coming in every day and traders are having to evaluate whether that is going to contribute to an actual conflict in the middle east. so far we have seen it has not. clearly traders are focusing more on the fundamentals and broader markets rather than what is going on. the red sea even though eight to 10% of crude flows through the red sea and on face value that is not insignificant, there would be a much greater risk to crude oil if there was a

disruption in the strait of hormuz. we are not seeing that happen yet. it is very unlikely. jon: i guess at the end of the day, people have to try to figure out how much supply will be affected than. mia: exactly. the reality of the situation is crude is very oversupplied. we are seeing record amounts of crude coming out of the u.s. recovering very nicely from crude drawls during the summer. like i said, a lot of the crew that was supposed to be transported through the red sea is being redirected through the cape of good hope. even though this will be more costly for producers, we are seeing those barrels are seeing those barrels ultimately hitting the market. the worst thing that could happen right now or the scenario that would cause crude to shoot up as much as 20% would be if there was a disruption in the strait of hormuz but that scenario so far is looking unlikely. sonali: thank you for your time on a complicated situation. i want to bring you some

breaking news. we have harvard president claudine gay confirming she is quitting her role as the university's president. claudine gay had the shortest tenure in harvard's history. just six months and two days into the presidency. first reported by the harvard crimson. now being confirmed by claudine gay herself. this is amid a scandal over her brief tenure. her concerns over anti-semitic speech on campus as well as allegations of plagiarism among her own work. we will get you more on the details of that story later. susquehanna's cohead of derivatives chris murphy joins us now to talk more about these markets. we are heading into 2024. a lot of comic eta news on a lot of fronts. when you think about these markets, one thing a lot of people have been thinking about is we have been floating near all-time highs even on a decline today. how do investors think about

hedging their positions going into a world with so much risk? chris: happy new year. thanks for having me. the situation could not be more different than the beginning of last year if in the rally we have had, how confident everyone is on soft landing, rate cuts, how optimistic everybody is if you look at the bull bear stuff. it is easy to forget about protection. it is the best time to hedge in a while. volatility is up marginally today. it is still really low. skew is low. downside protection tales are as inexpensive as they have been in a while. if you are lucky enough to have been riding the 2023 rally and you could be looking in taking advantage of a much cheaper option than they were at this time last year. jon: what would determine the pricing of those hedges?

here we are trying to make sense of the selloff today. some people saying maybe there is a rethink on what rate cut strategy looks like into the new year. after the big run-up we saw if all of a sudden you had several days or a couple of weeks where there was a more negative tongue, would you anticipate you would see more people looking to the options market for some protection? chris: a lot of it is related to supply and demand and what strategies are working and what strategies have gained assets over the last year or so. you take a day like today, if we are going to pick out the trend we are seeing, it is investors taking advantage of the market pulling back. a slight increase in volatility and looking to sell puts in some of the harder hit names, some of the big cap names. we are seeing a lot of that today. i would expect even the environment and the sentiment we are seeing right now, it would take more than a couple of down

days in a row because one or two down days and the prevent length flow is how -- and the prevalent flow is how we take advantage of this as opposed to any sort of panic we better put hedges on whether that is right or wrong. sonali: talk through some key dates. if you are looking at the macro calendar and where there is the most surprise, our people positioning? chris: we have fomc minutes tomorrow. we have the jobs report later this week. just before i came down here, we were seeing a fair amount of near-term call buying in the tlt. the tlt is the 20 plus year u.s. treasury. higher bond prices would be lower yield. positioning for that trend to continue. we are seeing a little bit of that. i would say we are not seeing an overwhelming amount of equity hedging ahead of those near-term events. we are on record weighting over

the last couple of months not rushing to put any pressure on. as the calendar turns for the third quarter, maybe it does make sense especially if you're sitting on some gains. jon: it is interesting not all stocks obviously were created equal in 2023. coming into this year, you have the tech bowls remaining bullish. i do wonder how closely you are going to be watching that particular sector of equities vis-a-vis the broader market when you're trying to determine positioning going forward. chris: that is the first thing we look at. it drives everything especially if you are looking at the macro level. we had a situation earlier today. probably still now that earlier today, about 55% of the s&p components were higher. the rsp which is the equal

weight was higher. why is the s&p down 70 basis points? it could be explained by apple, microsoft, nvidia, meda and the like, a handful of stocks. the macro level, if you're looking at the vicks, macro volatility which is the most good form of volatility, if you're looking for exposure, it is going to be driven by the big cap stocks. was going on there matters. other sectors like health care, stables and banks having decent days today. they are getting swallowed up by a handful of mega cap stocks. sonali: that has been a big question. at what point does the market breath widen beyond what you sell from the magnificent seven to last year? the value trades, the beaten-down stocks, the financials. what would it take for them to get some love? chris: we are starting to see a little bit of it. we are starting to see some of the health care biotech today outperforming.

i think it is just somewhat of a show me situation and we are starting to see that. if you rewound for much of the -- there were differ points last year where small caps would catch up for a couple days. and then they would roll back over. it just needs to be more of a consistent trend. . obviously we did see that for a lot of the last month or two. it is one of those situations where you are not on the investing sign. you are going to not get into too much trouble with your long apple, microsoft, nvidia etc. if you stick your neck out unless her numb small-cap names, you have more explaining to do. that is part of it too. they are going to have to keep showing up. i think eventually they will continue to get some love. jon: sonali was talking about the economic calendar ahead. when it comes to earning season, it is early but i already spoke to a guest today who is very interested in what happens in

not just the fourth-quarter results but what ceos have to say about the outlook for the year ahead. what kind of activity are you anticipating in the derivatives market as people will potentially position around that larger catalyst? chris: that is one of the more interesting trading observations we make. when you see a trade in the options that stands out in a stock that has earnings coming up, you take note of it. whoever was doing their research and decided to do that trade is putting their money kind of where their mouth is. that is information i the marketplace. when example obviously we know the banks have earnings first. we'll be looking at more of the bank names. seeing a lot of call buying in bank of america that reports friday. positioning for upside there as well as in the xl left itself which is the vanke etf. seeing mostly bullish flow. the initial readthrough heading

into the bank sector from the earnings is for upside. sonali: this us when a cohead of derivative strategy chris murphy. happy new year to you. we are going to talk about apple. it is off to a rough start to the year after barclays cut its rating. we had a stock down more than 3.5% hitting its lowest level since late last year. since september. worst day it has been having. we'll talk more about that after a tremendous really last year. this is bloomberg. ♪

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jon: this is bloomberg markets. time now for our stock of the

hour segment tiered apple shares over today after barclays cut its rating on the company to the equivalent of a cell. barclays is concerned about life on demand while suggesting this year's iphone 16 may not have enough new bells and whistles to further boost the stock, which had a really big year last year, advancing 50%. mark gurman covers apple and joins us with more context. this is an analyst view but you are constantly doing channel checks. what do we know about the demand story around the iphone? mark: barclays is showing the holes that do exist in the apple story. if you are on wall street or you are an investor. certainly things have an ok for apple. i continue to believe they will be ok for the next year or so. we are not talking about some sort of breakthrough year in terms of sales. certainly the hardware, new products will be significant.

obviously the vision pro headset, the first mixed reality device is going to be launching within a month from now. you'll see a revamped ipad in the spring. a new macbook air. and larger iphones. but there is nothing that is going to amount to any considerable growth. the new product category, the headset is unlikely to bring in any material revenue. anything of significance for a few years. the iphone change barclays was talking about is indeed what is happening this year. the iphone updates are not going to be a major overhauls. you're going to see larger displays on the pro models. you're going up by about .2 2.3 inches. which is important for sales in china in particular. you're going to be getting significant camera upgrades. i do think the new phones will sell well. there are a lot of people who bought iphone 12, 13, 14 who did not upgrade to the 15 who will find that they want to upgrade to the 16 pro or ultra.

i'm not as down as barclays about the new phones but they are showing holes letter there where as we do not believe there is going to be significant growth for apple in 2024. sonali: the move brings it to five different analysts who have now put cell ratings on the apple stock. you have 14 holds. have an overwhelming amount of people say i've stopped. how does it show or does it show a trend of people starting to sour a little bit? mark: certainly the situation in china has created a lot of concern around the stock. the belief that the first major new product category in seven or eight years is not going to drive any revenue of significance. the app store could potentially be a major headwind for apple the next year or two. you're seeing a lot of litigation. you are seeing a lot of antitrust scrutiny. the services segment for apple

has been the one real bright spot for the company last year. and certainly the app store is the majority of that pie. if the app store continues to be in the crosshairs of different governments, if the department of justice considers actually going through with suing apple over app store practices, if you see more companies going after apple in patent litigation like you saw masimo do with a great amount of success, there is some risk. on the other hand, you have to remember the strength of apple and the underlying business even if they are not continuing to grow. the iphone is still going to sell a certain number of units per year. they're still going to sell a certain number of ipads and a max per year. i don't anticipate a big decline in fiscal year 24. . you're probably going to see growth in line to the year prior. . given the numbers they are

bringing in, three to 400 billion in revenue, i think there is a lot of strength. i would say it is difficult to bet against apple. i would say traditionally anyone who has put a sell rating on apple did not do too well. jon: i think 13 of the last seven years have been positive for apple's stock. bloomberg's mark gurman on the apple story. when we come back, we will have more on the news of the resignation of harvard's president. stay with us. this is bloomberg. ♪ the first time you connected your godaddy website and your store was also the first time you realized... well, we can do anything. cheesecake cookies? the chookie! manage all your sales from one place with a partner that always puts you first.

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jon: this is bloomberg markets. let's get to a story we have been tracking the last 30 minutes. claudine gay stepping down as president of harvard university ending a brief and tumultuous tenure.

the chief academic officer at harvard has been tapped as the interim president. as for gay, she said it has become clear it was in the best interest of harvard to resign so our community can navigate this moment of extreme neri challenge with a focus on the institution rather than any individual. david westin joining us with more on this developing story. what can you tell us about what led to this? david: we know about it because miss gay and the president of penn and m.i.t. recalled before congress to answer for some of what was going on on the campuses and the aftermath of the attack by hamas on israel. it has been a firestorm for these three presidents to deal with how you control and influence discussion on the campus, there were discussions that discussed that the developed over time about some of the work the president had

done for her phd in allegation she had improperly used sources she did not identify. the corporation of harvard said they had been an investigation and a total exonerated her. now she said she stepped down. at this point, at some point a leader becomes a distraction. it sound like she reached a conclusion with the corporation. sonali: they did name an interim president. this is alan garber. did see a similar situation at you penn as well. how hard is it to find talent to run these universities in the middle of such pushback from donors, the public and lawmakers? david: these have always been hard jobs but clearly they are much harder jobs than i understood before. maybe some of this in fairness is a reflection of the society where things have become so polarized in every issue becomes a major issue with personal attacks on leaders on both sides of the equation.

it certainly is not going to be easy to find someone to take one of these jobs now. it takes enormous amount of skill particularly because as you suggest everybody and their brother thinks they get to run the universities now. the congress thinks they get a say. the donors think they get a say. that is before you get to the donors and the faculty. jon: obviously a lot more to watch now we have seen this announcement. thank you for that context. bloomberg's david westin joining us. there is this belief and bloomberg is reporting on this that possibly the attention will shift to harvard corporation which is led by the former commerce secretary penny pritzker because it has been asked by congress to account for how it responded to the accusations of plagiarism. we will continue to watch that as we are also watching the story on the markets today. we have seen that cautiousness in the equity world after the big run-up of what we sought to end 2023.

right now continued selling pressure for the s&p 500 to the tune of 6/10 of a percent for the benchmark index. this is bloomberg. ♪

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bloomberg headquarters in new york, welcome to 2024, katie: where closing out the bell and u.s. and not exactly starting with a pang here, look at the s&p 500 off by .6%. it may take a breather here. a bit more of a breather when it comes to big tech. the