jon: welcome to bloomberg markets. a finale: we are watching every day on the screen, the s&p 500 up, finally some love back in the market, a rough start to the year. two year yield heading out at 403. we had an auction earlier in the hour. relatively flat of change, crude, we see movement in oil

prices down 1.4% on the day, u.s. crude stockpiles, and a lot of volatility in the oil markets and i think we are talking about it every day. jon: please s -- we saw the steam come out of energy stocks, and intuitive surgical gaining some ground over the last decade, this has been a star performer. the outlook towards da vinci surgical system that seemed impressive to wall street, up 9% and the homebuilder with a shareholder friendly message on dividends and buybacks, wall street seems to like that news, shares were up about 3% at this hour. as we get to the end of the week you are busy watching what all of the big wall street players have to say as we get quarterly results, citigroup among them, goldman sachs moving into next week. a lot of the stocks of had a nice run over the last few weeks, the most analysts had -- analysts had comments. sonali: many of those names

reporting, i'm not sure how i got myself into this mess. moving into the treasury market, 37 billion auction of 10 year treasury notes. the offering held by have a basis point, stopping a 4.024%. it signals hesitation from traders to pay up ahead of tomorrow's u.s. inflation print. the rates strategist joins us now. how willing the writers to put money to work when we still has its critical economic data ahead? >> we always do, we have said there is a cadence every single month where we have treasury auctions and at the same time you have some the cpr reports and the retail sales report, kind of on the heels of that. traders have to try to determine are we going to take some risks here and buy some of these treasury securities before these data groups and how are we want to manage risk limits when then

that -- within that? quite frankly anything within a basis point is more or less as expected. it is when you get those big numbers like we have the thirty-year tail not long ago where it was a three or four basis points above what the market was expecting at 1:00. i think it is more interesting because it shows hesitancy and a lot more -- a lot more market risk to the market auction. tomorrow's through your auction could be more telling because of that is a lot of market risk coming to the markets tomorrow. jon: the bigger picture thing that got coverage in the big take as well and you are looking at that, a couple of months ago there was a general fear about all of the supply coming to market and here we are with the change in tone and the markets which seems largely based on market expectations for interest rates in 2024.

what is your assessment over the last couple of months by comparison? >> you are talking about going back to the august refunding announcement which really had a pretty big 2025 basis point effect on longer-term bond yields because of the additional supply that was unexpected and a bit surprising from the announcement by the treasury department. the way we think about it and we have pieces we have written about this over the past couple of months is supply will affect the market, but that supply will be overwhelmed by the economic calendar and what is going on with the overall economy and then the fed's reaction function. you are right, the reason why we have been rallying and why we went from 5% to 4% 10-year yield was the movement from going from one cut this year to six cuts this year. you cannot ignore the monetary policy implications and the strength of the economy.

maybe the rally will not be as severe as they would be if there was less debt, supply has an effect, it is not on a day-to-day basis, it is on a much longer term kind of sustainability basis where if yields would have been 2% when that was low, maybe it is only 2.25% today. sonali: you think about just how much things have been shrugged off. an investor explained to me the dynamics went into the year, the idea that bank balance sheets could be more constrained at a time where you also see funding needs increasing. do you think that of the situation gets more fragile as we move into the year? >> the question i think that a lot of financial institutions are having is if we are going to have a slowdown, will

they see slowdowns in their portfolios? loan portfolios or commercial portfolios? as you prepare and get ready for this long expected a slowdown in the economy, you can see banks being more constrained and be more selective in their lending and going higher up. when you look at the senior loan officer survey, that is already occurring. even though we have seen somewhat of a slowdown in some categories, it is -- that has not yet slowed the economy very significantly. looking at things like the november consumption numbers and those continue to trend up pretty well on our real basis. the banks are not as influential this cycle as they have been in past cycles in terms of how fast the economy will continue to grow. i think it is more about the labor market cycle because it is wages that are pushing a lot of

the consumption and retail sales and therefore the prices of a letter of the goods and in particular the services which is right now what is driving inflation. sonali: the perfect set up for cpi and the thirty-year auction, we are keeping a close eye on it. that is u.s. rates strategist ira. the potential decision day for the spot bitcoin etf's and competition among shorts intensifies. companies are further slashing fees. this is bloomberg. ♪

that first time you take a step back. i made that. with your very own online store. i sold that. and you can manage it all in one place. i built this. and it was easy, with a partner that puts you first. godaddy. how am i going to find a doctor when i'm hallucinating? what about zocdoc? so many options. yeah, and dr. xichun even takes your sketchy insurance. xi-chun, xi-chun, xi-chun! you've got more options than you know. book now.

jon: this is bloomberg markets,

time for our stock of the our segment. we are cracking cryptocurrency related stocks like coinbase and marathon and microstrategy. they were down and now they are back up. the market trying to anticipate everything in the crypto world including the fdc decision on whether to approve a spot bitcoin etf. the regulators saying that it is a count on acts -- its account on x have been compromised and the post was fake and we are awaiting more details as we wait to find out what happens on the approval process. the author of crypto's macro now joins us now. what is your take on the last 24 hours? >> my take on the last 24 hours, most of the crypto market is wh at? it is interesting that the price

bump on the fake approval. we saw it welcomed and then the price fell where it had been before the fake tweet when out. what will actually happen to the price when the actual approvals does come through? it highlights how dramatic this industry can be and how important this day is for the bitcoin community. how crazy crypto can be sometimes. sonali: given the many people if there is an approval today of an etf and they start trading as soon as tomorrow, what are the biggest risks in your mind that investors are not paying enough attention to? >> learning about bitcoin, it is not for everyone, it is volatile and it does not have any clear valuation methods. any objection are valid, it is not for everyone. fomo has been a feature of the market, you have been covering it for a long time, you have seen it in action. it is a risk because investors can lose a lot of money.

hopefully with the weight of the reputable people behind this, they will be educating their clients and educating themselves in the potential as well as the risks and any allocations going forward will be prudent and if anybody does want to take a wild punt they can do so on their own. i read an interesting question from a colleague, when does crypto go mainstream? when is it easily adopted as of the u.s. dollar or even bought as a bar of gold? >> that is a fascinating question because it depends on what we mean by adopted, really? we talk about holding as a store of value or selective asset or mainstream because it is a payment stream in many areas of the world who do not have access to the international systems that we enjoy. what does adoption mean? in terms of awareness, that is

the way i like to look at it, that starts today as soon as we get bit going tho -- bitcoin spot etf. people are responsible for educating themselves and their clients. it becomes a potential mainstream asset. it has been edgy, a technology play. it has been the rebel investment. it is something your cousin talks about a thanksgiving. as of today it will probably end up gradually of course in their diversification of many mainstream portfolios, retail and institutional. jon: i want to build on her question, bloomberg intelligence has already estimated, uc records set -- you see records set, in the case of blackrock, we have all of these players who have lined up who are increasingly lowering their potential fees for these products.

i will assume they have allocated some budget for some big marketing campaigns. how do they go about marketing these products if we are not in a point where there are digital payments that are really easy to consumers? what do you think the marketing message around these products look like? >> we have seen so far from the crypto native shores is very much about bitcoin is the alternative to the fiat system. that is a fascinating experiment because the crypto natives are undoubted and they are the non-fee at plate. -- fiat play. does that apply to dentists? -- appeal to dentists? maybe not. but to investors and will take a different message on focus and focus on the diversification rather than the alternative fiat. that is not anything an investment manager wants to

convey to their client. banking fees, fascinating you brought that up, we expected it would be and we have to ask ourselves how are these asset managers going to cover their overheads as well as the trading fees that tend to be quite high in crypto? a loss leader for more diversification later? sonali: people do not talk about this, the idea that coinbase is the custodian for a lot of assets and at the end of the day, if something were to happen to assets it is immaterial risk for the investors and the etf's. is there too much concentration in terms of coinbase? >> we hope that coinbase is taking the necessary steps to divide it up so if there is a breach by the government it will not affect more than a small portion and we can hope that there is insurance in place to cover that if necessary. that would be a disaster. jon: just a quick one, the sell side is also interesting to

watch. speaking to a researcher at a standard charter earlier today who had already been predicting $100,000 u.s. for bitcoin, longer term he is putting out some numbers that would be higher than that. what is the accountability on these calls and a lot of numbers? big numbers get thrown around all of the time. >> they do and this is a feature and a bug if you like. there is no valuation method for bitcoin because it is unlike any other asset any manager has had to deal with. they do not teach us how to value this back in the day. that is an advantage as well, there is no right or wrong. you can throw any number. there is no accountability. this could be an disadvantage. many investment advisors are not comfortable with the justification. it is a narrative driven investment that is hard to justify administration investment managers are worried about losing investment, if their client loses money and

there is not a clear reason why it happened, that could be a career of it. the volatility is a feature and a bug and that is why we get such a wide range of predictions. much like the wide range of predictions you hinted at earlier about the amount of money that is going to come in on day one. i see an astonishing range, 2 billion, 4 billion, people think it is priced in. people have priced in such a wide range of expectations. waiting to find out. the bigger impact of the etf is not the short-term price movement, the bigger impact is the mainstream awareness that you are talking about. the education. there is no advisor who is not responsible for explaining this to their clients, whoever they are when they ask questions and most do. jon: good food for thought. thank you. the author of crypto is macro now, cracking the bitcoin story. ares management is nearing the

biggest ever direct lending fund. sue talked about the activity on the credit side recently, big money being raised. this is bloomberg. ♪

jon: this is bloomberg markets,

time for today's for what it is worth. 20 billion euros, roughly $22 billion u.s., brooke has learned that aris management -- ares management is expanding rapidly in recent years as traditional debt providers pull back. a number of firms have built out private credit teams to cash in on the boom. you have some fun too are sitting on very sizable firepower right now. sonali: i remember not too long ago, oaktree announced they were looking for more than $50 billion in an opportunistic credit fund and the market went wild. a time to start the point s people needed to refinance, that opportunity and maturities will start to hit. ares are coming in with records and they have multiple funds that have been bringing them to new heights and the stock has been up more than 70% last year. isn't that incredible? jon: there is a variety of

reasons why the credit story changed. on the wall street side when you were doing deal in the past you would get some of the credit offered from the investment bank. that started to change. is that a fair way to characterize it? sonali: i bet you, so i have heard out in the market that the competition is going to get pretty stiff. we talk about the private market versus the public market, the public market has some chances out there. volatility is tearing up certain asset classes and hedge funds particular, let alone the banks hedge funds are seeking out ways to capitalize. some of the fascinations is the idea of the multi-strategy firms, the biggest have gotten big, a lot of people are worried about the smaller ones. this consolidation, does it fix the problem? what are the asset classes people are interested in in terms of diversifying? >> consolidation is one of the big themes everybody is talking about this year when it comes to multi-strategy funds. to the fact that their size has

grown and their assets have swelled of the are looking to deploy all of this capital, they will need more teams. you can raise capital internally and talent internally, but the better way sometimes or the more efficient way can be to snap a big team of people if you are looking to hire at scale. there is a lot more going on right now. sonali: if you look at the performance of these funds, the multi-funds for as much as people talk about them, they are lagging when you look at credit and equity hedge funds. how do you think of the first two asset classes and who is winning? >> multi-stock funds or middle of the pack, and mind of historical averages of doing a percent or so. being consistent and steady but the winners of last year were the equity guys. the stock pickers. double-digit gains, also the fact that they have a very difficult 2022. a lot of them are getting out of the high watermark. do recoup losses.

-- trying to recoup losses. they have not made up for the losses from the year before. jon: how much does the personality story play into this? you have been covering a former credit suisse star who seems to have had a lot of success with his own find? >> we are seeing really interesting performance of the credit side as well too, leaning up in the double digits, 32% in his fund, better than most other credit funds, the bloomberg credit index is up about 8%, relate an outsized performer there. also, blackrock has a hedge fund and that is up 16%. digging themselves out of double-digit losses from the year prior. posting pretty good numbers after last year. jon: before we go, sonali talk about consolidation. if there were other players looking at these returns and they are interested in doing

deals, what should we be watching for? >> if there is more consolidation you will see it among the smaller funds, most likely to get picked up and it could be strategy specific if there is an expertise, it could be funds that are underperforming and if they are looking to grab talent in a cheap weight. it could be for the outperformer that they are known for doing a good job, generally speaking or looking at the smaller sized funds being bought out by potentially the bigger sized guys. >> and he seems to be watching, thank you for joining us -- a theme we seem to be watching. when for joining us. -- thank you for joining us. maybe the markets more probably want to see with the inflation numbers tomorrow look like. they're looking at a positive s&p 500 to the tune of .4 percent. this is bloomberg. ♪

thanks to avalara, we can calculate sales tax automatically. avalarahhhhhh what if tax rates change? ahhhhhh filing sales tax returns? ahhhhhh business license guidance? ahhhhhh -cross-border sales? -ahhhhhh -item classification? -ahhhhhh does it connect with acc...? ahhhhhh ahhhhhh ahhhhhh

romaine: minor market moves. live in new york, i am romaine bostick. katie: kicking off to the closing bell in the u.s., take a look at the equity markets right now, not too much going on, take a look at the s&p 500, we managed to flip into the green. .4%, higher when you take a look at the big tech or the nasdaq 100.