analysis from bloomberg's washington headquarters. get the latest from and about politics biggest power players at the end of every trading day. "balance of power" live around the world every weekday at 5:00 p.m. eastern on bloomberg television. context changes everything. ♪ >> welcome to "bloomberg markets ." i'm sonali basak. let's get a check on the markets. the s&p ending the week on a green note. s&p 500 is now the s&p 5000. u.s. benchmark on track to finish above 5000 for the first time ever. if it closes above that level, it will have taken only 719 sessions to get to that milestone. let's check on the rest of the markets. with the s&p 500 cracking 5000, the nasdaq 100 up on the day,

.7%. a strong earnings fueling the market more. the two-year yield, a movement of three basis points up to about 448 to in the week. the 10 year yield has been trading higher. watching these yields had the highest levels in 2024. the 10 year yield, for 18 higher than it was six month ago. looking at some midday movers. we want to talk about the idea of not just s&p 5000, but 10,000. mike antonelli writing in a post-people are obsessing about this level. he's thinking about how to keep investors to that plan as they look to the next big landmark. we are not the same, he says. let's see how long it takes to get to that. now the midday movers. notable decliners. even with the s&p moving higher. pepsi given a full year's sales outlook as it estimated a drop in volumes in north america

beverage and quaker foods units. you have a firm also dropping more than 13%. the forecasting weak transaction volumes for the coming year. what that means for the u.s. consumer. expedia following the most since 2020 -- expedia following the most since 2020 after it came short of expectations. announced a change with ceo peter kern stepping aside. with more on expedia, we are joined by emily graffeo. tell us about what is to come. >> it is hard to tell if it is an individual story for expedia, investors not really liking the surprise shakeup in the upper management. or this is a story we can connect to the broader macroenvironment of these travel companies, consumer discretionary companies pulling back. i was looking at the broader s&p 500. the best sectors performing year to date. in 2023, the cruise liners, the

travel companies where the best performance. you look at it now, the consumer discretionary sector is the seventh best performer. it is lagging behind. now we see a travel company, expedia falling. that is the question, is it signaling investors are sniffing out economic weakness in the market and a consumer that is starting to pull back from spending on travel? sonali: it begs the question, looking at consumer focused sectors, where are you seeing the weakness flow through earnings reports? sonali: pepsico, you mentioned at the top of the show, we are starting to see that this company had been raising prices for several quarters. sometimes by double-digit increases in their goods. it was a strategy that worked for a while. now it looks like in this earnings report, it is not quite working anymore. the ceo mentioned they would not be able to raise prices. they also had a growth forecast

that was still looking at a full year sales forecast of 4%. it missed estimates of about a 5% gain. that pricing power also looking a little bit weaker heading into this year. sonali: we had that from the consumer side, what about the technology side? the technology sector almost immune to the issues we are talking about. what were the biggest winners coming out of the season? >> immune is a good word. it was not today, i think pelletier reported two days ago. it was a big story for the week. the stock was up over 20% on the day. this was the first year they had actually reported a profit and the company was saying they would pave it even more to ai. it seemed like a report that really pleased the shareholders. an example of the resiliency from the tech sector and a lot of these companies, they are leveraging ai and the market is rewarding that. sonali: emily graffeo ao, thank

you for your time. turning to the larger economic picture, new data confirms the initial cpi progress from the end of last year was progress. we are joined by the chief economist. when you look at the data, and pair it with expectations next week, how volatile can things get? >> they can get more volatile. the revisions did not do away with the downward momentum we saw last year. some economists were concerned about that. ahead of the cpi report, the expectation is a minimal rise on a monthly basis, giving at least the headline below 3%. perpetuating the notion we are on a sustainable disinflationary trend. but for the fed, thinking of patients against the backdrop of a very solid economy, they will need to see more than one additional month of improvement in terms of price pressures. sonali: what type of risk is

there that there is reinflation in parts of the economy in the next report? >> one of the biggest risks stems from international factors. i don't want to oversell or overplay the impact of the national conflict on the domestic economy. as any further expansion of the chaos or military response is unlikely to cause an adjustment to domestic policy specifically. if we did see further disruptions in food, energy, fertilizer, shipping costs, that can be enough to move the inflation needle and at the very least, muddy the outlook for the pathway of monetary policy. sonali: we are looking to more fed speak next week after a slew of it this week. what are you listening for in terms of clues on the trajectory? >> any deviation from the current message. the message of patients, temperance, the need for further information. the idea that rate cuts are on

the horizon, but not yet. the idea fed officials are looking to the second half of the year. myself, investors will be parsing through every word to see if there is any sense of expediting that process. if there is any inflation coming or near the 2% target. i don't suspect that will happen. the fed has been clear that while inflation has come down from peak levels against the backdrop of an economy accelerating into the year end, and a very resilient consumer and very stable business investment. i would argue in historical cycles, the feds would consider a rate hike. i think the fed will be on the sideline for quite some time and we will continue to hear that message from fed officials. sonali: you were talking with a resilient consumer. we talked about it as it pertained to the story about consumer stocks and corporate america and how they have been able to feast off of the consumer.

we still see signs of weakness when you look at things like delinquency rates. at what point do you see the consumer start to rollover under the heat of higher rates? >> i think we've seen a loss of momentum. consumers are feeling the pain of higher prices, higher borrowing costs. we've also seen a number of different factors that have helped offset that pain. particularly when we look at the decent jobs gains, the wage gains to supplement the consumer. real wages turn positive at the end of last year. we have seen a significant upward trend in momentum with average hourly earnings about 4.5% and the latest report. more than 100 basis points above the pre-pandemic average. consumers are returning to more organic factors to supplement their spending patterns. that is not to say there won't be volatility or further loss of some momentum going further into the new year, but right now the consumer appears to be on relatively sound footing. sonali: you look at the one by

one headlines. the idea the tech industry alone has really started to take an axe to the workforce. they have started to let go thousands at a time when some of these companies, you are looking at a tally of more than 50,000. does the job market get impacted more as tech companies and others, banks, start to recalibrate what their footprint looks like into this year? >> if we see sizable layoffs, absolutely. we will see the labor market recalibrate. right now, that is an initial reaction to the upward pressure, the stability and elevated labor costs. particularly as companies are desperate for cost cutting measures. pulling back on investment, implement and sizable layoffs or hiring freezes to set the increased cost of labor. businesses are also turning to technology or ai with a significant number of businesses reporting they've already replaced labor over the past 12

months. . and even more businesses reporting to plan for additional layoffs as a result of adopting a.i. over the next 12 to 18 months. i think there will be an ongoing recalibration of the labor market for a number of different reasons and factors. sonali: it is interesting, you have the layoff question looming large. the idea companies are pulling back power. you also have gallup polls showing americans are still unhappy with the state of the current economy. inflation has been cooling. unemployment remains low. when will americans feel better about the strong economy we are in? >> in recent past, we have seen americans often say one thing and do quite the opposite. even though consumers are still questioning their financial footing, the state of the u.s. economy, they are still out there spending. we have lost some momentum, but consumers are still putting dollars to work on goods and services. even though they are somewhat disappointed to the relative stability in the economy. but i think we will continue to see improvement in confidence as

long as inflation continues to trend down back to the 2% target and growth remains in relatively positive territory. sonali: lindsey piegza, thank you for your time. we will keep our eyes out for inflation numbers. coming up, shares of blue owl soaring to a record high. it is another company in the private capital world enjoying new heights. it is our stock of the hour, up next. this is bloomberg. ♪

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sonali basak this is "bloomberg markets." i'm sonali basak. it is time for the stock of the

hour. blue owl shares are surging and hitting a record high. it comes after reporting strong earnings and revenue growth. joining us to talk about the momentum in these asset managers are john sage and -- if you think about the things we have seen from aries, apollo, kkr, where does blue owl fit into the story of private credit? >> i would say especially from growth in feed related earnings. especially things like taking one of their bdc's public and showing how it will generate 200 million of estimated annual growth in their fee related earnings. small things like that where they are saying we have a lot of potential shots on goal when it comes to these types of bdc's and these types of growth and high feed generating products, which they have a lot of. sonali: about five years ago, we broke the story when a predecessor firm for blue owl

became a $1 billion company. today, it is more than $20 billion. it is worth more than carlisle. can these kinds of firms that have really rode the private credit broom, can they continue this kind of growth into the next five years? >> let's think about that for a second. that was 2019. this firm is less than 10 years old. it is one of the true pioneers founded by heavy weights from wall street. the pedigree was goldman sachs, blackstone, kkr. when they did that initial stake sale and became a unicorn on wall street, they've had tremendous growth. but the scary part is everyone still wants to think about the space where they have been the experts, the private credit space as a cusp ahead of us. we want to talk about the golden moment ahead for private credit. there is cracks that will emerge and you have to worry about cycles and whatnot. but when you think about some of

the vindman to changes across how companies borrow money, private credit is the place to be. at least with everyone we are speaking with. sonali: it is not without competition. last year, the leverage loan markets were clogged up and you saw the private credit guys step in. john, you have been at the forefront covering the competition coming back once again. what are some of the deals you are seeing the banks when back? >> a great example is our dona, it is a u.k. insurer. currently in this deal -- up until about a couple of weeks ago, private credit had won the deal. it was a $5 billion loan, refinancing. but the very intelligent private equity sponsor said now that the broadly syndicated or the bank run market is coming back, let's go see what our friends on the bank side are saying. with that, the bank side is

saying we can originate to billion dollars of that $5 billion. immediately or directly taking a chunk out of what private credit was expecting or had underwritten to close the deal. sonali: that begs the question, what does the fight look like inside the banks? do you think goldman and morgan stanley are recognizing the dynamic and trying to win the share back? >> 100%. they will lose out on the fees from the capital markets business. they don't want to lose out of that. it is not a function of whether the market is clogged up, but it is a function of a secular change taking place in the markets and this is why some of the biggest banks are talking about these private credit jvs. if they lose out on fees, they want to find different ways to recoup that lost money. that is why you have some of the biggest banks thinking about these partnerships where they say we are really good at sourcing these loans. we are good at finding companies you want to invest in.

partner with us. we will put balance sheet money to work because we want to show skin in the game. that way they get to make money of the origin nation fee. someone like j.p. morgan might have an ongoing agency fee. be rest assured wall street heavyweights will not sit back and say please come and eat my lunch. sonali: speaking of that dynamic. another weird dynamic was with kkr, its relation to the banks, its own capital markets arm, and a deal we are finally seeing come back. what is going on? >> it was fascinating to see how this deal about a year ago was almost entirely won by private credit. the banking market was kind of influx, there was stress going on. there was not certainty that private credit is pitching. but now that the deal has come back and all of the private credit folks that were originally around it are saying we would love to give you capital, this financing, but kkr's capital markets team is weighing those options.

now that there is more certainty in the pricing banks can give, they are saying thank you so much for sticking around for about a year, private credit folks. but let's go look at our bank friends. it seems as of right now, it is a done deal with the banks where a year ago it was almost certainly going to go in the private credit phase. sonali: i love me a good wall street competition. thank you to john sage and sridhar natarajan. next, we will talk about how private equity is getting involved in temp -- nfl team ownership. this is bloomberg. ♪

>> we have a big sports business here at aries, as you know. and in a world that is increasingly divisive and

political, tribal, you begin to realize sports is the way we come together and rally around shared ideas and values. i'm passionate about baseball and what sport means for society. thrilled to now be part of the baltimore family and looking forward to the future. sonali: that was ares ceo mike arougheti speaking about buying the baltimore orioles. the ultimacy u.s. -- the ultimate u.s. sports event is sunday, when the super bowl takes place. we will discuss the nhl franchises and billion-dollar valuations teams are drawing in an expanding class of owners that could include private equity. vanda williams wrote a story and joins us from vegas. how hard is it for private equity to break through into a sports league that has been really marked by its billionaire owners? >> it is very difficult.

the rules currently don't permit it. sources have told me that will change in march. i think when that happens, you will see a lot of investors who will be looking to buy pieces of teams. sonali: what is the hold up? you mentioned it is not currently allowed. other leagues have recently opened up to private equity ownership. what is changing? why now? >> the team valuations are growing higher and growing larger and bigger. when you are thinking about the business of a team, some have been around for almost 100 years. some have been in their same stadiums for 100 years. the cost of stadiums and running a team is not getting any cheaper. so you will need new cash flow because when you are looking at a team and the money -- the money will not always go to building a new stadium. it will go to the players, the people who work for the team, executives and things like that. private equity can come in and help some of that offset things to buy stadiums and do so much more. sonali: what about some of the

downsides? what are people worried about bringing in a private equity owner? you see some of these concerns playing out in real time when it comes to european football. >> one of the concerns, specifically in the nfl, is owners don't want to split the pie. that is what it comes down to. when you have something -- the nfl is a family business. when it is in the family, you will have people like this is mine, i've had this for many years, i don't want to give it to someone who i'm may be unfamiliar with. you will not have private equity investors who will come in and be quiet or sit down and say here is 300 million dollars or $500 million to do whatever you want. they want some stake and an opinion on how the team runs and things like that. for nfl owners, do you really want someone stepping in that is going to have another opinion when you have been running it yourself for many years? sonali: that is for the owners, but what about the players? could there be a massive rise in

pay packages if the value of the team keeps rising? the meteorites around them are up for dispute in the future. what does this mean for the people on the field? >> potentially, but it is a good ways out. the salary cap is continuing to rise. private equity can help. it will help the business and teams more than the salary cap and things like that. some of that is connected to meteorites. the nfl prints money. probably more than any league, sports league in the world right now. they have the p card game, the black friday game with prime video. when you thing about player salary, it is going to be connected to meteorites. if private equity comes in, maybe in 10 or 15 years, we will see an impact. sonali: randall, thank you for your time. enjoy the super bowl. > sonali: sonali: i will try. keeping an eye on the markets. ending the week on a high note. s&p 5000, we are finally there. yields are writing higher on the

heels of muted expectations for rate cuts. keeping an eye on the inflation data. let's hope it keeps the calm in the market. that does it for "bloomberg markets." this is bloomberg. ♪ fresh, warm hot dogs!

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>> from the world of politics to the world of business, this is balance of power.