>> welcome to "bloomberg: markets." stocks fluctuating near all-time highs as retailers post mix outlooks for the consumer. a quick check on the markets as we wait to talk more about the consumer. the s&p 500 hanging out about flat on the day. as is the nasdaq 100. interesting moves amid the exuberance we have seen earlier this week. the two-year yield down to 482, lost about a basis point. the 10 year yield down round

numbers to 4.40. a far way since the 4.50 move we had seen weeks ago really. mid-day movers on the equity side. eli lilly shares hit a fresh record today after inking a deal to develop drugs that target tumors. it received approval for a drug in china to treat type two diabetes. eli lilly up about 3.2% on the day. quayside technology among the biggest laggards. the maker of measurement equipment issued a forecast that disappointed wall street. some analysts see green shoots emerging from its communications a business. quayside down almost 10%. earlier today, we have to know one of wall street's most prominent bearers, morgan stanley chief u.s. equity strategist mike wilson hiked his s&p target about day ago. he spoke about his outlook. >> are housecall, it is a soft landing goldilocks outcome.

we are not that confident we want to make it fully. it is still late cycle, which means quality. large caps over small caps. we like staples over discretionary. we have two defensive sectors overweight utilities and stables because it protects against slowing growth risk. the main factor that has been working his quality. quality has been the most consistent factor and we don't see that changing. sonali: we will discuss the market now and outlooks with bloomberg's opinion columnist who watches it closely. interesting to see what was wall street's biggest bear, if not all of them, throw in the town. and set the bar higher for the s&p 500. was he right to do that? >> he's right to do that based on expectations at large. one of the things that should be highlighted is when you look at earning estimates for the s&p 500 for 20 tony four and 2025, it is bullish. there is no recession in sight

in those estimates. if you look at the five-year trailing annualized growth of the s&p 500, that number is 7%, which sounds low, but still three percentage points higher than the long-term average, just closer to 4%. you look at estimates and the five-year trailing annualized growth at the end of 2025, that number doubles to 14%. now you talk about multiples with the historical rate. people right or wrong about the estimates, time will tell, that is hard to say. based on the estimates baked into the market, people are wrong to assume there are bearish views in the market. there are not. there are bullish views in the market. sonali: how vulnerable are all of those at this point? when you hang out near record highs, you have to ask the run for cover when any risk might pop out of the corner. >> very good question and timely question. this is where i think you have to distinguish between the u.s.

and the rest of the world. one of the things i should share is you look at the estimates 24 and 25, they are just as bullish outside of the u.s. and emerging markets, big turnarounds, big increase in earnings expected, the differences emerging markets have been very bearish in their evaluations for a long time. if they disappoint, i don't know that you have a lot to lose. in the u.s., valuations are extremely stretched. on the back of some of those stocks that have carried higher this year. if earnings disappoint, you should have some valuation contraction to think seriously if you are in u.s. stocks. sonali: what is the relationship to interest rates at this point? if you see the drastic repricing in the bond market, you have to wonder how much has been priced in and how much any marginal move can mean, especially for risk assets. >> i have a very hard time, and i try to look at this for years.

i have a drawing between interest rates in stock prices. to some extent, it is no surprise we saw the big hike from the fed, zero to 5, 2 if five handle. -- two a five handle. since then, stocks have been gangbusters. that speaks to the longer-term lack of correlation between interest rates and stocks. i do think it is safe to say anytime you have high living assets, i'm talking about private equity, the mann market, which is affected by what the fed does, you have to worry. i'm not concerned so much about yields as it relates to the stock market. i'm more concerned about whether those earnings come in hot or not. sonali: speaking of earnings, there is a big one tomorrow. nvidia aftermarket. you look at the philadelphia semiconductor index, just the way it is stalling out in

negative territory today, for example. is it fully valued at this point? >> i have to think that it is. especially michael wilson, talk about quality. quality is the big winner. nvidia is a big -- it depends how you define quality, etc. in many definite -- in many definitions, they are in their quality bucket. not just nvidia. a lot of the mag 7 stocks. nvidia, the valuations look optimistic. depending how you slice pes in the 1980's and 1990's. so you really have to believe the most optimistic scenario about nvidia going forward, and i would say they are even more vulnerable than what i said about the market at large. the question is how much do you want to gamble on a single stock, and how much they want to gamble on the fact the most

optimistic scenarios will come to fruition? if you are shaky about that at all, you need to rethink nvidia, and you might have to rethink quality. >> it is interesting, a nice reminder that we are still in the thick of earnings season. we are almost done. you see the consumer names also come out. take macy's for example, started higher on the day, trading in negative territory for the day. how vulnerable is the market to the consumer when you look at these earnings hit the tape? >> if you are betting on consumers, you have to be worried. you look at savings down, loan defaults are up, loan balances in general are up. so the consumer to me looks stressed. it is hard to bet against the u.s. consumer. we have all set for a year now that the consumer looks stressed and they keep coming through for

the market and companies in general. i do think you have to keep an ion valuations to go back to that. stocks in general. one of the things that jumps out at me is when you look at valley stocks in the u.s., and retailers are in that camp, and other stocks, those valuations while not nearly as high as quality, they are high in historical terms. a lot of that is based on the fact the consumer has been strong since all the fiscal stimulus in the pandemic. if you are betting on value stocks in the u.s., whether you are betting on macy's, more broadly, you are betting the consumer will continue to come through. that is looking like a shaky bet to me. sonali: thank you for your time and analysis, that is neon case are. we will talk about comcast setting up a price for its netflix, apple tv, and peacock bundle. those details up next.

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>> this is bloomberg markets, i'm sonali basak. it is time for the stock of the hour. comcast's new streaming bundle with netflix, apple tv+, and peacock will cost $15 a month when added to an existing tv or internet subscription. that is about 30% less then if you paid separately for those services. we will discuss this with felix gillett, who covers media for us at bloomberg news. it is worth talking the genesis of the bundle. why are these coming to the surface? >> you are seeing the end of this peak tv era where these

services were spending huge amounts of money on original programming. coming out of the size, looking to cut cost per they want to retain subscribers. how do you do that? you see the password crackdowns, now you see a bunch of bundles popping up. get a bit of a discount subscribing to a bunch of these. they're hoping if you subscribe to a bundle, you will be less likely to go through and cancel them as soon as you are finished watching whatever series you want to see. sonali: what do apple and netflix get out of this? >> cutting down on the churn, what everybody wants. cutting from cable era to the screaming -- streaming area is these all a services to do the streaming tourism. where you pop in, see a couple of things, and you are done and cancel. they have had a problem with this in recent years. they are going back to the old idea, which is if you have more services bundled together, you are less likely to cancel. sonali: sad days for original content.

also the news about pixar cutting 14% of staff. what does it mean? >> it is part of the broader cuts bob iger has been looking for $7.5 billion in savings, there is pressure from investors to find those savings. they've had something like 8000 job layoffs over the past couple of years. pixar in particular, they could not miss with all of the movies. during the pandemic, they had a couple that went to the streaming service worried they did do as well. elemental was a huge hit. there have been some idea pixar would make more series for disney plus. today they announced their staff, we are going to go back to making these movies. that means we are going to be less people. sonali: the nerdy child in me is upset about the elemental news. thank you so much. we will switch gears and talk about the ipo market. brad bernstein will join us on why he thinks the ipo market is broken, in his words.

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sonali: this is "bloomberg markets." i'm sonali basak. it is time for the wall street beat. we will look at how one fund has added a rare cap on inflows after surge of demand in private credit. for more, we are joined by john sage, who wrote about what is happening at hbs. this is the big fund founded by scott. now it seems like people are lining up out the door. >> it is kind of a problem we are getting too much money and. with money coming in the door, they have to find places to put it. this is at a time when the biggest competition to private credit, banks, have come roaring back. the number of investment

opportunities, or at least profitable investment opportunities, seems to be diminishing. the rest of the group there, it slowed down the amount of caps coming in so we can be patient and wait for the next great big deal to come in. this cap allows some of the flex ability. sonali: patient capital, long-term capital. it is still a $10 billion fund. one big question is how hot the market is. does it run too hot? do we see more people having to do exactly what they did? >> the expectation, or at least the belief is there will be more of this happening and conversations where it seems like a smart idea. it is very rare. that especially because in the private credit market, we have recently seen some of the lowest pricing in terms of spread. we have seen the early -- optional early discount recently. we have seen some of the biggest ticket prices ever issued for

some of these private credit loans. it is at a time when they say we don't want to play in these super highly competitive where all of our returns are getting competed away. let's pump the brakes a little. sonali: things to john sage and the gates are coming down for the investors. switching gears from public credit -- private credit to private equity. in an op-ed last month, the founder of ftb capital wrote the ipo window is not closed, it is broken. he added the public market is markedly failing to meet the needs of today's high growth businesses, creating a growing vacuum that private markets that larger feeling. joining us is brad bernstein, the author of that report. it is an interesting time to write this report. we are seeing ipo's come back. why do you feel the ipo market is not broken? >> when a look at the market, it is not about whether companies can get public. the question is how are they thriving once they are public?

let's look at the broader ecosystem. over the last 20 years, we've gone from over 8000 public companies to under 4000. at a time with so much innovation that you would expect 15 or 20,000 companies. i get to see all of these exciting dynamic companies in the private market and time again, entrepreneurs aren't choosing or talking about wanting to run a public company. and that concerns me. sonali: what are the challenges they are presented with? why don't they want to go public? >> i think we are seeing the cost of being public is very significant. particularly for smaller growth companies, companies that are less than $10 billion of value, you will spend at least $10 million as a public company between your auditing fees, legal fees, compliance costs, your dino insurance, your compensation consultants, independent board members.

not one of these things is unreasonable, but add in the cumulative effect, it is death by a thousand cuts. it makes the job of a public ceo quite burdensome. sonali: it is interesting because you are operating herein the growth investing industry, you look at the companies that are supposed to be the companies of tomorrow. if there is an issue with how they go public, what is the choice left for investors? >> absolutely. the truth is this dynamic is great for my business. we as a growth equity investments firm are seeing huge opportunities to invest in the private market. and for institutional investors, their fantastic opportunities. what we are seeing now is more retail investors being tempted into growth and buyout private equity funds as a way to access these companies. they are signing up for illiquidity that really is better suited to institutional investors. >> i can see the opportunity here being created in investing

in private markets. what about the exit opportunities? if ipo market is not attractive to certain people, how do you find returns for investors? >> absolutely. we are fortunate. thinking about the markets as a food chain, we play in the middle of the market where we are able to sell to larger funds and strategic buyers. right now the concern is what will happen to these larger funds who need access at the top of the food chain to these public markets. if we don't have the liquid successful public market, at some point it will cascade down the food chain and create an unhealthy dynamic because everybody needs to get liquidity. in the near term, firms like ftb are well-positioned. we are seeing great opportunities and we still have buyers. long-term, this is an unhealthy dynamic which really needs to be addressed. at the same time, strategic buyers are also under pressure from the ftc and other regulatory bodies around the world, all of which is having an

impact on m&a. all of these things have to be working for our capital markets to be successful. sonali: it is interesting, speaking to this clogging the system that private equity firms with big existing holdings are certainly feeling, blackstone is one of the investors in ftv. they have their own growth business. certainly you and they feel like this is an interesting and important space. what is the opportunity as you see it? >> following up on your conversation about the private debt market, a $1.7 trillion market, the growth small-cap market is equally being moved into the private alternatives market. the beautiful thing is it is a market like baskin-robbins with many flavor of ice cream, many types of investors who do minority deals, control deals, leverage deals, venture obviously. in growth, we are seeing all

sorts of companies that grew up out of the venture industry now ready for the next level of maturity, scale, and an owner who can help them to execute from there. we are thrilled with the opportunities we are seeing and we think it will be a multitrillion dollar market like private credit. we also think we need to make sure the public opportunity is there as well. >> one problem for these opportunities, we have been talking about it a lot. private equity is cost and financing. venture especially is the ipo market. it is exiting, it is valuations. where does evaluation story stand as you see it today? >> it is back to fundamentals. obviously in 2021, we got to a point of euphoria, it was growth at all costs, venture folks would -- were leaning in, there is no discipline about profitability. and through 2022 and 2023, that is something that has been a major pivot back to more rational valuations. that is something we have been committed to long-term.

i think we will see that discipline continue. many public investors who got burned in 2021 have also blew out their expectations in line and are looking for the rule of 40 type companies that have a good balance between profitability and growth. to your point, the lower the valuations in the public market, that has to trickle down the valuations that venture capitals can pay, growth investors can pay, buyout firms can pay. >> valuations in public markets, you are seeing stocks at all times. is it not true for everybody? >> it is so narrow. small-cap has really not seen the kind of valuation expansion we have seen in the magnificent seven and top tech names. what happens is the etf, the indexes that are so market-based and market weighting really lean towards going in the large cap name. have to figure out a way to widen out the participation and

see that valuation uplift into the small-cap. i think that will obviously be important to get to the public ipo market taking off. we still have to address these other challenges and make it more successful for founders to operate in a public environment. sonali: interesting time to talk to you. ipo markets looking to open back up. a lot of challenges for a lot of companies that investors on the surfaces. this is brad bernstein. i want to talk about one stock in particular. children place shares are under pressure. this comes after the company announced the departure of its ceo effective immediately. we will watch these shares into the close. children's place down and now about 15% on the day. that does it for "bloomberg markets." we are watching this market trying to keep into the green on the day near all-time highs. a lot of our earnings still ahead on the day and into tomorrow. nvidia. keep an eye on us through the close. looking forward to the earnings

tomorrow as well. stick with us through the close. this is bloomberg. ♪

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