still moaning -- still mourning over there, right? i'm matt miller, with paul sweeney. behind me, the brandenburg gate. an all-time high of 69. paul: it is dark there in berlin, but we had an amazing sunrise today in new york, called out by a lot of folks. green on the screen, and we will take that s&p up 0.5%. matt: let's get over to a screen that will be joined by abigail doolittle to walk us through what is going on in markets. happy day after christmas. is boxing day? no, that was yesterday. abigail: it's a festive day here in new york, and to paul's

point, and i sunrise. -- a nice sunrise. the s&p up 0.5%, the best since early november. if we stay higher come of the 69th record close of 2021. only surpassed by 1995. that is the kind of gains we have. bonds rallying just a little bit. the 10 year yield down by about one basis point, but right in the sweet spot of 1.48%. right in that level where it is not too high, not too low. clearly stocks seem to be liking it. bitcoin is up 1.5%, back above $50,000 per bitcoin. the gains do not extend to travel because there's also to

delays and cancellations over the holiday weekend having to do with staff testing around omicron and other delays around the virus, so the travel index, the s&p 500 airline index down about 2% over the last two days. a real plunge from the gains we had seen last week. there had been some optimism that omicron was not going to affect the travel industry that much. today, cooler heads prevailing in those losses. we have losses in the commodity complex, which is interesting because both stocks and commodities are risk assets. you have crude oil down just a little bit, but the really interesting decline happens to be in the european natural gas space. down 11% over the last four days , down more than 40% going back to when records were kept. the weakness in the commodity space, let's see whether that bleeds into stocks. right now, stocks up in the way to get it looks like we will have a divergence among risk assets. matt: thank you so much.

we appreciate that. abigail doolittle giving us the market wrap. we have the s&p 500 up to 5% or so in 2021, heck of a run. now the question is, 2022, what can we look for their? gary schlossberg, wells fargo -- wells fargo institute, thank you for joining us here. after such a good move in risk assets in 2021, particularly the equity markets, what is your view for 2022? guest: we see a maturing growth recovery, but i growth recovering nonetheless. we think cannot growth will be starting off strong next year, beginning to moderate in the latter part of the year. the fed pulling back a bit, but the paper with ink will be fairly cautious, so they will begin in accommodative credit move. that should provide a good backdrop for risk assets. we are certainly constructive on

stocks, certain types of commodities and the like. having said that, we are keyed towards the large cap u.s. stocks, reliable earnings growth, solid backdrop. the kind of stocks that have done well over the past couple months. matt: we are looking at march as possibly a live meeting, at least according to governor waller. does it concern you buying stocks in a rising rate environment? gary: not at this point. for one, we are not entirely sure just how aggressive the fed will be on their interest rate hikes next year. we have two priced in and the latter half of the year. our since is the market became a little too aggressive from an omar connotative -- from an over accommodative credit stance. there will still be accommodation which we think will provide before -- risk

assets in the market. matt: i know a lot of people are thinking, do i stick with some of those big tech stocks that have worked well since the great financial crisis, or how about those cyclical plays that have been working well over the last 18 months or so, whether it is angst or energy or reopening trades. how do you think about that for next year? gary: a little bit of both. the common denominator will be larger cap stocks, high-quality stocks with reliable earnings in an environment where the economic backdrop will be one of transition, but we do favor the large cap technology stocks with their reliable earnings, and at the same time, economically sensitive stocks should be able to ride above average growth through the. first half of the year arch capital -- the first half of the year. matt: what do you expect in

terms of fixed income? we have had such incredible issuance in 2021. is there going to be the same amount of supply in 2022? is there going to be the same amount of appetite? gary: to some extent, the volume will remain strong. treasury is pulling back on some supply, but as the deficit narrows, that should provide room for non-treasury issued in an environment where businesses are continuing to restructure debt. we see a pretty good volume flow there, and we do see opportunities in the non-treasury or spreads sector of the bond market, particularly in the area of preferred stocks, where yields are attractive, muni stocks, but also certain other aspects of the market as well. to a certain extent, investment grade corporates. the volume will be there, but we think the demand will be there as well. matt: on the equity side, give me your top one or two sectors

that you are telling your clients to really spend some time on. gary: i would say the top three sectors are technology, communications, services -- communications services, and industrials. we think those three sectors of the market should do well. we view each of those favors favorably. less so, on the defensive side, we think given the economic environment, we would be much more cautious towards consumer staples, utilities, stocks of that type. matt: the u.s. far outperformed everybody else in 2021, or at least is set to by the end of the year. do you expect that to be the case for 2022 as well? gary: yes we do. there are opportunities overseas. the environment for most markets will continue to hold up with the trade growth we are looking at. once we get by the omicron

infection, which we view as a temporary hit that will be disruptive a little more than the market is anticipating, but as that clears, that provides for it as well. the concern centers to some extent on china. we see growth stabilizing at a low level for the chinese economy by recent standards. our view for emerging markets overall is neutral. we view asia a bit more favorably than other parts of the emerging market space, and keep in mind for international stocks generally, we see the dollar firmer, which means modest currency losses for u.s. investors on overseas investments. we think the u.s. economy will be a growth leader in the coming year, and that bodes well for corporate earnings, which we have a double-digit growth rate in 2022. matt: gary, thank very much.

gary schlossberg joining us from the wells fargo institute. we really appreciate your time, and hope you had some happy holidays, and more to come. happy new year as well. we will talk about holiday sales when we come back. we saw a pickup, but was it a big jump in volume or just a rise in prices? we saw a lot of travel chaos alongside as thousands of flights were canceled. how is the omicron situation affecting the economy? we will discuss when we come back. this is bloomberg. ♪

>> after knowing that every thing would have a huge consequent's for us, it is a little bit hard to drop it, and there are parts that i admit i never thought i would miss, but i do miss. >> what are those things? what do you miss? >> even sometimes as i say i feel a little bit of a relief in not being intense, but i miss that. i miss the background noise even of having things to fret about all the time. >> is there such a thing as a substitute for that? >> i'm sure there's a lot of

people who work at great organizations and have quite fulfilled lives and give their all and they are not at goldman sachs, so there's a lot of other things that one could do. i am a commercial person. i am involved in some philanthropy things, and i enjoy that. and you can be quite commercial in those places. you can be a commercial person and government in the sense of getting things done and taking risk and pushing things along. you can be that way in a philanthropy. but i liked the immediacy of it and i like the intensity of it. >> your predecessors as chairman of the firm, paulson, friedman, bob rubin, all went on to serve in government. why not you?

>> i would say among the many reasons, i haven't been asked, so that would be one of the prominent reasons. it is a little bit of a charged environment. i would not say when you look at the administration you are finding a lot of people from finance and business backgrounds . even traditional roles in which they are occupied by commercial or finance or business people. so it is not something that i mourn, but certainly i would have considered public service what else is left? i worked at a high level at goldman sachs for 37 years. you want to do something different to make a contribution , but i understand why it is not happening now. >> i hear janet yellen is looking for an exit. what about lloyd blankfein for

treasury secretary? would you throw your hat into the ring if you thought they were interested? >> you would have to be preparing for your end-of-life or jumping off a cliff or something like that. of course, to make that kind of a contribution and to be at the fulcrum of that very large lever, of course you would want to do it. but i have no real connection to that. i don't think that is going to happen. ♪

matt: will come back to "bloomberg markets." i'm matt miller in berlin, alongside paul sweeney in new york. this is special coverage, simulcast on bloomberg television and bloomberg radio. we will be with you all week for an undecided number of hours. each morning, my boss calls me

and says today, these are your hours, and i just go. paul: we just go. the week preferring -- the week between christmas and new year's. matt: exactly. a lot of people are asking, why are we even at work? there is nothing happening. but hopefully they are watching television or listening to the radio. you are not doing anything at work this week, so let us accompany you along on this journey. paul: absolutely. the markets are certainly open, and we got green on the screen today. the s&p up about 0.7%. the nasdaq 100 up a little more than 1%, so a nice lift in the markets. like volume, but still nice to see some green. matt: still an all-time record, once again. if we close out at this level or anywhere in positive territory, we will have a 69's record high for the dow jones industrial average. that is putting money into people's pockets. is it helping them to buy more stuff?

we certainly saw spending in uppsala dollar terms rise over the holiday season, according to data we got from mastercard. george holding covers retail and the consumer for us at bloomberg news. jordan, how was this holiday shopping season in comparison, especially considering covid? was it good? jordan: yes, it was stronger than a lot of analysts expected going into it, when they were putting out their estimates in september. from the popo of early november to christmas eve, u.s. retail sales brew 8.5%, but i am sure everyone remembers that retailers are saying buy earlier because of supply chains, so it was even stronger when you look at october to christmas eve. if you look at big-box retailers like target, traffic was up. overall, the picture looks really strong, and people are

willing to spend and did spin this holiday. matt: just several weeks ago, a couple of months ago, people were concerned that there would be things on the shelves once people decided to go and shop. i guess the retailers did a pretty good job managing through that. jordyn: the largest retailers had a lot more leverage when it came to working with vendors, getting ships and things to their stores. it was a smaller retailers that suffered more when it came to not being able to get stuff on shelves. for the overall picture, obviously larger stores are driving that number, but if you look a little under, mom-and-pop shops were not able to do distribution, so those were where a lot of the concerns lied. matt: are we starting to see omicron really hit sales

numbers, or do you expect that maybe in q1? because we saw, and we continue to see airlines canceling thousands of flights because they don't have the crew, because even if crewmembers aren't going necessarily to the hospital, they are coming down with the virus. they didn't have to quarantine for 10 days, and you can't staff . is that going to affect sales? jordyn: the initial data is that omicron has not affected sales. if you look at the saturday before christmas, it did not seem like it chipped away at in-store traffic, but one thing it could do is shift spending back to e-commerce and online. retailers have been able to build up their online channels, and they will be more ready for demand to shift back to people worried about heading into

stores. matt: do we know what consumers were really spending money on this holiday season? was apparel? was electronics? -- was it apparel? was it electronics? jordyn: lots of apparel at department stores, which could get about 1/4 of their annual sales during this time. they perform strongly. jewelry as well. jewelry is a really interesting example because when i was talking to jewelers earlier this season around supply chain, they say they face their own challenges, and it was mostly because of demand, that so many people had savings and wanted to buy some thing really special, and that they were going to be nervous about not having enough diamonds for folks, but it looks like jewelry really performed well this holiday. matt: there used to always be one thing, like a cabbage patch kid or elmo.

i guess in some sense last year, video game consoles, the playstation 5 or the new xbox were impossible to get. was there something like that this year? jordyn: not one item. the electronics category was really challenged, as we think about the chip shortage we are seeing, or just going back to the overall supply chain issue of getting things from china to overseas. that's where a lot of that early out of stocks were. but it was not a situation like the movie "gin the law the way -- movie "jingle all the way" with the turbo man. paul: 8.5% year-over-year, matt, that is pretty solid for the consumer. matt: it sounds good, but inflation, what was the last consumer inflation number we got , like 6%? paul: the other thing is, people had a lot of cash in their

pockets from all of the enhanced stimulus they received. the question is, as you look to 2020 to, how strong will the consumer be there? maybe this year is a little bit of pent up demand and extra cash in people's pockets. matt: that is what i keep hearing about, but i don't have any extra cash in my pocket. so i think it depends on who you are, where you are, and also win. do people really keep stimmy checks through christmas, or did they spend it all on gamestop early on? paul: we will have more coming up. this is bloomberg. ♪ p. this is bloomberg. ♪

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>> one area your firm has specialized in his cryptocurrencies.

many people think of the currencies are not a real thing and not a great asset category, but you are a big investor in coinbase, among other things. i remember a couple of years ago you were going to take a look at blockchain and things related to that. what is it about cryptocurrencies that you think makes it an enduring invest in proposition. >> it is a little bit like the parable of the blind man of the elephant. people it kind of distracted and carried away and energized on these different topics. we view it as fundamentally the technological transformation. there's a fundamental technological breakthrough happening. it is an area of conspirators science code to strip you to consensus. it is the ability for people to be able to form trust relationships. money is when application of being able to have distributed consensus, but only one of those applications. there are many other applications and many other things people are going to be able to do with this technology, and many of the smartest people in commuter science -- in computer science are going into this field. for us, it looks like it is just

the eighth or ninth fundamental architecture change breakthrough technological transfer happening in the industry, and we take it very seriously. >> your view is not whether bitcoin is good or not or worse x or y. you are insistent of the whole technology underlying bitcoin is going to change the world. >> bitcoin is an internet computer. it is spread out across hundreds of thousands of physical computers all over the world. it is a turns action process system that runs without any sort of central location. it is like a giant is to be did mainframe, and out of that transaction processing comes the ability to exchange money. out of that process comes this token, the coin, that is a representation of value in the system, but it is a complete transaction processing system. it is a new kind of financial system. >> when people invent something, even if they are shy, they will say i did something nice. how come the inventor of bitcoin hasn't surfaced publicly? >> this is one of the most amazing things i have ever seen

in my life. most people don't realize how important it is at the time they invented it. whoever this person, ai, government agency is that invented this thing, they knew the importance of what it was from the very beginning. ♪ matt: -- paul: this is special markets coverage simulcast on bloomberg television and radio. will we with you -- we will be with you all week. markets are open this week. matt: and we have some real action as well. granted, it is then volume -- it is thin volume. we always say that around the holiday time, but it doesn't matter. if you are long this market, you are happy to see it go up in the matter what kind of volume you are looking at. we have the doubt owned industrial average up, back up 36,000. it is a big, round number that

doesn't really mean anything or matter too much. it is cool because there was a book, dow 36,000, and no one thought it would ever come true, and now it has. s&p 500 gaining 0.8%. 4764 the level there. although it did not feel like there was much of a santa claus rally this month, this is the fourth day of pretty big gains. the last three trading sessions come up 3% and change. today another day of gains. paul: dr. anthony how she was making the rounds this weekend, talking about how americans should stay vigilant about becoming complacent about this omicron variant. let's tick a listen. dr. fauci: the issue we don't want to get complacent about is when you have such a high volume of new infections, it might override a real diminution in

the severity. paul: that was dr. fauci making the round this week and over the weekend. let's check in today with dr. samuels carpino of rockefeller foundation, the managing director. i guess one of the questions i know a lot of people have about this omicron variant is how long is this going to last? it seems like it is spreading so quickly. does that suggest maybe it will burn through much quicker than maybe we saw with the delta or even alpha variants? dr. carpino: the omicron variant is spreading more quickly than anything we have been used to. it is one of the reasons why dr. fauci's concern about a lack of vigilance is so important, both because we are really at risk of hospitals getting overwhelmed. what we did see in south africa is that was over much more quickly as a result of how fast the variant is spreading. in the united states, that is going to depend on a number of factors, the biggest of which

being the underlying immunity, how may people have already been infected, and that is unfortunately something we don't have great data on. matt: we are just getting the governor of new york holding a press conference right now, saying that on christmas day, new york state saw 36,000 cases. there are a lot of people in new york state, but that is to a relatively high number, and the state had 5500 covid hospitalizations. that is a more concerning number, i think, then the overall infections, isn't it? this is the main concern, the hospitals have too many covid cases coming in, and then can't deal with their day-to-day business. some across the country are even needing to call in the national reserve. dr. carpino: we have seen hospitals across the country have to call in national guard members and putting emergency procedures around care they are giving. many states like new york have already eclipsed their previous

high record for seven-day averages. in the u.s., we are heading there. we will probably cross through that record within the next week or so. this is a very serious situation. one of the most concerning signs is that pediatric hospitalizations are also increasing rapidly over the past couple of weeks. paul: if the expectation, is it a fair expectation that once we are through the omicron variant that we are going to have two segments of the population, the first is vaccinated, and the second has been infected with either the alpha, delta, or omicron? dr. carpino: we are looking at a very high percentage of the population that will be infected with the omicron variant, especially if they have not been previously infected, nor vaccinated. i think you are right, what we are looking at is a situation where a very high percent of the population has prior infection or vaccination. the concern is the omicron

variant is re-infecting people i very high rates. with inc. it is breaking through the vaccine at high rates, unfortunately severity is still low, but we need to be very concerned about future variance. we know they are coming and they could still be at risk for breaking through the omicron derived immunity. matt: low severity is great, and of course, there is still a smaller portion -- i guess a higher portion of unvaccinated people who are infected and up in the hospital, but what do we know about longer-term illness? long covid, or the fact that the virus could affect systems beyond just your respiratory system and actually cause problems that last six months, a year or longer? dr. scarpino: first, i would say it is less severe than the delta variant. i thing it is by no means low severity. if with inc. about the fact that covid is probably 10 times

deadlier than the flu, which is one of the top 10 causes of death in the u.s. every year, if it stayed a half as that, it is still maybe five times worse than influenza, so it is a very serious disease, even if we are seeing a reduction in hospitalizations. in terms of long covid, there is no data yet, although i have no reason to suspect that we don't have similar risks for long covid, especially for individuals that have not yet experienced infection. that is one of the things we will be learning about over the coming weeks, months, and years, as all of the long-lasting effects of this disease not just on our bodies, but on our economic health as well. paul: real quick, what is the next variant, do you think? where do you think that is going to come from? dr. scarpino: we need to focus on vaccine equity. it is quickly important that we get the world population vaccinated. that is the best thing we can do to reduce the chance of variants

emerging. more than likely, what we will see is an omicron that may be spreads more efficiently, and then the one after that will be a variant that breaks through the omicron derived immunity, and that is what we are doing a dependent prevention institute, staying vigilant to alert the world and respond quickly. paul: thank you so much for joining us, dr. samuel's carpino -- dr. samuel scarpino at the rockefeller institute. what we have been hearing today is that the lions share of those who end up in the hospital are unvaccinated, from early unvaccinated patients. this is bloomberg. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. ♪ than 120 countries. ♪

>> you have a cohort of up-and-coming chinese companies increasingly allowing chinese consumers to live their digital lives at home and on the road. that means in the car they can have their soho media, their gaming, and things like karaoke.

it is not your usual road trip. it is big business for companies who are at the forefront of this trend, besting western rivals by offering models with karaoke microphones. >> we are just showing you some of the functionality of the car. there's a qr code here in the car. you scan the qr code and it takes you directly to your own media account. >> we are here in the x punk p seven. the entertainment functions, the karaoke, the gaming comedy movies, are not able to work when you are driving, so they are by default turned off when you are driving. after the car has been purchased, the owner can change the settings so that passengers can enjoy the functions. for many chinese drivers, the car is more than just a way to get from a to b. it is also a place when part that they can enjoy a bit of time with friends.

electric carmakers in china are competing on what happens inside the cabin, from social media integration to voice recognition software. [speaking non-english language] >> the technology is particularly key to luring chinese consumers. as you are shopping for a car, how important are these functions in your decision of what car to buy? [speaking non-english lung which] -- non-english language] >> electric vehicle sales have surged in china.

their forecast more than double to 3 million units this year and 1.3 7 million in 2020. >> ♪ and seven goes some things are meant to be ♪ ♪

matt: welcome back to "bloomberg markets." we are going to bring you every day this week on the bloomberg television and bloomberg radio. myself, matt miller out of berlin. paul sweeney in new york. we are partners in the sense that we are co-anchoring a radio and television program together. paul: an ocean apart.

matt: i'm not saying that we are partners like police or lawyers. we are partners in crime, in a sense. in any case, looking at a week where we expect little to happen, but you never know. with all of the issues we are facing, omicron, the spread is rampant right now. we see thousands of flights canceled because they don't have enough staff. you've got china came out yesterday and said they are going to start more targeted fiscal policy to try and help that economy recover. you had vladimir putin pulling 10,000 troops back from the ukrainian border, saying they were just there for exercises, but ukrainian sources still tell us there are almost 200,000 troops gathered on the border there, so that could be problematic. then of course, you've got the inflation issue that has may

affected holiday sales. you still had 6%, 7% inflation, see you wonder how much holiday sales were growing from last year. paul: we still got our friends and washington, d.c. trying to get some legislation through, that old back better plan. matt: i bet they are not there. paul: exactly. matt: i don't think they are in d.c. right now. i think they are all chilling because i think they are not in session this week. so you didn't expect anything out of them anyway, and this week you are not going to get anything out of them for sure, right? paul: exactly. but we will see. the biden administration is seeking a path forward for its build back better economic stimulus and social spending plan. vice president kamala harris said sunday, let's take a listen in. >> to your point about the economy, it has been the fuel behind our insistence that we

find common ground in congress to pass the build back better act so we can bring down the cost of living are real americans, working people. i'm not giving up. the president is not giving up. frankly, the stakes are too high. paul: that is vice president kamala harris saying they are still working on the boat back better, again, it seems to be bogged down a little bit. let's get some more color on all of that and all things washington, d.c. with henrietta treyz, veda partners director of economic policy. thank you for joining us here. handicap for us where you think this build back better plan is. is it doa, or is there still some work being done to push it forward? henrietta: i am happy to be an accomplice with you all today. i would say that we have to start digging about the bbb in different terms than we have been. we started off with a $6 trillion package, moved down to

$3.5 trillion, then 1.7 $5 trillion. one thing i want to be clear about is that when we use the term bbb, we have to a knowledge that it might come in materially smaller than what we had previously been factoring into our assumptions. you can see that from macroeconomists revisions about how this is going to impact the gdp of the united states for the remainder of the year because it is substantially diminished, or if it is dead. there are a number of reasons to believe there will be legislation passed, not only because there are pieces that need to pass like a tax bill or a government shutdown prevention package, but the child tax credit, the ongoing desire to see various business interest deductions expended, a whole slew of energy credits automatically expire at the end of this year. there are requirements to get a bill through, and the possibility that you get it with just 60 votes in the senate with three public and support, or only 50 in the case that democrats go it alone. to sum up what i would say,

there is a bill that is the bbb 1.7 $5 trillion, and i think that is effectively dead. i think there is a material likelihood, 70% or so, that we get a package that looks more like $700 billion. something with less than $1 trillion i think is probably appropriate, and i think it could be as low as $300 billion. and a package of that size is a very short extension of the child tax credit and then a slew of energy tax credits, so a much smaller bill. you can call it the bbb if you want, but it will be much smaller than what we have been factoring in. matt: there are certain things that have so much support that they are guaranteed. for example, the child tax credit is one of those things that is very likely to get extended into 2022, may be retroactively if they take too long to do it. then there are other things like salt that are still highly

debated and you don't know what is going to happen. henrietta: exactly. i think what happened when senator manchin took to fox news, he got on the trampoline with a bunch of these provisions and bounced a whole lot of stuff right off the trampoline. the salt deduction, i would not be surprised if that was gone from the conversation. will that be a problem in the senate and the house amongst coastal democrats? 100%. but joe manchin in west virginia doesn't care very much, and that was a want to have, not must-have. it comes back in 2025. i think there is a path forward to leaving that in the dust. the child tax credit is going to come in at a smaller level than it had been, but i think the most important component, and to get also to what the vice president was speaking about about the cost of living, if the child tax credit expires added expanded rate -- at its expanded rate, you get it once a year. it is immediately impactful, and

i think a big part of why macroeconomists took their forecast down, because you're not going to get that credit on a monthly basis the way you have been, and when you go to file taxes in april, you need to pay taxes only $300 you have been getting every month since july, so it is a double whammy to the average american family, and something i think both sides of the aisle will want to address. i don't think republicans and to be the party that votes against the child tax credit. i think there are enough votes to get that extended with 60 numbers of the senate. so one path forward is to break the bbb into smaller packages and pass them on a more digestible level of $300 billion, and that way you can get $1 trillion in spending, but it is not one big handle. paul: do using the market has discounted a $300 billion package? i don't think so. henrietta: i don't think so at all. i thing there is a lot of confusion. i get questions that run the gamut. are we going to see the capital

gains tax hikes come back into play? the answer is no. are we going to see the corporate tax rate rise to 28%? the answer is also no. i think there's a lot of confusion the market place about what is going to transpire from here. i think the range for folks to incorporate is $300 billion at the low end, $700 billion probably at the high-end. there are outlier scenarios where we get nothing, and outlier scenarios where we get $1.4 trillion. but i would say the sweet spot is somewhere between $300 billion to $700 billion in the next couple of weeks. matt: i think you have moved the ball forward more than anyone we have spoken to in the last couple of weeks. so great to get your intelligence here. really appreciate your view on this. henrietta treyz there from veda partners, the director of economic policy. this is bloomberg. ♪

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matt: welcome back to "bloomberg markets." matt miller in berlin for the time being. paul sweeney in new york for the long haul. we are with you on a special simulcast program. this is pretty exciting. we are going to go live on tv, live on bloomberg television, live on bloomberg radio for the whole week. what i am hoping is that we do such a good job that they just get rid of what either of our program they have at this time on bloomberg tv and just keep us. paul: absolutely. why not? we are here for this week, and the markets are green on the screen, so it is all good. let's get a sense of what is going on in those markets. we check in with ritika gupta. she is the expert. what you have for us? ritika: we are seeing that santa claus rally continue on lighter volume and lighter trades, two

things you need to have a sustainable and meaningful rally here. still, as we continue on this trajectory, this would be the 69th record close of the year for the s&p 500. we are seeing a semler picture in europe, with stocks higher there. interestingly in the bond space, we are seeing bonds moving higher, so maybe there is a bit of risk underneath the surface here, with 30 year yields down more than two basis points, giving back some of the gains we had last week. where we are seeing some relief, i talk about the european natural gas futures going from record highs, but over the past four days, we see those dropping significantly. lng gas from the u.s. coming to save the day, and some more moderate temperatures as well. where we are outperforming today, we know we did see it in the nasdaq, but really, what is leading the nasdaq higher is a lot in the chip space. we have seen that in the year-to-date story as well.

the philly semiconductor index is up more than 40% on a year-to-date basis, outpacing the gains of the nasdaq, as we talk about that global chip crisis. while we speak broadly of tech and the nasdaq doing well on the index level, i point to some of the more speculative areas of the market that have not been doing so well in terms of the returns. here i am talking about spac's and ipo's. those have given weaker returns despite the fact that we had record issuance this year. the renaissance etf down 7% year-to-date. this has really extended to the stay-at-home trade as well. we talk about another wave in the pandemic, down 8% on a year-to-date basis, looking at the selected stay-at-home index. matt: thanks very much, ritika gupta with a look at what is going on in the markets. bottom line, we are up again today on light volume, but at a new record high on the s&p 500, and if we close their it will be the 69th record high we have had

this year on the s&p. let's get to pinebridge's global head of equities. thank you so much for coming and spending some time with us. it has been a pretty impressive rally, even if we did not get a massive santa claus climb, or at least we haven't really yet. it has still been an amazing year after an amazing year after an amazing year for equities. how much longer can this continue? guest: the real question is how long and how strong is the economic cycle ahead of us. i think that is the debate. i think that this year, the investment banking community and sell side analysts -- not just this year, actually, they have not covered themselves with a huge amount of glory. they have looked back most of

the time to play books in the past, which of course, the current situation has no parallel. i think the other thing we have seen this year is that the markets have been too short-term focused, so much so that a lot of the data is moving pretty fast, and it is not glum and it is not gloaming onto that either. -- it is not plumbing onto that either. i think this is much more an alpha market because interest rates have bottomed after 40 or 50 years, so that immediately puts a little but of pressure in terms of the tremendous beta rallies we have seen in recent years. but there is a huge amount of dispersion in the markets that we should expect in 2022. it is a terminus outlook. just think about the growth in the u.s. that is going to be

solidly in the region of 6% to 7% next year. sorry, nominal growth. could potentially be higher because now we are close to double digits. you've got china, where growth rates have bottomed we think in q4 of this year, so that is going to be another driver of growth next year which has been largely missing in action in 2021, and then of course, you've got tremendous growth out of india, so major economies are powering ahead, and combining that with monetary policy, the europeans with the ecb will continue to do qe next year. interest rates, even if they edge up three times that the fed has promised, that is hardly an issue. we are coming off of 25 basis points, so tremendous support from the monetary and fiscal

side, together with a really good demand outlook, almost like a secret as growth outlook for 2022. and with that, valuations are obviously high, so gdp is much more an hour for market. matt: that is where i wanted to go. what is your call on the market valuations? earnings have been very strong over the past couple of quarters, but are they strong enough? anik: there's a variation of that everywhere. they are high in all asset classes. i would say it is a function of the fact that we don't think interest rates are edging up much more. it is a little like gravitational pull. on a planet with zero gravity, you can jump very high. so when you have a very low interest-rate outlook that is 42% at the long end for an extended time, valuations can be sustainably high. but i would add that we should

expect more earnings upgrades, but selectively more earnings upgrades in q1 and q2 of next year. that is why we think there's going to be more dispersion in the markets. if you think about the s&p 500, about 85% of the stocks are in territory. but outside of the s&p 500, it is about 50-50. there's going to be a lot more support in global equity markets next year, and in the u.s. you need to be much more selective. matt: it is exciting in your research that you see multi-year capex cycle just beginning now, and that is really going into sustainable technologies, as well as businesses trying to future proof their models. where do you see the most opportunity? anik: with technology, you have to think of the high-end.

most tech has very little pricing power because they don't have a lead time of more than two or three years, so you stick with the real market leaders that have scale, the ones that have innovation. that is what gives them that tremendous pricing power. so if you stick with, on a buy the dip mentality, with all of the leaders in tech, that is a great investment opportunity. if you look outside of the u.s., there are a lot of emerging platforms, technology platforms, that are likely to see double earnings growth for a very sustainable future. paul: thank you so much for joining us, anik sen. we appreciate another constructive call for risk assets for 2022. people are still riding the

crest of this wave. matt: it has been an incredible run. the last three years have been beta breakouts. we had a 29% gain for the s&p 500 in 2019. we had a 16%, 17% gain last year. we are looking at 27% for 2021, so it has been incredible. maybe we get back into more of he termed an alpha market, but he still sees gains. great to get some time with anik sen. paul: coming up, we will chat with patrick schultz and get the latest on travel. we will get the latest, coming up. this is bloomberg. ♪ ♪

>> you buy software companies and only software companies. why? >> because software is the best business in the world. think about it. you have recurring revenues, you have high rates of growth, you have gross margins that are 90%, you have the potential for big cash flow margins. it is a fragmented industry where you can consolidate markets, and software is becoming the business of everything. >> software was definitely hot before the pandemic, but now it is on fire, right? in money is pouring in. tell me about the competitive landscape. >> we have always had great competitors, and we continue to do so. our competitor advantage in the market is that we have been doing this for 22 years, and in the process of buying 300 software companies, we have

developed and operating know how that really adds value to the businesses we are partnering with, and most of the industry to this day, while we have seen great innovation and software is leading the world, most of the industry today is on profit, so to do a deal based on fundamental investing, you have to re-create that and have to turn these great, innovative companies into cash producing businesses. do have to combine the best of both, and if you have been doing it for a long time and have an operating model around it, you are able to achieve that. that is what keeps many players on the sidelines of this great software industry to this day. >> it is true that many players are on the sidelines, but increasingly, there are firms that want to compete with you, right? some of the largest private

equity firms in the world are raising growth equity funds. they want to be the next softbank. hedge funds are becoming serious players in late stage venture capital all of a global, d1, others. is that changing the competitive landscape? it has to be. >> it is making it better, and this is why. competition is a very good thing for us. it is very good thing for our peers. when there is competition, we alone don't have to create a market. when a company receives many different types of proposals, may be a growth round proposal, acquisition proposal, they feel a lot better about where they should be valued and where they should trade. >> so with software is as attractive as you say it is, and i believe you, and furthermore you have a track record to back it up, why hasn't everybody figured this out? >> one is the lack of

profitability in the industry overall keeps many players out. we started, when we were very small, so you are doing small deals, you can take the risk of learning operations, learning how to run these things when you are investing $50 million. are you ready to take that risk when you are investing $7 million for the first time of turning a company from -10% to 40% while not hurting their growth rate and allowing that innovation curve to continue? that is a tall order. the second reason which you pointed out is it is interesting how things work in our favor when it doesn't seem like they should, which is the high valuations of software. those are a natural barrier to entry in the space. if software today traded for 12 times ebita, we would have 40 competitors. but that in essence keeps many players out of the business. ♪

>> welcome back to "bloomberg markets." this is special market coverage simulcast on bloomberg television and radio. we will be with you all week, covering the market action each hour and looking ahead to the new year. the omicron variant is in full speed on a global scale, and wreaking havoc for a number of

businesses. we will get to that in just a moment. let's get the latest on what is going on with this variant and how things are playing out. tim annette joins us with bloomberg news. what is the latest? tim: the latest is that it just continues to spread globally. we are seeing in many countries cases rising above the peaks we saw with the delta earlier this year. that includes the u.s., where i think the data collection has been a little bit disturbed by the christmas holiday. you're seeing some lags in reporting, but generally speaking, in terms of the seven day average, we are above what we saw with delta, so it just continues to spread across the country. matt: the concern isn't really the number of infections, but the hospitalization, the overcrowding we have been

seeing, the national guard having been called in to a number of states to back the doctors and nurses who'd can't -- who can't deal with the overflow. timothy: that is the important distinction thus far, is that from what we have seen and from what the available data suggests , it is not causing as severe disease. however, we are going to have to keep an eye on it because as the number of infections grow, that could still push a significant number of people into the hospitals, where you start to get into some complexity in terms of who can be treated and how well. matt: tim, thanks very much for joining us to talk about the spike in infections of the omicron variant and the hospitalization concerns. none of it holding the markets back. i want to reiterate that we got a rally on our hands here, even if the day after the christmas break, volume is relatively

light. that is definitely the case right now. we are seeing a drop in volume on s&p shares about 35% compared to what we normally see at this time of day on the dow jones industrial average -- this time of day, on the dow jones industrial average it difference of 40%. the s&p at a 69th record high for 2021 if it were to close at this level. let's talk about the industry groups the omicron variant is affecting. patrick scholes joins us, the general manager for lodging and leisure for hotels and restaurants. what kind of damage are you seeing? we know in the airlines, we have seen so many flights canceled due to a shortage of employees,

people getting the omicron variant, whether they are really sick or not, they can't go to work for 10 days. are we seeing this happen across the sectors you cover as well? patrick: you've got a lot of different impacts going on right now. let me tell you something that is probably going to surprise you in many viewers. the flight impacts themselves of the cancellations and delays could very well be a positive for the hotels. i think the delays and cancellations are very similar to a weather event, a snowstorm, a hurricane, and interestingly, hotels specifically are net beneficiaries of things like that because people end up staying another night or two in a hotel. so for the flight cancellations, probably a small net benefit. for the variant itself,

excluding the flight cancellations, i don't see it as a positive. certainly it is going to be a negative for business travel and for groups and conventions. we have certainly seen some cancellations or modifications with large group events. number one was the jp morgan health care conference in san francisco. that has gone virtual. if we go back six months ago, there was a lot of chatter in the industry that that conference was going to be ushering in a new normal. when it was supposed to be live, every thing was going to be fine. so here we are getting pushed back. you also have the consumer-electronics conference in las vegas, which has been pared back. i believe it is still happening, but a number of companies have pulled back out of that. so it just kind of pushes things out. i have met with many of the executives of the public companies two weeks ago, and sort the general chatter was it

is not destroying the industry. it is just a speed bump. but the recovery for business -- matt: patrick, how about the cruise business? i know those customers are really loyal to the cruise lines, but it does not sound like a good idea right now. patrick: you definitely have a core group that is very loyal, but many are not loyal, and unfortunately we have seen some really bad headlines this week. it is unfortunate because a lot of the cruise companies were starting to ramp up again. we are entering right now what we call the wave season, the height of the booking season, when all of these -- and with all of these negative headlines, it is not good, i suspect. matt: i talked to a guy this morning at aberdeen who said i am ticking advantage of this negativity to buy airlines and cruise lines. patrick: i don't have any buy

ratings on cruise lines. saw a really strong performance asked week in the cruise stocks. i am not ready to jump in and take anything accelerating on carnival. i am not quite ready yet to do that. matt: thank you so much for joining us. really appreciate getting some time from you. patrick scholes, covering the lodging and leisure business. we have markets rallying this morning. the s&p up 0.9%. the nasdaq up over 1%. this is bloomberg. ♪

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>> which is gained pace in recent years, whereas it used to be quite straightforward to repair electronic devices 25 or 30 years ago, have grown more proprietary it has grown harder and harder. no we've seen a wave of legislation. towards the end of next year there is likely to be proposals that standardize fair parts for each device and also ensure their pricing is reasonable. that is where apple comes in. they seem to be getting ahead of some of the legislation with their own proposals. the devil will be in the details. how expensive for the parts going to be? how easy will it be to do this yourself? >> there are plenty of videos

online to explain how it is done. most customers, we estimate only 5% of customers will repair their own device, where is 95% will go to a professional. if you will get it wrong it is quite costly. while in many ways devices have become easier to repair and more intuitive, there is also many risks in terms of one little bit of damage to the logic board for one tear of a flex cable could render a significant part damaged entirely. >> right now to get an iphone screen fixed will cost you $280. for a battery to be replaced will cost you about $70 if you do it with apple. for the longest time, apple said

it opposed repairs being done by users doing it at home, they said it was danger and risked creating fires. this is a huge turn and does a lot to burnish apples green credentials. matt: welcome back to bloomberg markets. i matt miller in berlin with paul sweeney in new york. i will be moving to new york city next week. paul: we cannot wait. matt: next week. that is very soon. we will not be doing this program in this fashion. this is one week only special program simulcast on bloomberg television and bloomberg radio. we welcome our listeners on sirius xm, on terrestrial fm radio as well as our viewers on bloomberg television. what a day we are having for

market. it is a slow day in terms of volume. smart people have taken this week off. why would you come to work the week between christmas and new year's if they both followed a weekend? it does not make any sense at all yet pollen i are both doing it. -- yet paul and i are both doing it. you see the s&p up. it is starting to look a bit like christmas, a little bit of a santa claus rally forming, 4769 and the s&p, the dow jones up more than 200 points. that is better than a stick in the eye as dr. anthony used to tell me about -- as tucker anthony used to tell me about everything. this is pretty good. paul: this is bree good and we will take it. -- this is pretty good and we will take it. the buy on the weakness if

nothing else. matt: nonetheless we get negative headlines about the coronavirus and the omicron variant. you can see the new york state governor has announced 35,000 new cases in new york on christmas day. 5500 hospitalizations. another headline that italy has 30,000 810 new coronavirus cases versus 24,000 the day before. that is a rapid climb. we are seeing the most in china since january. the most in china in almost a year since the pandemic began. record numbers all over the place when it comes to the omicron variant. let's bring in ingrid, tencent and company analyst to talk

about, not really the news of the day on the infections, but what these companies are able to do about it. i did see a couple stories today , roche has its home testing kit approved, that is good news because the u.s. lags behind in terms of testing. what are you seeing in terms of opportunities in the sector where investors have not already bid up the price? ingrid: we see governments and companies have been better and better equipped to deal with the pandemic as a whole. as you mentioned, we were previously talking about vaccines and now we are talking about -- to the point where we can lower the risk of possible his asians. the tools -- of hospitalizations.

the tools become more of a part of the pandemic situation moving forward. as usual we should continue looking at vaccinations the companies driving covid-19 vaccine efforts in 2022 at large. we know by now we have enough information and the needs for booster and governments are ordering enough vaccines to boost their entire population most of the time. there might be more opportunity go forward and companies that have not had the opportunity to launch their own covid-19 vaccines in development could be coming to market with improved vaccines with different attributes on the vaccines we are seeing. for example, vaccines that might be helping you be protected against infection for longer times can work against several

variants, or even vaccines that will be combining covid-19 with the flu shot. paul: are we going to get to a point where these companies will get so good they could create variant-specific vaccines? ingrid: yes we well. we are already at that point. most of -- both moderna and biontech have come out and said they would be ready. pfizer and biontech said it would be ready to result in omicron specific covid vaccine by march 2022. the only thing is we do not know if we need a variant specific vaccine. if it is needed, we could see early launches around the beginning of next year. we should expect that going forward as well. matt: i want to point out we have the president speaking right now, talking about the

covid problem, saying there is no federal solution. let's listen into president biden. pres. biden: we discussed the rising covid cases coming out of the holidays. as i said last week, omicron is a source of concern, but it should not be a source of panic. if you are fully vaccinated and get your booster shot then you are highly protected. if you're unvaccinated you are in a high risk of getting severely ill from covid-19, being hospitalized or even dying. this is not like march of 2020 and the beginning of the pandemic. we are prepared and we know what it takes to save lives and protect people and keep schools and businesses open. we just have to stay focused and continue to work together. my message to the governor is simple. if you need something, say something. we will have your back anyway we can. last week we took steps to bolster support for you with

more capacity to get shots in arms, with more places, more vaccinators, more times for folks to get vaccinated or get a booster shot. we have added appointments for booster shots adding hours and getting more convenient to get a booster every day. the second thing we're doing is more testing. seeing how tough it was for some folks to get a test shows we have more work to do and we are doing it first. let's talk about how we got here. when i took office we were 10 months into the pandemic. even so we had no over-the-counter home tests in the united states. none. if you wanted to get one, you had to go to a clinic or a drugstore.

>> one historian traced the traditional longhouse format from people enslaved in africa and transported to haiti. the massive slave revolt that ended with the haitian revolution in 1804 brought

thousands of freed and enslaved black people to new orleans. the sudden influx created a housing shortage. free black people were in a position to buy and build their own homes, and many built the earliest shotgun houses. no single architectural style encompasses the house. there greek revival shotguns and federalist style shotguns. there shotguns with hip roofs and gable roofs. some feature elaborate detailing while others postclassical facades. the most common style is the victorian. distinctive for its innate millwork comet segmented arched doorways, and full-length windows and stained glass. when it comes to floor plans, the houses, as standalone singles, duplex homes known as shotgun doubles, and once with

the second -- and ones with the second story addition. traditional shawn donnan is one room wide -- a traditional shotgun is one room wide. the first room is the living room, then a bedroom, then a second bedroom and the last room is a kitchen. they did not include bathrooms but outhouses. there are high ceilings to allow hot air to rise. doors were installed in a single line to help with airflow and transom windows could be open to allow breeze to pass through the house. thousands of these homes were destroyed in 2005 as a result of hurricane katrina. demolitions followed for years as the city rebuilt, sometimes without the permission of the homeowners.

today, people are still building and renovating shotgun houses all over new orleans, with many of the original features, and one more modern one, a hallway.

paul: welcome back. this is a special simulcast on bloomberg television and radio. we will bill you -- we will be with you all week covering the market action each hour and a look at the year ahead. it is good we are here because we have a nice low-volume rally going on.

matt: a nice little lift. more than 200 points on the dow jones, about a percent on the s&p 500. this follows three days in a row of gains pre-christmas. it looks like santa was cutting it close but he has finally delivered. the s&p 500 at 4769. the dow jones at 36,160. i think -- we were talking about that book, dow 36,000. i think the authors both wrote for bloomberg. it was written in 1999. now 22 years ago that forecast, they expected it to happen in the next couple of years. it took a while, but it looks like it stuck. paul: yes it does. markets are rallying despite the fact that build back better does not seem to be moving its way

forward, if it is it will be a much smaller package. let's check in with senator ben cardin speaking on fox news sunday on the topic. sen. cardin: we have to find the sweet spot. president biden has included all parts of our caucus in these discussions. at that we can reach the sweet spot. a lot of us will be disappointed but we will not let perfection be the enemy of getting something done. paul: that was senator ben cardin speaking on fox news sunday about the big bout -- about the build back better plan. we have laura davidson of bloomberg news in washington, d.c. it does not look good doubt can we heard numbers earlier, they could be looking at a package that is as small as $300 billion. what are you hearing? laura: the senate has not been in person since joe manchin

through that bomb that he could not support the bill. they come back on monday. chuck schumer said he would put a bill on the floor in early january. he wants to move forward with the process despite what joe manchin is saying it basically der joe manchin to vote now. the likelihood is joe manchin will vote no and their base will have to go back to the table and reconfigure the package. right now the packages to trillion dollars but includes a bunch of stuff that expires after year or two, it is just there for one year. to extend that would cost around $1.5 trillion. joe manchin has said he will not spend more than $1.75 trillion. they want to do the child tax credits, they want to cut out a lot, climate education, childcare spending they are looking at. matt: are they going to break this apart and do it piecemeal, at least with some of the

things? the child tax credit you mentioned, even joe manchin does not want to vote against that if it is more or less standalone, that would pass, right? laura: the problem democrats have is the reason they have combined everything is because that is the bill that has the special privileges that only needs the 50 votes in the senate. if or when they were to break up the bill, they would need 60 votes which means they would need 10 republicans to vote for it. any element of the bill is unlikely to get 60 votes. anything that had bipartisan support they put in the infrastructure package. paul: the senate comes back next week. how quickly or not can we get some clarity? laura: with u.s. congress, always better to take the under -- or the over in terms of time. they are making noise about doing some stuff in january. that stuff is unlikely to be consequential.

it is likely they will not actually have a package that could get a vote until march, that is if they could get something together. they have to go back to the drawing board and get everyone on board. this will take weeks of not months. they will be lucky if they have something by memorial day. that will be a win for democrats. paul: laura davison of bloomberg news covering what little progress there is on build back better. it is a drama nonetheless. let's get over to abigail doolittle with a look at the markets. this is just one more day of a rally, stringing together four in a row, putting us at an all-time high. abigail: it has been an extraordinary run, not just the last four days. that is the longest winning streak since early november, but we are looking today at the likelihood of the 69th record high of the year, a third up year in a row. overloads last three years i

believe the s&p 500 is up north of 50%. the rally continues. we have chips rallying in a big way. we have autos up. on the other hand, as we have seen some of the blaze and issues with travel over the weekend because of of omicron, we have the travel stops and the hotels in the casinos down. fear around the fact that industry or the idea that industry might be hurt longer than had been anticipated because of omicron. overall up and away. paul: should we be pleasantly surprised this is a market that is moving higher despite the fact we have a federal reserve saying rates are going higher next year? abigail: as you and lara and matt were having a conversation about build back better, i would take an opposite view on the situation. i do not think joe manchin say no was a surprise at all, so last week stumble on monday, if you can remember that far back,

i do not think it had so much to do with that. i think the fiscal stimulus, the possibility of it coming in, whatever is priced in, i think everything has to do with the fed. i was thinking about the idea that on the one hand it sounds like the fed is hiking and certainly they would be hiking, but the fact we have the market up suggests the market thinks they're getting it right. if they do do three hikes the economy can handle it, it will not dent the economy. it is not as though they are reducing the balance sheet, they will not be adding to it or that is the idea it will come in march. volume is 39% below the average. there is a good situation for the bulls. matt: also speaking of build back better, i have to wonder about incentives to buy electric vehicles. now, prior to the expiration, new york state you should get $9,500 off an electric vehicle,

even if it is a luxury tesla model x or whatever. should that be of concern to shareholders? abigail: i do not know if it a concern to shareholders but if you look at the tesla stock is higher in a massive way. it seems right now that is not factoring in. perhaps in 2021. tesla is one of the stocks that has had a monster run. we will see if that happens in 2022. paul: i will pull up the tesla chart and check it out in case. looks like, yes you are right will stop incredible rally from 650 two 1108. abigail doolittle with the markets. this is bloomberg. ♪

romaine: welcome door special simulcast. we welcome all of our audiences across all of our platform. i am romaine bostick. paul: and i am paul sweeney. green on the screen. a good start to the week. romaine: looks like a good potential end to the year. the s&p setting up for what could be a record high. for those of you watching, we will walk through the charts all day long. we look at this on a technical level, you continue to see strength despite all of the obstacles being put in place. whether it is concerns on what is going on in washington or just concerns about some of the valuations. paul: absolutely. there are a lot of bricks in that wall of worry, the omicron variant being the latest and most immediate. this is a market that we have

seen time and time again in 2021 the just wants to move higher. we know rate hikes are coming, get this market seems to have discounted that. romaine: they seem to have discounted that. maybe they are discounting how aggressive the hikes will be. even if you get two hikes next year that will be a not enough to print too many valuations. you are seeing record highs, but is everyone participating? paul: i think the breadth of this has some market watchers concerned. if you back out a handful of names that takes away a lot of the performance. some folks would like to see the breath of this market and these gains extent. a lot of folks are calling for that next year. it has been a heck 2020 one with the s&p up over 5% -- it has been a heck of a 2021. it is a -- romaine: it is a good

day i can be with you. we have never worked in the same booth before. it should be a good way to close out the year. that's get a check on where we stand in the broader market and get more analysis. abigail doolittle is standing by. what are you watching? i do not think we have abigail just yet. let's bring in our first guest. we are getting a few kinks out in this final week. let's bring in dan alpert joining us live on the show. we are trying to make some sense of what is going on in this market. we are trying to make sense of what folks did expect going into 2022, we are trying to make some sense as to whether things have gotten out of control or what we are seeing in the market right now is representative of where it should be? dan: clearly santa claus has showered this market with a lot of good joy and cheer for the

christmas season. it will end up on a boom, but of course low-volume. when the adults come back after the new year we will see whether or not the risk on environment will continue. from a macro economic standpoint, the economy is actually slowing down somewhat. one of the things that was very stunning if you go back to last thursday's personal income and outlay data, you saw a slower but still very robust continuation of the pickup in personal spending. on the other hand you saw personal income begin to subside , most particularly if you strip out a pickup in one-time payouts to nonprofits through some of the health care reimbursements attended to covid, really personal income only went up about 0.27%, as opposed to the

0.4% month over month number shown in the headline. what you are starting to see is a spread between spending. that has to close where eventually -- that has to close or eventually consumers will run out of all of the savings they accrued during the two years of the pandemic. i think we all have to come to our own judgment, those of us who are in the market come as to whether or not washington will cook up another bunch of relief. i do not think that is likely, i do not think it is likely given the pressure we know has already built up around build back better. i do not think we will get the kind of relief around omicron we saw in prior waves of the virus. then you have to deal with omicron. i am in the u.k., i was in france earlier in the week. this is a real economic crimp,

and you are about to see, euro racing three of the four nations in the u.k. announced shutdowns beginning shortly, and i would not be surprised if you see that in england as well, certainly france is heading towards more lockdowns. it will not be the same as in past rounds of the virus, but is still going to have an impact on the services side of the economy. paul: give us your sense of inflation. this is a raging debate. it is tangible, consumers are feeling it, what is the extent of how much of a headwind that could be for the markets in 2022? dan: it is interesting. it is the big debate into the first quarter of the year. my view is inflation will surprise us to the downside. we had a huge oil spike earlier in the year. that subsided because the supply and demand realities of oil are

out of whack. opec was not going to continue to hold back supply given the attractive prices you can sell at. clearly from a global perspective we do not have a shortage of oil anywhere near the kind we did earlier in this century. we do not have the demand sufficient to push the price up into the 80's on a sustained basis. obviously energy is a huge input throughout both the goods and services side of inflation measures. i think that will have an impact. the big issue that will surprise people in the first quarter is we will see a more accelerated cure to the supply chain problems then we saw the last couple of quarters. a lot of them due to the fact we had almost a perfect storm of demand of christmas restocking for stores as well as all of the

revenge spending coming through during the summer. as a practical matter, if you are going to see most of the supply chain if not all of it resolve by the end of the first quarter. that will bring back significant disinflation from the import sector. my view is the bond market is reading things quite accurately and the chance of the fed raising rates multiple times next year, at least as many times as the market has baked in , i think it is fairly low. romaine: in the bond market you are looking at 71 basis points on the two year yield. the 10 year yield going down as a lot of folks prepare themselves for whatever they get out of the fed. i am curious about the labor side of this equation, when you talk about fighting inflation, when you talk about economic growth or the lack thereof. the number of people in the labor force, the number of

people paying those people has to be a big part of the equation. dan: yes. we are still down under 4 million workers from where we were if you have the population growth to that figure. 5 million workers from where we should be in terms of apples and apples to pre-pandemic. many of those workers did not return to work because of viral concerns. clearly omicron will not help that. the larger issue that drove the drop in labor force participation was clearly the fact we have unparalleled assistance to people who suffered during the couple years of the pandemic in terms of government relief. that built up an enormous buffer for people, especially at the low end, and they had the option of whether they wanted to stay out of work for a considerable time. that buffer has been eroded, and i think coming back after the

new year we will see a lot of people return to many of those positions. it could be slowed due to the omicron, but the offsetting factor is you may have some problems on the labor side with omicron, you will also have problems on the demand side because of omicron. you will not see hotels fill the way people expected, you will not see restaurants filled. those things will offset each other. paul: as you think about 2022, i know a lot of folks are trying to wrestle with, on the equity side do i stick with the growth story, the top line growth stories that have worked so well for so long, apple and amazon, or that rotation trade, cyclical trade, whether it is energy or banks that have performed well during this pandemic as people think about all of the stimulus and the reopening of this economy. dan: on the banking sector i

think the issue is will the consumer borrow. that we require fairly sustained confidence on the part of the consumer and future wage growth and income growth. we have seen a huge spurt, particularly at the low end in hourly wage growth. not so much in hours worked. some of that we might lose because some of that came across in the form of signing bonuses and some overtime. at the end of the day, most of it will stick. that will not be repeated. it is very unlikely to be repeated. the concept of a wage price spiral a lot of people have thrown out i do not think is going to happen. we do not have the demand side. i think when you look down the pike into next year, the top line growth you saw was a result of a huge amount of government

finance demand. government transfers were off the charts relative to any other period in history in comparison to private incomes. that is not being repeated next year. you are putting a lot of pressure from a macro economic standpoint on the private sector to make up the difference. thus far, we are still hundreds of billions of dollars on an annualized basis in private sector incomes that have not recovered relative to the huge amount of government transfers that flowed in. that will be very difficult. we might get there. it will take some time. romaine: i want to get your thoughts, i was drawing on your expertise in the past and the real estate space, and how commercial real estate holds up in this environment with so much talk about potentially hybrid work being a big structural change coming out of this pandemic, the need for less office space, how do you look at

that space as an investment? is it still attractive? dan: that is the $64,000 question. if you look at where we are at in this particular crisis, that is something that is going to resolve itself or it is truly going to turn out to be the slow moving train wreck of 2022. the situation with omicron is going to be a huge setback to the office market, the retail market obviously is a complete disaster already, bricks and mortar retail. it will reignite pressures on the hotel industry as all of the business travel will recover in the first quarter will not recover, at least not immediately. the office sector is the one that will be very difficult to see recovery, and of course all of the related service and retail that serves the office

market. very difficult to see how that is going to return to any form of normalcy in 2022. to the extent people have let the genie out of the bottle, we've all discovered how to mark. i am sitting in oxford, england having a chat with you. the idea that we can all work this way, that genie is not going to go back in the bottle. the use of existing space is going to be far lower, that market is going to have to reprice itself. paul: thank you so much for joining us. appreciate getting your thoughts and insights. dan alpert, westwood capital managing partner. coming up, we will get the latest on the omicron variant come it is riding roughshod through the u.s. and the world. this is bloomberg. ♪

paul: welcome back to this special markets coverage simulcasting on bloomberg television and radio. we will be with you every day all week covering the market action each hour and looking ahead to the new year. right now let's get the latest on the coronavirus. it is a story that continues to move at a rapid pace. joining us is it the bloomberg health care editor. the numbers are accelerating in terms of new cases. tim: that's right. the new case numbers are surging and one thing we should take note of is because of the christmas holiday there is little bit of a hole in the

data. it is clear that cases are surging. romaine: his think attention to cases what we should be doing question mark what about hospitalizations? what about severity of illness? tim: the thing to watch is severity. the data so far suggest hospitalizations and deaths are not picking up as much. in the deaths there is a bit of a lag over the course of the illness. it takes time for a severe case to become a death. hospitalizations as well come the data so far is encouraging. paul: there is a school of thought that since this variant is so contagious it is spreading so quickly it might burn itself out quicker. are you hearing anything on that front? tim: that is something that could happen. we have seen in other countries we see a fast ascent followed by

a peek into the client. we saw that in south africa and are seeing signs of that in some european countries. i think that is a possibility that is on the table. i do not think we are at that turned yet. we do have noises and data where this coincides with the holidays. romaine: all of our viewers can check out our virus tracker and our vaccine tracker, tracking all of the data. tim annett. we will pivot from that. earlier we heard from the head of the national vaccine institute and he joined daybreak asia to talk more about what he knows. >> we know omicron is transmitted more readily than other variants,, even the delta variant. we know it affects people who previously been infected and the vaccinated. we have to go to defense. the first line of defense are

the masks and avoiding crowds, the second is vaccines and boosters, the third line being the effective treatments. the fourth are the things governments do, things like vaccine passports, restricting entry into certain high-risk venues and all the way to lockdowns. as we look at this, we are going to need to think about who we are protecting, what we are protecting, and what we need to do in order to do that? is vaccine equity important? absolutely. coming will have increased vaccine supply and some are talking about cutting back. paul: -- >> what then, based on the data we do have on this, and it does seem to suggest it is less nasty than previous variants, what you need to do to protect us against it. people who are vaccinated and

you have had this seem to be getting it. >> yes. it does seem the higher the level of the vaccine induced protective antibodies, the better off we may be. there is actually some suggestion of data that boosting -- this is from scotland -- boosting may be associated with a higher effectiveness, very important. at the same time, it is much more transmissible. although people may be less sick, it is still too early to have definitive evidence. we have to be careful because this is on top of existing delta outbreaks. hospitals that are already stressed out nearly to the max are going to have another wave of people who had omicron infections. we have to do everything we can to try to vaccinate everybody or boost the people for whom boosters are indicated and then try to emphasize their other measures we can take short of

lockdown that may make this better and we are all in it together and we have to try to minimize the impact of omicron and covid on our society. that is decreased hospitalizations and decreased deaths. >> one of our bloomberg opinion columnists was talking about how maybe omicron is kind of the best case scenario on how we will fight and end this pandemic because you do have -- no one dies because it is not as severe, everyone gets it comes everyone gets the immunity. explain to me how this is not over in three to six months, and is there anything wrong with that kind of view? >> there is. it makes the assumption omicron is the last, and it is not. as the virus accumulates mutations that allowed to spread , it can also a tkibuli mutations that make it more dangerous. assuming everything is fine may be missing an important point.

the second part is why do people die? they do not have access to appropriate health care. they get sick in their lungs cannot exchange oxygen appropriately. we have to prevent that. we have to keep people from getting sick. if that is using masks and distancing and avoiding crowds, if that is making available these new treatments, it is going to be very important to do that. i think that simply assuming it is not going to affect anybody ignores the fact people are getting sick from omicron. people who are not vaccinated are going to get sick from omicron. what we are seeing in south africa is the impact of having a significant portion of the population, maybe 50% to 70% having naturally acquired infection and boosting and vaccination on top of that. in scotland, significant number of people have already been vaccinated. it is difficult to track the impact of omicron because the world has been through infection

or vaccination. increasingly, we will need to remember there are significant parts of the world that are not vaccinated, and those sites may be areas where new variants arise and we have to be careful and watchful for this. romaine: jerome kim, the director general of the international vaccine institute. the s&p at a record high, the philadelphia semiconductor at a record high. you're watching bloomberg markets. we will be back in a moment. ♪

romaine: christmas may be over, but the santa claus rally started today. we forget the santa claus rally is not the lead up to christmas, it is last seven days of trading after christmas, starting today.

starting up a good note. the s&p 500 at a record high. the nasdaq less than 1% from a record high as well. paul: exactly. for folks in this market it will pad their performance at the end of the year. a lot of folks are chasing performance because we had such a good year and it, a lot of people by surprise. there is a lot of worry that kept a lot of folks out of the market or underweight the market and are trying to chase some of the performance. romaine: that is still keep -- that phrase you used, chasing the market. what do we get in 2022? paul: there's a lot to be concerned about, particular rising interest rates. we'll see how the market behaves. we will have more coming up. this is bloomberg markets. ♪

paul: welcome back to a special edition of bloomberg markets.

simulcasting live radio and television, doing it every day this week. we will review the latest on the markets and a peek ahead to 2022. this is a good way to start the week, the s&p up more than 1%. the nasdaq up more than 1.2%. romaine: good start to the week. if you look at the market in aggregate, the concern is what is leading the charge. there was some data on the bloomberg today showing the concentration of these gains among those few big cap tech stocks. even on a day like today when almost everything is in the green, you can pick and choose and say there is some broadness to it, but when you look at what is leading this, you have to go back to microsoft, apple, tesla. paul: the santa claus rally, as some like to call it.

let's check in on economics and the outlook for 2022. a lot of uncertainty out there and people need to make sure they get their economic all right. lindsay piegza is with us now. i want to start with washington, d.c.. it does not look like we are going to get a $2 trillion build back better, and i'm not sure to what extent that will represent a headwind, if it comes in materially lower, which we are hearing it might. lindsay: i think the loss of government stimulus, build back better, the other programs initiated in 2020, this will be somewhat of a drag on the consumer. that being said, the latest figures suggest the consumer is improving right now, much more resilient than many had anticipated. the big question, going forward, if we don't see further government support, if we see

continued elevated inflation, will the consumer be able to maintain these positive spending patterns into the new year and beyond? romaine: i was born a pessimist, so let me give you the pessimist case. you look at the wage gains being in no way by inflation, other gains in the economy being eaten away by inflation. now some are starting to wonder, what do you see right now from the economic policy perspective, and i don't mean necessarily what is happening at the fed. but coming out of the white house and congress, is there anything they can do to get inflation under control before it gets out of control? lindsay: what they can do is not make the situation worse, more government spending, more printing of dollars. that will exacerbate the inflation we are already seeing in the marketplace. in response to the virus,

further struck towns and restrictions will only compound the labor supply shortage and exacerbate some of the pressures we are seeing in terms of supply chain disruption. we cannot control what happens overseas but we can control what happens at home. from an inflation standpoint, when looking at government officials, less is more at this point. paul: the federal reserve has made that hard. , trying to get rid of the concern that they are behind the markets here. how do you think the fed will move in 2022? some are saying i'm not sure i see three rate hikes. lindsay: i think the fed is behind the curve, and now they will have to move slightly faster than they otherwise would have if they had initiated a removal of these emergency policies on an earlier timetable. as we look out to 2022 with some of these risks in place,

fragility's still evident in the marketplace, i think it will be difficult for the fed to push toward a more hawkish forecast of four rate increases next year and then four the following year. i think the fed will maintain the accelerated pace they outlined at the end of the year, concluding in march. that opens the door for rate hikes, but i think they will be more patient in their upward ladder toward removing accommodation. that is a long way of saying we could see one or two rate hikes next year. romaine: what about a lack of correlation amongst a lot of the major central banks? you see what the fed is trying to communicate. seems to be at its with what we're hearing from the ecb, pboc. does it matter anymore in this

particular economic cycle that all the major central banks are not on the same page, at least right now not in the same stage of the process? lindsay: it represents the fact that there is still risk and tremendous uncertainty in the marketplace. central banks are responding to that in different ways. the boe versus ecb, very different policy measures, and the fed is somewhere in between. it represents the fact that not all economies will be recovering from covid, from the crisis at the same pace. it is less about the virus and more about the policies implemented. when we talk about a zero covid policy in china, the central bank will have a very different response than here in the u.s., where we seem to be taking a less heavy-handed approach this time around. paul: what is your gdp forecast for next year, what are the big

risks to that forecast? lindsay: i think we returned to an average pace of around 2%. i know that sounds less robust than many would have hoped for, but we have to remember, we are struggling to return back to quote normal. we tend to romanticize the economy prior to covid, but we were already losing momentum with the fed at very accommodative levels, 3% gdp in 2018 down to 2% by 2019. as we returned back to normal, i think we get back to the more modest 2% pace that was established prior to the pandemic. paul: as we think about it here, i think the question for a lot of folks is, fiscal stimulus, how much is baked into the market right now, how much would

be a disappointment as congress comes back? lindsay: i think the market has come to grips with the fact that we will not see the massive spending proposal that was originally proposed by the democrats. it has come down to $2 trillion. the market has come to the realization that these were very aggressive reaches, that we will not see that type of stimulus come into play. that being said, the market is still looking for some sort of package, additional government spending, but it doesn't have to be in the form of the build back better plan. there's a lot of expectation that as we turned the corner into 2022, if we continue to see millions of americans sidelined, there is an expectation that the government will provide additional unemployment benefits or government support to those individuals that are still in a position of unemployment. whether it is bbb or other,

there is an expectation that we will see further government stimulus come into the market at some point next year. romaine: for those already in the labor market and have benefited to a certain degree from some of the upward wage pressures on employers, do you see that persisting? not necessarily for those workers but for the new ones that come off the sidelines and back into the labor force. lindsay: absolutely. wages tend to be more sticky. that is really the transitory component at the fed was focused on. wages are more sticky, so even after months of these government programs and doing, the expectation of new entrants into the labor market, new hires will be extremely elevated. when we talk about the wage increases we have seen, this

sounds like a pretty good deal for workers, but when we factor in inflation, we still see inflation is trending to the downside. workers are still getting the short end of the stick as inflation eats away their pricing power in the marketplace. paul: thank you so much. we appreciate your thoughts and insights. the chief economist for steeple financial. coming up, we will go to washington, d.c. for the latest on what is going on.

romaine: this is bloomberg markets. special coverage of this week cymer can cross our tv and radio platforms. we welcome our viewers and listeners this week. i'm romaine bostick. paul sweeney drew the short straw and is stuck with me. we want to get to the news of the day, the covid-19 variant. we heard from joe biden earlier today. joining us now is joe mathieu. what did we learn from the president today in regards to the government response to the surgeon cases? joe: i must have gotten the short straw because i'm the only one in washington. it is all about testing. we spent so much time over the past 10 months talking about vaccines, and that is still a huge part of the message here coming from this administration, not just vaccinations but

getting the booster as well, exactly how we define vaccinated. but we are finding as you walk around the city, other towns around the country, there are not enough tests. omicron has cropped people to go out to get test with the idea of gathering with family. the administration is now looking to boost testing with more pop-up sites, making more at home testing available as well. we have had a lot to talk about as we see people going out in droves for tests, that we put too much focus on vaccines and took people's attention away from testing, which is a very effective way to prevent spread. paul: at the beginning of the pandemic, the prior administration said it was up to the states to deal with the pandemic response. now it seems like it is more of a federal problem, we need to provide federal solutions.

is that a change in focus? joe: i'm not sure if it is that much of a change. you are right, we are talking about federal mandates affecting the federal workforce. the osha ruling little you heard by the supreme court after the break. members of the governors association met, and they said, when it comes down to it, it is a state-by-state level, and it is up to the governors to get it done. they also remind people it is up to their own family decisions and doctors, since we have been hearing since there was last vexing hesitancy. nothing seems to have brought people together more than this omicron. romaine: it will be interesting when we see the new data shaking out. still some concerns about the

potential economic ripple effects. not seeing a major drawdown but we have spoken to people on this program who suggest maybe additional government stimulus may be necessary. we already know the build back better plan that president biden championed is on the sidelines right now. is he committed to pushing that forward? joe: the white house says they are not giving up, that was the word from vice president kamala harris. they were not fazed by self-imposed deadlines, that this was a long-term project. a couple weeks from now wouldn't make much of a difference. i would point you back to the child tax credit expiring this month. the next round would have gone out in the middle of january. that will be the one motivator democrats have, mainly progressives, in getting lawmakers back to the table to

hash something out. in terms of another stimulus, you would have to's some real damage. we have talked about how to define full employment and what the fed will do as more people come back to work. whether that means stimulus because of a downturn next year -- that would require something pretty bad to happen, so we hope we are not looking at that. child tax credit, pre-k, paid family leave, some of these issues may come back as standalone pieces of legislation next year. paul: appreciate the insight as always, joe mathieu. covering everything washington, d.c. for bloomberg. he may be the only one in that studio in washington, as we are lonely here in new york as well. let's pivot to the increase in cases, because it is wreaking havoc on the travel industry. our next guest is in toronto.

tough couple of days for the airlines and the airlines and travel industry. what is the latest? >> a tough few months, if you ask me. if you look at the share price, it's been falling consistently since the early part of the year. around the first quarter, they hit a peak, and now they have come off of that. i don't know who was talking about it earlier, but we were talking about how everyone was focused on vaccines, how this would completely reopen the economy and world. we see these issues with variants. first, deltek, and now omicron. that has been hurting airlines for months now. but today's move in particular, which was much bigger, and the slump was bigger earlier today, had to do with the cancellations that airline saw over the weekend. romaine: when you talk about

that surge in stocks we saw earlier this year, that was largely because everyone was jumping back on trains, making trips. anyone who traveled over the summer knows just how horrific it was in some cases getting from point a to point b. it doesn't seem like the airlines have wrapped their arms around some of these labor issues, driven at times by covid. >> labor issues are key. if you don't have enough light attendance or pilots, you won't be able to get your passengers on, which means revenues fall, and stocks fall. these are really the issues that are hurting the industry right now. stocks have just come off of their highs from the early part of the year, which is why you said it has to do with everyone traveling. but also there were investors

who were buying into this reopening trade. now they have slowed down on that. romaine: you talk about what we saw in the first few months of the year, you were talking about the index rallying something like 37%. now down 20% from those highs. great to catch up with you, divya balji. keeping and i on airline stocks, pretty much all in the red. this is bloomberg markets. ♪

romaine: this is a bloomberg markets i'm ok. -- simulcast. let's hear from lauren sauer from the university of nebraska. >> one of the things that people are actively collecting is that initial space between exposure and when you start to be some somatic. one of the challenges, in the u.s., sequencing was delayed. while we have made lots of gains in that space since the pandemic began, we have gotten complacent , have stopped sequencing everything to understand when these new variants came out. we are catching up on the data and comparing that data to delta, two other strains.

this is a big focus, especially considering our frontline workers need the support. looking at how long it takes for people to become infectious, how long they stay infectious for his a number one priority of our scientists. >> that answer may be different depending on the subject in question, vaccinated or unvaccinated. as we talk about all of these symptoms appearing to be more mild, at least that is what the data has suggested early on, how is that different if a person had actually gotten their shots? >> we are seeing milder disease in people who have been vaccinated. a lot of work being done to understand how vaccine efficacy is specific to omicron. are we going to need additional boosters? what we are seeing is there is more severe disease in people who are not vaccinated. the people who are in the

hospital are primarily unvaccinated people. there will be some breakthrough cases, that is inevitable. but by and large, the people getting severely ill from this disease and variant, even though it seems to be less severe overall, are people who are unvaccinated. and we are seeing a spike in pediatric cases. many of those are because we are catching up with children being vaccinated. they had access to the vaccine later. kids under five still don't have access. pfizer is doing a ton of work to refine that study looking at boosting the immunity of their findings. >> speaking of pfizer, it is not just the vaccine, but they also have the therapies. merck's was approved last week as well. how much can it make a difference when we talk about hospitals potentially being overrun with patients? >> any additional tool we have

right now makes a difference. these therapies are great because they don't do to be given in a hospital setting. this is where telemedicine comes into play. we have even explored strategies of providers who are quarantining cannot be in the hospital but are well enough to work, to be able to run covid clinics. the approach from staffing is very creative. this gives us an especial -- additional space for people who don't need to be hospitalized. if we could get medicines like this to people early in their clinical course, we can keep them out of the hospital, which is better for everybody. paul: that was lauren sauer. this is bloomberg. ♪

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paul: good monday afternoon. a special edition of bloomberg markets. we are simulcasting tv and radio all week to give you the latest on the markets, and also take a look at 2022. good start to the week here with the s&p up 1%. romaine: we are not even done with 2021 and it looks like we are getting a rally, the start of that santa claus rally. based on the records, you get about a 1.5% gain in the markets. 1.4 percent on the nasdaq. even the russell 2000 participating, up .4%. paul: a good way to end the year, which has been a good way .

the bricks certainly continue to be added. the federal reserve and interest rates, they are going up, but perhaps the market is getting more comfortable than that. let's talk to a professional to help us wade through all of that. ed al-hussainy, analyst at columbia threadneedle. so we are not the only ones here. thanks for joining us. we had that pivot from the fed. they will accelerate the taper, raise rates in 2022. i guess the question is, how often, by what degree will they raise rates? what is your fed call? ed: the way i would frame it, the fed has left a lot of optionality on the table. it signals they will complete the taper by next year of march. it leaves them a lot of room to start hiking early in march.

if inflation declines, they could sit on their hands. i would frame the picture from one key perspective, look at the tales of distribution. in terms of what is in the price, 200 basis points of tightening over the next three years. that is unlikely to fight aggressive inflation. at the same time, it is not clear that inflation will be high enough for the fed to be very aggressive next year. from my perspective, the odds are good that the market has overpriced the fed in the near term. romaine: when we talk about what gets baked into the pie with regard to what jerome powell is communicating, we are there on inflation. he seems to think we will achieve their measurement of maximum employment. do you think we will get there? ed: the labor market is the key

piece of the puzzle that remains dislocated. from the labor force participation perspective, there are significant gaps between where we are and where we would like to be. where we would like to be is not exactly 2019 because the demographics and underlying dynamics have changed. retirements are up. the labor market looks different from two years ago. at the same time, it's clear we can do better versus where we are today. we are here in new york city. the unemployment rate is 9%, double the national average, so there are tremendous inequities across geography, across professions. there is still a lot of work to be done on the labor market front. paul: count me as someone who doesn't understand this labor market. 5 million people out of the labor force but there are plenty of jobs out there.

maybe you'll get some wage inflation in this market, some meaningful wage inflation in this market. what is your take on the labor market? ed: from the wage perspective, it's clear we are at the moment seeing significant wage increases, particularly at the bottom age of the -- part of the wage spectrum. from a real wage perspective, the only part of the working population seeing real wage gains is at the bottom. the top are seeing negative real wage growth. that is not a sustainable set up. if you look out over the next 18, 24 months, thoughts are good that if the pace of wage gains we are seeing right now is likely to come down, whether that feeds into inflation is a key question for the fed. usually if we see sustained

periods where wages are about productivity, that feeds into inflation. we have not had a lot of those outlooks in the last 30 years. we will not replicate this new environment. romaine: in conversation right now with ed al-hussainy, currency strategist at columbia threadneedle. i want to focus in on the currency side of this now. we are looking at what will turn out to be a relatively strong year for the dollar, which defied a lot of expectations at the start of 2021. do you see that persisting into 2022? ed: i think it will be more difficult. a lot of the uncertainty around what the fed would do peaked around this december meeting. repricing of rates on the front and relative to the rest of the world, significant repricing in terms of upside inflation surprises, here versus europe and the rest of the world.

that is not likely to be repeated next year. a bulk of the gauge on the dollar are likely behind us. situations could change, there could be a strong dollar bid if we see a significant risk off period next year, but from today's vantage point, there is not as much upside to the dollar as there was 12 months ago. paul: where do you see value in the currency markets right now? ed: i'm starting to get more excited about emerging markets. they frontloaded their hiking cycles. real rates are getting into positive territory, particularly relative to the rest of the world. if the fed stays on its current course and does not get to aggressive, em will be an interesting spot next year. in fact, we will likely see the initial stages of rate cuts creeping into the second half of

next year, which is an unusual situation in an environment where the fed is making hikes. romaine: then you certainly need to have an eye on commodities. how does that factor into your forecast? ed: commodities have been supportive of em this year. the counterfactual argument is that if em didn't have a great year, if commodities were not where they were todayn we would have had a worse yearm; emerging markets are supported by commodities. the piece that is missing is em growth. that has been substantially below historical trends this year. there will be room for that to pick up and recover, particularly as china picks up its economy, but that will be a tailwind for em. paul: unfortunately, we are seeing a surge in the omicron variant. i'm trying to get a sense of,

how is it impacting your interest-rate outlook? for a lot of folks, they are saying i need to rethink my economic outlook at least for the early part of 2022. how is it impacting yours if at all? ed: easier call to make on the bleed from the covid research is to the economic outlook. it is likely economic growth in q4 will slow into the year and q1 will not be as robust as we expected only a couple months ago. the connection between growth and inflation and interest rates is not very straightforward. i think surprise a lot of people this year. we have had robust growth, 10-year yield remains at 1.5%. i think i would focus on the fed's reaction function. the best reaction function right now is really well priced. if anything, front end interest

rates are relatively high. if we are looking at value across the curve, there is probably value in that front end. romaine: we just had a two-year sale. when you look at what is being priced into this market, the idea that short and rates go higher, i guess longer-term rights you can consider softer, not going higher at this stage. what is the set that into 2022? anything that would cause you concern, any red flags you are looking for? ed: two red flags particularly in the first half of the year. the fed has been pretty explicit , if current wage growth continues and we see the labor market continue to tighten, the's of wage price spiral, at least pressure from wages into inflation is going to be a red

flag for them and they will be forced to act faster, faster than it what is in the price. that tightening of conditions that they will need to achieve is not priced in. that would be a red flag from a risk asset perspective. the second is, we have a lot of issues with keeping inflation at 2% or getting close to in the decade going into this crisis. czar could be go back to that environment. romaine: we have to leave it there. glad to see that you are in the office, one of the few. ed al-hussainy does some great stuff at columbia threadneedle. we will be talking more about the retail space. this is a huge season for shopping. at least based on the upper data, it looks like a lot of us spent a lot of money over the past few weeks. paul: i saw the retail holiday

spending print, plus 8% year-over-year, which sounds good. yes, there is some inflation, so maybe the number is not as impressive, but people were back in the stores, a lot of clicking those buttons. good to see. a lot of stimi, as matt miller likes to call it, but still a good number. romaine: this is bloomberg markets. we will be back in a moment.

as industrial montreal began people look for new places to build. inside the apartments, c a centralorridor runs from front to back with rooms on each side of the hallway. like many homes of the period, the kitchens were in the back. an external typically spiral staircase connects the back door to a small outdoor area bordering the alley.

but beyond the standard shape, they are little bit eclectic, reflecting different periods in montreal. some have enclosed staircases and playing facade. others post elaborate cornices, stained-glass windows, and wrought iron staircases. the architecture is a little bit french-canadian, 11 scottish, and a little bit british. the external staircases seems to be distinctly quebecois. working class plexes were sometimes known as the poor man's coffin. this means they were not always carefully preserved in the late 20th century. many lost their original futures, with solid oak doors and stained-glass landing in the trash.

today, plexes i regained popularity. once known for affordability, montreal has no joint canada's real estate frenzy. they are undergoing a modern renovation craze as people knocked down original walls for more space and sunlight. even today, the colorful, iconic buildings are still inspiring construction, blending into a small field of many montreal neighborhoods.

romaine: this is a bloomberg markets special simulcast. we welcome in our viewers and listeners on tv, radio, and youtube platforms. we'll be doing this every day this week covering the past week and looking into 2022. romaine bostick alongside paul

sweeney. we are looking at a market creeping toward another record high. the s&p 500 up more than a percent. paul: i always think this time of year, that lone portfolio manager in his or her office trying to get some performance at the end of the year. romaine: the big question is how much this carries into next year. we know where we are in the final days of 2021, but you talk about the risk ahead in 2022, whether it is the persistence of the covid variant, or maybe the fed gets in the way itself. paul: there are plenty of bricks in the wall of worry, but again, the market is up north of 20%. romaine: one of those areas of resiliency is the retail space. pretty much higher all across.

this is all about retail spending, all about the strength of the consumer. i guess it is also about how the industry is changing. i think we could go to our next guest, tom mcgee, ceo of icsc. talking about not only how we spend the money, but also how companies are adapting to what we want. let's start out with this season, if we can extrapolate out the last few months. what exactly are people buying? tom: over the course of the last couple of months, very heavily influenced by the holiday. it was an exceptionally strong season. you referenced 8.5% growth that recently came out. we think when the final numbers are tallied, probably closer to nine. whether it was apparel, electronics, etc., and channels,

online and physical stores, the consumer was back and very active this holiday season. frankly, i expect that to continue, other than those challenges that you made reference to, including the virus. but i expect the consumer to be strong into 2022. paul: leading up to the holidays, there is a concern that the supply chain would result in, when you made that click or walk down the aisle, you didn't find what you wanted, but retailers say they are in pretty good shape, meeting the demand. what are you hearing? tom: that is absolutely right. retailers due to good job of managing expectations and demand, fulfilling demand over the holiday season. obviously, a unique holiday season, much longer, and that will continue into next year as well. people's experiences will start to change. i think the longer holiday season has helped with some of

those supply chain issues. 2022, some of the big macro trend that took place over the course of the pandemic will continue to manifest themselves. the big one being the convergence of the physical and digital world. you may initialize a transaction i online and then pick it up at the store, or the opposite. from the retailer perspective, that is just fine. romaine: the data that i found was surprising, the amount of in-store foot traffic. prior to the pandemic, everyone was talking about the death of brick-and-mortar, at least certain corners of it. certain companies have found a way to thrive, bring people physically into their stores and spend money. how are they doing that? tom: one of those ways is investing and creating a consistent experience both online and in the physical world, using those stores not only as an historical means of

people browsing the shelves and looking for product, but also for picking up things they bought online. and then when they are there at the store, that is a chance to engage with them. traditionally, when you get someone in their store, they often make an incremental purchase. that is a big part of the strategy of retail going forward, leaning into both spaces. it is rare, there are some, but it is rare where you have a successful retailer that is dominant in the online world but doesn't have a strong physical presence. you will continue to see that. you will see the trend of bion online, curbside pickup, etc., that will be prominent in 2022 and beyond. paul: we have seen in the last 20 years, a shrinkage in the footprint of retail space in the country. do you think the industry has consolidated enough or are there still too many stores out there? tom: over the past year, what

you are seeing is more stores opening for the first time then closing. three times as many stores opening this year than closing. that speaks to the strength of the retail environment. this is a fiercely competitive industry, always has been. there will be some retailers who will contract, but there will be others who grow. looking over the course of the next couple years, given the liquidity, strength of the consumer, if we can manage through the supply chain and importantly the pandemic, i think the retail environment will be quite strong, particularly as you see more people moving out to the suburbs, millennials buying homes and driving the housing market. buying homes typically leads to growing families which leads to strong retail sales and product demand. paul: thanks for joining us.

appreciate getting a couple minutes of your time. i know it is a busy time of year for you and everyone in the retail sector. tom mcgee is the ceo of icsc. coming up, the latest on the pandemic, the variant, and the boosters. we will do that with dr. william shaffner, professor of medicine at vanderbilt university. grade on the screens today. the s&p up 1%. this is bloomberg. ♪

scooter sharon companies suffered. >> when things first started to hit, there was a 90% decline in ridership. >> the scooters you have seen on the streets were more likely used by frontline or essential workers. spin wants to seize the moment and has new scooters packed with tech. most companies buy off-the-shelf scooters and put their labeling on them. but this one is designed and built in-house. we took one for a ride. it has a more powerful swappable battery pack for longer-range, faster acceleration, and less environmental impact. and it can see the world around it. >> cameras and sensors on the scooter that goes through an a.i. algorithm that says, am i

on a sidewalk, am i parked correctly? i can deduce that in real time and provide audible feedback. >> the technology is about enforcing good writer behavior. the company did hundreds of test to prove the durability and safety. it is a dynamic industry. the main players globally raised report $5 billion since 2017. spin was bought by automaker ford in 2018 and has grown to be the third-largest company in sales behind bird and lime. the company is san francisco-based but is launching its new headquarters in sacramento. its largest market is washington, d.c. >> more durable scooters that last longer, you don't need to replace as much. naturally, better environmental financials. a better scooter will get you a

better market in that category. >> spin is also working on a tele operated scooter that can be moved out of harm's way remotely or to an area where it is more likely to get a customer. paul: welcome back to the special markets coverage, simulcast on bloomberg television and radio. we are doing this all beat, keeping you up-to-date on market moves, looking ahead to 2022. in honor of lisa abramowicz, i will call out the yield curve. up to basis points. we will see how that plays out as the fed continues to accelerate tapering, talks about raising rates. romaine: that will be one of the biggest stories of the year, at

least for the first quarter as people count down to that march meeting. you see that pricing going on right now in the bond market. paul: the omicron variant among us, people getting a sense of how long this will take to play out, how good is my vaccine, booster? let's bring it at expert, dr. william shaffner, vanderbilt university professor of medicine. he joins us from nashville, tennessee. thanks for joining us. on this omicron variant, do you have a sense on the duration of this variant? past variants have been about two months making their way through the population. mo this be faster because it is more contagious? dr. shaffner: it certainly is more contagious but omicron has surprised us from the beginning. my crystal ball is a little bit cloudy about what it will do. but i will venture this. it is already causing the

substantial of new cases across the united states. i think it will run through the u.s. and get into every city and town by sometime early in 2022. romaine: how concerned we need to be about the infection from omicron? i remember when delta started to make its way around, there was a lot of concern among doctors and scientists about the severity of the variant, what it would mean if you got it and ended up in the hospital. for those that get the omicron variant, however he do they need to be? dr. shaffner: a couple of things, let's divide the vaccinated from the unvaccinated. if you are vaccinated and have had a booster, the likelihood is that your infection with omicron will be either without symptoms or with mild symptoms. you could take to your bed for a day or two, but it is barely unlikely that you'll need hospitalization.

on the other hand, if you are unvaccinated, this virus can still put you in the hospital. the majority of people we are seeing, not only in our medical center, but across the country, that are in the hospital because of covid, are unvaccinated still. if you are unvaccinated, you are at much greater risk of a severe illness than if you are vaccinated. paul: if, at the end of this omicron variant, will the world fall into two categories, fully vaccinated and already infected? is that where we will end up post omicron? dr. shaffner: i think that is very likely. of course, there are some in the middle who had omicron and have been vaccinated. they have very high levels of antibodies. if that is true, if you and i

and our predictions are accurate, then we could get the downslope of this pandemic phase and just cope with omicron and covid in a kind of smoldering fashion with periodic outbursts the way we do with influenza. that would be a great gift for the new year. romaine: when we talk longer-term about dealing with these variants, the covid crisis overall, i just want to point out to the listeners and viewers, we are getting headlines out of france right now. they say they will make working from home compulsory three days a week going into effect january 3. when you look at lockdown measures like this, and i guess this is sort of a soft lockdown, is this necessary? do you think that makes a difference in curbing the spread of the virus, and two, is it something that is realistically sustainable as a practice? dr. shaffner: clearly, it is the

hope that this will slow down transmission, but this is such a highly contagious virus, and it is out there spreading so widely at the present time, that sound you hear is the barn door closing. those horses are out running in the pasture already. i think it is a little too little and too late. certainly it cannot be sustained indefinitely. at some point, we all want to get back to work, if not part-time, then full-time in the locations that we were before. paul: you are a professor of medicine at vanderbilt university, one of the leading medical facilities in the country, if not the world. tell us how your people are doing, the people on the front lines. this latest wave must be overwhelming. what are you seeing on the front lines? dr. shaffner: our cases have picked up largely in the outpatient department but it has

also leaked into admissions. admissions are going up also. we have not been hit as hard as other parts of the country yet because we have a large proportion of our population in tennessee that is under vaccinated. yes, people are stressed out, but they are hopeful that maybe we are just beginning to see the beginning of the end of this. i will say, everybody in our medical center has been vaccinated. we achieved a vaccination level of 99%. i am so proud of everyone who works there. romaine: have you seen any disruptions in regards to non-covid related treatments? our covid patients effectively taking up the space that other people might need? dr. shaffner: that happens, covid taking the space that other people would normally occupy, and we are having to

adjust our schedules. that happened in previous surges. it has not happened too much yet, but we have to keep our seatbelts tightened. in addition to covid, the other respiratory virus looking around the corner is our old enemy influenza. it is out there waking up. what we don't want is a twindemic, the two of us hitting us at the same time. paul: you mention tennessee is under vaccinated relative to the national average. are you seeing that change at all? is this omicron variant a catalyst to get some folks the jab? dr. shaffner: just slowly. the folks who are really not vaccinated now, the adults, they are pretty hunkered down. i have not seen anything that moves them in a substantial way. we are trying to persuade

parents to bring in their children five and older to get their shots, and of course we urge everyone who has been vaccinated to get their boosters. that is working pretty well. romaine: i appreciate you taking some time. a wealth of experience and great advice from dr. william shaffner. a lot of us are talking about this, but the human psychology here is a little bit different from maybe what we saw a few months ago when delta and the other variants were moving around. people are saying, we will take precautions, but i will not be stuck in the house anymore. paul: i saw that yesterday watching a bunch of nfl games. stadiums were full, people are out, and i think you are right, certainly the vaccinated folks, particularly the boosted, i will go on and live my life. yes, there is a risk out there, but there is a general risk in life.

unfortunate that we still have a high percentage that is not vaccinated, because that is the incubation for these mutations. romaine: you walk the streets of new york over the last couple of days, the lines for these testing centers were around the corner, but in that same space, you would see outdoor dining areas packed full of people. there is this weird dichotomy going on. paul: interesting to see how people adapt, but we are adapting. we will see how this plays out. more, coming up. this is bloomberg. ♪

>> a lot of bright people think it has a bright future. i have my whole foot and four

toes in the old world and it is not something i gravitate to. i can think of a lot of reasons why it will not work. but i remember when they were auctioning spectrum for cell phones, say why would anyone need a cell phone? just drive up to a phone booth. who would carry that clunky thing? the point is, there are a lot of things in this world that have worked out awfully well. >> you sound, for somebody who used to run a bank, pretty constructive. >> i ran a bank, ran risks. you have to separate fact from opinion. nobody knows the future. there are all sorts of things. there are a lot of things that move in different directions that i could not and would not

have it dissipated, and nobody would have either. to just come out and say a market already in excess of $2 trillion that faces all of these regulatory headwinds, that a lot of people don't like and would enjoy seeing crushed -- every day it doesn't look like it is flourishing, but on no day doesn't look like it is dying. >> are you doing any crypto? >> no.

romaine: this is bloomberg markets. a special simulcast coverage on bloomberg tv and radio. we will be covering all the market reaction today. and i'm told we are doing this all week long together. paul: there is a lot going on, the last week of the year.

wti crude oil up to .8%. just under $76 a barrel. romaine: it is interesting as we move toward the end of the year, there will be a lot of look back at what the market did. pretty much everyone got it wrong, even the most bullish forecasts were still a little bit light as to where we would end. 4979 on the s&p 500, up 1%. let's bring in abigail doolittle, who breaks down all of this for us every day. this is a good start to the weekend, looks like it will be a good end to the year. abigail: certainly. on the day, the s&p is up 1%. fourth day in a row. not to mention all these record highs. the s&p 500 heading toward its 69th record closing high of the year. that is only capped by 75 in 1995, and it comes after two

monster up years. right now, we have started the official santa claus rally, and i was reading in email ben emmons. when you have such a strong start to the santa claus rally, that suggests january could be very strong. that has more to do with small caps, so maybe this risk as a party will continue. paul: i know you follow a lot of the strategists on wall street. i cannot imagine they are anything but cautiously optimistic for 202022. -- 2022. abigail: we are again, this is the third year, up more than 26%. last year was even more. before that, i think about 30%. this is something that was surprising that strategists have

gotten wrong. among the three best sectors this year, energy is top, but then tech is up or than 30%. that is the third year. the year before that, up more than 40%. that is a double in three years for the world's largest companies. hard to imagine that does not reflect fed accommodation, and with the plan to pair back a little bit next year, you would think that they will be a little more cautious going into 2022. strategists this year were cautious given those huge gains of last year, and they got it wrong. maybe 2022 will be another banner year. paul: we will be wanting the week and the year down. abigail doolittle, thanks for joining us. she covers all things on the markets for us. let's look ahead at 2022, what we are seeing in the economy right now.

let's get to look forward on that with bloomberg economics. one of the best economists out there, makes it simple for people like me. yelena, give us your thoughts on your growth outlook for 2022. there are so many crosscurrents out there? >> hi, paul. it's a pleasure to be back. we will still feel headwinds going into next week. fiscal tightening, monetary policy tightening, and omicron is the wildcard. they will continue to slow growth going into next year. still, the consumer remains really strong. we heard the news from mastercard, holiday spending was absolutely amazing. bloomberg economics models predicted quite strong results,

actually record results, looking for a 7.5% in terms of spending. with that, we are pretty good going into next year. the consumer will remain the main driving force. consumers will be just fine, economic growth will probably slow down, but not that much. romaine: a big part of the growth we saw this year was certainly fueled to a large extent by the stimulus programs out there, fiscal stimulus programs that will not be there in 2022. and we have a fed that will make some attempt at removing the accommodation from financial markets. how does that factor into your outlook? yelena: i think we will see growth slowing. 3.9% next year from what we project will be 5.4% in 2021.

certainly, we will see some slowdown in economic growth, but the reason the data has been really upbeat -- look at personal income, for example. the combination of wages, payrolls growth, hours worked is growing, quite strong growth. that will support economic growth into next year even though some of these programs you mentioned, obviously, were e nded. we continue to see low levels of jobless claims. paul: how concerned are you about inflation? to what extent is that impacting your economic outlook at bloomberg economics? yelena: we think inflation in terms of cpi will peak around this time in december, 7%

year-over-year, and we will see some slowdown in inflation, but it will remain elevated. what is more important, it remains prone to supply shortages. if omicron proves to be a significant supply shortage kind of thing, then we will probably see another spike. this is a risk, not a central case scenario. we think that inflation will continue to subside and end the year somewhere below 3%. 2.8% growth in cpi. romaine: only 30 seconds left. i am curious about the shift that we saw earlier on in consumer spending away from goods and services, now seems to be going back into goods. what are you seeing in 2022? yelena: the recent data we received last week showed a significant increase in real

spending and services. we saw a recreational services were very strong. that was away from goods. omicron is a risk. we could see a disruption in this rotation, but we will continue to trend into services going into next year. romaine: always great to catch up with you, yelena. if you don't follow her research out on the terminal, check it out. they do great work out there. paul: they have a good group, and they have been pretty bullish going into this omicron variant. we will see how it plays out next year. romaine: that does it for this portion of our bloomberg markets coverage. our simulcast continues, after the break. ♪

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romaine: this is bloomberg markets special markets coverage on this day. a special simulcast on bloomberg television and radio. we are going to be here with you every day all week covering the market action throughout the day and take a look back on the year that was. romaine bostick alongside kriti gupta and tim stenovec. i'm told every day is going to be beyond the belt. tim: we are off to a pretty strong start. this is the official start of what could be considered a santa because -- santa claus rally. kriti: liquidity is still higher from the levels in october. is that for the standard rally that everyone is expecting? romaine: traditionally a low-volume we care. i guess at the end of the day it

doesn't matter. that is going to be a record high. you're looking at the nasdaq composite. about 23 points away from its record high. and the lira. certainly something to keep an eye on. a week ago monday you were paying about 18 lira per dollar. abigail doolittle has more perspective on what's going on in the u.s. markets. a lot of people thought we would rally, but not necessarily this much. abigail: it's pretty amazing what's going on here. the s&p 500 up 26%. the seventh double-digit gain for the s&p 500 over the last 10 years. of course you have had fed support accommodation.

the 69th of the year topped only by 1995 when there were 77. some of the other indexes a little bit away from the record highs. it is 40% below the 20 day moving average. ben emmons at medley global was saying that for the official santa claus rally, these days typically bring on 2% gain in january. so perhaps we are looking at some sort of rally going into the new year. hard to know. the bulls are out today for sure. romaine: absolutely. looks like a 27% gain on a year to date basis. we want to keep this conversation going and bringing senior vice president and senior portfolio manager at ubs wealth management. i do want to start off with the

27% number. there's going to be a lot of hate made out of these numbers. normally i wouldn't ask anyone to look a gift horse in the mouth. tell me does this concern you at all heading into 2022? >> i think there was a lot of optimism about how the first half of 22 was going to go and a lot of managers had closed up their books already because they didn't want exposure and were concerned about omicron headlines and now they want to make sure they are not missing out on any front running of the 2022 returns. we anticipated this rally coming up and we have been having good exposure i think folks are still feeling pretty good about the first half of 2022. they're going to be additional

headwinds, maybe monetary policy. we think that our earnings carried the day and we are in this pre-earnings season now and typically the market has anticipated some pretty good earnings and seen the market rally ahead of those earnings. romaine: you mentioned omicron. we made it about three minutes into the show without tensioning it. i have to ask if the headlines aren't derailing any of your optimism. we have thousands of flights canceled. new york city is running its subway at a different schedule because they are trying to deal with fewer crewmembers. how is this playing into the early part of 2022 for you? >> that's a great question. it speaks to a lot of what we saw in 2021 which was this back-and-forth action between

the reopening trade in the stay-at-home trade. i think that back-and-forth action is going to continue to be the order of the day in 2022. so for us it frankly helps maintain kind of a wall of worry about the markets because these headlines are concerning. if we see a sufficient caseload to actually overwhelm the health care system and i get particularly concerned about nursing homes. and obviously you could see more of a lockdown of economic activity. the reality is in some ways the market is not always the economy and there are areas of the market that do perfectly fine in a less high cyclical recovery environment. that's what we sought it define

a lot of the characteristics of the market in 2021. there was a more high-risk severity, i don't think it would derail large set errors of the market that aren't depending on a resumption of the cycle. kriti: a staple has been the rally eating into the bottom line in the margins of a good chunk of corporate america. how much of that is the story of 2022 as well? >> that's a great question. we have seen a lot of corporate pricing power. so we are not overly concerned about deterioration in 2022. we are mostly seeing decent ability to pass along higher prices which will attract the ability of the fed. we are not seen in most of the areas we are looking at huge margin compression. in some areas we are.

in the airline industry, that's a real concern. in many areas where there is sufficient pricing power with corporations, we are not seeing a lot of compression yet. romaine: -- in the equity market? >> it is amazing. we are printing strongly new highs in the market. if you look at the new york stock picked -- new york stock exchange new high and low list, the number is super small. you have had a lot of concentration and very narrow breath in the market. you can interpret that that someday the generals will fall

and nothing will keep the indexes up or you can also interpret it as a lot of majority in the market has corrected already and you are beginning to see some signs that they are coming off of their bases and looking to recapture their highs earlier in the year and something we have been focusing on a lot is the sensitivity of things like financials or the russell 2000 which has a lot of financials in it and how they are reacting to upward movements in the 10-year treasury yield rate and increasing expectations for fed hikes. we really want to see those kind of sectors move along too well unless you see both short and long rates pick up. i think those are the ingredients for an upward move.

romaine: michael zinn, thank you so much for joining us. it reminds me of the note we got earlier today from j.p. morgan about concentration not being a sign of any sort of market top. romaine: it has been there for -- tim: it has been there for eight or nine years. maybe you stick with it. kriti: the question is does that continue into 2022. romaine: we've got to talk travel. tim: i'm ready. get me on a plane.

>> i was brave or stupid depending on your point of view. in 2006 2007, we set up a small investing teams in asia. a year into it, we just shut it down. it was the way the laws work, the laws may exist on a piece of paper and some of these emerging markets. they are really not followed in practice. we want to fix these businesses that get troubled. and your ability to make those changes operationally is really stymied and as a result we look at asia, we look at the large

parts of emerging markets. for the most part, not really for us. >> do you think china will become a viable market for credit investors like yourself? >> there are some credit investors already in china. some of their peers have operations out of hong kong. they have significant investments in china. we think over the next 10 years it's not changing. you look at the headlines coming out of china every day. in the u.s. papers, it doesn't feel so welcoming. if you are a u.s. investor trying to restructure companies and improve businesses. >> if operating expertise is what distinguishes svp from the rest or most of the distressed debt industry, why limit it to

distress? why not raise a private equity fund? >> in five years will there come a time where we should raise the private equity fund, it. 40% of what we didn't fund as control oriented investment, i would think 50% of what we do will be control oriented investment. >> but largely through debt. the reason i ask this question is because what you do to companies is what private equity firms due to companies. improve, restructure, rehabilitate, consolidate. with the goal of building a more valuable company. the only difference i can see between what they do and what you do is that you are buying at

a lower valuation and applying leverage to get the same return. >> when you can buy swissport, we believe we took our equities at two times stabilized. maybe two and half times stabilized. the businesses i'm describing today like the corporate businesses we are taking control of as we speak are at five or six times. when you think about private equity where the average multiple is 11, why would we be in such a hurry to go there? if we can keep buying at five, 6, 7 times and there is low hanging fruit operationally because these businesses are troubled and some way, sounds like a great way to invest. so we don't see ourselves in a hurry. to go by 11 times. >> tell me about specs. a few people in your industry

are raising hundreds of millions of dollars into spac's to finance stressed and distressed borrowers. have you have interest in joining the spac party? >> why bother? [laughter] i think what you are hearing from me is we are not a supermarket. we are not like this is the flavor, i got one of those flavors for you.

tim: this is special market simulcast. u.s. travel stocks are retreating after hundreds of flights were canceled due to covid-19 cases. abigail: we have records hi -- record highs for the s&p 500.

for these travel specs not so much. at this point you have american airlines down a little bit less than 1%. you have the s&p 500 hotel index down .6% and the bigger losses are in the casino section. as for those cancellations having to do with omicron, more than 1500 flights were canceled. today so far 991. if we put this in the context of early 2020, today's declines of 1% or so stacking up in such an equal weight to that earlier time. some of the cruise operators not so much. s&p 500 airline index down just about 2%. tim: for more on the travel sector, let's bring in jay

stein. it's a hotel brand and management company. you guys also have margaritaville resort in times square and then the dream hotel around the u.s. and thailand. give us an update on what is going on with reservations. how are you seeing cancellations due to omicron? >> thanks for having me on. i appreciate it. omicron has taken its toll on us. nothing like what we saw almost two years ago at this point. it's a very soft time usually for us around christmas. we are still holding on pretty decently for new year's. all in all it's not devastating. romaine: you are not a traditional hotel in terms of the overnight stays.

most of your hotels have restaurants and nightlife attached to it certainly draws a hipper audience. when we get back to some of those pre-pandemic levels, i frequently walked by your property that you have done on 16th street. i remember before the pandemic that place was hopping like none other. do you have any real insight into when we get there? >> on the food and beverage side and the venues and nightlife, we are getting back to regular levels. primarily more on the thursday, friday, saturday nights. the sunday through wednesdays are slow and some of the venues haven't reopened yet. the weekends were almost as busy as we were pre-pandemic. we are also running with smaller staff. those areas have actually been pretty good.

on the room side, still the business travel. a lot of the citywide conventions are not back yet. we started seeing the national business coming back in once the rules changed back in early november and now you are starting to see that slow because of omicron. domestic travel is not really going overseas so we are still keeping the domestic travel coming into the property. it's been a decent wash what we really want to get corporate travel back on the road again. kriti: let's talk about your domestic operations. some of these cities on both coasts -- we are not at 100% yet. what are you seeing in the major cities in the united states? >> new york has held up really well since spring and summer. a lot of leisure travel coming in. l.a. held up pretty well as

well. i think san francisco, chicago. honolulu. those markets were taking a bigger hit than what we saw in l.a. and new york. it's really relying on the business travel for those cities. tim: how dynamic is your pricing ? can you give us examples of when you have had to adjust prices to attract people? >> that's the amazing thing about this industry. it is so dynamic it could change in 24 hours. we could three days later be at $400. you just don't see that in other classes of real estate. rates actually have been going up and a lot of markets. miami has been very strong. to your question, dynamic

pricing, the most dynamic in any real estate class. romaine: what about labor cost, materials cost? >> like everywhere else it's becoming difficult. shortage of labor is most dramatic. but we'll get through it. we will raise prices, we will raise salaries and than the prices for the rooms are going to go up. you're used to paying to 75, you are going to be paying 350. it's just like the bourbon you are paying 15 years ago it was 11. i think it will balance out it will take a little while once the covid comes back. kriti: jay stein, thank you for joining us at a crucial time for travel. speaking of travel, in europe natural gas prices are plunging.

we talk about what drives the move coming up next. this is bloomberg. ♪

>> we do believe that gold does very well in times of inflation. if you own long-term treasury bonds that are yielding 2% and interest rates moved up to 5%, those bonds fall materially in value. likewise, if you have cash sitting in a bank that you are earning 0% on, inflation is 4%, you are gradually eroding the value of your money. as inflation picks up, people try and get out of fixed income, out of cash. the logical place to go is gold. especially if it starts to rise in inflationary times. but because of the amount of

money trying to move out of cash and fixed income towards the amount of investable gold, the supply and demand imbalance causes gold to rise. the more it rises, it feeds on itself. it has the potential to go what i call parabolic. david: you are a big believer in gold as a good investment now? john: we thought with the fed doing quantitative easing, which is essentially printing money, that would lead to inflation, but what happened was, while the fed printed money, they, at the same time, raised the capital and reserve requirements at banks, so the money sort of recycled, created money, wound up at the banks. it was redeposited at the fed. the amount of excess reserves at the fed almost grows by the same amount they were printed. the money never really entered the money supply, so it was not inflationary. this time around, the money has

entered the money supply. so, the money supply was up something like 25% in the last year, and the best indicator of inflation is money supply. so i do think we have inflation coming well in excess of what the current expectations are. i'm not a believer in romaine: this is a bloomberg markets special simulcast. we welcome in all of our audience is. romaine bostick alongside tim stenovec and kriti gupta a little after 2:30 in new york. let's get you caught up on the commodities space. nymex crude futures, 75.63 a barrel is roughly where we will settle. we started the year around $46 per barrel, so a pretty good run, nice bump off of the 200-day moving average. gold futures went from green back to red.

soybean futures setting up for a nine-day run, up about 2%. the second line on your screen, for our tv audiences, what's your that's what you're are looking at our european gas futures -- what you are looking at are european gas futures. they were below 100 euros at one point during the trading session, but we started to see a big decline in some of the natural gas future prices. still well elevated, 300%, but well off the highest of a few weeks ago. our european natural gas reporter is joining us. can you give us some sense as to why we are seeing this pullback in prices right now? >> the situation right now, euro started the winter -- europe started the winter well below the average that it needed.

the continent was hoping for relief from russian suppliers, their main natural gas provider, and that didn't come through. but the u.s. and other exporters came to the rescue by ramping up cargoes to europe. with elevated natural gas prices, europe was at a premium to asia. that's a rare occurrence. usually, asia is the top buyer of natural gas, be it from the united states or other sources. when european gas prices went above asian prices, a lot of tankers started heading toward the continent. and now you see more than three dozen u.s. lng cargoes headed that way. tim: help us understand how wonky weather is playing a part

in all of this. >> this is a la niña year. that plays out in different ways across the globe. in the united states, it gives us a mild winter. as you may have noticed in new york and elsewhere. that lowered demand for natural gas. here in the united states, we are seeing lower winter demand for natural gas. that lowers prices here. elsewhere in europe or north asia, you see cold winters or colder winters. you see higher demand they are. there are price gaps between them. kriti: we have about 30 seconds. is this going to have a better outlook going into 2022, when a lot of europe is dealing with this for months on end now?

>> people i've talked to about the situation -- normally, there's a lull in lng cargoes and buying activity during the summer. i think that europe is going to spend the summer buying lng to store it for the next winter. tim: big thanks to sergio chapa. thanks. let's turn to the broader u.s. economy. we bring in the senior u.s. economist for bloomberg economics. it's great to have you. help us look forward to 2022. what's the biggest risk to the economy in 2022 according to bloomberg economics? >> we have seen it recently. we think there will be three major headwinds going into 2022. first of all, it's omicron. that is already playing out. without consumer spending on services, we will not see significant increase.

we see some deceleration going into the next year. the other two headwinds are monetary policy and fiscal policy. we will see some fiscal tightening. a lot of programs come up pandemic programs have already ended -- a lot of programs, pandemic programs have already ended. the fed is about to tighten policy. these are the three major headwinds going into next year. romaine: did you mention inflation? i didn't hear you say inflation. >> that's an interesting one. we think that inflation has peaked or is about to peak actually this month at around 7% in terms of ppi. and it will probably decelerate -- well, it depends what you are really looking forward to in terms of the speed of deceleration. but i think a lot -- a lot of economists and policymakers

agree we will decelerate into 2022. we have already seen that commodity price inflation has come off the boil. the question is what happens to inflation in the services sector. we see rotation into more services spending. i think the full omicron heat -- we've seen some signs of it happening at least in the november report. we saw some evidence of that. romaine: we have to get some of your forecasts specifically on gdp and other economic measures. yelena does some great work. check out all the research, if you have a bloomberg terminal. we are here on this monday afternoon, final trading week of the year, final week of the calendar year. s&p 500 at the highs of the day, 4783 right now. if i had told you that in january, that this is where the

s&p would end, you would've said i was crazy. tim: i would have. we have to be careful about trading here, of course. maybe put a little money into an s&p 500 index fund, if you could go back with a time machine. the question is looking ahead and what 2022 looks like. romaine: i put on my money in binax covid tests. tim: i have a few extra. i think i overstocked. romaine: romaine bostick here alongside tim stenovec and kriti gupta. i'm told we are going to do this all week. we are going to talk about an interesting report, that employees are going to be blocked from selling their shares indefinitely. that's coming up next right here on bloomberg. ♪

david: the inflation

environment has been changing a little bit. inflation has been low for 25 years. now people think inflation is coming back. how are you going to deal with that? kim: many tools we have historically used to battle inflation no longer work the same way they used to. people oftentimes thought of housing as a way, or especially retail and real estate as a way to hedge against inflation. less and less possible the way we have invested in it. i think commodities similarly have been thought of as a way to hedge against inflation. there are challenges over the long-term. equities have been a hedge against inflation. we will continue to do what we have done in the past, build a diversified portfolio with many different opportunities with the possibility of hedging against inflation, because different types of inflation have to be hedged in different ways. so if it is a quick increase in inflation as opposed to a slow rise, is it temporary, is it a long and persistent type of

inflation? so, for us come i never thought of myself as an economist that can predict which way inflation is going so i need to build a diversified portfolio with different options to fight the different types of inflation. and pay attention to it. fundamentally, it is done through the equity markets. david: what about debt? the u.s. government has a lot of debt, about $28 trillion of debt and is adding $3 trillion a year. does that worry you? kim: for a long time, i was worried about the debt because of the potential impact on the inflation and value of the dollar, but i was not super worried until you have capacity constraints. we are starting to see capacity constraints, which have a much larger impact on inflation, so as far as inflation goes, that is a mounting worry, but the issues around the dollar and the sustainability of the united states and reliability of it and

whether other governments and other places and markets trust the united states, because the currency is just backed by the promise of the government, so they have to believe in the government. i think we continue to have a place in the world where people feel confident about us, but there are other powers rising every day and other people looking around and trying to make sure they also have a place, a vocal voice in the world. we have to be conscious of that -- that.

tim: this is special markets coverage, simulcast on bloomberg television, radio, and youtube. according to a report in financial times, shares of didi are taking a hit, lower now by more than 5%. adr's traded here in the united states. let's bring in the leader of the

equity america's team. why would we see a move like this when it comes to didi? help us understand. >> the slump didi has been seeing has been literally since it went public, when china basically clamped down on major tech stocks and didi themselves. concerns that a lot of these companies were listening -- listing in the u.s. instead of hong kong or china. with didi, the country was concerned that the company was collecting weight -- way too much data for one company and then listing in the u.s. there have been constant updates with the government on what they want to see from didi. the latest news, before this report today, was that didi is looking at delisting from the u.s. and moving back to hong

kong or china for listing. the expiry was set today. -- set to today. there were concerns about a whole bunch of selling. romaine: i am curious. we've had reporting here that they planned to delist and move back over to asia. is there really any reason why they needed -- why the government needed to impose something like this? gift inside investors wanted to get rid of some of their u.s. adr's, why not just let them? >> technically, they could. if you were to look at china, th at didi even tried to list in the u.s. to begin with when china didn't want them to, it just clearly shows the hold the government wants to have on these companies. these companies can list in the u.s. investors can then sell their

shares and move to hong kong. it's a form of how the government is trying to take control of the financial sector. kriti: let's talk about this from the investor point of view, for the folks who want to china and em exposure. is this a temporary pause until some of these adr's get relisted in hong kong, or is this investor appetite that has been lost forever? >> it's possible that this appetite will wane as it goes on. we haven't seen any major chinese listing in the u.s. since this cup down -- clamped down began. a lot of investors will be switching over to hong kong and china to invest in that emerging-market going forward. in that sense, that i could have gone into u.s. exchanges -- that capital that could have gone into u.s. exchanges is probably going to shift over to asia instead. tim: that's probably's -- that's pretty substantial. it seemed like every other day

there was a new chinese company listing adr's in the united states. that's because the exchange is to take a hit. -- that has caused the exchanges to take a hit. >> there are all of these companies that are listed here that could potentially delist and move everything to hong kong or china. and, you know, there's a bunch of other chinese companies out there that are private, massive, and may have concerns -- considered listing in the u.s., but now won't. it's a lot of money that could potentially be lost. romaine: divya leads our america's equities team. breaking news, for goldman sachs employees, goldman is going to require employees to get booster shots and more covid tests. goldman announcing these measures in a memo. it is sticking with its plan to return to the office, but it says it will require employees to get booster shots and will require some form of additional testing.

kriti: what's interesting here is some of these wall street banks are taking this diversified approach. it's not just about vaccine mandates or testing. they are putting it all together, which is something you are not seeing on the administrative level, a very distinct transition from vaccine mandates to more testing. tim: let's talk a little bit about the automotive industry and go from the changing vaccine mandates we are seeing, which is certainly evolving, to how things are playing out when we think about how the electric vehicle industry is adapting and certainly how cars are adapting. the last year has meant a lot for the large car companies as they struggled to get chips, and it has meant a lot to the industry. let's go to the automotive industry. there's a new story about silicon valley -- silicon valley's push into aptiv. what is active -- aptiv? >> aptiv is an auto supplier.

they have focused on supplying parts for the trends you mentioned, electric vehicles and the software needed to either power assisted driving features, semiautonomous features in cars, and also things that make the car of the future have it be more intelligent. infotainment system is becoming more digital. that's what they work on. romaine: those of us from a certain generation no aptiv -- know aptiv. the ceo, devon clark, and what he's done since he took over, in 2015 acquiring software companies -- took over in 2015, acquiring software companies. has the investment paid off yet? >> if you are a shareholder in the company, it has paid off. aptiv went public in 2011, had

an ipo. the stock is seven times more valuable than it was then. that has paid off. they are seen as a poster child for how to transform yourself to handle disruption in the auto industry, because their history is that they were once just a very commoditized, bloated parts unit of general motors. they were spun off, went bankrupt, and were almost liquidated in the financial crisis. the ceo said, i have a vision for what this can be, the auto industry is going to become electric, autonomous cars are going to be a thing, and we have the technology for that. that was clark's predecessor. clark accelerated that vision by selling off everything you can think of as old auto and investing in driverless car startups and software and things that can flash updates to your

car, like an iphone. they focused on that. romaine: this will be a big story for quite some time. great story today on aptiv as well as some other companies out there trying to get on the trend, if you will, with regards to ev's and autonomous driving. this is our "bloomberg markets" simulcast. i'm romaine bostick alongside tim stenovec, who, i should point out, is wearing a tie. it took me 56 minutes to realize. kriti group that is tie-less. -- kriti gupta is tie-less. we're going to break down all the numbers right here on bloomberg. ♪

>> this is a special markets coverage. we welcome in our audiences across all of our platforms. we are going to be here all week long, romain bostic alongside tim senna vacant kiriti -- kriti gupta, looking ahead into 2022. we are looking at a market that's holding at a record high for the s&p 500. the nasdaq indices are not that far from reclaiming the record high. when you look here at what we've seen over the past few weeks, few months, that is been quite astonishing, i want to point out we talk about travel stocks being done today, but not by much. they are still down significantly from what we saw back in march. but i've got to flag apple. this really seems indicative of what we've seen in this market here, a lot of the large-cap -- mega cap tech names. this is where the concentration

is right now when it comes to the rally. tim: i know this is not a day where people go to havens but it reminds me of what i think j.p. morgan said earlier today -- increasingly a company like apple is turning into a safe bet, a haven trade. you mentioned today being a record high for the s&p 500. if it closes at a record high, 69th a record high of the year, it'll go back to 1995 to get -- we have to go back to 1995 to get record closes. kriti: we are talking about this growth play, what if it is traditionally becoming a key part of everyone's portfolio, at the end of the day turning into perhaps a value play dependent on the supply chains that extend all the way into asia. it is interesting to talk about how big tech wears 10 different hats in terms of an investment portfolio. romaine: let's continue talking about big tech. looking at apple, market cap right now, $2 trillion -- more

than $2 trillion. i assume you are on apple watch, abigail. >> i am, looking for that market cap we were looking for weeks ago. it's not happened yet but very close, perhaps this would. you never know, the volume is so low. perhaps you will see some traders take advantage of that. over the last four days, the nasdaq 100 come up about 6% -- the best four days in about two months. everything to do with the likes of apple, microsoft, tesla, meta, amd and video, all these big cap techs. bond yields are done a little bit. that offers a tailwind, with concerns around valuations. the santa claus rally, investors really seem to like big tech in the context of the santa claus rally. one question you will have been asking all day -- how long can it last?

especially the s&p 500 right now, on pace for a 27% gain this year, after gaining about 16% in 2020. and 28%, even 29% in 2019. that is a huge rally over the last three years. helped out by the fed. will it last? it will depend on big cap tech, which remains the tech and mega cap internet names. 50% of the s&p 500 makeup. let's see if the rally lasts. romaine: asking the big question about, will it last? after 20 plus percentage point gains here. we are joined right now to discuss a little bit more -- discuss this a little bit more. as we come off pretty much an unlikely run that we've seen in this market, based on some of the predictions we saw at the start of 2021, do you dare go

over weight equities heading into 2022? >> i think if you do, it should be just a modest overweight. you should focus primarily on the united states. that is how we have tactically tilted. when it comes to international investing, we would still avoid or have a very low exposure to em, and primarily just have somewhat of an exposure to more developed. tim: can you talk to me about why valuations are so concerning to you into 2022? you had a no doubt at the beginning of this month -- note out at the beginning of this month with high starting valuations. >> you can look at next year's pe multiple, roughly about 21 times, look at market cap, the gdp, which is now in line or above 1999 levels, and as well , you can just look at the underlying fundamentals of the

year -- you did have lower quality stocks do quite well throughout the entire year as credit spreads started to tighten, talking about high-yield credit spreads. again, you can make money in this market in 2022. you just need to be more focused primarily on more high-quality types of investments. kriti: you said credit and my ears perked up. it wasn't too long ago in 2020 when you had big tech borrowing at near treasury level borrowing rates. on the other hand of the spectrum, you had airlines borrowing at 10%, 13% premiums. how much of that translates into perhaps a burden on equities in 2022? >> it certainly can, if you start to see a slowing down of the economy. financial stress. even moderate become more normalized -- that could have

dampening effects on lower quality equities. we are not perhaps predicting a credit dislocation overall. that is not on our -- in our focus. but you did have a substantial amount of credit creation, not only on the corporate side, but also on the government side. keep in mind that this fiscal deficit -- the disco deficits were white extreme in 2020 -- the fiscal deficits were quite extreme in 2020 and 2021. the fiscal push is going to be a fiscal headwind in 2022. that to us is a major concern, that deceleration of u.s. economic growth could provide perhaps a headwind for equity performance. assessing what's romaine: going on with fiscal policy romaine:, a lot of the gains that we sign the economy were of course title out to some of the fiscal stimulus measures and pandemic related measures. most of which have either been

removed or are going to be removed by the time we got deeper into 2022. what is the violence that you are looking for right now, with regards to what we are getting -- balance that you are looking for right now, with regards to what we are getting from the market? without the help from the white house and congress and maybe without the help from the fed? >> i think it can. but it is just going to be a deceleration of economic growth. and perhaps earnings growth, perhaps is going to be a bit too high. when you have a deficit that is roughly 11% or 12% and then it glides 24 months later down to perhaps 3% or 4%, that is a massive fiscal headwind. in you pile onto that -- then you pile onto that potential monetary policy which has already been announced, where they are going to -- at least taking that punch bowl away at an accelerated matter, that could provide perhaps some stress on valuations, may be

earnings hold up, but perhaps multiples compressed a bit. tim: but have historically seen equity markets do ok over the last decade when interest rates are not quite at zero but they've been pretty low for about a dozen years now. >> yes. that is true. they have been low for a dozen years. i've got to tell you, that has provided a lot of that rocket fuel for the overall broader averages. the real question is -- at what point valuations matter, and you have an excessive amount of margin that's built-in. corporate profit margins are excessively high right now. any type of moderation on that is going to provide somewhat of an issue for 2022. with that, we do though anticipate that the markets will be at a higher high in 2022.

but overall, it's just going to be the inner parts of the market, where that's going to play out. tim: chad morgan lander, we've got to leave it there, thank you so much for joining us. did you spend a lot during the holidays? romaine: i did. i spent way too much. tim: i spent more than i did in 2020 and 2019 combined, i think. shoppers got an early start on gifts this year to avoid supply chain issues. we will talk about that in a couple of minutes, we will talk about how that impacted holiday sales. you are listening to bloomberg radio and bloomberg tv. this is bloomberg. ♪ >> it's a place where ideas can change the world. ♪ a place where if you have a dream, nothing stands in your way.

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♪ >> this the special markets coverage. i'm tim sinovac along with kri ti gupta and roman bostic. u.s. holiday sales jumped from a year ago, a pretty staggering figure. let's bring in john edwards, who leads bloomberg's u.s. consumer coverage from massachusetts.

since the summer, executives at major retailers have been on our air and saying that by early - saying buy early and often, i wonder how much that wasn't resonating led to the increase in sales that we've seen already. >> i think that message did get through loud and clear. consumers really responded. they did push sales up a little further forward into the holiday shopping season. in part because they were urged to, given the supply chain constraints that were out there. that seems to have paid off. retailers saw continued strength right through the season. i think moving forward -- the moving forward of sales mitigated the supply chain issues and help keep the shelves relatively soft. romaine: these numbers are not

only good on a year-over-year basis, but when you compare them to those pre-pandemic levels in 2019, still pretty impressive -- 20% pretty much across the board. i'm curious about discounting here. i think a lot of folks after thanksgiving go into the websites, these stores expecting to see deals. i didn't get a lot of deals this year. >> that's right. you were not alone. i think retailers saw that they had continued pricing power and they really wielded it all throughout the season. they were pleased to not have to discount heavily. sales still held up. discounts were by many measures the lowest in five years. we saw that on black friday. there was relatively little discounting compared to previous years. yet still relatively robust sales, up 30% over last year. on black friday itself. resellers didn't want to

waive any profit margin on the table until they -- and they kept discounts relatively limited and customers continue to buy. kriti: let's talk about the savings rate here, at one point in the last two years, you had savings higher than even depression era austerity. now it's coming back down to earth. how does that play into some of the consumption patterns we are seeing when it comes to the retail space? >> well, i think in a lot of ways, we are going to have to wait and see on that. certainly, consumers -- we've been waiting to see those high levels of savings get eaten into. we start to see that show up in diminished sales figures. we haven't really seen that. inflation is out there, people have grumbled about it of course, and said they were worried it's going to start treating into the sales, but a lot of the inflation is demand driven. the fact that customers are so

robust and willing to spend. so i think that inevitably, savings rates are going to decline, people are going to start running out of stimulus, is not going to be -- it's not going to be renewed, but we haven't seen it quite yet. we will be waiting to see it in 2022. romaine: john edwards, helping us lead our coverage here. jumping 8.5% year-over-year according to mastercard's spending. the other big line out over the weekend is amazon's labor board settlement is crucial for union organizing. amazon basically agreeing to open the door to potentially more unionization. let's bring in bloomberg's brad stone, who covers amazon better than anyone else. this is being built as an agreement between amazon and its workers. but it's something that had to be brokered through the national labor relations board. something that amazon had

thought of very publicly for quite some time. >> is very specific. it's not necessarily amazon opening the door to labor unions. they prefer to keep that door very much shut. but it's amazon acknowledging in an agreement that has violated labor laws. and it agreed to email about one million of its former and current workers notifying them of their rights to organize. this is important -- allowing them to congregate inside facilities and talk about labor organizing. that is something that amazon's really fought against. so that idea that at the beginning or end of your shift, talking to a college, -- a colleague, not a stranger, but a colleague about organizing, that's a change, that is how amazon now has to comply. tim: nobody knows more about amazon than you, you recently wrote the everything story back in 2013 and earlier this year -- why does amazon for your labor unionization -- fear labor

unionization? >> it really has encrusted in the culture for 20 years. it is too easy to say it is about an hourly wage, amazon boosted starting pay for seasonal workers to $18 an hour recently. that's far above the minimum wage. it really has much more to do with flexibility. if you ever saw the ebb and flow of fulfillment centers, along with demand, you can hire workers but dismissed them in january when demand falls off, or suddenly there's a covid inspired woman you request mandatory overtime for your workforce, again, ebb and flow. unions, rules worried that that will limit visibility and inhibit their ability to service customers. romaine: brad, always great to catch up with you. a couple of great books, definitely check those out, if you have a chance. we will keep the ball moving here, we are going to talk about

what we've been seeing in the travel space. airline stocks are down 3%-4% on the day come off the lows of the day right now. still in the red. a lot of concerns right now on the omicron variant and what that could do to current travel. we've seen a lot of cancellations already from over the holiday weekend here and now. some concerns here about the travel plans going forward, people might be putting off some of the plans, as they try to figure out whether the flats are still going to be there or not. you are taking a look at where we stand with some of the airline stocks. american done about .6% -- down about .6%. this is a bloomberg market special simulcast. we will be back in a moment. >> over the world, there are labor issues that are a reflection of the pandemic, there are supply chain issues. some of the stuff is transitory. there are some secular trends we have to watch closely.

but i think we are adjusting. dealing with it as anybody else is. leaders are thinking about it here the same way that leaders are thinking about this around the world. >> you've been extremely involved in carbon offsetting, and london spearheaded that movement. >> i think it is important that governments around the world to with the private sector to try to get capital directed towards innovation, in a way that we can accelerate the climate transition. i want to emphasize transition.

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switch chaser. i think there is a new consciousness. mi doing everything i could be? probably not. but i am super conscious of the need to do what we can to make a contribution here. the biggest thing i am doing in my lifestyle is traveling around the world trying to do diplomacy. and help make a larger decision in the context of glasgow that could reduce a lot of the anxiety that we are all living with today about where we are headed. >> for the people wondering why are we investing all this money, talk to us about how you believe this will help benefit us. >> this is a road to spaces of future generations can build a future. we live on this beautiful planet, the most beautiful planet in the solar system by far.

romaine: this is special markets coverage simulcast on bloomberg television, radio and youtube. romaine bostick alongside tim stenovec and kriti gupta. we are going to be with you every day this week looking back at 2021 and looking ahead to 2022. all eyes remain on the latest covid variants and what it could mean for our economy and for our health. president biden spoke about a little earlier. >> omicron is a source of concern. --

romaine: emma court joining us right now. let's talk about the tone we are getting out of the white house which seems to be less focused on vaccinations, or at least a little more focused now on testing. they seem to be trying to balance the two. the strategy prior to this seemed to be all vaccination and boosters. emma: yeah, and i think that is a really interesting and important point you are raising. the president's words come at a time when people have been gathering for the holidays. they may have been seeking out covid tests prior to getting together with family members. even vaccinated folks gathering for these holidays were concerned about potentially spreading the virus to

vulnerable family members knowing there is a risk of breakthrough infection. so there has been a severe testing crunch. the administration has been under a lot of pressure recently, but also the recent months now with this knowledge that people who are vaccinated can get infected, which obviously was less of a concern earlier on in this year. the administration has not invested in testing resources as early as it said it would when it took office, and is not invested as much as many experts would like to see. this harkens back to the trump administration. there were similar concerns about testing under that administration. the biden administration has defended itself saying we had pretty much no actual testing when we got into office. of course at home testing has ramped up dramatically, but there has been a real squeeze in terms of resources. that is something express essay could have been avoided. romaine: i am wondering about

hospitalizations because testing and -- how are hospitals holding up? are we seeing them under strain similar to what we saw almost two years ago and during the height of the delta variant, or are we not there yet? emma: we're seeing hospitals under tremendous amounts of strain. and they really have been for a period of months now. the focus on omicron does not totally acknowledge the fact that delta has been reading a lot of havoc in the u.s. and hospitals have pushed medical care for many other conditions were also all these procedures people were not able to get. hospitals have been under tremendous strain. health care workers are suffering significant burnout. they are getting infected themselves. just like other people are at this time of year in particular. and it is adding up to a lot of pressure from pretty much every aspect.

tim: thank you so much. we aren't just seeing hospitals affected. we're seeing airlines affected. earlier, romaine took you sue -- took you through some of the airline stocks taking a hit, as we learned thousands of flights have been canceled. for more on omicron's impact, let's bring in mary slang and stein. my little brother visiting family in seattle got a message earlier in the day today from his airline. he is trying to get back to los angeles. they said his flight was canceled due to weather and they cannot even rebook him on a flight. they said quote, in the next few days using its automated system, because they have no availability. that is something i have never heard about, not being able to get rebooked. how long is this going to last? mary: we thought at the start of today that things were looking better, but cancellations have continued to pile up. so today within the u.s. we are

a little over 1100 cancellations compared to yesterday when we had a little over 1500. so we are kind of closing in on that number. it is hard to say how long it will last. planes were booked full before the holiday period started and it is difficult when you cancel numerous flights to squeeze all of those people onto flights that are already full. i think what we are seeing some airlines try and do is bring in larger planes so they can fit people may be from a couple of canceled flights onto a larger plane and to get more people moving. but it is likely to continue to last as they try and reset their systems and shuffle through these cancellations. kriti: you are the expert on all things airlines. i want to ask you how some of these airlines are tackling that hit to their bottom line that they are not able to get passengers through business travel. are they really tackling some of that missed profit through cargo only flights? mary: the airlines did that a

lot during 2020 when demand basically evaporated for air travel. it has since picked up. but domestically it has been strong for a while. they are still doing a lot of cargo flights internationally which helps. we have seen a couple airlines report quarterly profits already and i think the expectation is that next year it is going to be a much stronger year for recovery. they hope international travel will come back next year. that is a big missing picture. they really need that, particularly airlines like dell, american and united. they really need that international travel to get back on sound footing financially. romaine: that is a great point. mary schlangenstein covering everything airlines for us. airline stocks are well off the lows of the day but still deep in the red. we are going to get ready to count you down to the close. we are about 22 minutes away from the closing bells. volume light, down about 40%,

below normally. but markets are higher. s&p right now at a record high. tim: santa claus rally to the s&p by about 1.4%. the nasdaq, axes make. s&p 500 up by 1.15%. the nasdaq higher closer to 1.4%. kriti: it is important to talk about the fact it is a quiet day when it comes to movers of the airlines are taking the cake when it comes to what is moving on a very quiet day. romaine: 10 year yield going in one direction, the two-year yield going in another direction. volatility tamped down for right now. this looks like how it is going to close out 2021. how do we set up 2022? sandip bhagat going to be joining us in just a moment. ♪ ♪

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romaine: oh come back. this is bloomberg markets special. we welcome all of our audiences across all of our platforms as we count you down to the close. we are looking at a market setting up for i guess if you're counting what is going to be a 69th record high for the s&p 500. kriti: and that is also on

cruise control. of course led by big tech. it is totally natural during a santa rally. but the question is it is only monday. does it continue the rest of the week? romaine: all the talk about the s&p 500. how about the philadelphia semiconductor index up 2%, a record high. even the retailers getting in. tim: but the airlines still facing pressure over the cancellations and fears of the omicron variant. makes people think twice about traveling if they are concerned about rising covid cases. and perhaps change consumer behavior as a result. romaine: we have seen a lot of anecdotes as well as some data on flight cancellations and travel cancellations. let's get more insight into what is going on in the markets. what i guess we have learned out of 2021 and maybe with the set up is going into 2022. big friend of the show, sandip bhagat, joining us right now. he is going to be sticking with us as we count you down to the

close. you look at this market, you look at this year. an unlikely rally by some measures. do you see the strength at all continuing into next year? sandip: absolutely. the remedies that we put in place to counter the covid recession, they were so substantial. we had massive stimulus. we saw $5.8 trillion in fiscal stimulus. the fed expanded its balance sheet by more than $4.5 trillion. we will be left with a legacy of those policy responses well into the future. we know monetary policy works on a lag to basis and fiscal policy has still resulted in high sify -- high savings rate. so i see smooth sale here for the next couple of years. romaine: fiscal policy has been a big ballast for the market and the economy. so has monetary policy. of course we have a fed that has basically made it clear it at least wants to start to remove

some of that accommodation from the market. do you anticipate the fed is going to stick by its plan for what could be two to three rate hikes next year? sandip: they have committed to three in 2022, two more in 2023, and two more yet again. they will be data-dependent and they will adjust, but for right now the big news on what the fed did in the last meeting, they turned hawkish, which is normally a bad signal. markets get really jittery when the fed turns hawkish. but in this instance i believe they heaved a sigh of relief because they have been so long -- wrong on inflation. they kept calling a transitory and they were calling for zero rate hikes. so the fear was there will be a big policy misstep from the fed in the direction of actually being too slow. so the fact that they have sped up their tapering and this cycle of rate hikes is actually viewed as a positive. now it's aligned between market

excitations and what the fed plans to do, i think three, perhaps two is perfectly in line. and let's not forget, this is a very different economy than what we saw in 2020. any policy measure from last year cannot be appropriate today. we have to normalize. tim: help us understand what could happen if they were not three or possibly two rate hikes in 2022, perhaps if shifting in the next few weeks and months as a result of the new very and perhaps -- new variant perhaps shifts more to goods and less services. inflation moves higher and not peak. is that a scenario that you see as likely? sandip: to the extent that inflation does not peak, i think it will give the fed more ammunition to persist with the rate hikes. people attribute despite in inflation, clearly there were supply chain disruptions, there is no denying that. but a fair component of the

increase of inflation is related to demand. so, look, we have a seesaw here. omicron will affect economic activity in the near term. hopefully it is just a small blip. the data from south africa is encouraging. they have already peaked in maybe three weeks or so. so, this variant is more contagious, it is far less potent, hospitalizations are down, but hopefully spikes up and then comes down pretty quickly. so we will have this little bump in the road, but i do not think it derails us going forward in any significant way. i am still calling for upside surprises to growth for gdp, for earnings, and therefore valuations will stay fairly intact, and i think we are looking at a positive, constructive 2022. not with the same types of returns that we saw this year, but still double digit equity

returns. tim: let's do one more on inflation. when do you think that inflation will peak in the u.s., and when do you think you will get back to a level that the fed and the u.s. consumers are more used to? i am talking 2%, of course. or sub 3%. sandip: ok, let's start with sub 3%. that's not happening anytime soon. inflation spiked up dramatically and will subside at a more gradual pace. so i do not think we see sub 3% until 2024. will it go a lot higher from here? let's quickly calibrate. headline cpi at 6.8%. i think we're going to peak soon. remember the year-over-year comparisons will become challenging. the spike that we saw began in earnest in february and march. so that is a good marker where year-over-year comparisons will not be so dramatic.

i look for inflation to peak in the next three to six months, and then the dissent will be far more gradual. -- the descent will be former gradual. we will get to 3% in 2024 p erhaps. but let me assure our viewers it is not a reason to be concerned. equities actually do quite well when core inflation is in this 3% to 4% range, especially if it gets there from a previously low level where you have now removed disinflation, deflation fears, and these levels are symptomatic of a healthy economy. kriti: in a previous life you were the head of equities at vanguard, which makes me think you are the perfect person to ask about etf's in particular. something that has caught my eye is we have not had a correction in the s&p 500 in 2021, but yet on the mnicr -- micro level we have seen corrections in apple and facebook that have not shown

up on the index level. is that perhaps the reason for passively investing through etf's in 2022? sandip: look, the arguments in favor of passive aggression are fairly impressive, starting with the empirical evidence that most active managers are just not able to beat these passive benchmarks. having this collection of stocks in one single, convenient instrument that can be traded in real time gives you instant diversification. they are all available at low cost. so those are the arguments in favor of etf's and of passive investing. i might point out that if you will allow me that what this approach lacks is the ability to customize a portfolio for a client or an institution's unique risk exposure needs. for example, if someone is heavily exposed to economic risk, business cycle risk, by owning a business in construction, you want the

investable portfolio to be negatively correlated with these risk factors that they had inherited or that they are stuck with. and an etf does not quite allow for that customization as much as a portfolio of single stocks would. so i guess those are the pros and cons. kriti: let's talk about that index level diversification or lack thereof. as you start and see the s&p 500 become more tech driven or even other indexes become more isolated or more geared towards one sector roi the other. what is the way to combat that? is active investing really your only choice? sandip: you would be tempted to think the active approach would pay heed to how concentrated a stock or a sector has become and then do something to address it or alleviate it. of course the minute you advance that argument the empirical evidence comes right back in

your face, because again, most active managers, given the ability and luxury to adjust their portfolios away from concentrated holdings, would be able to benefit, but they simply cannot deliver. so, active management has room, it has space, but you really need to be selective. good active managers are hard to find. t they are outh -- they are out there, they are few and far between. but you should be able to find them. one quick note of caution on etf's. the narrower the etf becomes -- so think sector etf's, somatic etf's -- you suddenly lose that differs of acacia, -- that diversification, then they become really speculative positions in the portfolio, and i would really caution our viewers to guard against that. it has the convenience of low-cost and easy trade ability, but you may not be building the

best portfolio and might be tempted to trade fashions, fads and the latest hot winner. romaine: always great insight here from sandip bhagat. he is going to stick with us as we count you down to the close. going to help take us beyond the bell. we are going to get back to our conversation with sandip bhagat of course. equity markets put much across the board are around the highs of the day. the s&p 500 has been holding at a record high all week long. i'm looking at the nasdaq 100 right now. the record high, only about 10 points away from that. that gives you a sense of where folks' heads are at. tim: what is impressive to me is the breadth of the rally. 454 stocks in the s&p 500 are higher. higher by close to 1.4%. romaine: when you talk about the breadth, a lot of big cap tech names, a lot of energy stocks,

some materials names and a lot of retailers. kriti: you are actually seeing small caps in on the rally. that is something we have not seen for days on end. romaine: we should point out volume is lighter than normal. when you measure across all the trades. getting roughly 7 billion shares were so traded across all the tapes on average. we would have a daily average normally around 11.3 billion. here the closing bell numbers. dow jones higher by about 1%. s&p 500 going to finish the day higher by about 1.4%. the nasdaq, the composite finishing up about 1.4%. the russell, which is a relative laggard, still higher by .9%. tim: the term santa claus rally includes the last five and trading -- last five trading days of the year. the first two trading days of the new year. this santa claus rally is off to a really strong start. kriti: what is interesting is

you are seeing big tech lead that charge. big tech is no longer limited to your apples, microsofts, it is now also including tesla. that is the poster child of what you are seeing. on a sector basis, auto stocks are leading the charge, right behind it in second place will be the semiconductors. the ev trade and a semi-trade go hand-in-hand and it takes more chips to make an electric vehicle then an electric vehicle. even in the worst performing stocks you are seeing a lot of green when it comes to sector basis. the only real laggard will be the telecom stocks. tim: it is a different picture in the s&p 500 versus the nasdaq composite. in the nasdaq composite we are pretty much split between tonka meat -- between & co.'s that were higher for the day and those that were lower. a different story playing out in the nasdaq composite than the s&p 500. romaine: going back to the breadth issue, when you measure

the s&p 500 versus the equal weighted basis, he on a year-to-date basis they are basically an. 27.5% on the s&p 500. that is on a year-to-date basis. the problem is if you start over the last four or five months, basically since the end of september, you see a much bigger divergence by about four or five percentage points. that raises the issue of that concentration risk. kriti: it is a key point. we are talking about what kind of exposure you have and what is at risk when we are talking about rising yields and the fed. and of course the three interest rate hikes that are now priced in for 2022. romaine: take a look at what yields did today. you seeing that divergence between the long end of the curve. the yield on the short and continue to move higher. a lot of people anticipate some kind of rate hike almost immediately as we get into next year. the second meeting of the years when people are pricing that in and that is flattening out

things as a long end of the curve moves in the opposite direction. sandip bhagat still with us, patiently waiting. i want to ask you a little about some of the positioning we are seeing in the bond market and how that feeds through to expectations not just for the fed but also with regards to economic expectations. i'm wondering if what the bond market is pricing in right now is in sync at all with what the equity market seems to be pricing in. sandip: no, they seem to have diverse. bond yields that are this low, especially in the face of persistent and rising inflation, you are looking at hugely negative real yields. and that would normally be a precursor to a dramatic slowdown in growth. and here is the equity market just racing away to a new high. trading at a multiple of 21. so that has been one of the bigger conundrums.

maybe a couple different ways to reconcile this mixed signaling from the two markets. maybe around the following lines. that the world is still a wash in negative nominal interest rates. as paltry as that of youred -- it's still more attractive than what you get on the german bond. it becomes a favorite destination for for investors to collect that type of a yield premium relative to their own domestic bond markets. i will also point out that i mentioned that a legacy of the fiscal stimulus is that we have high savings rate. that was a temporary spike. the more secular trend is we have a global glut of savings. and what better safe way to invest excess savings that are earmarked for a long horizon than a long-duration, relatively

risk-free asset. that is another reason. and let's not forget that savings apply more to the individual institutions also have significant growth in assets. and they are beholden to the asset liability management framework. long-duration assets, long-duration liabilities, great fed produces a great demand. i will throw in a lost one very quickly. the central banks, they have hopelessly distorted the bond market. tim: one more on the disconnect between the bond market and the equity market right now. are you concerned that the equity market is perhaps a going to catch up with what the bond market is telling us about growth? sandip: we have seen the disconnect between the two markets even as stocks produced spectacular returns. on the yields were very low. so, i do not see the correction, or the reconnection happening with a big decline in stock

prices. to be consistent with the extremely low yields which might suggest slower growth. i am just going to leave the bond market as a manipulated, distorted, and not fully reflective of fundamentals. it is more influenced by supply demand considerations. and so normally this bond market is cerebral and we get it before the bond markets -- equity markets. they are a bunch of cowboys in the equity market. this time i do not think stocks are terribly wrong and you will always see a pullback of 10%. do not see a bear market in 2022 or 2023, or a recession. kriti: i think you may be the only person on wall street who says stocks are right and bonds are wrong. what a rare thing to hear. but it is crucial to talk about the fact that stocks perhaps have the message right, considering they have been trading in line with growth, which brings me to perhaps the next catalyst that comes from

washington next year. we have been talking about the santa rally this last week of the year. the first week of next year, one thing really important happens is the build back better plan comes back into the congressional agenda. how much of that should markets really care about? sandip: not a whole lot. i will give you a quick and prompt reply. we have been thinking about this a lot. all the way through its different configurations. first it was earmarked $3.5 trillion, then $1.75 trillion. but all along, people fret that the bears on the debt side would say don't we have excessive debt and this spending will tip us over and exacerbate the situation, and those focused on higher taxes would say aren't they restricted to growth? the arithmetic we did say that they were actually working in tandem. they were similar in magnitude. so, yes, the restrictive effect of higher taxes, we felt, would

neutralized, would get offset by higher spending and greater stimulus. on the flipside, if this does not happen, people are saying access the fiscal stimulus, the important tailwind to growth. the counter is the same. the absence of fiscal stimulus will now be offset by the absence of higher taxes. we felt all along this was a wash, this would be neutral on growth, and this was much ado about nothing. still hold that view, even if you get a weeken -- weakend bill, or none at all. tim: sandip bhagat, always great to have you join the program. thank you so much for taking the time. guys, what do you make of it? surprising comments from sandip, especially about the disconnect between the bond market and equity market. kriti: i am shocked he said the

stock market was right and the bond market was wrong. there are bond investors around wall street rolling their eyes right now, but he has a point. perhaps the growth picture has been kind of differentiated in the bond market, where is perhaps the stock market has it right all along. romaine: i think the flipside of that, keep in mind, that has been coming down. it is still incredibly elevated from years ago, still around $12 trillion. but you start to talk about that being pulled back, that could right the ship. tim: coming up next, we are talking the real estate market with pierre debbas of romer debbas. this is bloomberg. ♪ this is bloomberg. ♪

the aspirations of japan's citizens for better lives and retain a place in the popular imagination. by the mid-1950's, japan's postwar recovery was stalling in one key area -- housing. the country needed to build 3 million homes. to address this issue, the government established the japan housing corporation to provide public housing for blue and white collar workers, pouring into urban hubs like tokyo. these workers would form the backbone of a new middle class. the name means group land. they were not just inexpensive easy to build complexes. they were fitted with amenities

virtually unobtainable elsewhere. stainless steel sinks, toilet, a private bedroom, a kitchen. people jumped at the chance to pilot this modern lifestyle and put dissipate in a grand social experiment. architects and officials envisioned a reorientation of living space that would house nuclear families, elevate women, promote privacy, and encourage consumer lifestyle. these complexes were essentially groundbreaking suburban commuter towns, self-contained communities with their own shops, police boxes, clinics, and schools. the typical one was often a cluster of five-story concrete buildings, usually built on the outskirts of tokyo and other cities. buildings ranged from simple boxes, to the iconic y-shaped star house, a triple pronged

tower offering better natural light and circulation. the true selling point was there amenities and floor plans, typically featuring two bedrooms with a kitchen and dining area. a model that could be scaled up or down to one or three bedrooms. the designs were a radical departure from prewar houses, which contained multi use rooms and a kitchen concealed in the back. postwar reformers argued the old-style was not just unsuitable for modern life, but also reinforced feudal social structures. the new model penetrated the cultural consciousness. in 1960, the prince and his wife visited one, cementing the middle-class values it symbolized. but the experiment also had some unintended consequences. women's initial euphoria was followed by a sense of confinement as husbands left to

work in the city. the liberation promised by privacy gave way to isolation and a lack of community. as housing shortages eased from the mid-1970's, construction trailed off. this has led to widespread demolition in recent years. some however come a have been renovated to make them more suitable to a variety of lifestyles and senior friendly. some renovations are going further, boosting a community field by remodeling public spaces around the unit. this project, led by a renowned architect, is once again trying to put these complexes at the forefront and provide a model for the future. they remain a testing ground for the intersection of architecture and social change in japan.

romaine: this is special markets coverage, a simulcast. we welcome all of our audiences across all of our platforms. romaine bostick, tim stenovec, kriti gupta do as well. all three of us, this will be the team here for the week as we walk you through the markets. we are going to take a look at where we stand in the markets on this day.

s&p 500 closing at yet another record high, 69th record high of the year, second-most ever for a year. you take a look at the nasdaq also higher. we should point out the nasdaq 100 only about five or six points away from its record high. transports also getting in on the action. russell 2000 getting the bid as well. still some concerns about what is going on with omicron and covid variantss. it did put a crimp in travel. some data show there was a lot of cancellations over the christmas weekend, where a lot of folks pulled back on travel plans. and of course they were cancellations on the other side, airlines having to cancel flights because a lot of their workers got sick and they did not have enough light attendance, pilots, or even baggage handlers to keep things going. do we see this rebound that we saw back during the summer? does that continue into 2022 and people grow more confident about going out? well, people are still showing a

lot of confidence in spending money, and that has been the story. 8.5% growth in holiday retail sales year-over-year. that is the latest mastercard data. looking at a big rally we have seen in macy's and nordstrom, four straight days of gains, we longest stretch of gains we have seen for them going back to early november. home depot up for a fifth straight day. people still spending money. maybe not traveling as much, but still willing to spend. tim: to what extent do we see omicron affecting the real estate market and potential new variants affecting the real estate market? let's go to pierre debbas, rumored abbas managing partner. the company handles -- romer d ebbas managing partner. i want to start with commercial real estate. thousands of flights canceled in recent days. in new york city the subway is reducing service. rto being postponed until after the new year, and some

indefinitely. will the search affect commercial real estate? pierre: absolutely. the longer this goes on for, the more accustomed society guess of this remote working aspect of life that was sparked by the pandemic. it is without question we are going to have some kind of virtual component to how we operate as an economy for perpetuity. and the long-term effect of that is it will likely result in several businesses trying to downsize the amount of real estate space they occupy. obviously through cost-cutting measures. quite frankly i think it is something the workforce is going to require in order to recruit and retain talent in the future. romaine: i am going to piggyback off of tim's question. there is a question here about how hard commercial real estate gets hit. there is also a question about how some of these commercial real estate companies adapt to this new environment. we talked to some folks from some big real estate firms have already said they made changes

to try and adapt to this new world where maybe we only do come into the office three days a week. maybe we do not need to go to as many starbucks or whatever was on the reed town -- on the ground floor retail. what changes are being made, if any? pierre: it's still too early to tell. starbucks is one of the most successful companies in world history, that has already gotten rid of the cafe idea of sitting down and congregating with friends and having coffee. you are going to see a lot of companies do that. when you say how does it impact commercial real estate, right now 30% of retail in the grand central area is vacant. and what is going to fill up that space is we are going to have this work from home for two to three days a week going forward. if you do the math there is going to be 40% less foot traffic in business districts in major cities if our production is accurate.

the landlords are really going to have to create space that is tailored to experiences, probably smaller spaces. clearly reduction in rent to attract smaller businesses to take up that space. but you are talking several year cycle until we really see that. kriti: nevertheless you are seeing how -- seeing housing prices get bigger and bigger. what is the take on this kind of growth from folks that are not in the u.s., folks that are abroad and looking at this as either something to get in on, or perhaps the makings of a bubble? pierre: it is funny, that is one of the things i am most anxious and eager to see in terms of going into next year. historically, our real estate market has been very attractive for overseas investors. we have experienced the most robust housing market in u.s. history in 2021. that was not fueled by foreign capital whatsoever. part of our firm's representation of people buying

property in new york city focuses a lot on foreign investors and people coming in from overseas. and we saw one of the slowest years for foreign capital entry in the market, yet we had the best housing market in the country's history. so when you look at omicron and the travel restrictions and variants and what is going on, if we do have foreign capital reentering the market next year, it should really only lead to the housing market continuing this robust cycle it has been on the past couple of years. and with the travel restrictions being lifted, many of us were optimistic we would be seeing that right now. but i think the variants, as long as we have them, and more portly than that, in terms of what our tax code is going to look like. income tax, capital gains tax, utilization of ultra corporations, many things for investors are worried about when investing in real estate. tim: breaking news. apple is closing its new york

city stores to shoppers after a covid spike. certainly some ramifications from the most recent variant making its way around the world. the question is to what extent do consumer behaviors change and to other companies follow not just in new york city, but outside new york city as well. pierre debbas, a big thank you. joining us right now. thank you for taking the time. coming up, we're chatting with the ceo of aspiration about the recent funding the company has received. this is bloomberg. ♪ this is bloomberg. ♪ >> what is the new normal going to be when it comes to supply chain disruption, pricing issues, etc.? >> when you think of supply

chain, think of two things. [indiscernible] very early on we said we would not put all of our eggs in one basket. we sourced across 24 countries, not from any single country do we source more than 20%. you talked about costs. given our global buying power, we negotiated the first half of the year at very low single-digit inflation relative to last year. the one thing has been really resonating with consumers, we continue to take pricing, even during the pandemic. the brand has pricing power. >> full year revenues are on track to match 2019, fulfilling levi's pledge to emerge stronger from the coven crisis. >> we - from the covid crisis. >> we committed that when our revenues got back to pre-pandemic levels, our margins would be up to more than two

points and we have not delivered on that. >> with the virus still weighing on consumer confidence and inflation surging, this is no time for any retailer to relax. >> as you look forward over here, i think the biggest question is who is going to take the learnings from the pandemic, versus who is just going to fade back to what they did in the past. >> i think over time, because of the pandemic, there's going to be thinking about how do you globalize your supply chain? do you concentrate in two countries? do you diversify? do you bring production home? one of the programs we started a couple years ago is using lasers to finish your denim product. it used to be done by hand. it used to be done overseas. but now we bring in the blanks and we finish it closer to market. so we're in the process of

expanding that program around the world. i think people need to think about different ways of doing it, and i believe technology will play a key role.

>> do you think cryptocurrencies are a plus for the global economy, or is it too early to tell? >> does are not currencies. full stops. crypto's are highly speculative assets that claim a guarantee but they are not. i think we have to distinguish between crypto's that are highly speculative, suspicious occasionally, and high intensity in terms of energy consumption.

but they are not currency. on the other hand, you have stable coins that are beginning to play referee which some big techs are trying to push along, which are a different animal and needs to be regulated where there is oversight. irrespective of how they name themselves. and you have central banks who are prompted by demand of customers to produce something that will make the central bank and central-bank currencies -- the century we are in which is why we are not -- central-bank digital currencies, so that instead of having banknotes in our wallet, we can have actually -- exactly the same thing in a digital form. all of us are working on this

and we are keen to push the issue on our agenda because i believe we have to stand ready for that. ♪ tim: welcome back. i am tim stenovec joined by romaine bostick and crete he grouped out. -- kriti gupta. the funding to the tune of $315 million comes ahead of its merger with a spac. for more, let's bring in andre turney. a tagline on aspiration website says "leave your bank, save the planet. how do you save the planet through financial services? >> follow the money.

our deposits every day are actually funding the climate crisis. the biggest banks in the world fund more climate change fighting activities like oil and gas drilling in a day than exxon mobil will in a year and they are using our money to do so. when you move your money to aspiration, we guarantee all of your deposits are fossil fuel free. we go even further to show you your personal sustainability score seek and see how the places you shop treat the environment and to their employees. consumers spend $36 billion a day and that gives us a lot of power to make our money have a dramatic effect in pushing businesses to do the right thing. and then we let you plant a tree with every purchase you make. we will end this year with aspiration members having funded the planting of over 50 million trees.

that is more trees than there are in central park, every four hours. where you spend your money, how you spend your money, all of those have a dramatic impact on fighting the climate crisis if you do it the right way. >> i am going to play devil's advocate for a second. there are some who would say how much do you scale this up? to certain people, that would sound like a niche business. how do you grow this to the point where -- i guess it is more universal because you are staking a claim at what is a political position. >> there is nothing political about it. the shift to sustainability is the largest bath to shift we have made in human history. we have seen that play out in things like electric vehicles, plant-based foods, clean energy, aspiration is taking it into the financial services space, the

largest space of any industry and we are also going -- by creating sustainability as a service and integrating sustainable action into what people and businesses are doing every day. you are seeing businesses across the board all over the world announce commitments around sustainability. you are seeing more people want to take action to fight the climate crisis. that is far from niche, that has become mainstream. most people want to do something about climate change and do not know where to start. for individuals and businesses, aspiration gives them meaningful action to fight climate crisis. >> you are an online bank, so how do you market an individual who is prioritizing earning easy interest on their savings as opposed to prioritizing climate change? >> it is the same thing you will see in many. there is a huge chunk of americans who are conscious

consumers, making daily spending decisions around what to buy in the grocery store, what car to drive, what coffee to drink, what clothes to wear based on its impact on the fire -- on the environment and the ethical consideration they are making. that is a big chunk of our population and people are looking to both do well and do good. with aspiration, we let them do so. industry-leading interest rates and the ability to have direct climate change fighting action built into your debit card, built into your credit card, built into the way you are saving and spending every day. >> we thank you so much for joining us. we go from online banking to wall street banking. morgan stanley ramping up efforts to curb the spread of omicron and telling their staff to put their masks back on. writing, "this applies to all locations, even those where everyone is fully vaccinated.

for more, let's bring insured knowledge bostick. -- sonali basak. sonali: one of the most interesting things that happened was today when goldman sachs said employees must get booster shots which go step -- goes one step further. booster shots by february 1. we are seeing the things that want their employees back in the office, do more to make sure people are vaccinated fully as well as whatever they can to stop the spread indoors. jp morgan also had said employees really need to get vaccinated before coming in because it was not fair for people wearing masks in the building when so many people were already vaccinated, but let's see if they also go by the way of goldman sachs and requiring a booster. tim: banks are certainly doing things one way, but we have seen companies like apple and

alphabet having put off their return to office. you talked to a lot of sources on wall street, how are banks feeling about this changing guidance? >> for the last year, we have seen all the banks take different courses. citigroup has been a lot slower to return people to the office as its neighbor, which is only blocks away. now they ask employees to stay home during the holidays. even then, they said critical employees had to come in. there are a lot of employees that do need to come in for services at the bank. the banks have been more flexible. employees that are there are more used to that culture. a bank like goldman sachs, which by the way our number one this year, believe you need to come to do the job at a more immediate speed.

it is tough to know how that actually plays out across business functions, but right now everyone seems to have coded. everyone seems to have their own personal situation and this entire situation has thrown a wrench into everyone's plans. romaine: sonali basak with an update there. we had a headline earlier about apple, which is dealing with issues at the retail level. the flagship new york store in new york city is going to be closed temporarily because of a surge in covid cases. a lot of this not just customers, but potentially the employees. coming up, we talk movies. did you see spider-man?

>> now you have the opposite challenge. it has been reported that it is hard to get employees to come back or to hire new people you have to pay more. is that a challenge for you in reopening? >> it is. at this point, almost all our hotels are open, but not fully staffed. the single biggest issue we have is getting labor back in. particularly in certain roles like housekeeping and culinary. while we have seen some easing of that over the last few months, we still have a ways to go. it is something we are working very hard on. it is a complicated issue. part throughout this have been health concerns. people don't want to go to places where people are congregating. there have been significant issues on childcare. when schools weren't open, people had nobody to take care of their children.

government policies have compensated people that were unemployed in ways that provided some disincentives. to be honest, some people have been reevaluating life and what they want to do. some of those folks have said i would rather go work in a warehouse rather than clean rooms and other things. it is a complex equation that is going to take a significant amount of time to work through. we are better off than we were even three months ago and would we wake up over the next year, we will be able to get labor back to do with we did. >> one of the biggest concerns the industry has is that people like me have gotten used to using zoom and instead of traveling across the country or around the world, i can zoom. is that a big concern that people will say the zoom experience is pretty good and i don't need to travel. >> it is not a big concern for me.

the world is figuring this out. a year ago, i think people were saying gosh, this is so efficient, maybe i don't need to do the things i was doing. a year later, everybody i'm talking to has realized there are limits. don't get me wrong, it is great technology. it has facilitated our ability to communicate during this crisis, but there is a unstoppable force that exists with humans which is that humans want to interact with humans. that is not just for a vacation, humans want to interact on business, to build partnerships to innovate, and they want to congregate. they want to network. they want to grow their business to build relationships. i have no real worries. every time as we have been recovering, the minute people start to feel like we are

through the crisis, the demand for meetings and events skyrockets. people are dying to get out. ♪

romaine: this is a special simulcast here. we welcome back our audiences across our bloomberg platforms. romaine bostick, tim stenovec here. we did get some headlines a few moments ago with regards to the omicron variant, the covid crisis in the united states.

the cdc basically shortening the recommended time for isolation. if you have covid symptoms, a symptomatically that, shorten your isolation to five days from 10. those are the headlines crossing the wire. emma, what more do we know about this shift in the timeline the cdc is recommending with regards to isolation? >> this is really hot off the presses news. you heard it here, possibly first. we are hearing right now from the cdc is that shorter isolation periods, so if you have covid-19, as far as the cdc has said, it does not appear to have any relation to vaccination status. anyone who has covid-19 right now has to isolate for five days , followed by another five days of wearing masks when you are around other people. this is different from the earlier guidance, that you had to isolate for 10 days if you

had covid-19. the other piece of this news from the cdc today is related specifically to when you have been exposed to covid-19 and you are unvaccinated, or have not yet been boosted. or than six months since finishing your primary period two doses of an mrna shot and you have not received a booster, if you have been exposed to covid, isolate for about five days, then wear a mask for another five days. this is a time where it a lot of guidance around how to isolate and quarantined is changing. the cdc recently changed guidance for health-care workers and they are saying they are making this change because of the science. they know now that in the first two days before symptoms show up, people are spreading the virus then. they are saying, we know this is basically the period when people are spreading corona and this is the time when people really need to be isolating.

tim: a big part of this conversation has to do with employees getting back to work after having developed covid. i am wondering based on your reporting how you think offices are going to follow this guidance? are they going to say it is ok to come to work if you test positive as long as you wear a mask and are not symptomatically? >> it is an interesting question. that is good emphasis as well about this point of people being asymptomatic. the guidance regarding the shortened period is for people who do not have symptoms. you will see a lot of uneasiness about this among people with a little bit of control over their employment situation. you're going to see people say well, what if people really have symptoms and they are saying they don't have symptoms? what if my employer is pressuring me? there are going to be questions about how they interpret this guidance and there is also going

to be a little bit of a rush from employers to embrace it. this has really disrupted return to work in a big way. i think -- throwing everything in to disarray. employers i think will be eager to embrace this guidance and i think how employees react needs to be determined. i imagine there will be disagreements. >> emma covers health care. thank you for bringing us the latest. let's talk a little about spider-man. fans continue jamming theaters to see the film, putting aside concerns about rising covid cases and pushing the film beyond the $1 billion mark to be the top grossing film in 2021 globally. lucas, i feel like i am the only one who has not seen spider-man. i will be honest, a big part of that is because i can't stream it. how much of spider-man's success

at the box office is due to the fact that going to the theater is the only way to see it? >> take part in knowing i have also not seen it because i cannot watch it at home. tim: i am not alone. >> i do think you are right that this seems to be the first movie in a while where there has been this swell of support and interest. it has become an event. even some of the big movies that came out this year, you think about venom, james bond come the fast and the furious, those are the highest grossing movies until this point. it seems like still only a certain segment of the population going to see that one. it was probably young people who felt safe. this one feels like it has appealed to just about everyone. it's the second-biggest opening of all time. its second weekend, the one that just happened, would have been the second-biggest third-biggest weekend of the year on its own. there does seem to be a level of

momentum behind the movie that we have not seen since before the pandemic. >> how is this influencing what comes next in terms of the relationship between studios and streamers? will bc now more movies solely released in theaters, as opposed to the dual option of theaters and streaming platforms? >> the release in theaters first is the plan for most studios. warner bros., which had its biggest diversion from the norm in 2021 by releasing all of its movies in theaters and hbo max simultaneously, has said it is going back to a 45 day period between theaters and streaming in 2022. universal pictures plans to have a window some time. paramount pictures plans to have a window of about 45 days. most of these studios are hoping they can get back to the tradition of having a period in

theaters. spider-man is the biggest vote of confidence they have had yet. i interviewed the ceo of warner bros. before it came out and she said at the time she was not sure the actual business could support a $200 million movie. this suggests it can. >> all those companies you mentioned have streaming platforms. i am curious where they see the trade-off. if you're not getting premium content on the streaming platform in a timely fashion, why am i paying for it? >> they are hoping that they can bridge that difference. they know they can still make the most money or, they believe they can make the most money with the movie in theaters first. they also believe there is something to the psyche of someone in thinking about a property or a character. if there is all that marketing behind the theatrical release, there is something special to that they want to preserve. they have cuts that window from what used to be nine months, or

a minimum 90 days, to 45 days. they are hoping those people who want to see it in theaters will do it in the first month and a half but there will have been enough marketing that it will fuel new enough that people who pay for streaming feel like they are getting their money for it. romaine: looked -- lucas shaw breaking it down. spider-man is the biggest movie of the week, one of the biggest in the year theatrically speaking. we want to -- apple closing down its flagship store on fifth avenue. primarily because of concerns of rising covid cases. tim: the company saying it is stepper rarely closing stores and this time the closing includes consumers not being able to go in. if they order online, they can go pick it up. romaine: this has been our special coverage on liver television, radio and youtube. we will be here with you all week, i am told.

we look forward to seeing you tomorrow. this is bloomberg. ♪

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