matt: good thursday morning. welcome to "bloomberg markets" in this special coverage of the week between christmas and new year's. we had a 70th record close yesterday, aiming for a 71st today as we are simulcasting on bloomberg radio and bloomberg television. paul sweeney joins me out of new york. i'm matt miller in berlin. not a lot of momentum, and obviously almost no volume, but we have another record high. i always remind people, it doesn't really matter if you have no volume. for people who are long this market, they are now wealthier than they were before. paul: a little bit of a lift in the equity markets, but we will take it. low volume, but that is what you expect on the week between christmas and new year's. but we are here simulcasting, doing it all week, and getting a

look at the markets. we are also taking a look ahead to 2022. the s&p up about zero .2%. abigail doolittle joins us with some market movers. abigail: pierpoint, you are wealthier to -- to your point, you are wealthier today if you invest in the dollar. interestingly, bonds are down just a little bit -- excuse me, higher. yields are down just a little bit area -- a little bit. they are fractional, keeping with these tiny moves. crude oil up about 0.7%. you can make the case that there's a little bit of risk appetite here, but very modest. matt: strategists are not optimistic for stocks in 2022. i have spoken with a couple of

portfolio managers who think we are not going to see the kind of returns we have gotten use to over the past three years. abigail: the average forecast for the s&p 500 at the end of the year i believe is 5000 or thereabouts, so that does suggest there could be some sort of a gain, less than this year at the highest. that would be a double-digit gain, but perhaps some of the strategists are concerned about the inflation fears everybody is worried about because of course, operating margins are starting to stagnate, and companies are trying to figure out how to manage rising input costs. will consumers pay for them? the consumer staples because of the expectations prices are about to rise, but will consumers continue to pay? we don't know. i'll janis down after samsung said they are not buying biogen -- biogen is down after samsung said they are not buying biogen

area tesla recalled 500,000 cars. on the upside is carnival. i don't know how many people are looking to get on a cruise. matt: me and paul. we are making our reservation. we are going to go on a cruise. i don't think we have decided yet, but neither one of us has been on a big-time commercial cruise. is that right? paul: i have not been. but i would do it, but maybe not right now. matt: we are going to make reservations, but maybe for 2024. abigail doolittle, thanks very much for catching us up on those markets. it's bring in david jones, b of a global research senior investment strategist. let's get his take on 2022 expectations as we near the end of this year, with 26% gains right now on the s&p 500. what are you looking for in the coming year? david: i guess i have to say i'm

one of those more bearish strategists at the moment. we certainly think that returns in the next year are probably going to be low single digits, perhaps even negative. at the broadest level, our view is informed by the idea that rates are going up, liquidity is going down, and growth is slowing. that is a very hard environment for equities to perform at the levels we have seen over the last few years, particularly when you start at the valuations we are starting it now. paul: that's kind of where i want to go to get your sense of valuation. does a couple of camps out there. one is that this equity market is richly valued. another camp will say, but look at where interest rates are. the 10 year still at 1.5%. so put in that context, maybe the valuations aren't so high. how do you think about it? david: that is really the key, where interest rates are. this market has really been a product of said stimulus and fed policy. as long as that can continue,

you can see the market continued to perform the way it has. but the thing is it is not going to continue. the fed has already signaled it is going to tighten, remove accommodations certainly. it has sped up the taper, and the fed has said it will hike perhaps three times in the next year. we think the fed is probably going to have to do a little more than that, so interest rates are certainly on the way up, and that is probably going to affect some of the asset allocation going forward. matt: so you think the fed will hike four times in 2020 you -- in 2022? david: potentially even more than that. you are really in a situation at the moment where the fed is certainly hiking. the question is whether it is hiking into an acceleration or into a deceleration. at the moment, the economic outlook is still going to be fairly robust. so if your hiking into

acceleration, you are probably going to have to do even more tightening than the market has currently priced and. what we think that leads to is you are going to have a rate shock in the first half of next year, and probably going to have a little but of a growth scare in the second half as the curve starts to flatten very sharply. matt: so if we have a rate shock, a growth shock, what are you advising your clients to do if they are allocating capital to the markets next year? where should they go? david: we think the smart bet is to look at some of the quality defensive's, so staples and utilities globally. perhaps even more outside the u.s. than inside the u.s. our view is if central banks can thread the needle and bring down inflation by raising rates, but not scourge growth substantially, perhaps in that scenario, the optimal allocation would be some sort of barbell

where you have equities that do well and inflation such as energy, such as materials, and then barbell that with staples and utilities. or if you get something we think may occur or has a higher likelihood of occurring than the market has priced, that is a slowdown our a recession scare in the second half, you're still going to want to have quality defensive's. so either way, quality defensive's are a good bet as a hedge. matt: but not bonds, right? if you expect 3, 4, five rate rises in 2022, you don't want to hold treasuries. david: certainly not at the short end. but if you start to see an inversion of the curve, and that scenario you want to belong dollar, and perhaps even longer bonds, but that is not our consensus benchmark view. matt: i'm searching for a bear case for the u.s. dollar, but

speaking to people like you who think about this rising interest rate environment and how it may be more aggressive than the fed is signaling, it is tough to come up with a bear case for the dollar, isn't it? david: it really is. you can always come up with conceptually a scenario in which the dollar weakens. perhaps if omicron were to turn out to be worse, or god for bid, there were even something more aggressive and lethal down the road. then you could have a scenario where the fed perhaps causes or resumes some of its emergency liquidity facilities on the presumption of a lockdown. in that case, you could see the dollar start to weaken, or if the cases are more severe in the u.s. than in the rest of the world. matt: what do you think happens to the fed balance sheet? if they are raising rates by so much, are they winding down? david: probably not. they are probably going to reinvest in maturing issues.

they had the experience a few years ago where they were unsure how far to bring down the balance sheet, and they basically had to run into the point where the curve steepen's, and then they had the issues in the repo market. so now they have a better sense of how far they can conceptually bring down the balance sheet, but they are several billion dollars above that, so i don't think they reduce the balance sheet quite yet, but even if they do, they have plenty. matt: really good to get your thoughts. david jones, the bfa global research chief strategist. a little bit of a bearish call there. going to get a lot more, coming up.

>> for 12 and a half years you held what was arguably the most powerful job on wall street. what is it like now being the former ceo of goldman sachs? >> a bit of a relief. i spent a lot of time arguing against that, and i always thought to myself, if i'm so powerful, how much -- how come i am taking so much abuse? >> how are you keeping busy? >> well, here we are chatting. somehow, i am not scheduled. i don't set my clock most mornings. and somehow i am busy the whole day. i spend a lot of time reading. originally i thought, i would not preclude going back and doing something else more intense certainly than the life i am leading now. i originally was advised to take a gap year, and when i finished my gap here, the country decided

to go on its own gap year. the longer you are not setting your clock in the morning, the more you want to set your clock in the morning. but after 40 years of running around the world, living in the macro markets, knowing the price of everything all the time and knowing that anything that could go wrong anywhere in the world would affect us and have huge consequence for us, it is a little bit hard to drop it, and there are parts of it that i never thought i would miss, but i do miss. >> what are those things? >> even as i say i feel a little relieved in not being as intense, 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? >> well, i am 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. if you are asking me have i found a passion, i am a commercial person. i am involved in some to stuff and i have elevated my involvement in some things in this period, and i enjoy that, and you can be quite commercial in those places. you can be a commercial person in government in terms of getting things done and taking risk and pushing things along. you can be that way and a philanthropy. but in -- i am a pnl guy, and i like the intensity of it. >> your former chairs at the firm all went on to serve in government. >> don't leave out john whitehead. >> well, there was one in between, john weinberg.

one night you? that's why not you -- why not you? >> well, i would say among the many reasons, i have not been asked. 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 at ministry should you are finding a lot of people from finance and business backgrounds, even in traditional roles that are occupied by financial people or commercial people or business people. so i would say that it is not something that i mourn, but certainly i would have considered public service because in a way, what else is left? i worked at a high-level what goldman sachs for 37 years. you want to do something different, 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 swear your head into the ring if you thought they were interested? >> who offered to that job would decline that? 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 contribution and to be at the fulcrum of the very large lever, a course you would want to do it. but again, i have no real connection to that. i don't think that is going to happen. ♪

♪ paul: welcome back to a special edition of "bloomberg markets." we are simulcasting, bloomberg radio, bloomberg tv. matt miller in berlin, me, paul sweeney, new york.

we look forward to 2022, and again, we've got a little bit of green on the screen. light trading, as we would expect. people looking forward to 2022 and thinking about what you do as a curtain call to 2021, where you had the s&p up about 27%. matt: you can round up to 28%, i believe, and that after 27% in 2020 and 29% in 2019, so it has been a fantastic run over the past few years. the question is, does that continue to be underpinned by earnings growth next year? do we get a strong economy along with the inflation we are already seeing? do they los continue into next year, or does the fed, as they try to fight inflation, also end up slowing down a, growth?

i was going to say make a misstep, but in some ways, you can't imagine how they would stop inflation and not stop economic growth. you've got to break some eggs when you are making an omelette. anything they do, they taper, they raise rates, they reduce their balance sheet, even if you just start with jawboning, that is going to put fear into the heart of markets, fear into the heart of executives, and maybe will slow down gdp growth as well as inflation. paul: and throwing some additional headwinds out there potentially for this market is some geopolitical risk, when using about russia, finding about china. today we have presidents biden and putin getting on a call later today to talk about presumably the ukraine and other issues. let's bring in marty schenker, bloomberg editor-at-large for bloomberg news. marty, set the stage for us for this phone call today between presidents putin and biden.

what do you expect to be topic number one? marty: from the russian side, top number one -- topic number one is going to be security issues and guarantees. russia considers expansion of nato an existential threat, and putin wants definitive word from biden that they will not proceed with that. for biden, it is a different set of issues involving the ukraine, and the possibility of a military incursion by the russians into ukraine. matt: the question is who has more leverage. there's very little the u.s. where western allies can do if vladimir putin does march into ukraine. i've read unprecedented economic sanctions, but does that move the needle much for someone like latimer putin? marty: it hasn't -- like vladimir putin? marty: it has not in the past,

and there have been sanctions put on by the previous trump administration, and in fact by the biden administration, and it doesn't seem to have affected vladimir putin's behavior. putin may be just playing this to stay relevant on the public stage, but you can't miscalculate with 100,000 troops at the ukrainian border. paul: give us a sense of how you think the u.s. relationship is with our nato allies because obviously, that is one of our points of leverage vis-a-vis russia. give us a sense of how you think that relationship is today. marty: it is a lot better than it was a year ago or two years ago, when donald trump was upsetting the world order, some say with justification. but between antony blinken and joe biden, who have decades of experience on the international stage, i think the allies feel

much more assured in the consistency of the u.s. position towards russia. but the devil is in the details, and we will see what comes out of this call today. matt: you wonder how much they worry about something like a withdrawal from afghanistan. the germans were not terribly happy about the way we did that, nor were a lot of other allies. they were not informed. they were not kept abreast of what was going on, and it turned into a very dangerous mission for a lot of our allies. the same could be said about the way the biden administration dealt with the simmering contracts, with australia, without telling france. marty: the biden administration had to do a lot of damage control on that one for a couple of weeks. it even came to the point where the french recalled their ambassador over that issue. things have gotten better, though that has been at least

papered over, if not substantively explained to the french, and the biden administration has gone out of its way to say nothing is going to happen on this call with latimer putin that won't be completely transparent to our nato allies. matt: it is also important to point out, in terms of the strength of nato, you've got turkey buying weapons systems from russia, germany, although they were asked not to again and again, helped russia and fully supported latimer putin building a pipeline from their country to hear. so it is not the same nato that it used to be. marty: as the saying goes, all politics is local. so on certain specific issues like defense systems in turkey and like energy supplies in germany, there are divergences, but the overall defense mechanism that the west has put up against russia is still

pretty much intact. paul: marty, thank you so much for joining us and giving your views on this. marty schenker, bloomberg editor-at-large, previewing what could be an important phone call between president biden and president putin this afternoon. presumably focusing on the ukraine, but perhaps other broader issues as well. of course, we will bring you any headlines, any news coming out of that later this afternoon on bloomberg radio and tv. we are going to have more coming up. this is bloomberg. ♪ >> paulsons bet on the collapse of subprime mortgages earned his firm the largest one-year payout in the history of financial markets. >> it is kind of like finding a

needle in a haystack. >> paulson's 2007 performance rocketed him to the list of superstar managers. his firm managed $38 billion, making it one of the largest hedge funds in the world. >> it opened up a lot of doors and became very interesting in terms of the people i met. >> paulson has yet to repeat the success that made his fortune. recently he joined the list of industry legends to quit the hedge fund business, converting his fund into a family office. >> personally, i never really liked the business side of the business. i did like the investing side. >> he has also enjoyed giving away his fortune. he pledged 400 million dollars to harvard university and donated $100 million to the central park conservancy. >> i wanted to give back to the institutions that were important to me. to me.

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>> when things first started to hit, there was about a 90% decline in ridership across the board. >> they were more than likely being used by frontline recent workers. spin has a new scooter packed with tech for the post-pandemic world. most scooter companies by off-the-shelf scooters and slept there labeling on them, but this scooter is designed and built in-house or get we took one for a ride. it has a more powerful 500 watt swappable battery pack for longer range, faster acceleration, and less environment to impact, and it can see the world around it. >> basically, cameras and sensors on the scooter that goes through an ai algorithm and basically says, am i on a sidewalk, am i parked correctly,

and then it can deduce that in real time provide audible feedback. >> technology is about enforcing good writer behaviors, which spin hopes will help more cities get on board. it is a dynamic industry. the main players globally have raised more than $3.5 billion since 2017, according to bloomberg. spin was bought by ford in 2018 and it has grown to be the third-largest behind bird and lime, according to data tracked by bloomberg. the company says it is launching in sacramento. its biggest market is washington, d.c.. will spin's technology convince hesitant city officials? >> it will last longer. you don't need to replace it as much. so it has environment accrued until. >> spin is also working on a

tele-operated scooter, a three wheeler powered by software that can be moved out of harm's way remotely or to an area where it is more likely to get a customer. ed ludlow, bloomberg news, san francisco. ♪ matt: welcome back to "bloomberg markets." this is special coverage of the markets throughout the week between christmas and new year's. we are simulcast both on bloomberg radio, which you can listen to anywhere in the world on the internet, but in the u.s. on terrestrial radio and on sirius xm, and on bloomberg television which you can see anywhere in the world, on the internet is world, globally broadcast. on a day when the markets are up once again, we could see a 71st

record close for the s&p 500. paul: folks are looking forward to next year, but some of the drivers for this market continue, and we are seeing light volume, but a little bit of a lift to the market here. the focus for investors obviously is on 2022. what are going to be the key drivers for this market? that is what we are trying to spend a lot of time on this week, talking to some smart people about what to look for for next year. matt: the focus today for investors has been what happens to the real estate unit that they are spinning off, currently rising in the market at $11 and change. we are talking about the luxury real estate broker douglas elliman. we have the president, ceo, and chairman, howard lorber, joining us right now. thanks so much for your time this morning. it's got to be a great day for you and for vector shareholders

because you are getting paid, and they are also getting the valuation for the real estate brokerage. why do you think it has gone so well? is it the growth that the luxury real estate market has seen and that your business is experiencing this year? howard: we are basically just in the luxury markets. we don't have any intention of being everyplace in the country. we have built out a great portfolio of companies in each of the markets. a lot of our business comes from , let's say a new york owner who wants a place in florida. we recommend a douglas florida broker and do the business. if florida owner's hides he once to go to the hamptons for the summer when it is too warm and florida, so we hook him up with

a broker. we put them together at the luxury end, and i think that is what has caused the growth of our company. paul: give us a sense, you talked about the migration. we have heard so much during this pandemic about migration from new york and other urban areas to florida, maybe to texas , low tax, pro business. is that something you see as a longer-term trend, or is that just kind of a knee-jerk reaction to what was the unprecedented time with this pandemic? howard: i don't think it was a knee-jerk reaction because many of these people, a knee-jerk and come with the pandemic. that is what pushes them to say let's do it now. the big difference in 9/11, when all of a sudden nobody want to be in the city, those people pretty much all came back. i don't see the people that move

to a low tax state from new york as coming back. i think that they are here to stay, and that is why we are doing so well in florida. we will do more business in florida this year than we did in new york city. matt: that is fascinating, but then why is the luxury market in manhattan doing so well? howard: i think that really is because of the change in administration, with the old mayor leaving a new mayor coming in. there's hope. there's life. new york city is always going to be a great place to live and work, always, but there are people that, if they can, a lot of them can't just pick up and move. they have children in school, whatever. both people -- but the people who can move are doing it, they like the lifestyle in blower tax states, and they are saving

money, and they enjoy being there. so the pandemic pushed them off the ledge of deciding to move other places. paul: talk to us about the international buyer here in midtown manhattan. we've got these ridiculously tall skyscrapers popping up along 57th street and park avenue, and they seem to stretch to the sky. a lot of those buyers were expected to be international buyers, maybe even asian buyers. are they still there? howard: they could not be here when the pandemic started, but they started to phase out a little bit before that. the real estate market was not doing well even before the pandemic. it was sort of in a low slide downwards, starting from around 2015 to 2016, up until 2019. now, when we thought they would start coming back after covid, the international buyers,

there's problems again with covid, and now they are not coming back. you hear stories everyday about hotels that reopen and are booked for the holidays, and now there are no holiday bookings. so it is going to be a little tough during this time, and if the international people don't come, they are not going to try to make a phone call and buy something. they want to come here. they want to see what the product is, touch it, feel it, and i think that is not going to happen until the pandemic has basically slowed down to a crawl. matt: the real deal says there's a lot of competition for workers in your industry. you have obviously big names, famous people working for douglas elliman brokers.

what kind of competition is there for that talent, and how do you retain them? howard: brokers, the conversation is strictly their commission -- their compensation is strictly their commission. that has been moving down for the company. definitely the margins are moving down, which is why a lot of us have gone into ancillary ventures. we have the mortgage business. paul: howard, thank you so much for joining us. howard lorber, douglas elliman chairman, president, and ceo. they were spun out today on the new york stock exchange. more coming up. this is bloomberg. ♪

>> china is the world's most important car market today. big global brands like volkswagen, bmw, gm have had great success here, but at the same time, it is becoming increasingly clear that in some significant ways, they are starting to fall behind some of the local competition. one facet that really stands out is the connected cars. [speaking non-english-language] >> 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 social media, they can have their gaming, and they can have things like karaoke. >> ♪ darling, darling

stand by me ♪ >> 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 showing some of the functionality of the car. you scan the qr code and it takes you directly to your own social media account. we are here at x punk. the karaoke comedy gaming, the movies are by default turned off when you are driving. but after 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 where they can enjoy time friends for a bit

of karaoke or even a picnic. electric carmakers in china are competing on what happens inside the cabin, from social media integration to voice recognition software. [speaking non-english-language] ♪ >> a car's digital technology is particularly key to learning chinese consumers. how important are these functions? the wechat, karaoke, these digital functions? [speaking non-english-language] >> electric vehicle sales have surged in china.

they are forecast to more than double to 3 million units this year from 1.3 7 million in 2020. ♪ and so it goes some things are meant to be ♪ ♪

♪ paul: this is "bloomberg markets ," a special edition simulcasting, bloomberg radio, bloomberg television. not miller in berlin, germany. me, paul sweeney, in new york at our bloomberg studios.

let's try to get a little bit smarter about this pandemic, about vaccines, about quarantines. after anthony felt he spoke yesterday to abc news, trying to get the latest guidance around the pandemic. let's take a listen. >> you can get people safely back out in a five day period, so long as they wear a mask, if they are without symptoms. that is the science. the impact of that is to try and not be in a situation where we essentially have to shut down the entire country. this was not done because of any statement by any ceo of any company. paul: that was dr. anthony abc news, giving his latest thoughts on dealing with this pandemic. joining us now is dr. nathaniel landau, in my you school of medicine professor of microbiology -- nyu school of

medicine she. i would love to get your thoughts on how people should be ticking about these vaccines now. we have the vaccines, we have the boosters, and most people are trying to avail themselves of these vaccines. we do have a sizable percentages that does not. but if you are vaccinated, if you are boosted, how should people go about their lives in the face of this omicron variant? dr. landau: it looks like, if you got vaccinated and you are boosted, you who -- you will have very good antibody's against the omicron virus. when you get the boost, you get about 10 times more antibodies as a result that fight the omicron virus. so i think you are in very good shape. the virus itself is a little bit less bad as compared to the delta virus. so if you are vaccinated and boosted, for the large majority of people it is a very mild infection.

so it is important that people go about their lives and not just stay home out of fear, but i think you can pretty safely do most things. just be sensible about it. matt: we had a couple of variants before this. delta was a little scarier in terms of the severity of disease than omicron seems to be thus far. what do you know in terms of how viruses mutate and what we can expect? is it always going to get easier to deal with, even if it is more transmissible, or is it possible for the viruses to get more dangerous? dr. landau: i think it is very unlikely it will get more dangerous. viruses in general tend to become more transmissible, but less deadly. so i think that is what is happening here. what is important to realize is

that this omicron virus is going to really spread through the population of the u.s. and other countries, but it will leave in its wake a trim and this amount of immunity, both to the omicron virus, as well as to the delta and any other viruses, but it will also leave immunity to the future variants that come up. this omicron infection is going to give you immunity to that, and give you immunity as a result of the response. t cells are really very good at fighting viruses, and viruses cannot escape the t cells. paul: that is kind of where i wanted to go. it seems to me if you take a look at the high rate of infectiousness of this variant, when you are at the end of this variant, however long it takes to run its course, it is going to hit pretty much everybody,

and you are going to be left with maybe two populations, one that has been infected with some form of the virus, and you're going to be left with a second group of people that are fully backed and fully boosted, so i'm not sure where the host will be for the next variant. how do you think about that? dr. landau: new variants will come along. abie we will get omicron.2. but the t cells are going to keep you from getting sick. the t cells, and a way they are better than antibodies because they don't just respond to the spike protein. they can respond to any of the other proteins of sars-cov-2. as a result, the virus cannot escape. the t cells work by killing the infected cells in your body, and because of that, they are attacking the factories producing more virus. so as a result, you don't get

sick and you don't spread the virus. so in the end, even if not everybody has immunity to the virus, you get to so-called herd immunity, where the virus ceases to become dominant. matt: is there a chance that we get a pan coronavirus vaccine, one vaccine to rule them all? dr. landau: people are certainly working on it. my belief, i have been promoting t cells a lot, is the way to do that is by a t cell vaccine. that is the vaccine that will be the pan coronavirus vaccine. in the future, it will be helpful to have vaccines that stimulate a stronger t cell response than the current vaccines we have. matt: should we be positioning

ourselves, getting ready to get some type of covid-19 shot in the future? matt: both combined, hopefully. dr. landau: i thing it is unlikely. with the flu, that is really a special case because the virus changes dramatically from year-to-year. so you've got to vaccinate every year. but with sars-cov-2, it does not undergo that sort of change. it could do that with omicron, but i don't think it is something that is going to happen on a yearly basis. so i think it is unlikely that you are going to need to have yearly vaccination. i think these are going to last for several years. matt: that is good news. that is good to hear. i've had one booster. i would do another if i need to, but i am happy if we don't have to. i don't love needles. great spending some time with you today. really appreciate your time.

i know you have been incredibly busy, working hard. our thanks to you and everybody in the industry, dr. nathaniel landau, nyu school of medicine professor of microbiology. paul: boy, those guys are in demand these days. matt: you know who is a professor of microbiology? greg grafton, i think. or gregor ritz. one of the guys from bad religion did his phd at cornell. punk rock and microbiology. somebody on twitter will correct me. we're looking at markets that continue to gain on this thursday. we will be back with more. this is bloomberg. ♪

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matt: welcome back to "bloomberg markets." it is 11:00 a.m. in new york, 5:00 p.m. here in berlin. this is a special edition, all-league long -- all week long, simulcast on bloomberg radio and bloomberg television. we are glad that you joined us. we are looking at another day of gains in the markets, and obviously on no volume, but still looking at the possibility of a 71st record close for the s&p 500 in 2021. paul: using about the year we've had and equity markets and risk markets in general, the s&p 500 up about 28% year to date on another good gain from the prior year, so ordinary rebound and some of these risk assets. let's see where the action is today in these equity market and bring in ritika gupta, bloomberg

markets correspondent. what are you looking at? ritika: more volatility for the markets. do we get that 71st record close for the s&p 500? it looks like we are heading that way, even though there is low trading today, as there has been all week. markets aren't really reacting, even though we have a third day with more than one million global coronavirus cases. we are being led higher by big tech today. one of those names is apple, on that $3 trillion market cap watch, inching closer with the magic number. also got my eye on crude, seven straight days of gains. this is the energy sector best performance of the year. matt: in that case, best performer of the year means a lot. what about next year? what are analysts, what are strategists expecting? ritika: the s&p 500 has done very well this year, double-digit gains, but we are about 3% or so away from next year's end of year target, i

believe the average is 4950. more concerns, but one of the saving graces is that earnings-per-share forecasts are coming in strong. the expectation that the end of next year will get 8.27% increase. i remember back in april, we were worried about margin compression. haven't really seen that come into play. we are also talking about a more bullish dollar because hedge funds are actually the most pro-dollar they have been in two years. at the end of last year, the consensus was a weaker dollar. we have not seen that play out either, and the question is whether that will continue. have we already priced in a lot of those rate hikes? also want to take a look at bonds because that is really where the consensus has been very confusing. this year we were expect and we would get something like a 2% for about 50 -- 2%. we are about 50 basis point below that on the 10 year.

the consensus for next year's we will be at that 2% level. we have not had 2% in about two and a half years. quite a lot to look to next year. matt: thanks so much for joining us. ritika gupta talking to us about the markets now and what we can expect in 2022. right now, janet mui joins us from brewin dolphin. it is great to have you on the program. it has been a while since i have spoken to you. i know you are sticking with the european market open. you are loyal to them, and i have moved to "surveillance: early edition." what is your outlook for 2022? janet: thanks for having me, and great to be back on the program again. we have a modestly positive view on equity for next year, and that is based on positive fundamentals that would be key to sustain the equity rally.

we believe it will continue to deliver strong earnings, and we believe that monetary policy will still stay relatively accommodative, despite the rate hikes that will be undertaken by central banks. we do think the global economics recovery will continue, but will be at a slow pace compared to this year. so overall, we are still overweight on equities, and we still think bond yields will trend higher into next year, but probably not in a sense that will deter the equity rally. paul: where should we thing about allocating capital regionally? the u.s., european union, asia? how are you singing about that for 2022? janet: our view hasn't actually changed much. we have a preference on u.s. equities we have held for a couple of months now. we started the year overweight in european equities because we

let the cyclical and value aspects, but shifted more to the u.s. in the middle of the year, and we believe the u.s. will still outperform in a slowing growth environment. so in that historical perspective, u.s. has to do well, and as growth slows, investors will be seeking more growth, so we think the u.s. will continue to outperform. we did not think that we would exit asia ex-japan because we think that is not particularly exciting for next year. we have a preference on devout markets generally. we think there is still concern on chinese growth which will obviously affect the wider asia region, so we prefer the u.s.,

followed by europe, followed by u.k. and probably asia, and we will have to wait and see how it goes next year. matt: the u.k. has sincerely underperformed. i like to pull up the comp screen a lot just to look at the five-year snapshot of how stocks or indexes have done. the s&p 500 has more than doubled. the ftse is up 4.7% in total, including reinvested dividends -- sorry, 3.8%, price change when he's expert and, including reinvested dividends. why are you positive on the u.k., especially as we go into full on brexit? janet: our position currently is only a modest overweight, so our

favorite region remains the u.s., which we have a bigger overweight, so we have a slight preference for now because for the u.k., as we all know, it is quite heavily suited to financials and energies, which actually have done well. if we see u.k. interest rates going up, as much as u.k. is having a faster and higher rate hike cycle compared to the fed, if that actually materializes, it could be quite beneficial to the u.k. banking sector, and also, our view is that the dollar is likely to rise, so we have a modestly positive dollar view at the moment. if that is the case in sterling, we can see the benefits, so we do have a slight preference, and evaluation is quite attractive,

and of course the dividend yields angle is also attractive in an environment of low interest rates. paul: in the u.s., if i want to go there, do i buy the big growth names or the cyclical trade which has worked very well over the past couple of years? janet: we have a preference over quality growth names which you would tend to favor the big tech because over the past year or so , it has shown that it can deliver good earnings, and it also has great growth prospects at a time when we to have relatively low interest rates and low growth prospects. so we have a quality growth side relative to cyclical growth next year. matt: janet, thank you so much for joining us. have a happy new year is the investment director at brewin dolphin, talking markets with me and paul on this special coverage of the markets. this is "bloomberg markets," simulcast on bloomberg radio and

bloomberg television. i wonder if people would --, you know what? if you like this format, go ahead and tweak us -- and tweet us. just tell us what you think. do you enjoy this simulcast format? i like it, paul. i would stick with this. paul: we are multimedia. matt: all day, every day, absolutely. looking at the markets right now, we are headed for another record close. the s&p 500 up 6.5 points, only 0.1%, but it would be a 71st record close. this is bloomberg. ♪

>> you buy software companies and only software companies. why? >> that is easy. 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. >> -- software companies.

we have developed and operating know how that really adds value to the businesses we are partnering with. most of the industry, while you have seen great innovation, and software is eating the world, most is not profitable. so to do a private equity deal based on fundament two investing, which is what we do, you have to re-create that and turn these great, innovative companies into cash producing businesses. you 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's 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. 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 sudden. tiger 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 a very good thing for our peers. because when there is competition, we alone don't have to create a market. when a company receives many different kinds of proposals, may be a gross round proposal, an acquisition proposal, they feel a lot better about where they should be valued at and where they should trade. >> so if 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, you are doing small deals, so you can take the risk of learning operations and learning how to run these things when you are investing $50 million. are you ready to take that risk when you are investing $7 billion for the first time of turning a company from -10% to 40% while not hurting their growth rate and allowing that innovation to continue? that is a tall order. that is the number one reason. the other reason you astutely pointed out, 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 ebitda, we would have 40 competitors. but that in essence keeps many players out of the business. ♪

paul: we are back, "bloomberg markets" special edition, simulcasting with the latest on the markets, getting a look ahead to 2022. matt, what is your twitter feed looking like right now? matt: i am getting very positive

feedback on this format. i should say, i asked people to tweet me if they liked the format. i did not ask them to tweet me if they did not like the format. i should have opened it up to either opinion. anyone is free, obviously, to tweet me at any point if they have a problem, but i was just wondering what people thought of the simulcast format. someone writes in that she thinks it is better for the sake of consistency because she's watching the program, and then she has to get in her car to drive to work, she once to be hearing the same continuation of the same program, and i totally agree with that. paul: i think you are onto something. i will talk to al from jersey and see what we can do here. let's talk dealmaking. it is the end of the year. know what wall street does? they look at the league tables, who is number one. when we look at the tables here at bloomberg, we've got all of the great functionality to do that, guess he was on top?

goldman sachs. michael moore joins us, bloomberg news. he's got the story. i've been on wall street for 30 years. it seems like every year, goldman sachs is on top. what happened in 2021? michael: i think it was a boom year, and they took advantage. really all of wall street did. goldman's top at least on m&a and ipo's. that is where they landed this year. they made a push more into the middle market, trying to get a wider swath of those deals, and that seems to pay off, but also it is kind of their bread-and-butter, the giant deals we saw across the board. m&a in general was a major boon. a big problem a lot of banks had was holding onto enough talent to keep up with the deals flow, so people were stretched, but

they made quite a bit of money. matt: i have to say, shout out whoever put this together. i think christine showed me this function 21 years ago. but goldman sachs, 20% and change of the market. they had 582 deals worth an average $2.3 billion, and that is the highest average deal value of anyone except for centerview partners, which had a value of almost $2.6 billion. jp morgan did a few more deals at 616, but i guess they were worth less, about $1.8 billion. it is just a great function to dive into if you are in this industry. what are we expecting for 2022 in terms of deals? 2021 was an absolute banner year for m&a, shockingly because unlike paul and his investment

banking heyday, these guys and women weren't shuffling back city to city every 24 hours on a plane. michael: i think there was some skepticism that this would continue into 2020 two because you did have some deals that maybe were slowed down by the start of the pandemic, and then you also had some concern about tax reform coming in, and whether that would spur capital gains or other sort of taxes. that led to some dealmaking as well. so i think you had a few one-off items in 2021 that helped boost volumes, but i think what we have heard from the banks in recent months is the momentum seems to be continuing, so at least for the start of 2022, it does not seem like you are seeing a slowdown coming, at least on the m&a and deals side.

maybe a little bit more on trading, but for the classic investment bankers, things are going to stay busy. paul: one of the questions is are they going to do it from their offices, from the trading floors, or are they going to do it from their basements? what every hearing from some of the big investment banks about back to work? michael: most of them have stayed pretty committed to it, whether it is more masking in the offices, more testing, required vaccinations. we have seen all of those measures to try to get people back in, but traders have largely stayed in the last two years of the pandemic. investment bankers have been a little more in and out. but there is a desire from a lot of firms to get people regularly back into the office, although we have seen with the omicron surge they have had to be a little bit more flexible. matt: you know what i wonder? how important manhattan still is

to invest in banking. sure, everybody is going to have an office in manhattan, but how important is it, or how heavy is your presence going to have to be in new york city? michael: i think we have seen banks really expanding in other parts of the country, some at the expense of new york, but i think that trend will probably continue, that they will have a bit more of a spreadout workforce, especially post-pandemic. but i think broadly, there does seem to be this desire to keep manhattan bases and built that culture that way. paul: i don't know, matt. miami beach. matt: the thing is, nobody wants to work equities in dallas, right, paul? [laughter] paul: exactly. that was the plan back in the day. matt: was that it, equities in

dallas? paul: that's it. matt: didn't goldman sachs actually expand its equities presence in dallas last year? michael: yeah, i think they have been building out in texas. matt: i may be dating myself a little bit come -- a little bit. michael moore covers investment news for us. if we don't talk to you tomorrow, have a fantastic new year's eve. from paul sweeney and myself, we will be back. this is bloomberg. ♪

david: i think you put on a trade or you bought gold futures and you are called a gold bug. gold is dell $1700 announced. are you believing now gold is good it investment at this price? >> we do and thank you for bringing that up. we believe gold does well in times of inflation. what happens is if you own long-term treasury bonds yielding 2% in interest rates move up to 5%, those bonds fall in value. likewise if you have cash in the bank that you're earning 0% on and inflation is 4%, you are eroding the value of your money. as inflation picks up, people try to get out of fixed income, they try to get out of cash. the logical place to go is gold, especially if it starts to rise at inflationary times.

because the amount of money tried to move out of cash and fixed income dwarfs the amount of gold supply and demand imbalance causes gold to rise. the more it rises it feeds on itself and has the potential to go parabolic. david: to date you are a big believer in gold as a good investment now? >> we thought in 2009 that with the fed doing quantitative easing, which is printing money, that that would lead to inflation. what happened was the fed printed money and at the same time raise the capital and reserve requirements in banks so the money recycled, the fed bought treasuries, created money, wound up with the banks comment was redeposited at the fed, so the amount of excess reserves at the fed grows by the sum amount printed at the money never entered the money supply so was not inflationary. this time around the money has

entered the money supply. the money supply was up something like 25% last year. the best indicator of inflation is money supply. i think we have inflation in excess of what the current expectations are. matt: welcome back to bloomberg markets. matt miller in berlin with paul sweeney in new york. this is special market coverage all week long. we are simulcast. i took a survey on twitter to see if people like this format and -- paul: overwhelmingly -- and? matt: overwhelmingly yes. i just got one tweet from robert smith, npr, says i like the simulcast but as a radio

listener i hate to be reminded constantly it is also being seen on tv. i want you to be talking directly to me, not feeling like i'm listening in on television sound. do you robert smith, i say we are talking directly to you. thank you for listening. i've said it a million times before. i prefer to get my news from the radio as well. it is exciting for me and paula to also be seen on tv. my mom knows what color my tie is. that is exciting. paul is actually wearing a tie. paul: usually i go a little more casual. matt: you are dressed up for the markets. we are looking like we are headed for another record close on the s&p 500. 70 in a row -- 70 record closes in a year on the s&p 500. who would've thought at the beginning of the year we would be at 4800 and change on the

s&p? you know when the last time we had this many record highs in a year was? paul: i don't but i bet somebody in bloomberg news knows that. matt: 1995 was last time we had more than this. 77 in 1995. no chance of beating that this year. paul: are never 1995. goodyear. matt: 1995i was working at the general manager at the granite village -- at their greenwich village record store with a mohawk the same color as the green on the screen right now. paul: we have to get a foot on that. matt: that i decided to let me get into financial news instead because i felt punk rock was dying. paul: let's get a little bit smarter on this pandemic and bring in simon clark, university of reading associate professor.

a little bit above my pay grade. thanks for joining us. i would love to get your thoughts as we try to get our hands around this omicron variant and the vaccine. the vaccines seem to be doing their job. and we feel good about that? simon: i think we can. the vaccines are working quite well, particularly when they have been boosted with a third dose. the efficacy we get from the two does vaccine after the initial two doses is respectable, it is still worth having, but it does not nearly as high as we would like. that is why it is so important for people to get boosters. i think that is what is keeping a lid on this thing and stopping people ending up in hospital. paul: is this thing going to go into my very quickly at this point -- going to go endemic

very quickly at this point? will we see everybody get a milder, more transmissible version, and then it will become an annual issue? simon: i think that is fairly likely, although i have not had it yet and i've had all of my boosters. we are moving towards it becoming endemic. people should not think that is an answer. for example, hiv is endemic in sub-saharan africa but still kills a lot of people. our immunity does waane after a while. i think what is keeping us well at the moment, unless we keep that topped up, is going to leave us. the answer is to keep on boosting. we should not see something becoming endemic as a rescue, something that will save us all.

it is not necessarily so. paul: for this omicron variant, we saw in south africa a very sharp increase in cases, but than an equally sharp decline in cases come a much shorter duration for this variant vis-a-vis the delta and maybe the alpha. is that how we should think about this and other parts of the world as well? simon: there is still an awful lot of people in south africa who are in hospital with it. while it contracts quickly and the people it does not make very ill, i do not think if you are unlikely enough to end up in a hospital you'll be in and out very quickly, at least not yet. the people it is not making sick , it does appear to be a hit and run virus, give them light symptoms and then go. matt: you are clearly still

cautious. are you encouraged by the speed at which we came up with the vaccine? do you think that kind of technology will help us fight future pandemics as well? simon: absolutely. the vaccines have been a fantastic success. not many people thought they would be along quite so quickly and so effectively. that is the sort of thing we are pleased to be wrong about. i think those technologies will be useful in combating further outbreaks should we have them. you have to remember that although it is possible to make versions that work against other variants, it is not a case of flipping a switch. it does take a while, a couple of months to produce a vaccine, probably near three months. we do have to be careful in the interim. matt: thank you so much for

joining us. appreciate getting your expertise, simon clark, university of reading associate professor. reading just a low bit west of london, one of those big research universities in the u.k. appreciate chatting with dr. clark. a little bit of green on the screen. we are inching towards our year end, getting a low bit of a bump. matt: definitely seeing a rise above 4800. this is interesting. we only have a forecast for 5000 at the median for next year. that would mean less than 200 points to go in 2022. we will go back and continue talking about markets. this is bloomberg. ♪

>> binding shotgun houses in new orleans is easy. thousands of these are across the city, appearing in any neighborhood developed before 1920. tracing them back to their origins is more difficult. the first records of these houses date back to the error of the louisiana purchase in 1803. the earlier shotguns were built in the french-speaking neighborhood in the french quarter. these homes without always -- new orleans signature house arrived in the city with a turning point in the new orleans slave trade. people were enslaved in africa and transported to what is now 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 graded 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 boast collapsible facades. the most common style is the victorian. distinctive for its ornate millwork comet segmented arched doorways, and stained glass. when it comes to floor plans, houses, standalone, duplex home

known as shotgun doubles and those with the second story known as campbell backs -- known as campbell backs. traditional shotgun is one room wide. the front door opens into the living room come the next door opens to a bedroom, and the third room might be a den or second bedroom. the kitchen was at the back of the house. originally they did not include bathrooms. summers in new orleans are brutally hot in the popular home was designed to handle the heat. there are high ceilings to allow hot air to rise. doors were installed in a single line to help with airflow. transom windows could be open to allow a breeze to pass through the house. thousands of these homes were destroyed in 2005. 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. many original features and one more modern one, a holiday -- a hallway.

paul: welcome back to a special edition of bloomberg markets. we are doing a simulcast with radio and tv. we thought we would have some fun with that as we countdown the last days of 2021. an interesting headline.

the fda to allow pfizer boosters for 12 to 15-year-olds according to the new york times. that is good news for a lot of parents with kids in that age group. we will have follow-up on that throughout the day. later today, president biden and president putin will have a phone conversation at the request of president putin. interesting to see what will come out of that. angela spent, georgetown university professor and the author of "putin's world" joins us. thank you for taking the time to speak with us. how did this come about? it seems like russia reached out and said we want to have a call. is that typical? angela: three weeks ago president biden and boudin had a call. the u.s. is very concerned about the russian troop build up on

the ukrainian border. there are about 100,000 troops and no one quite knows what vladimir putin's intentions are. as a result of that call they said they have to talk to each other and try to de-escalate it. very shortly whereafter the russians present two treaties on russian u.s. relations and the other on nato russian relations and they say sign on the dotted line and we will pull back. they're asking for concessions the west is not going to make. it is going to be a basis for some discussion. the u.s. went ahead. there has been intensive diplomacy between the white house and the russians in the past the week. the week after next there will be three meetings, one bilateral u.s. russian meeting in geneva, one nato russian meeting in brussels, and one of the organizations of security and cooperation in europe, which includes all of the countries of the former soviet union, europe,

central asia, the u.s., and canada. apparently putin requested this call because he wants to talk about what is going to happen next. i think president biden wants to rerate we are ready for diplomacy but if diplomacy does not work in the russians take military action, we have strong economic and other measures we may take against russia. matt: how strong are those economic? i keep reading the phase unprecedented economic sanctions. i cannot imagine vladimir putin cares that much, especially since he has western europe stuck between a rock and a hard place. they have to buy his gas no matter what, otherwise it is very cold here. angela: you are so right about that. the "nuclear option" is throwing russia out of the swiss international payment system.

if you do that you affect a lot of other countries that do business with russia, including the countries that get their gas from russia. the countries have already factored some of those things in and they have been talking to the chinese about a possible alternative international payment system. it is not clear that would deter them. it is hard to think about sanctions even if you go after the bank accounts of people in vladimir putin's your circle. will that change is calculation if he is determined to use force, which we are not sure about yet. paul: what you think the intentions are of vladimir putin as it relates to the ukraine? massing troops at the border feel so cold war-ish. is it a shakedown or does he want to build back the old ussr? angela: he does not want to build back the old ussr. they do not have the resources. he would like to have a government in kiev that is much

more favorably inclined towards russia and says we do not want to join nato. by taking all of these military actions and massing all of those troops at the border, he is strengthening the backbone of the ukrainian population. if you go on social media you have people of all ages saying we are prepared to fight back. it is counterproductive what he has done. he would like nato and united states to say we will never offer membership in nato to ukraine, that is not going to happen. matt: don't they want to? you would think especially everybody in ukraine would be sincerely down to enter nato. angela: 10 years a majority of ukrainians did not want to join nato. now as a result of the annexation of crimea and what has been going on in southeast ukraine, now majority

of ukrainians want to join nato. these russians actions produce the exact opposite effect from what they are designed to produce. paul: give us a sense of the power president has within russia. how is his position today, it seems like his powers almost unassailable. angela: if you look at public opinion figures, he is less popular than he was before but he still get 60% approval. this year he has clamped down on the opposition in russia, including closing down this 30-year-old iconic organization the looked into the crimes of stalin. it is becoming increasingly difficult in russia to oppress -- to express any opposing views. when russians are asked who would you vote for in the next election, many of them say we vote for putin because there is no alternative. he has succeeded in gritting a situation where there is no alternative and he is presenting

himself as stability and order in russia and he appears to have consolidated his position. there may be things happening we do not know. from the outside he looks strong. matt: he seems to have created a situation where there is no alternative to russian gas in germany. angela merkel's administration backed the building of nord stream 2 and phased out nuclear power, so they do not have any other choice. how much leverage does this give vladimir putin over western europe? angela: considerable leverage over western europe and eastern europe as well. apart from lng and u.s. lng, this is what the u.s. and some of the european countries are trying to push, there is no alternative to russian gas. if it does not come the controversial nord stream 2 pipeline, it comes through other pipelines.

as long as europe needs to import as much gas as it does and as long as it has not switched to other forms of energy, russia is still the crucial supplier. putin knows that and it does give him leverage. matt: excellent. trade to get some time with you. thanks for joining us. angela stent, georgetown university professor of government and foreign service. if you're going to be a professor of government and foreign service, georgetown university is probably your best choice to work. great knowledge, especially about vladimir putin. definitely recommend picking up that book. in terms of the market we continue to see the s&p writing over 4800, just over, but still a record. this is bloomberg. ♪

paul: good thursday afternoon.

we are back with our extended bloomberg markets coverage. we have the simulcast on bloomberg radio and bloomberg tv. romaine bostick and paul sweeney in new york driving the conversation forward. green on this breed. -- green on the screen as we count down the final days of 2021. let's get right into it. i want to look at this market. ibs and p up eight points, the dow up 27 points -- i have the s&p up eight points. let's bring in abigail doolittle. abigail: i think that is the real action. the santa claus rally, while it may not be as robust as it was on monday, at this point we are looking at a gain of more than 1.7%. the santa rally is here. interestingly our markets producer was just pointing out the s&p 500 back above 4800,

that is the 11th 100 point move of the year. that is incredible because blowing away the highest target last year for this year, which was goldman sachs at 4400. here we are at 4800. the question is where will it be in 2022. most strategist suggesting it will be higher. there is a low on the screen. yields into the question, if the fed does hike three times as expected and lays off the balance sheet, that causes that to steer away from risk assets. we will find out. paul: abigail: -- romaine: abigail doolittle kicking off the latest leg of our simulcast. joining us is sylvia dobransky. let's start with how optimistic you are about 2022. sylvia: i am actually very optimistic about 2022.

we are in a good spot. the last couple of weeks has brought volatility to the market and a lot of that is uncertainty around the headlines like omicron, potential rate hikes, the fed getting hawkish, the $2 trillion package passing. if we step aside the fed balance sheet remains huge. if we have rate hikes next year they will go slow and steady. there is loads of liquidity in the market. 70% of gdp is consumer spending and the consumer has the highest saving rates. they are spending. omicron is a setback in the near term but if we look at 2022, i expect a return to hopefully normalcy and a pickup in his spending and a pickup in consumption in some of these areas getting hit like services. overall i think earnings will look good, liquidity is there, consumer spending is there, it will be a positive year.

not as heightened as this year was but i do think it will be a positive year. paul: let's talk about inflation. when folks are filling up their tight or going to the supermarket, they are seeing inflation. the question for a lot of folks is how persistent is it going to be and is it going to be a headwind for this market we are maybe not discounting right now? sylvia: i think that is a great point. the answer is it remains to be seen. my hunch on this is once some of the supply chain issues ease and we do get back to the state of normalcy we will see prices fall back in line. isaac we have seen a peak in inflation. that being said, that has not been the case last couple of months. it has gone up. with covid coming back into the ecosystem, potentially showing down factories, things like that

slow it down. it is somewhat supply chain driven we have the fed acting in the background. once those things ease up we will have a clearer picture. romaine: a lot of people look at the points you've just made and say if it is not an impediment to additional gains, elites -- it at least creates bumps along the way. sylvia: totally agree with that. i think we will have increased volatility. i did not read anything into last two weeks, it is the holiday season. one week was a big down week, no you volatility, we are seeing the santa claus rally to the upside. i expect to see more of that. for the traders who are experienced with this type of thing come you can actually buy on the dips. good thing about volatility as you get trading opportunity.

the other side is you understand you will have to tolerate bumps along the road and take additional risk in your portfolio. paul: give us your sense of valuation in this marketplace. we have had good earnings growth of the last several quarters and for a lot of investors and fund managers that has been enough to them off the ledge as it relates to valuation concerns. how do you think about that? sylvia: is a valid point to consider but it depends on the company. a lot of times when we talk about valuations we paid to facebook or meta now, apple, alphabet, these types of companies. the ee in pe has been rising. that justifies the valuations on some of these names. i think about the future and the focus on enterprise technology,

the growth of the cloud, those are the top three cloud leaders. if we have a metaverse those been the top metaverse leaders. this aa's are changing and shifting and shuffling along with technology. valuations are high but they are justifying them. quality balance sheets do not hurt either. romaine: what about the next big thing or the next big company. a couple of years ago when the pandemic hit people embrace relatively new stocks in for a time that trade worked. now other people looking at this pandemic saying there been major shifts in our economy and our way of life. a lot of people try to figure out which companies benefit from that. sylvia: i am almost taking that to the side because i think the situation we had a year or two ago when we are all at home it was obvious to by netflix and peloton, that has changed. the difference are the travel

revenge trade. airlines, hotels, and cruises will pick up at some point next year when we get past this next wave. i think cryptocurrency will be the big themes of next year. hydrogen green medicine. investing eb. we get into the doctor plan a lot of spending should go there to go carbon neutral by 2050. things like high futures have to benefit from that. thinking outside of the box in terms of the next generation of fangs would look like and i think it'll be things like 5g, competing in some of the other topics. paul: how about that cyclical trade that work for a lot of investors for a long time. energy and banks, how do you

think about that? sylvia: it comes down to the barbell approach. the ideas i'm sharing of the ideas i think of the best to have the highest returns. as did by the idea that you have a -- he makes a great point. energy, i think energy is going to be a short-term thing -- the long-term focus was to go to cleaner energy and look at things like hydrogen cover, uranium. in the short-term term i am interested in crude. if seen a big pop getting people back on airplanes, back on the roads. these are shorter-term things -- the banks of weathered covid well i think they'll have a recovery story. paul: thank you so much for joining us. sylvia jablonski, chief

investment officer at defiance etf. coming up, let's talk crypto. there are a lot of plays in the crypto space. we will break that down. it is time to look at wall street league tables. guess he was on the top. we will break on that story coming up as well. this is bloomberg. ♪

romaine: this is bloomberg markets. a simulcast across bloomberg tv and radio. taking a look at everything going on on the day but also looking back at 2021 into 2022. one of the big stories was cryptocurrency.

the rise of bitcoin in the rise of either, but i guess the rise of secondary coins that did not get a lot of attention in the mainstream media but are starting to get more attention now. kayla gardner giving us attention to some of the secondary coins. it coins dawn top. ethers number two? what is number three? >> is called binance coins and saw a record gains. that is a huge return. it is not everyday you hear a 1000% return on everything. it has been attribute to binance's rollout of their smart chain. that is fixed some of the problems we have seen in a theory on like a lack of ability to make big transactions.

it is tweak some of those smaller issues and leveraged its millions of users who are looking for an alternative to a theory on -- ethereum to build their own tokens, that is how it has been able to rise to that third spot in market capitalization. paul: we a function on the bloomberg terminal gryp crypto. it has a lot of the coins. it seems like it is exploding in the number of different opportunities in the community. it seems like 2021 was the year crypto came to the forefront of people's consciousness. what is the expectation for next year? akayla: we are looking at researchers and analyst predictions for next year and they are predicting alternative coins, rivals to a theory of and bitcoin will continue to grow. that is where by finance coring has following -- where binance

coring is falling under. bitcoin and either did sing of get returns, a theory him -- cerium more -- etherium more. crypto has capitalized on the speculative nature of the market which is allowed investors to make a lot of money, but also use cases like finance, chlorine, and a theory of will continue to become popular. romaine: i will talk about some of the use case because we need talk about the coins that have asserted themselves, that has primarily been one of the main drivers in one of the main reasons people say bitcoin could fade, at least in terms of its dominance in the market. akayla: that's right. analysts are predicting use cases will continue to drive value and returns in the case of binance point which is an

alternative blockchain network. because of investors like an fts and building their own tokens, they are using these applications to start doing those. theory and finance -- and etherium and binancee are building up of people's interest to make their own money off of these applications. paul: crypto is a big story and likely to get even bigger as it gets more mainstream in 2022. a kayla gardner joining us, a proud graduate of the ohio state university. let's turn ourselves -- let's turn our attention to your end league tables, something senior banking focuses on. we think about m&a you think about goldman sachs. they had a good 2021. let's bring in michael moore. give us a sense of how m&a was

this year and who came out on top? >> goldman sachs office at the top of the tables took advantage. we saw over $5 trillion of deals as you had some deals held back in 2020 come through this year and then across the board, whether it was companies responding to what they see as post-pandemic life and deals across sectors and private equities, very active as well. that helps goldman as they often advising on the private equity deals. romaine: morgan stanley coming in third on this list. i'm curious as to why we saw them linger. they are still a prominent player, but i thought there was more focused coming out of the top of morgan stanley with regards to building up that deal this time.

michael: you saw some jostling for the top three spots among the three giants. really it was fairly record volume across the board. fees shoot up at every firm. the biggest challenge a lot of them pay is keeping up with the deal flow. you saw a lot of retention bonuses for junior bankers and perks to try to keep people fresh because it was quite the active year. they faced issues of her burnout in approaching the town was -- perhaps one downside of the activity. paul: what is the expectation on wall street for m&a activity next year? michael: it is expected to remain pretty high, at least at the start of next year.

the backlogs have been quite strong according to bankers over the last couple of months. i think there were some one-off trends in 2021 that may not continue. across the board, team is pretty active. we may see things read busy across the start of 2022. romaine: michael moore doing great work covering what a lot of folks on wall street pay attention to, the rankings of who helps facilitate the most deals. -- the senators -- the center for disease control says it is raising level to level four come the highest level since before the pandemic. there sing avoid cruise travel regardless of vaccine status. the cdc saying avoid regardless

of vaccine status. we'll keep an eye on some of the stocks which are weakening at the moment. coming up, we'll talk more about what is going on around the market and in washington a big telephone call slated to happen between the president of the united states and of russia. joe biden vote reviewed putin to talk about was durian on that were with ukraine. all that in morris coming up shortly right here on bloomberg. ♪

romaine: this is "bloomberg markets." special coverage all week long, simulcast on bloomberg television and radio. the headlines crossing the wire on the bloomberg terminal is the cdc in the united states is advising people to avoid cruise ship travel. the specific languages avoid cruise travel regardless of

vaccination status. this is a recommendation by the cdc. what i can tell from the headlines, this is not any mandatory decision with regards to restricting the cruise lines and their activities. we will pivot from that other big news happening later today. the presidents of russia and united states are expected to hold a phone call. marty schenker joining us now to talk a little bit more about what these two men are going to talk about, two men who did not talk much for the first two months of the biden administration. marty: they did not but apparently vladimir putin reached out to the white house and they quickly agreed to have this video call at 3:30. ukraine is top of mind on both sides for different reasons. paul: it seems unusual we would have won president call another and say let's get together for a call tomorrow.

does the signal anything to you that perhaps mr. pruden is willing to engage -- mr. putin is willing to engaging meaningful dialogue? marty: it depends what you mean by meaningful. after the first biden called the russians turned over two proposed draft treaties that were nonstarter's from the beginning without negotiation. whether they will actually get some clarity on what each side wants in terms of guarantees, you may get that, but the devil is in the details. romaine: how much from the u.s. side you think the biden administration wants to go down this path, given critical midterm elections for joe biden's party, and one for most of the electorate is much more of a focus on domestic issues rather than some of these foreign policy issues. marty: you're absolutely right. elections in the united states

rarely center around foreign policy. they are usually kitchen table issues like inflation, which are much more worrisome. at the same time if joe biden can orchestrate some sort of a de-escalation of the situation in the ukraine, he could view that as a real victory. paul: how united you think the u.s. is with its nato allies right now after the prior administration caused friction? marty: on the top line level they are united about trying to avoid conflict and trying to deter any potential russian invasion. at the same time there are issues that affect europeans that united states does not have a say in, such as energy prices. there are crosscurrents in that relationship. on the top line level they are seemingly together on the issue of russia. paul: thanks a much for joining

us up will probably be chatting with you -- thanks so much for joining us. will be probably be chatting with you later in the day. marty schenker are come editor-at-large for bloomberg news. interesting the cdc says again avoid cruise travel regardless of vaccination status. i pulled up some of the cruise stocks and it is kind of mixed. carnival is up, royal and norwegian both down. a little bit priced in to these names. paul: you're talking about -- romaine: you're talking about stocks well off the highs we have seen. this is more of rather than restrictions. it is up to people like you and me to decide whether we want to get on those ships. i can tell you from own personal family members, there are a lot of people excited to get back on the ships. we will see if this scares them away. paul: i never taken a cruise

although i would not mind. i know people that are cruisers and they are passionate, loyal customers of the cruise system, they love the experience. as i talked to them come as soon as we can get back on the ships we will get back. romaine: i have to agree with you on that. we are seeing a low bit of weakness in some of the stocks. maybe this all sorts itself out on its own as we keep our eye on the covid crisis. our eye is also on the markets. the s&p 500 camped out around a record high. romaine bostick and paul sweeney. this is bloomberg. ♪

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paul: welcome back to bloomberg markets.

we are simulcasting bloomberg radio, tv all week, to keep on top of the markets as we count down the final days of 2021. we had the news moments ago, the cdc says avoid cruise travel regardless of vaccination status. as expected, cruise stocks getting hit a little. let's bring in abigail doolittle for the latest. abigail: pretty interesting because we have a complete reversal for these stocks. carnaval, earlier one of the big winners on the day, bouncing back after multi-day declines, now at session lows. this as the cdc has come out with this advice to not go on cruise ships, irrespective of vaccination status. that is a pretty strong message and terms of a travel advisory. early on in the pandemic, if you recall, cruise ships where the

petri dishes, my little bit of a horror show frankly in terms of watching these passengers stuck on these ships as covid cases multiplied. right now, the cdc is monitoring 92 cruise ships for covid, doesn't mean that there is covid on the boats, but they are monitoring. based on the investigation, they say cruising right now is not the best idea. romaine: stocks are mostly weaker on the day after that cdc advisory. abigail doolittle getting us caught up on the latest news. the other big story all year long was all the disruptions in the supply chain. a lot of that being fueled by the covid crisis. here to talk about more where we stand now and hopefully what improvements can be made into 2022, we have lily shan, ceo of transfix, a logistics startup

that will hopefully help us better track where our things are. for anyone who ordered any big ticket items that came overseas, car, couch, the months-long wait was excruciating, but you couldn't get an update from some of these companies about where it was, whether it was on the dock, or on a truck. how do we get to a point where there is better coordination among all the various points on the supply chain so that we can at least know where things are when we want to? lily: absolutely. it is true the holidays were tepid, and consumers were as prepared as they could be with shipping. it did lead to fewer delays and shortages. as you look forward, what is required will actually take a while, because it takes

technology and automation and wide adoption of digitalization across industry. shippers, carriers across the board to make it far more easy to gain access to freighted capacity, as well as protect ability. that is where our machine learning and ai algorithms come in, to be able to critic that and provide transparency. the other thing i will add is the importance of capacity. everyone is talking about the shortage of drivers, however, one thing to keep in mind is that 30% of miles driven are still driven empty. i think it speaks to the opportunity in terms of being able to drive more efficiency into the system, waste out of the system, and really ensure a strong workforce. romaine: just to follow-up up on the idea of efficiency, our show spent some time at the ports in

long beach, california. you had people still doing paper logbooks, all of these five times -- fifedoms on the dock where each shipper had their own rules and did not talk to the others. how do you create efficiencies where everyone gets on the same page? what can your company do? lily: this is exactly what we are doing. we are building a platform that actually looks at, drives integration and automation across each part of the supply chain. in addition to that, we are taking a multi-network level approach. every shipper is primarily thinking about their own supply chain. carriers are primarily thinking about their own fleet. however, we have always taken an holistic view of the entire system, end to end, driving optimization and digitization

with tools that can enable our customers and carriers to work more easily and with flex ability. paul: for a lot of people, the supply chain challenges we are facing on a global scale have called into question the whole concept of just-in-time inventory. it is cool when it works, but when it doesn't, it's a huge problem, as we are seeing. what do you think of that from the holistic view? lily: i think everyone is moving from just in time to just in case, in some ways. disruptions in the supply chain will continue. you are still seeing port congestion. with covid, the early new year looter new year this year, we will continue to see disruption. but these moves in the market are not new to the supply chain. it is always the constant

balance, navigating the imbalances of the supply chain, and therefore, being able to remove some of that volatility in the system has been a key driver. paul: i have some experience with some of these industries, trucking, rail, oceangoing transport. when i think of technology, digital savviness, i don't think of a trucking company, a railroad. how hard will it be to really drive technology into this global supply chain? lily: it will take time. however, what i will say, some of the fastest, tech-forward shippers are already doing this, and it will take time. it requires wide adoption across all players in. a shipper who is very tech savvy alone will not change system.

you need to be able to drive that through the entire supply chain across all years -- players. that is why the platform is incredibly important but also the tool adoption, what we can provide for our shippers and carriers, is helping to drive that change. but it will take a while. romaine: you work with a lot of private companies. i'm curious as to how much government involvement there has been in solving these issues, whether at the federal level, or more importantly, at the local level, how much interaction you have had with those local governments? lily: it is actually an exciting time to be in this space, starting to work with government. it is something they are already thinking about. recently, they moved forth with a trucking action plan, which i believe is important. going back to the importance of building a strong workforce,

enabling capacity across the country, continuing to attract drivers on the front lines, the lifeline of our economy, is critically important. you think about the generational shift going on in the supply chain, what is needed to drive that next level of innovation, next level of thinking, and really determine how the supply chain across all the companies need to come together. it will require a different skill set. paul: let me ask the final question, the question that everyone has asked you a million times. when will the supply chain thing be worked out? lily: i think this will be ongoing. i don't have a crystal ball. [laughter] what i will say, the faster digitalization occurs in the supply chain, the faster we will get there, but it will take a while. we are moving a big ship together.

it is not the adoption of a mobile app at home. we are working with a number of really large companies at the forefront of it all, carriers across the country to drive this change. paul: thank you for taking the time, liley shen, ceo of transfix. crew stocks being impacted by the pandemic. off 1.52 2.5%. this is bloomberg. ♪

romaine: this is bloomberg

markets. special coverage all week long, simulcast across bloomberg tv and radio. i'm romaine bostick alongside paul sweeney, keeping an eye on the markets and the latest developments in the covid crisis. we want to focus more on that, not just the medical science but also the political science. joining us is dr. julie norman, professor of political science at the university college london. we heard the cdc advising travelers not to get on cruise ships. a lot of messaging over the past few weeks and months that i think has confused a lot of people. are we supposed be back at work, sheltering at home, are we allowed to go out new year's eve? when you look at the messaging coming out of major governments around the world, how successful do you think they have been in keeping the public not only in the know, but making sure they

are comfortable enough with what is being communicated? dr. norman: it has been a challenge, not only in the u.s. but in the u.k., across europe as well. what we see the cdc doing right now is adjusting as much as they can to the science of the moment, but the impact of that means the messaging is changing often. that is confusing for citizens, not only for things like cruises, which i would say affects a small subset of americans, but more about how people go about their daily lives. should they wear, what will happen with masks? it is about keeping up-to-date but having clear and consistent messaging for citizens. paul: one of the cdc rulings recently was about the quarantine timeframe, the duration, reducing it from 10 days to five days, assuming the person is asymptomatic. they would have to wear a mask

another five days. they essentially admitted, that was an economic, political decision more so than a medical decision. how did you view that piece of news? dr. norman: we see the administration and cdc trying to thread the needle between public health imperatives on the one hand, and the real needs of workers and businesses on the other, trying to find that middle space. is it possible to still recommend isolation periods, but perhaps shorter to prevent these staff shortages. this is not just happening in the u.s. the u.k. has also shortened their isolation periods, and other countries are considering similar measures. it is not something the administration or cdc would want to do but it is a pragmatic response to what we are seeing right now with the effect on workers on the economy. romaine: certainly a pragmatic response, for those whose jobs it is, need to be pragmatic.

we are dealing with a populace here who is growing if not uneasy, that may be weary about the length of this pandemic and the messaging out there. do you worry we have reached a stage where there could be real, significant political or social backlash to the measures the government has been proposing? dr. norman: it is clear there is a covid fatigue from everyone in trying to respond and adapt. most americans, most other countries, in the u.k. where i live, are just trying to get through their life as best as possible with the virus still out there. in the u.s., where the virus has been very polarizing, politicized, you were probably see that backlash manifest in ways that are perhaps more vocal than other countries. across we will see pushback, but most people are trying to figure out, how can i live with this virus, but in no way that

provides some normalcy. there will be pushback from others who want to take a more independent approach. paul: let's pivot from the pandemic response to the legislation. congress will be coming back and one of the big items on president biden's to do list is to get build back better revived in some way. how do you think that may play out? dr. norman: you are right, that when the democrats come back next week, they will have to rethink their approach to build back better. they were hoping to get a vote before the holidays or a vote early on. manchin saying he would not support the bill in its current form turned the tables on that. the democrats are going to have to see what they can salvage from this bill. one option is to perhaps break

up the bill into smaller standalone bills. perhaps one that would speak to child tax credit, one that would focus on pre-k, something where you have more independent bills that could get the support without having that price of -- massive price tag. romaine: i want to get your thoughts on foreign policy. in less than three hours time, we have a telephone call schedule between president biden and vladimir putin, i guess to hash out some of the differences that linger from the previous administration. dr. norman: that's right. an important call between biden and putin. this is the second call this month related to the buildup of troops along the border. that situation is still the same. there have been negotiations going on between the two countries, plans to meet in geneva in january to discuss in person. putin is looking for a guarantee

that ukraine will not be admitted to nato. the u.s. and allies are not ready to do that. biden is hoping to keep things calm for the moment. paul: julie norman, thank you so much. political science professor from university college london. getting the political response to the pandemic, also getting a preview of what we may see in this phone call between president biden and president putin this afternoon. coming up, we will hear from mohamed el-erian and get his thoughts on the markets and his outlook. this is bloomberg. ♪

paul: welcome back to a special edition of bloomberg markets. we are simulcasting bloomberg radio, television, bringing you the final days of the treating year and look ahead to the next year. recently, the federal reserve made a pretty hawkish pivot, talking about accelerating the taper of bond purchases, discussion of raising rates as many as three times this year, three times the following year. is that enough, is it too late? we recently spoke with mohamed el-erian to get his thoughts.

mohamed: i will say better late than never, but let's not kid ourselves, they are still way too stimulative for what developments and forecasts are. if i were them, and i would accelerate even more the taper so that i don't risk a big policy mistake in the middle of next year. it is good news they had pivoted, but they are still behind the curve. >> given where real rates are, they are still highly accommodative. i am trying to understand when they become more restrict the. not after one interest-rate height, maybe not after five. when do you think they become more restrictive where the policy actually ends up seeing tighter financial conditions? mohamed: that is the big question, we don't know. that is why you want them to start early and go slowly.

we are trying to find that point. ironically, even though they have pivoted, accelerated the taper, natural conditions have actually loosened, which shows you we are nowhere near the point where policy is having an impact. >> you say if they go earlier, they can go slower. if they come in later, will they have to go quicker into 2022? mohamed: that is my biggest fear. that is why i've been advocating since last april that they could have started. if you don't want them to have to hit the brakes hard -- we are just easing our foot off of the accelerator. the last thing you want is for them to have to pivot quickly to a hiking cycle. remember, we are dealing with an economy and market that has been conditioned, for years, to live with broad interest rates and massive and protectable liquidity injection.

this is quite the change, and that is why you don't want to change to be too abrupt. >> we sat together in london just before the fed was about to park on its last tightening cycle. you said to me, i expect the loosest tightening ever by a central bank. how would you characterize it this time? mohamed: it is harder this time because we have inflation. that is why the inflation call is so important. the fed could end up being loose for long, and nothing would happen other than elevated asset prices. now with inflation, we are seeing behaviors change. it drives me crazy when somebody said on your show the other day, transitory for longer. transitory for longer doesn't make analytical sense because behaviors change. we are seeing price setting

behavior change, wage bargaining behavior change, consumption change. what is different this time around is that inflation is changing behaviors, and that that has to be sensitive to that. romaine: mohamed el-erian, bloomberg contributor speaking earlier. a lot more to cover on our simulcast across radio and tv. keeping our eyes on those cruise stocks after that cdc recommendation for travelers to avoid cruise ships. the big news this morning also on jobless claims. they moved the lower than where they were the previous week, that was a surprise. we will be asking heather boushey if it was a surprise to her. white house council of economic advisors. this is bloomberg. mberg.

romaine: this is bloomberg markets. special coverage all week long, simulcast coverage on bloomberg tv and radio. looking at the s&p 500 at a record high. the dow jones industrial average at a record high. even the nasdaq 100 within points of a record high. paul: it may be the 71st record high of the year. crews stocks showing weakness, no surprise with the cdc recommending people do not go on cruises. we are seeing stocks trade off about 1% to 2%. romaine: relatively good economic news also crossing the wires, weekly jobless numbers in the united states, surprise dropped to 198,000 in the most recent week. let's bring in olivia rockman, bloomberg economics reporter, to talk about these numbers and why

it took some folks by surprise. olivia: jobless claims numbers are specifically people who have been laid off or dismissed from their jobs, so we still have a tight labor market where employers are looking to hire and are letting people go. there may be some who are calling out sick or not looking for jobs but the actual number of people who are going for unemployment claims still remains low despite omicron. paul: it is interesting, we have the augmented on employment benefits rolloff in september, and people expected to see more improvement in labor, more people coming back into the labor force. what do we know about that? olivia: there are many factors at play when it comes to people returning. some say it is retirement, some say it is lack of available childcare. some have elevated savings. there is also talk about families who were dual income

before the pandemic finding out they can get by on one income, moving to a less expensive city. romaine: looking ahead, and about a week or so's time, we will get the monthly jobless claims numbers, which tend to be a little bit less volatile than the weekly numbers. what is the general expectation? the economist that you talk to, how do they see that sustaining itself deeper into 2022? olivia: december data will be helpful to understanding what impact the omicron variant is having on people looking for and applying to jobs. the data we will get at the end of next week is through december 18, so we did start to see omicron take an impact on american's behavior in early december, so hopefully we get an idea of whether this new variant is holding people back. moving into 2022, a question for

economists and the fed is whether labor force participation, which has remained flat in 2020, although picked up in november, will see an improvement, or if we will stay at a lower level in this kind of new economy. paul: appreciate it, olivia rockman. the latest on the labor market. better-than-expected jobless claims this morning. good to see the labor market continuing to heal. let's switch gears and take a look at the market, how this market can perform next year and what is likely going to be a rising interest rate environment. it has been a while since the market has had to perform in that environment. kathy jones is with us. as we think about the rates market, fixed income market, talk about where opportunities for performance maybe next year given what we know about this economy, what we know about the

fed's intentions when it comes to raising rates. kathy: probably another challenging year for fixed income investors, and maybe investors in general we are moving from the very easy monetary policy to one that is less easy or even tight perhaps by the end of 2022. last year, the big performers in fixed incomes were tips, inflation protected securities, high yield bonds. it paid to take risk and bet on higher inflation last year. it seems unlikely that that is where the opportunity set is in 2022 because we already have spreads for high-yield bonds at very low levels. the opportunity for capital appreciation is probably not that good. if we get any sort of a setback in terms of economic performance because of fed tightening, it will show up there.

similar story in tips. we have priced in a lot of inflation over the next couple years. tips will perform reasonably well, but they have priced in a lot of inflation. looking at 2022, where the opportunity set is, maybe to take some duration risk on the low end. maybe time to start taking some duration risk if we start to see those yields move up toward 1.75, 2%. we don't really see a huge amount of increase in interest rates coming, more of a flattening of the yield curve. that is where we will probably be looking. maybe down the road we will see other opportunities, but right now it will be in that flattening yield curve. romaine: there still seems to be some reticence on duration going longer. you have seen the movements on nominal treasuries, still around 1.50 on the 10-year yield, which is lower than people thought we would be, coming off the

commentary from the fed. you still have a 10-year really yield under 1%. what can we read from that? kathy: a couple of things going on. the negative real yield is based on expectations implied by the market. that can change as inflation expectations come down, perhaps as we start to see, we think, in the first half of next year, easing in inflation. the question is how fast as the fed and what do they do? if they move quickly and growth slows down, we will not see those long-term yields move up very much from here. if the fed goes slowly and accommodates more inflation for a longer period of time, that could pull those yields up. the other problem at the long and of the yield curve, you have these two factors. one is this strong, secular

demand for long, safe assets. that's been going on for years. doesn't look like. that will change, whether it ispension funds or insurance companies . the other thing is the yield is pretty . it tends to cap out where our yields can go. paul: if i'm looking to take more risk in 2020 two, do i venture into emerging markets? i did not get paid for that in 2021. will i get paid for that in 2022? kathy: we don't think in the first because we are still looking for the dollar to be strong. titan financial conditions for emerging markets as you shrink liquidity tends not to be positive. interest rates went up, so em has not been a good place to go in the last year or so. maybe by the middle of next year, there may be an opportunity, if we start to see

the dollar peak out a little bit, easing for expectations of inflation globally. those yields are pretty attractive on a relative basis, but we don't think we are there yet. romaine: when you look at the volatility we have seen in the last half of the year, do you see that sustaining itself, or do you see volatility going higher or perhaps in the opposite direction? kathy: i would think the shift from the fed away from easy policy would, by definition, give us more volatility. they put so much liquidity in, have been so persistent with her for guidance in terms of the fact that they would keep that liquidity in the market. now, as you pivoted to the opposite end of the spectrum, that should boost volatility. i would be surprised if we don't see a much more volatile market in 2022, then we have seen in 2021. paul: what is the big risk that

you are highlighting for clients next year? kathy: the one thing i'm curious about is the possibility that the fed would actually use quantitative tightening. in other words, use the balance sheet to tighten policy rather than allow a gradual rolloff. that is not a base case scenario, but we have heard a couple of fed officials talk about employing the balance sheet in a way that could tighten policy more than expected. maybe it is an operation twist, selling the longer-term assets on the balance sheet, if they felt the need to do that. i'm not sure the markets factored that in. that would be a tighter scenario than the markets are set up for. romaine: fiscal policy, do you see it as a risk or tailwind? kathy: more of a risk, i think. failure to continue the child tax credit means that we will

see some of the boost to income for lower wage workers go away. although there is less issuance this year, the deficit is down, there is also the stimulus problem, fiscal policy. romaine: appreciate you taking the time. hope you have a wonderful new year's. we will catch up with you in 2022. kathy jones, fixed income strategist over at charles schwab. always lovely to get some levity with her forecast and outlook. paul: i appreciate her thoughts and comments. she has a lot of experience here, and speaks with a lot of investors. a good perspective on these markets. it will be very interesting for investors to see how some of these risk assets perform in a rising interest rate environment. it has been quite a long time since this market has had to do that. interesting to see how these markets start off next year. romaine: so many strategists

seem to shrug it off, say that the strength to still be there, telling investors not to worry. paul: that has been the right call. we have seen the buy the dip mentality, but that was when you had very strong liquidity. romaine: we will be talking with heather boushey at the white house council of economic advisors. we will be asking her about that jobless claims data that we just got. this is bloomberg. ♪ ♪

>> transforming everything from the checking process to the traditional room key. even as technology creates efficiencies, there are areas of rising costs on the horizon. after making deep staff cuts in 2020, marriott needs to rebuild its work force. >> the most painful part of this entire pandemic was about the furloughs and layoffs we had to do. it was necessary to survive, to make sure we got through to the other side. >> now, the company not only faces competition from an economy reshaped by the pandemic, it is trying to do this while wages in the industry are rising and one customer and employee expectations are in a state of flux. >> one of the things that sets a hotel apart from home sharing platforms like airbnb is the services they offer. there is an incredible tension as they work through what those

guest expectations are, what the strategic placement in the market is, and what their labor cost needs actually are. >> i do think they need to marriage technology to reduce the number of unskilled jobs in hotel operation. but they really need to provide jobs that require high levels of skills, so that they can reallocate a part of their payroll to pay workers better. >> we have been able to hire 40,000 people since the beginning of the year in 2021. where you see it is in really hot markets, where you can see the shortages. overall, it is improving. >> technology may help marriott meet this challenge as well. the company is rolling out a new labor management system that will more precisely match staffing to customer demand. >> this labor management system

allows a hotel too much more assign labor just in time, so you are able to say, i see what is coming over the next couple days. i can work the ships in a way that gives the associates more flexibility, but also makes staffing levels more appropriate. it used to be prior, i'm going to plan for all of next month. done. you know what your work shift is. now there is more adaptability to what is happening in the business of the hotel.

romaine: this is bloomberg markets. special coverage all week long, simulcast across tv and radio. paul sweeney alongside myself, romaine bostick. we did get those weekly u.s. jobless claims numbers earlier in the morning. they decline, 198,000 from about

206,000 in the prior week. to talk about that and the other economic issues is heather boushey, member of the white house council of economic advisors. i want to start not only with a jobless claims but the continuing claims. a year and a half ago we were at 20 million. down to about 2 million. how close are we now to recoup most of what we lost from the pandemic with regard to jobs? heather: we have made enormous progress. we have seen the on a blended rate has come down, people are going back into the workforce, they have gotten their jobs back, and you see that in the numbers of people needing to claim unappointed benefits. this is good news, indicates that the trends we have been seeing all year, the job market getting back to where it needs to be, has been ongoing. let's remember, one year ago,

before we pass the american rescue plan, we thought it would take years before we saw unemployment levels like we have today that are so low. this is ongoing good news for the labor market. paul: isn't your assumption or the assumption of the administration that the folks that left the workforce as part of the great resignation, that they are not coming back and let's kind of move on? heather: here is the thing, you always see people leave the labor force during a recession. this recession has been so unique. some families have care issues that they didn't have before. you have some ongoing issues from families all across the country with the pandemic. we do expect folks to come back into the labor force. 2021 and 2020 have been challenging for families, and you are seeing that in the numbers. but as of november, the owner, great came back down to 4.2%,

created 6 million jobs, and as people see the economy and families recover, we will see most of those folks come back into the labor force. romaine: a lot of folks are coming back into the labor force, some attracted by higher wages. some are still being scared away by the inflationary effects on those wages. i'm curious what the administration thinks they can do to try to tamp that down? we are staring down something like another 7% in that cpi number. heather: the most important thing we can do to shore up the economy and keep inflation down is to make sure that we keep people vaccinated and get the pandemic under control. each time there is a surge in the virus, it creates challenges across the supply chain. we have seen over the past couple of weeks, because of the virus in large part, there have been challenges with the airline

industry. so many workers are out sick. the best thing that we can do is continue to do that work. let me also remind us, the administration has done so many other things, keeping the supply chain moving, and making sure the consumer is not faced with high prices. because companies are taking advantage of the moment. there has been a whole suite of things we are focused on. romaine: when your meeting with other economists on the council, advising biden and his aides how to approach some of these issues, how much of that conversation is in totality about what is happening not only with the economy but the covid response? how much are those two links in your conversations? heather: there has not been a conversation about the economy where we have also not recognize the role of the pandemic. it is the reason we have this recession, the reason we have

these supply chain challenges. it's important to keep recognizing that nothing can get back to normal until we address the health situation. having said that, there are a lot of things that we can do to make sure we keep supply chains moving forward, keep the supply of services available for people and families. a lot of that comes down to containing the pandemic, masks, shots in arms, all the work the administration has done on those issues. paul: one of the big economic issues prior to the pandemic was income, wealth inequality. as we continue to make our way to the other side of this pandemic, how do you think we best address that? we have seen wage increases, but i'm not sure that is it. it is a much deeper problem. heather: great question, i'm glad you asked it. one of the things we have seen in the pandemic, not all families have been hit the same.

many of those workers on the front lines, continue to be, are in jobs that are not has paid as well as others. care workers, bus drivers. those families have been hard-hit. this has also been a good year for profits. over the past few weeks, we have gotten news about earnings, what is happening at the top end of the economy. our concerns about how the economy looks in terms of inequality after the pandemic. but one of the most important things we can do to address inequality during the pandemic is to make sure that those who are hardest hit have money in their pockets, that we didn't have families struggling on their own. that was the focus of the american rescue plan, to make sure we were putting -- helping families and small businesses through these challenges. the fact that on appointment is back down to 4.2%, and we continue to fall, that is good news for the longer trend

inequality data. paul: we appreciate you taking the time, giving us your thoughts on this labor market and economy. heather boushey, member of the white house council of economic advisors. coming up, we will chat with a mastercard advisor, a former sachs ceo. retail numbers were pretty strong during this holiday season. we will also get the outlook for 2022 on the consumer. this is bloomberg. ♪ he wanted to keep the team small

and he wanted to move step step. sub orbital, bring doors there was the first step, and then they would get to orbit, and then the moon. what happened was, the hare came along. elon finances it with venture capital, government contracts, they get all the glory, and bezos has a fair amount of -- i don't know if jealousy is the right word -- but here, elon is getting paid by the government to launch, and he is still paying into blue origin every year. so we see bezos accelerate blue origin's timetable and seed a little bit of dysfunction over the past year.

>> she makes her four-hour drive to check on the damage done

by climate change. she have been planting shrubs throughout the region and hope to slow down the acceleration of desertification. the goods blogging to the soil can withstand the desert. she says the shrubs have done their job, stopping the movement of the sand. the nearby village would have been under sand a few years but they saved the village. with its northern latitude, experts more and temperatures in russia at warming at twice the global average. despite the efforts from her team, the sands have doubled in size over the past year. for nearby towns, this threatens the mainstay of their life, facing drought and the desert's encroachment. last year, the area was expected to lose 80% of its livestock. after help from the government, that number hovered around 20%. he says it was horrible to look at the cattle.

they would look for grass but there is none at all. when you drove in, you would see the corpses of forces and camels and cows everywhere. you felt pity for the animals. policymakers have these areas in mind when it comes to talking about climate change. the deputy agricultural minister said efforts are now directed at solving the consequences of climate related disasters. experts worry this game plan will never address the root of the problem. >> he says the problem of desert vacation is really big because the past couple of years have been dry. most importantly, the pastors are not rejuvenating. while the russian government has drafted a more aggressive decarbonization plan, setting their net zero carbon emissions target by 2060, that may be late for the herders in the region.

he says the main enemies are sand and the wind and heat. there has always been heat, there is no escaping it. lately, it's getting really hot in the summers, and warmer in the winters. romaine: this is bloomberg markets. special coverage all week long, simulcast across tv and radio. keeping an eye on what is going on with retail sales and the consumer. the consumer is pretty much healthy when you look at the data. some preliminary data with regards to how they spent over the holiday season and those numbers are higher. to talk more about this is someone who knows a great deal about what is going on with the consumer, steve sadock,

mastercard ceo, former ceo of saks. thank you for being here. i'm looking at the mastercard data, it five jump year over year better compared to 2019. the question is whether some of that retail sales growth was a pull forward, the idea that consumers were scared into this belief that if they didn't get all of their holiday gifts in october, their kids would end up empty-handed. steve: great to speak with you and happy holidays. this was a terrific consumer holiday season. the 8% growth from a year ago, 10.7% versus two years ago. the numbers would show that there was clearly strong performance in the october timeframe, november, but it ran all the way through december. consumers heard about the supply chain issues, they knew they

would have to pull things forward, but two years ago, amazon prime day was in october. you are telling the consumer, come a really great if you want to get the items. this is december 24, so as of five days ago, we have a consumer that is healthy, showing recovery in a lot of the categories that were very weak in the earlier parts of the pandemic. apparel, accessories, jewelry, items that were not the at-home categories that you saw that drove the early part of the pandemic. now it is apparel and department stores seeing the best numbers they have seen in years as consumers want to get back out again. your question about pulling it forward early, that was going on, but over all the holiday season was strong throughout. paul: talk about how people

shopped over the holiday season. we have been conditioned over the past eight years, it is all e-commerce, stores are dying. how is foot traffic? steve: actually far better than in the past. brick-and-mortar sales were up 8% versus a year ago. e-commerce was up 11%. having said that, e-commerce has grown from 12% of congress to about 20% this year. 60% growth last year, another 11% this year. but that still means 80% of shopping is being done in a physical store. if i had to capture a story for this year, it was all about the recovery of brick-and-mortar. people going back to the malls and stores, department stores, which were on a long-term secular decline. department stores coming back. these are the categories driven by apparel, for example. i think brick-and-mortar is

doing much better. the consumer is more comfortable getting out. there are clearly hotspots. whether it is omicron or delta in varying cities, you have an effect when you see that, but also what happens, it doesn't affect overall retail. a little bit more e-commerce, a little more brick-and-mortar when code summers -- customers are comfortable. the reality is, the customer wants to shop wherever they want to feel safe. it may be online, curbside pickup, or in the store, but the consumers are back shopping. romaine: any insight into how that money is being spent in the big chains, whether it is macy's, amazon, walmart, versus the smaller independent businesses? anecdotally, around the streets of new york, you see a lot of those big chains still there, but a lot of those small

businesses are just gone. steve: one of the effects of the pandemic has been that the customer shops where they feel safe and comfortable. early in the pandemic, that meant they went to the big box stores, home depot, target, costco's of the world. that is where consumers were shopping. as we have evolved, people getting more comfortable, the smaller, specialty stores, strip malls, specialty apparel shops have performed much better than in the past. again, it goes back to where the consumer feels comfortable. you have had a lot of turnover in restaurants, as an example. specialty stores closing. but the reality is, during the pandemic, we had more store openings and closings. those will largely be some of

those smaller stores. paul: when you look at that 8.5 percent headline number, very strong. how much do you think that was helped by people having augmented unemployment cash in their pockets and not really indicative of where the consumer is? steve: well, it is where the consumer is because they have the money in their pockets and they are spending it. if i look at the luxury consumer, they are shopping very strongly. tied to the stock market -- when i was running saks, we had about 8.9 r squared connection to the customer. the lower end of the market has been spending nicely over the year. the unemployment checks, child tax credit, government support programs have been supportive of some of that growth, but it is real growth and has continued through the holiday season.

you can certainly ask the question, whether or not you go into a period where you don't have the government support programs, will the lower end of the market hold up? that's a fair question. right now, they continue to spend. you are getting a little bit of a benefit in the numbers with inflation. cpi is embedded within the overall growth. this is real volume growth as well as an inflationary in fact, support from the government helping it. romaine: let's look forward to how the industry adapted itself to the pandemic. we talked about how companies were able to straddle the line between brick-and-mortar operations and a rollout of their e-commerce and logistics operations. what kind of longer-term structural shifts to do you see in the retail spending space? steve: if you look at the

retailer side of the equation, they fared well. supply chain costs are high. if you are a brand with pricing power, they have been able to price it through the consumer. inventories are under control. my sense is they will have pretty good gross margins and profitability through the holiday season. i think the retailers are learning from that and will try to control inventories, promote earlier, probably have less promotion then you have seen historically. this year was a lower promotional rate then we have seen, and that leads to a better p&l structure for retailers. this earlier season is good for the retailer, i believe good for the consumer to find the items they want, as well. paul: we appreciate your time. steve sadove, mastercard

advisor, former saks ceo. a strong holiday season but the question is how much that carries into next year. romaine: keeping our eyes on some other stories out there. tesla. there was a big recall. about 475 thousand cars in the u.s. recalled for some safety issues. not having a huge impact on the stock. we will break down exactly what is happening and why. this is bloomberg. ♪

paul: we are back with special coverage, bloomberg markets. extended coverage, another couple of hours for you. we have simulcast, radio and tv, having some fun with that. keeping on top of the last trading days in the market into

2022. tesla is a name that is front burner for many investors, an extraordinary run. year to date, it is interesting, it is up 54%. it kind of sneaks up on you when you look at that performance. romaine: this company has been through so many ups and downs, but this was really a breakout year for elon musk, not only in terms of what the stock did but the number of deliveries the company was able to achieve. by some measures, they did achieve some profitability. paul: also having a lot of the concerns that other companies have had over the years. recalling 70 -- 475,000 cars due to hood and trunk issues. i guess tesla is not immune to these problems that other manufacturers have had to deal

with? >> recalls are quite common in the industry. everyone immediately panics and thinks, now these cars are coming off the roads and nobody can drive them. it is really not that. tesla issue two recalls. the first fx 350 6000 cars, all model 3's, and it is a problem with the cable that connects to the rearview camera. when you open and close the trunk, it can wear on the cable and cause issues with the camera. tesla is not aware of any crashes or accidents because of this, but proactively they are issuing a recall. just go to the service center, and if your cable is worn out, they will give you a protector or it. in the second case, an issue with the trunk harness, and that affects about 119,000 cars. these are pretty minor things. you are not seeing the stock react much, but the phrase

recall, you immediately jump to things like gm ignition switch or takata airbags. this is relatively standard. romaine: these appear to be minor issues, issues that deal more with the build of the car itself. there are still some questions out there about the technology in tesla's vehicles and the contentious back and forth they have had with regulators over that. where does that stand? diana: when it comes to tesla, the big thing that everyone is watching is autopilot. nhtsa has opened up a defect investigation into autopilot, asking why some tesla cars went on autopilot seem to be smashing into fire trucks and police cars. that is a very narrow line of inquiry that nhtsa is taking,

but they open that in august, still ongoing. there has been a lot of back and forth between the company and the agency. there has not been any kind of result from that ongoing inquiry. paul: what is the reputation for tesla, overall reliability? diana: i think it depends on what you mean by reliability. does the car work? diana: does it break down, doesn't need repairs? compared to others, is it seen as pretty good? diana: it is. a lot of early adopters are willing to overlook some flaws. those flaws i've talking about, there have been concerns about paint issues, for example, that it is too thin. others have had bigger issues. you see this amplified on social

media, so it is hard to know how much of it is real and how much we are seeing through our filters depending on what your twitter feed looks like. you see a lot of people saying, i love my tesla, but i wish they would fix x, y, z. as more cars come on the road, the coronavirus, the backup at the service center is pretty significant. the larger issue is that tesla could use a bigger name to be in charge of service, invest more in their service operation. there is not a sense that the cars are breaking down, per se. switching to electric is a mind shift that a lot of consumers have gladly taken. romaine: recalling 475,000 cars due to minor issues with the camera and trunk. the shares are basically flat on the day, still about $1000 a share. we want to pivot to hedge funds,

which are having a good year, part of the reason, their allotment to private equity. joining us now to discuss is kathy burton. private equity was the big diversifier this year. kathy: it really bailed out some funds, help others do even better. paul: is there a concern that hedge are maybe going outside of the remit, maybe doing some private equity, alternatives that are not necessarily what investors side up or? kathy: no, i think most investors in these funds that do private equity are very much aware that that is what the managers are doing. there is always a worry that people are able to pull money more quickly than would make sense if your portfolio has a lot of private investment in it. but i think managers learned a

lot from the 2007-2008 period and they are better about locking people up for longer. romaine: i feel like those multi-strategy funds did pretty well, certainly better than in the prior year. what about the quants? so much talk about them prior to the pandemic and their performance, in some cases, underperformance. have they bounced back this year in 2021? kathy: they definitely have. many of the quants had problems in 2020, but they have been able to deal with the volatility this year much better. they had pretty solid performance, i would say. paul: thanks for joining us, appreciate your thoughts on hedge funds, going a little bit with private equity for returns. romaine: that is the new 40 in the 60/40.

paul: i looked long at the hedge fund industry when i left wall street, and i just didn't see it, too competitive, not enough opportunities. sure enough, the performance for long-short equity has been really subpar. a lot of these managers have to do different strategies. romaine: a lot of crowding going on right now. i think you are about to go home. s&p of 4802. paul: not bad, interesting week. one more trading day for the year. it has been a heck of the year, especially for the s&p, up 20%. romaine: we should do the show tomorrow from times square. this is bloomberg. ♪

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>> welcome to our global simulcast across tv, radio and youtube. romaine bostick alongside kriti gupta and tim stenovec, looking back at 2021 and looking ahead to next year. record high on the s&p 500, on the dow jones industrial average. the nasdaq 100 within four points of a record high on its own. >> a santa claus rally. a fun technical i spotted courtesy of matt turner. the s&p 500 has not gone below the 200 day moving average this year yet. that has only happened four other times since. 1981 after three, it saw an annual decline the following year. something to keep in mind. >> that is a fun fact.

when was the last time we were below the two hundred day moving averagezz/ -- the 200 day moving average? >> i am guessing march of 2020. >> i have to make the questions harder. we will walk you through the market. we will get some great insights from a slate of guests. we will jump over to abigail doolittle for a breakdown on the markets. >> the technicals, super interesting. it would suggest that the market is overextended, not having gone to the long-term support to her maybe next year could be difficult. growth is expected to slow dramatically for apple. the all-time high for the s&p 500 on pace for the next record close. the nasdaq outperforming. we will look at that. and the s&p 500 hotel index is slightly higher despite having exposure to some cruise

operators. the cdc coming out with an advisory saying people should not go on cruise ships whether vaccinated or not. we saw a drop-off for royal caribbean, carnival, down about .5%, so not huge, but considering that these were up 3%, down 2% at the low, incredible. i was looking at carnival. expected to put up not even $2 billion. in 2018, it was $19 billion. that is what investors are worried about. >> when i think cruise lines and the travel sector, i think volatility. the bond market, what do you see therez/ -- see there? >> that is a great question.

they needed to raise tremendous amounts of capital through debt to make it through. that will be something to watch, credit for cruise lines and to some degree the airlines given that omicron is causing many cancellations for a number of the airlines. i think that jetblue came out today and said they are canceling 1300 flights between now and january 10. for cruise operators, for those committed to cruising -- i am not one of them, but i have friends who love to cruise a couple times each year -- will we see a real drop-off in revenue? if so, it could impact that credit. >> abigail doolittle, we will check in with her later. our next guest, ross mayfield, joining now. obviously a lot of distortions this and last week because of

the low volume towards the end of the year, but anyone looking ahead to next year and trying to define where the s&p might end up, it has to be tied to where they think corporate earnings will go. i'm curious as to whether you think some of the relative outperformer's of 2021 with regard to margins, earning, revenue, continues into next year. >> more of a mixed bag. we expect earnings growth to be positive. a lot of tailwinds, strong consumer, operational efficiencies companies put on and should continue. revenue should still be strong given strong nominal gdp growth. however, margins have peaked, and started to roll over, still at extremely high levels, but have peake and rollover. we have heard the inflation story and the stickiness of wage

inflation, one of the bigger factors across the industry, so i do think there will be an -- p&f corporate earnings to drive the market higher outside of something that brings multiples down. usually, in the early part of a rate hikes cycle, multiples are flat. so if you are taking high single digit, low double digit earnings growth, you can translate that to performance. >> will ask a lot of guests this week about the biggest risks in 2022. a lot of them think it would be a misstep by the fed. where do you fall? >> the biggest is the one we don't see coming. that is kind of a copout answer -- >> we checked that off. it is ongoing, right? >> on the fed front, we are at all-time highs.

the market is aware of the tapering timeline, pricing in three rate hikes for next year. i think the fed, it would be dovish. it will probably lean dovish. i think you could see the fed's cue dovish given one of the two options. in which case, it would not be a headline risk. it would be more of a tailwind. we expect monetary policy, even if they hike. >> we have to talk about tech because you cannot continue that strong equity performance into the new year without having tech on your side. what is the bull and bear case for big tech? >> the bull case is long-term secular growth, wide moats, high

cash, strong margins and the ability to protect them that they have mostly shown. they have also been a covid hedge. throughout 2020, big tech was the sector or subsector leading the market higher. it popped in various ways the last year. it is not hard to make a strong bull case for these companies because they are high-performing operators and have done so well over the last decade. next year, maybe midcycle, it seems high quality as a place we are looking to take refuge. on the flipside, you look at interest rates, rising interest rates, long interest rates as a headwind for the growth here -- for the growthier parts of the market. small caps taking it on the chin. that would be a headwind. and the antitrust sentiment has taken a backseat as build

back better has become the focus in washington now, but with more appointees, you know, policies, so you could see that sentiment throughout the year and maybe even ramp-up as the midterm -- as a midterm election talking point. >> one minute left. >> that's the number one question on the board. rising inflation, you don't want to be in treasuries, fixed income, cash, just losing money. going out the credit spectrum in fixed income and going shorter duration, maybe bank loans or shorter duration high yield could be a place to go. it is fairly rich, as with the equity market, but if you see an uptick in rates, it will be one of the few places. we do not mind a small allocation in alternatives or commodities but we would keep it small. >> ross mayfield at baird, thank

you. his comment about alternatives reminds me of your conversation with paul sweeney. >> absolutely. when you look at the performance, that was the diversifier for a lot of those funds. when you talk to private wealth managers, they tell you that's what they provide clients. >> i did not hear bitcoin. >> yeah. i don't know. >> we are talking jobless claims coming up. in the u.s., they declined unexpectedly in the latest week. more on that in a few minutes. you are watching us on youtube, bloomberg tv and listening on radio. tim stenovec, romaine bostick and kriti gupta. this is bloomberg. ♪

>> we set up small investing teams in asia. a year into it, we shut down. it was the way the laws work. the laws may exist on paper in some emerging markets. they are not followed in practice. we want to fix these businesses. we are trying to do more than just be paper investors. your ability to make those changes operationally is stymied. as a result, when we look at

asia, large parts of emerging markets, we say, for the most part, not really for us. >> do you think china will become a viable market for credit investors like you? >> there are some investors like that in china already. some of our peers have operations out of hong kong. they have significant investments in china. we will agree to disagree. we think, over the next 10 years, it is not changing. eric, you can look at the headlines coming out of china every day. in the u.s., it does not feel like -- it does not feel so welcoming, right, if you are a u.s. investor and they are trying to restructure companies. >> if operating expertise is what distinguishes svp from the rest for most, let's say -- rest, or most, let's say, from

the rest of the industry, why not raise a private equity fund? >> in five years, will there come a time when we say we should do that? maybe. but 40% of controlled, oriented investing, 50% plus of what we do will be controlled, oriented investing. >> largely through that. >> yeah. >> the reason i ask is because what you do to companies is what private equity firms, many of them, due to companies -- do to companies, restructure, rehabilitate, consolidate with the goal of building a more valuable company. the only difference i can see between what they do and you do is you are buying at a lower valuation, they are buying at a

higher valuation and applying leverage to get the same return. >> when you can buy swift port, we believe we took our equity stake at two times stabilized -- the businesses i am describing today, like the two we are taking control of as we speak, are at 5, 6 times that. when you think about private equity, where the average purchase multiple is 11, why are we in such a hurry to go there, right? if we can keep buying at 5, 6, 7 times and there's low hanging fruit operationally because these businesses are troubled in some way. sounds like a good way to invest. we are not in a hurry. we don't see ourselves in a hurry to buy at 11 times. >> tell me about spac's. a few people in your industry are raising hundreds of millions

of dollars in spac's to finance distressed and distressed borrowers. do you have any interest in joining the spac party? >> why bother? look, when you look at -- i think what you are hearing for me is we are not a super market. we are not, like, this is the flavor. i have got one of those for you. ♪

>> welcome back to the special markets coverage simulcast on bloomberg. i am tim stenovec joined by romaine bostick and kriti gupta. unemployment claims unexpectedly low, falling to the average of

3.5%. let's dig into this with jelena. help us explain the difference between this decline we saw and what is going on with the omicron variant. is labor just so tight now that employers are unwilling to let people go? >> that is true. and also because it is hard to find new work, not just because of omicron but in general, the lack of available workforce. it is difficult to -- during a holiday week, so i would not take too much signal from just one piece of data, but definitely took a downside and we are seeing -- we saw the readings before below 200,000 a couple times already, so that actually means that we will continue to see this tight labor

market going into 2022. the number i look at in this report, the jobless claims report, is also called the insured unemployment rate, the number of people getting unemployment benefits as a percentage of the labor force, and that dropped to 1.3%, the lowest in the cycle. it is only .1% above 1.2%, which we had before the pandemic hit. so that means we will see significant progress in the employment rate going forward. >> help me reconcile what we are seeing in this data, the positive trend, and the anecdotal evidence we have of companies saying they cannot hire enough people. you see on the lower end of the wage spectrum stores and restaurants saying they have positions open for anyone, anyone who wants one, they have

one. are there who have completely dropped out of the labor force and are not coming back? >> that is true also. educational attainment plays a large role. so people get more educated, more people have higher education, so that means fewer people for blue-collar jobs. also less immigration. that reduces the pool of available workers as well at the low end of the income spectrum. i think we will see the same trend going into 2022 when people, when workers at the lower income spectrum, they will have -- in terms of wages and wage growth. that will support wage growth next year. >> talk to us about the gig economy this post-pandemic returned to work. people are looking for this flexible option. how does that play into all this? >> absolutely.

but you also see income coming from people as well, so if you look at a broader measure of economic variables, such as personal income and salary, you see that growth in income exceeded anything we have seen since 1984. yes, we are talking about inflation being the highest since 1982, but you have to remember that the average growth in personal income is also quite strong, so that also means we will see significant increases in consumer spending, particularly in the services sector. >> all right. always wonderful to catch up with our senior u.s. economist for bloomberg economics. we are looking at those jobless claims numbers from this morning and looking ahead to next week, one week -- week, when we get

data that will perhaps be less distorted. >> hard with all the elements here to understand the data and what is going on. often times, as we know, these things get adjusted in hindsight. >> let's pivot from that. keeping our eyes on washington. about an hour from now, the presidents of the u.s. and russia are expected to get on the phone and hash out their differences on a variety of issues. joining us to talk more about this is david weiner of bloomberg news. what are we expecting these leaders to talk about specifically? >> we don't know exactly what putin will say, but he will be wanting to discuss his security concerns, you know, essentially, russian diplomacy right now is lasering in on, focusing

on, reaching a deal with the u.s. first they want to speak one-on-one with president biden, in a way circumventing the europeans, to get a deal. >> what leverage does the u.s. have in terms of sanctions? >> i think the key here is for the u.s. to join with the europeans in a sort of concerted sanction that really involves the europeans targeting trade, targeting specific russian billionaires, targeting the banking system in russia. there's obviously, you know, gas pipelines, so i think just in general, you know, they are really threatening to up their economic sanctions i concerted action with the europeansn. >> bloomberg's david weiner with an update on everything happening. we will be looking for that call

between the president of the united states and the leader of russia, vladimir putin, coming up in just about an hour's time now. next, talking to one restauranteur in san francisco about the effect of omicron and how the industry is struggling, continuing to struggle and rebound after the last two years. you're watching us on bloomberg tv and youtube and listening on bloomberg radio as well. this is bloomberg. ♪

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>> crypto is one of these things where people get distracted. we view it as a fundamental technological transformation, a breakthrough that's happening in an area of computer science called distributed consensus, where people are able to form trust relationships in an environment. it is one application of distributed consensus, but there are many others, things people will be able to do with this, and many of the smartest in computer science or going into this and pushing it forward at a

rapid rate. it is another breakthrough, transformation happening in the tech industry. we take it seriously. >> your view is not whether bitcoin is good or not. the whole technology underlying bitcoin will transform the world? >> this gets subtle. bitcoin is an internet computer spread out of thousands of physical computers, a transaction processing system that runs without a central location, like a giant, distributed mainframe, and out of that processing comes the ability to exchange money. i do that comes this token, the bitcoin token, the coin, a representation of the value of the underlying system, a new kind of financial system. >> when people invent something, even if they are shy, they might say i did something nice. how come the inventor has not surfaced? >> this is one of the most amazing things i have seen.

i would go so far as to say that most people don't realize how important a profound breakthrough is at the time the infant it -- time they invent it. whoever invented this thing knew the importance from the very beginning. >> this is bloomberg markets, special coverage. romaine bostick alongside tim stenovec and kriti gupta helping you count down to the close in the equity markets, keeping an eye space. nymex crude futures coming in just about $77 a barrel. we have been talking about how like the volume is in the equity markets. in the wti futures markets, we are something like 50% below where we would normally be with

regard to daily volume. at the pump, you are paying about $3.29 on average. gold up about .5%. when you look at soft commodities, pretty much everything in the red with the exception of cotton. >> restaurants are continuing to struggle to pay for higher input costs as coping cases surge as well -- as covid cases surge as well. many restaurants are struggling to keep their doors open and recoup costs from the pandemic. we are joined by david nayfeld, a chef at che fico, and a member of the independent restaurant coalition, inc. a organization that calls itself a voice for the independent voice -- a voice for the independent restaurant in our community. with omicron, affecting

restaurants, patrons too, are you seeing that? >> it has been a tremendous hit to us. we made the hard decision to close both restaurants for the rest of the year. we had a spike in positive cases and, you know, the only reason we are able to detect that is we have paid out of pocket, over $5,000, to get these massively over inflated self tests because that's not being provided to us by our local, state or federal government, so that's something we need to do to protect our own staff and the public. you had onto that that when we get a number of positive cases, we try to do the right thing, shut down. we lose a tremendous amount of money doing that. we had to cancel all our new year's eve reservations, our biggest night of the year. it is a tough time for us, our city but also our industry in

general. everyone is hurting. i am seeing just dozens, by the day, restaurants locally, state and federal saying they will shut down because they don't know what is going on we all feel, honestly, abandoned -- going on and we all feel, honestly, abandoned by congress. you have 200,000 restaurants almost that applied for aid and never got it. we are deciding right now whether we will be able to reopen at all. >> it tells us -- tell us little perhaps about the ebbs and flows you have seen of customer in relation to vaccine mandates and other measures. >> there are moments where consumer confidence is. they want to come in.

they will want to dine inside. you see a news report come out, and within a day, reservations for the next week will be impacted. you will see the man for indoor -- see demand for outdoor seating go from all-time highs to nothing. a news report will come out and people all of a sudden are willing to dine in the rain outside, but not eat inside. that is incredibly hard for a restaurant to weather the storm of. it is hard in terms of predictability and visibility, how much we need to order and how much we need to staff. and staff is something that is challenging for us to deal with. we pay on the higher side to begin with, but, you know, it is something that, you know, the guest is going to feel the impact of because of rising prices all across the board.

the costs of food have gone onto the roof, our losses has -- have gone up through the roof, our debt, and labor will go up and up to get viable candidates. >> what will bring stability? what do you want to see that you think could bring normalcy and stability to the industry? >> there is one silver bullet answer and that is the restaurant revitalization fund, which we had the independent restaurant coalition were fighting for since march of 2020. we fought, and when every other restaurant, you know, trade group,, gave up on it, we were able to get it for over 100,000 restaurants. there's 177,000 that signed up and it did not get. congress is now in the business of picking winners and losers. senator schumer promised with the -- promised us with a

down payment on the rest of it. they need to help us get on the others this. if they do, they will save millions of jobs, jobs they will not have to take care of down the road. >> in the last minute, make the case and talk about the scarring that could occur to the industry throughout the country if independent restaurants don't get this aid? >> this is a simple case to make. we contribute more to gdp than almost any other industry. we provide more jobs than almost any other industry. 15 million jobs that independent restaurants alone provide to our economy. the amount of tax revenue to our cities. that is why our industry is worth saving. most importantly, something we need to remember, you don't need a college degree, not even a high school degree, to get into the industry, to make it into the middle-class.

you work hard, you can open up a small business and they are the cornerstone of our economy. >> well said. certainly the cornerstone and independent restaurants are certainly the lifeblood of so many of our communities and cities. it is what makes our cities cities. david, we wish you the best. thank you for taking the time. david nayfeld, part of the independent restaurant coalition and owner of and chef at che fico in san francisco. we will talk more about the covid crisis and new recommendations by the cdc, this one applying to cruise ships. we will talk about that and so much more right here on bloomberg. ♪

>> the first big test.

so far, things are going well.

>> do you have a view on that? >> clearly it is here to stay and will play some role. not clear what role it will play. it is important for us to dabble so we make sure we follow, have relationships with people who are going to develop expertise and can leverage those to decide which way to go. it is not something that we would invest a lot in, at this point, there's a lot of volatility, risk, which is not something that we are necessarily getting paid for now, but for sure, we have the ability, because we are long-term investors, to explore new roads. cryptocurrency is one of them. >> the inflation environment has

been changing. inflation has been low. people think it is coming back. how will you deal with that? >> the tools we use to battle inflation no longer work the same way they use 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 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, which is build a diversified portfolio where there are many different opportunities that have the possibility of hedging against inflation, because different types of inflation have to be hedged in different ways, so a quick increase of inflation, as opposed to a slow rise, is it

temporary? is it a long and persistent type of inflation? for us, i never model myself as an economist that can predict where inflation is going, so what i need to do is build a diversified portfolio that conflate different types of inflation and pay close attention to it. and, you know, fundamentally, it stems from the equity markets. >> what about debt? the u.s. government has a lot of debt, adding about $3.5 trillion a year. does that worry you? >> for a long time, i thought to myself -- i was worried about the debt because of the impact on inflation and the value of the dollar, but i was not super worried about it. we are starting to see capacity constraints, which have a larger impact on inflation. so as far as inflation goes, that's a mounting worry, but, you know, the issues around the dollar and the sustainability of

the united states and reliability of the end whether other governments and -- of it and whether other governments and markets trust the u.s., because the currency is 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 people looking around, trying to make sure they also have a place, a vocal voice in the world, and we have to be conscious of that. ♪

>> welcome back to special markets coverage on bloomberg television, radio and on youtube. i am tim stenovec joined by romaine bostick and kriti gupta. shares of cruise lines falling this afternoon after the cdc said people should avoid them even if they are fully vaccinated.

let's get to alex with the latest. what do we know about how and why the cdc made this decision here? after all, this is not the only place where people would find themselves in close quarters. >> that is true. i mean, the cdc's reasoning today mainly was that we have launched more than 90 probes into ships that have had covid outbreaks. they seem to say that these are places where it can spread quickly and perhaps that they are concerned they are seeing more cases than have seen since they started stealing again. -- started sailing again. >> 300 million people in the u.s., and abbott labs, the primary producer of those covid tests that are so in demand, set only 50 million are being produced each month, yet joe biden has promised 500 million rapid tests sent to homes across

the country. how does that all compute? >> well, i think -- well, in a dearth of tests, we are seeing record-breaking cases. the cdc said we broke another record. this might be an undercount. a lot of people over the holidays are seeking tests to go to gatherings, see family, to go to events on new year's, and they are finding them hard to get. the demand is so much higher than the supply. it will lead to undercount, it will lead to the fact that people be unsure they have the virus, or unaware. >> there's been a lot of talk about how we are counting these cases, particularly in light of the fact that those of us who have been able to get our hands on those home tests are not necessarily reporting that data to anyone official, so there could be an undercount there.

with regard to the government response, testing, vaccination and boosters, and tying it in with what they want to do with regard to keeping the economy going, schools, businesses, etc. here, how has the government been balancing those competing forces? >> well, you know, they changed the recommended number of days you should isolate from 10 down to five in a lot of cases. a lot of that is about getting people back to work. you know, this administration, it has been touting its jobs numbers. it is pushing people back into the economy. the biden administration has really tried to focus on revitalizing and surging forward in the u.s. economy. at the same time, they are dealing with a virus that is spreading more than it has ever spread. part of the issue is that we are seeing more virus spread but the number of hospitalizations and deaths have not responded.

the ministries and has been saying we are seeing cases but people are not getting as sick. part of that is allowing them to play these two issues together, essentially saying we can deal with a number of cases and maybe not have -- i think there's not an appetite for the kind of shutdowns we saw early in the pandemic, when this began. >> i am wondering what your reporting is telling you about potentially changing perceptions of the cdc or if the cdc is struggling with perhaps an interpretation of declining credibility among some americans given the recent changes they have made, made so quickly, and pushback they have gotten with decisions they have made as of late about quarantining for people who test positive but are a symptomatically -- but are asymptomatic. >> the cdc has really been working to revitalize and improve its standing in america.

this is an agency that for behind early in testing. part of the problem came up and the cdc did not respond strongly early in the pandemic and -- it plays a difficult place in our lives and -- why they are shrinking the isolation days, why one industry might be allowed to do one thing that another might not and i think there is -- for a long time, americans kind of expected to hear from the cdc and trust it implicitly and now i think there a lot more noise going on. >> keep an eye on that, alex ruoff, of bloomberg news. a lot of people were looking for opportunities in the distressed debt world here. some people found it, others had trouble. eliza covers this for us at

bloomberg and wrote about hits and misses of the year. the biggest has to be hertz. >> one of the biggest for sure. it was indicative of what happened over the past year and a half in more than one way. it was one of the first and only true pandemic caused bankruptcies. it also suffered from supply-chain imbalances and disruptions, but on the other hand, the other major theme of the pandemic has been a ton of government stimulus, and hertz and other distressed situations rebounded in a way we have rarely seen to, in the case of hertz for instance, rebounded, which is unusual. >> you mentioned the stimulus,

the monetary stimulus in particular. how much of that success in the distressed world is coming to an end in 2022 now that some of the stimulus is getting cut back from a monetary and fiscal perspective? >> it is interesting because the stimulus has sort of handed outside returns for certain investors but most of the distressed debt market is actually looking forward to the wind back of the stimulus because they actually do better when there's a wide array of opportunities in troubled companies, so they may have fewer hits, fewer huge hits, but more opportunities overall, so it will probably be a good thing for these markets. >> if we look back on the year in distressed trades, what was the most surprising thing that happened to you? what was the most surprising trend/ >> it has got to be the

180-degree change the retail sector took. retail was sort of the banner industry of distressed debt for quite a while there due to private equity buyouts of many major players in the industry and than a slump among major retailers overall, be at amazon or other online shopping elements. we were talking about the retail apocalypse for several years and now retail, in this last year, was one of the most healthy sectors. >> thank you to eliza ronalds -hannon. much more after the break. tim stenovec, kriti gupta and romaine bostick. this is bloomberg. ♪

romaine: this is bloomberg markets special coverage all week long. we welcome all of our audiences across all of our platforms. we are going to be counting you down to the close of trading on this thursday afternoon. just about one hour away. the s&p at another record high as is the dow jones. the nasdaq came within a few points of the record high. as far as the individual movers, it is a mixed bag. apple flat on the day. ford flat on the day. then you have stocks like peloton and zoom. a lot of meme stocks or pandemic plays seem to be back in focus. seeing a significant drop. peloton shares. up 9%. . kriti: it is still those names

that are familiar place when it comes to hedges on the omicron variant. those have been getting battered lately. why not buy the dip? tim: does apple hit $1 billion by the end of the year? romaine: we will do the show from times square. we will get to our guest in a moment. we want to jump over to abigail doolittle an eye on the markets. abigail: i am not in times square. i am at headquarters. everything you have been saying, cruise control rally, the s&p 500 up three out of four days. this is the nasdaq's first update this week, still not hitting a record high. nevertheless, it stands out. speaking of trends, crude oil at

its best going back to february. the s&p 500 likely to hit another record closing high, incredible. the nasdaq outperformance is coming from china tech. the golden dragon etf up more than 10% today. that is the best day going back to 2008. however, on the year, it had been down almost 50%. that is what is happening with baidu, alibaba, and a number of other stocks helping out the index. kriti: in the commodity space, have we hit the peak in the commodity rally or is the room to run in 2022? abigail: yesterday, you are asking about the dollar. a lot of people think the dollar will go higher. if the dollar strength reflects a strength -- strong economy, you could see commodities go

higher. if the dollar goes higher and there's not as much economic strength, more inflationary pressure on the dollar, it would be interesting to see whether or not oil can hang in or not. technically, it is somewhat strong. commodities, like stocks, tremendous year. the bloomberg spot index up more than 30% this year. oil up more than 40%. i think it will come down to fundamentals in terms of economic growth. in the beginning of the year, how much will omicron impact. romaine: let's see if we can get answers from our next guest. thanks to abigail doolittle giving us a nice run wait to start off with jason with about $40 million in assets under management at the firm. let's look ahead to 2022. i'm sure all clients have to be asking you what to expect given how phenomenal this year was for most asset classes and how unlikely some of those gains

probably were. jason: thanks for having me on. this is an interesting environment we find ourselves in. we think the gains will be more modest in 2022 given the valuation point we are starting with. having said that, we think there is some reason for optimism for investors. we are still in a recovery from the pandemic. that comes with an expansion of the economy and expansion of profits for corporations, and a good fundamental picture heading into 2022. we expect there to be growth in earnings, growth in revenue, and an underpinning for rising stock market, offset to some degree by the premium valuations.

tim: help us understand what you are factoring in from a policy perspective. what are you factoring in? jason: that is one of the key questions for 2022. what does the policy framework look like? let's address the two aspects, monetary and fiscal. the big picture for both of them is they are going to both be a headwind for the economy and markets in 2022. one of the reasons for it to be softer. fiscal policy will come in the ballpark of $250 spend next year. that is off substantially from 2021. monetary policy we know we will see the fed tapering the balance sheet or purposes --purchases. and also talking about raising rates in 2022. you put those things together and it is a headwind for the

economy and markets. it is not an insurmountable headwind which is one of the reasons we think we will still see gains, just not as big as what we had in 2021. kriti: i am a little bit confused about where we are in the economic and market cycle. traditionally after you come out of recession, you are supposed to see small caps, commodities, riskier assets, even emerging markets excel. we got a little bit of that and then go back to the defense of trade. does that mean the early part of the expansion that we have accelerated through it? jason: we think we are in the mid-stages of the expansion. it is a weird midcycle stance where we have oscillated back and forth between things typical

recovery trades due to the inflation cycle and variants coming forth from the covid crisis. at the end of the day, we think investors need to look at this as an ongoing economic expansion. look at what investments have participated and have not. if something participated really well, expect a trade-off back to something that has not. a great example is small cap securities. small cap companies participated early in 2021 but have backed off and relative performance through 2021. we think they are setting up for another run of outperformance due to the underperformance at the tail end of 2021. another area we think is interesting is real estate. real estate has been an unloved environment due to concerns about people staying

home and away from work and being less demand for corporate real estate. we think there is a significant misperception and even misunderstanding as to how much corporate real estate is dedicated to office space. it is a minority that is office space. the rest is used for things that are highly productive. tim: a big thanks to jason pride at glenmede. happy new year. thanks for joining us. the conversation continues when it comes to real estate, what it looks like on the other the pandemic. think about the conversation yesterday about the return to the office. a company like facebook delaying that but still investing in corporate real estate. kriti: that same psychology expands to a lot of space questions you need. it depends on one thing. that is the covid-19 virus.

romaine: are we talking real estate in aggregate or certain pockets? there are still areas of the commercial real estate market that are still completely beaten down. there is a rotation based on where we are living and working in what we are doing, but it seems you have to be choosy about where you put your money. tim: that is a good point. you cannot say residential real estate has been unloved throughout the pandemic. next, president biden and president putin are set to be on call any minute. we will discuss what to expect after this. you are watching us on bloomberg television, listening on bloomberg radio, watching on bloomberg youtube. this is bloomberg. ♪

>> this is a kelp farm, 10 acres. there is a lot going on under the surface that you cannot see. >> she is farming one of the fastest growing plants on earth that began as microsoft it seeds in november. -- just seven months later-- microscopic seeds in november. >> getting bigger every day. >> you are from new england. you grew up watching this watching up -- washing up on the beach. did you ever imagine as a child you would be farming this? >> i never imagined i would be farming kelp. i did imagine i would be on the water. >> she was still lobstering when

she met the man that built the first kelp farm in america. >> this was 15 years ago. i don't know if this is going to go. when we got into the process and built the first farms and i saw what his vision was, there is something here. >> the very first kelp farm in the united states was in maine. now there are more than 100 in maine alone. the industry is growing as fast as the kelp. the global commercial seaweed market is projected to surpass $85 billion by 2026. right now, 98% of the seaweed you buy in stores come from asia where seaweed agriculture dates back 1700 years. >> kelp farming is amazing. it requires water, no

fertilizers, no feed. and as it is growing, it is sucking up nutrients from the water and also cleaning the water. it photosynthesize is like a land plant but is 20 times more efficient. this stuff is amazing. then you end up with this superfood. >> this is it. this is heavy. a superfood. but not something many people want to eat like this. this is really delicious. >> that is where they come in. >> the vitamins and minerals you will find in kelp are a and k. potassium, magnesium, omega-3. >> they launched it four years ago with multiple goals of building a sustainable business, fighting, change, and creating new food. >> so much of our soil today is depleted of vitamins and minerals because of the way we are mono cropping.

we are sucking that in with the kelp and putting it into a burger and you are eating it. >> the patty is made with mushrooms, pipo team, black beans, and extra-virgin olive oil. but the main ingredient is kelp. it is not meant to mimic meet but offer a satisfying alternative with a rich flavor. >> we have sold over 20,000 kelp burgers. >> during the pandemic, they raised $1 million through crowdfunding. this season, it will buy out her entire 30,000 pound crop. how does this compare to lobster ing? >> this is much different. it is easier on the back. i have always wanted to come back to agriculture because of the sustainability.

after seeing the potential for kelp and the ways it positively impacts the environment, that makes me feel like it is a good business to start. some of it is beautiful. our goal is for every $5 billion we are earning, we are pulling one million pounds of carbon out of the sea. we are basically planting a rain forest under the sea. >> a hidden rain forest, quietly cleaning the ocean while growing healthy new foods. ♪

tim: welcome back to our simulcast on bloomberg television, radio, and youtube. any moment now, president biden and president putin are set to have a phone call to discuss what we can expect, let's bring in david. this call is coming into the

u.s. allies are concerned about russia's troop buildup on the border of ukraine. we know president putin requested the call. i am wondering what the biden administration hopes to accomplish. >> the biden administration was to make it clear that there is a redline on ukraine. they want to make it clear the price to be paid in terms of economic damage, in terms of russia's isolation from global markets, would be painful. romaine: it seems russia has been dealing with this for years if not decades where you go back to the obama administration and even during the trump administration there was not a huge relaxation of sanctions. is there any sense there is something the u.s. once enough to give putin what he wants?

david: i think that is the concern the eastern european, balkan countries, ukraine and europe at large, have. they are concerned biden wants to end the headache and the russians are taking advantage of this, going over their heads, and they are going to negotiate without including ukraine and poland and other countries in the region concerns. there is a concern that the u.s. might overlook european anxieties. kriti: i am looking at the ruble down about .9% ahead of the call against the dollar. it has been weaker since the original sanctions in 2014 that saw the crash in the russian ruble. i'm curious about the european side of this. on the u.s. side, you're dealing with the troop buildup in ukraine. but europe is dealing with their own geopolitical crisis. what is the european view of the conversation? david: i think the european view

is mixed. it depends if you're talking about u.k., france, or germany. the germans have a tremendous economic relationship with the russians. there is a codependency when it comes to gas. the germans don't want to completely shut off the gas from russia, especially if you think about how bad the energy crisis has been in europe. there are difficult decisions that need to be made in european capitals. that is not what the u.s. is contending with. the u.s. is more energy independent and wants to be done with the headache and ensure there is not some massive war that diverts attention and creates problems in market and takes attention away from china. tim: you bring up a good point with the idea that allies do not want to see a war happen here. i'm wondering, given what

consequences the putin administration could face, what is the leverage the united states has beyond sanctioning billionaires where they don't have to use military force, given the biden administration just got out of afghanistan and made a point of not having any troops in afghanistan over the holiday season. david: excellent point. i think putin understands the u.s. does not want to be trapped in a war like this, and the u.s. has made it clear it will not be supporting ukraine with direct military involvement. but at the same time, the kind of sanctions the u.s. and european countries could apply to banks, corporations, russian billionaires, there's a ton of stuff the west could do to inflict tremendous damage on russia and drive down the ruble. there is a lot of stuff the west can do. at the same time, these things can backfire for russia.

if russia invades ukraine or keeps going this direction, the u.s. could arm ukraine. that could drive ukraine further into the west's arms. there is quite a big price to pay for russia that putin needs to weigh. romaine: we will keep an eye on development out of the call. the call is expected to kick off at the bottom of the hour in washington. we talk about the idea there are so many loose ends on foreign policy in the u.s. that have to be tied up. it is not just russia. it is china as well. just earlier this month, new sanctions came down on chinese companies, including one that makes ai technology that can read your face. there were concerns by the u.s. that they were using the technology against the weaker muslims in western china. the company just went public. it is the first big chinese tech

company to go public since the didi debacle in june. they had a good start to the day. kriti: this comes after months, perhaps years, a talk in the united states about delisting chinese companies in the united states. to see them do well when most chinese ipo's have not and well is significant. tim: do you think this would have been one of those chinese companies that would have listed in the united states? romaine: it is a behemoth. i think it probably would have. everyone says this is a domestic story now. a year ago, he would have said this is a company that can sell products to u.s. companies, u.s. governments and governments around europe. right now, it looks like it will be primarily china and closer

allies in asia. beyond that short term, no one knows. kriti: let's see if it sets the tone for others who want asian exposure and are not able to do it through the u.s. market. romaine: about 35 minutes to go on this thursday afternoon. the s&p 500 good enough for a record high. the dow at a record high. nasdaq finally getting a little bit of mojo. we will be back in a moment. this is bloomberg. ♪

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>> do you worry about fake news? whose responsibility is that? >> the social media companies have failed. they have done a terrible job of managing the problem. they have this attitude that they are not responsible, and yet they are responsible.

i don't think there is any tech company right now that trades in information that i would call a responsible company. they have all failed. they get a failing grade. it is sad and bad for democracy. ♪ >> i have always pictured what it would be like up and back. i never realized the experience would be so vivid. [laughter] >>

your own goals being achieved, what did today symbolize for the company and for all the children present? >> for the children, we have got to get building as many spaceships as fast as we can so that one day those kids will have the chance to have a similar experience to what i had. that we will do. we also launched a giant global raffle today so for $10 for a pair of tickets, if they win the raffle, they can go up. that money will hopefully enable many people to go up that would never have dreamt going into space. ♪ romaine: this is bloomberg's markets special coverage across television, radio, and youtube. looking ahead to 22 and looking back at 2021. we are going to look at hedge funds and bring in our reporter at bloomberg. a year ago, the conversation about hedge funds was different than the conversation we are about to have now. a lot of hedge funds got caught by surprise in 2020. 2021 was a much better year for most of the funds. >> yes.

if we look at one strategy that struggled last year, they had a difficult go. their models were not able to adapt to what we were seeing in 2020, but they have bounced back this year. it looks like they have adapted and been able to navigate the volatile markets better. perhaps the markets have been refined or they have been able to adapt. kriti: you and i have been in the trenches covering those filings for a couple of years. one of the things that stuck out to me in 2021 is there was no clear consensus from a group that is supposed to be the smart money. what is your take on the diverting calls on where to put your money? it seems like hedge funds broadly did not have that consensus trade. hema: there are certain funds that outperformed and others that struggled. the ones that struggled were

funds playing in the treasury market that were caught flat-footed on the tumult in the treasury funds. those macro funds were not able to navigate that well. the funds that did better, multi-strategy funds, are generally pretty diversified. they have pods of teams. tegy. they put $20 billion into those funds this year alone, which is a lot because investors are increasingly viewing multi-strategy funds as a way to get diversification in their portfolios because they are not correlated to equity markets. so, you are seeing the money flow. tim: how important was private equity in terms of helping these hedge funds outperform this

year versus last year? hema: pretty important. for some of the world's largest hedge funds, really supporting their returns. they would have struggled if they did not have that exposure. these funds have been able to get in early and cheaply in some companies that are worth more when they go public. in a year like this year with a record number of ipo's, that really did help a number of these high-risk funds that do public and private investing. tim: a big thank you to him apartment -- him apartment -- hema parma. for more, let's bring in the editor for bloomberg's u.s. steel's coverage. according to bloomberg data, goldman sachs advised on more than $1 trillion worth of deals. that gave it a market share of more than 24%. a lot of superlatives, a lot of

records. goldman doing this for the fifth year in a row, how are they doing it? >> we quoted the head of investment banking at goldman. they focus a lot on each aspect of the business. what i think is remarkable is not only do they keep and break away in terms of their lead on m&a, but on ipo's, they took the lead going from third-place all the way to first. that is remarkable. there was a surge in everything in the last year. romaine: they took advantage of that. you saw a lot of money and clients flow to them. a big part of the bringing companies public in this year

dealt with spac's. most did not go through the traditional ipo'd process. there was still money to be made. >> absolutely. spac's offer different benefits for investors. but for the banks, a listing is a listing. they make their money regardless of what type of ipo, although there are differences. one thing looking ahead is the spac's have astronomical records beginning with the surgeon 2020. they look like they are tapering off. they will still be a popular vehicle for investors and for taking private companies public. but it looks like there will not be so many of them. there is so much backlog going into 2022. kriti: 2021 started off with a

bang. there was a massive ipo frenzy and then it underperformed. it did not succeed in the way other names did earlier in the year. if there is a backlog, how does that play into 2022? do you see a success story? >> in terms of ipo's, it will continue by most predictions. the backlog is in the number of spac's piled up looking for targets in the private sector. there are more companies which will go public. the one thing proven through the pandemic is that a lot of the market is resilient. some of the expectations are being altered a bit as to how extraneous factors and broader shifts are going to affect the individual company looking to go

public. romaine: a big year for goldman sachs. a nice streak they've got going. we will see if that continues into 2022 with regards to m&a. pop quiz time. hope you are ready. biggest m&a deal completed this year in north america? tim: i think it is the deal for cerner? romaine: no, sorry. tim: medline? romaine: that is pending. i want a completed deal. there are rules here. kriti: are you going to tell us? romaine: we will get back to the rules in a minute. she will be joining the big simulcast in a minute. you are watching and listening to bloomberg. ♪

david: the hardest thing in life is to be happy. you seem like a very happy person. >> it is like nature. nothing ever stops. you can be super happy one minute, and then something happens. it is just amazing. it is the joy of life. david: for any young woman watching this who wants to be the next diane von fürstenberg, what would you recommend? >> i think the most important thing in life is the relationship you have with yourself. when you have a good relationship with yourself, any other relationship is a plus. and the second advice is to be as true to yourself as you possibly can. it is not easy. you have to accept and own things you do not like. but the more you can be you, the

happier you will be. ♪

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romaine: this is a special simulcast all week across bloomberg tv, radio, and youtube. we are counting you down to the closing bell on this thursday afternoon. a little more than 12 minutes to go. the s&p 500 that had been hired turning red right now.

take a look or listen and see where we are right now. the tech stocks have weakened as we've gotten closer to the closing bells. you are seeing a bid come in late to some of the names. we should point out a lot of travel stocks are moving lower. that seems to be on the back of the announcement earlier today from the cdc advising against traveling on cruise ships. kriti: what is interesting is the ones performing better are the pharma stocks higher today, the vaccine stocks paving the way. this comes after yesterday when biotech was the laggard. tim: big tech weighing down the s&p 500. microsoft, apple, tesla leading the way to the downside on the s&p. romaine: let's get broader perspective as to what is going on now and what to expect in

2022. joanne feeney joins us now. always wonderful to have you on the program. let's start off with 2022. is there a fundamental reason to expect the gains can continue into the next year? >> hello, everybody. certainly not to the same extent, but to the degree earnings growth is expected to continue at a good pace next year, that does give a lot of reason to be confident some equities can continue to move higher. just like last year, we should not expect a lot of consistency across different stocks. picking your plays will continue to be important. tim: where should investors be thinking about putting money? joanne: there are three areas we think continue to be important to remain exposed to.

one is secular growth. there are a lot of good multiyear expansions ongoing. the companies that are key providers in those areas are likely to see sales and earnings growth continue at a pace well above the market average. this could be companies exposed to a 5g, the housing market we think continues to grow strongly given the backlog in demand. broadcom on the smaller side, and williams sonoma because people will things in those houses. beyond that, go to defenses and reopening plays. kriti: you caught me when you said five she and really caught my attention when you said defensive and big tech. i'm wondering about how much it's factors in when you are talking about the tech sector. joanne: that is going to be

tricky to navigate. politics is hard to predict. if you step back and look at the equipment that has to be built for the devices that will continue to be built. 5g is still in the early innings of devices being rolled out. some of these companies are beyond politics providing key smartphones but also providing key equipment into the defense industry. broadcom is another one. they will need to expand as 5g grows because of more streaming across the internet and cellular networks will drive demand. i think those companies are well out of the way of the political turmoil that might bedevil other

companies. romaine: health care has done well this year with pharmaceutical companies and the boost some got from the covid crisis. to a certain extent, some medical device companies that started to rebound later in the year. what is the general thinking right now with some of those names? do they still look attractive to you? joanne: go back to the fundamentals on health care. demographics are an important driver longer-term. the aging population around the world will demand greater innovations in health care. some areas we like are the analytical equipment providers. beyond that, i think the question you are really asking is, what about farmer, biontech or pfizer? we still like both of those. covid may continue to have surprises with new variants.

we certainly got a wake-up call with micron. these technologies are good at creating the t cell response which seems it is helping to prevent severe illness for folks that are vaccinated. we think that stock has more room to run as boosters become more available around the world. beyond that, we like the pipeline of a company like biontech in their other therapies, whether it is a flu vaccine or cancer treatment. while it has gotten a lot of attention because of covid, we own it and have owned it for our clients for a while for reasons that go beyond the current crisis. romaine: a lot of opportunities ahead for 2022. we are in conversation with joanne feeney. she is sticking with us as we count you down to the closing bells on this thursday afternoon. about six minutes to go. abigail doolittle is taking a

closer look at what is moving. abigail: we will take a deep dive on the cruise stocks. the nasdaq lower because of cruise stocks trading down on the cdc advisory that folks do not go on cruise ships godless of vaccination status. some cruise stocks down more than 1%. some stocks up 3% going into it. intraday, a 6% to 7% move lower. that is a big deal. not surprisingly, the cruise industry is fighting back. they say it does not make sense. this is not intuitive to me. i'm not sure how this works. but that the virus is spread more on land as opposed to ships. i think the bottom line will be whether or not people who like to cruise will stop. if not, it probably will not matter.

either way, this is a beleaguered industry from the pandemic. kriti: talk about the vix. we are looking at a 17 handle right now. in the last couple of weeks, it has dropped below 20. is the 20 in the rearview mirror going into 2022? abigail: i think it would be a mistake to say it is in the rearview mirror. the vix has been climbing on a series of higher lows suggesting you could see a big bout of volatility in early to mid-2022. in terms of what brings it on, there are so many macro uncertainty factors. i had not taken a look at the vix curve recently in terms of whether or not, what it suggests for january and february. the last time i did look, it does point to the idea that we may see more volatility. but traders like the moves up and down. we will be watching in the new year. tim: a big thank you to abigail

doolittle. about three and a half minutes until the markets close. let's go back to joanne feeney and advisors capital management. i'm wondering about challenges going into 2022. we talked a lot about opportunities. what is the unknown that keeps you up at night? joanne: there are plenty of them. we have mentioned covid. that should continue to be on everybody's mind. omicron may turn out to be mild. inflation is the next big concern. geopolitics after that. inflation has gone up a lot for two reasons. i think folks recognize the supply shortages are one of the reasons. what i think a lot of people might forget is the strength of consumer demand is really driving inflation higher. that is a positive sign. it suggests we could have

continued increases in inflation, particularly as the housing price data filters in. the fed is clearly taking action now, increasing the pace of tapering, looking to move interest rates higher a few times in 2022. the risk is going to be, how does that drive up interest rates? how will that affect multiples? but also, how much will that inhibit consumption demand? right now, consumers are in good shape. their balance sheets are strong. they have a lot of savings they are sitting on. when you look at the mobility data, they are spending. i think you have to be careful to pick where your exposure since. one way to get some exposure is to own energy stocks but also banks which will do better increasing that net interest margin. thanks could be a good hedge against one of the key risks we

think are facing markets next year. romaine: we are in conversation with joanne feeney. sit tight for one second. we are going to get the closing bells in about a minute in new york. we are keeping an eye on day to day moves. volume has been incredibly light. monday, tuesday, and wednesday were the three largest volume s -- lightest volume days of the year. kriti: it fits the pattern of hitting a record close in the next day the stock market dropping. the stock market in the red on tuesday and it looks like today as well. tim: new year's eve is tomorrow. romaine: why is the market open tomorrow? tim: i no one we are not getting a holiday. there is some exterior -- obscure rule that when new year's is on a saturday you do not get a three-day weekend.

romaine: who came up with that? tim: it is a little asterisk on the stock exchange schedule. romaine: big caveat here, the volume is incredibly light but the dow jones industrial averages is going to finish about 14 points. and the russell 2,000 also reversing the gains it had seen earlier in the day. down -- basically flat, you can call it. which i still point out we are sitting on pretty substantial gains on an actual basis. the s&p and dow each up about 20% or more. >> absolutely. we talk about volume being low

and the three days. what about tomorrow? is it going to be the lowest volume day of the year? romaine: i'll bet it is. tim: the volume did tick up a little bit today. slightly higher than yesterday but still these four days are still the lowest volume all year. krity: low volume, low liquidity and i want to take a look at what sectors are moving in particular. defensive trade at the top of the leaked. utilities is higher and once again you are seeing to the down side a lot of that tech pressure seeping in. not just apple and microsoft, but semiconductorsors and automobile makers. tim: we're looking at u.s. stocks but those chinese tech stocks were on fire. closing higher by about 10%.

the biggest one-day gain we've seen on that going back to 2018, if you believe it. >> i can't, that's an incredible number. let's talk about johnson & johnson. two doses of the j.j. covid vaccine. hospital san diegos down by up to 85%. that sent shares higher for johnson and johnson. good news there. robin hood. this stock has been under so much pressure since it it p.o. old. down nearly 75% since the august highs but today higher after we learned that robinhood is letting more use their mobile app. biogen down more than 7% as sampson group denied the report

that the u.s. drug maker was selling. also, norwegian crews lines. it was as high as 3.9% earlier in the day but after we got that c.d.c. guidance on cruise travel, down. romaine: and we should point out that is just a guideline. folks who love that you are cruising. 10-year yield around 150 so basically in line where we've been. joanne feeney still with us and i do want to talk a little bit about the fed and about the potential reaction to whatever decision they make over the next few months with the expectation primarily being that we're going to get two or maybe three rate hikes next year. joe ran -- joanne: yeah, romaine, the thing on everyone's

mine is -- mind is can the fed stick those? inflation is running hot. higher constraints and strict demand. housing starting to come into those numbers and that's going to continue for a while. clearly investigators are well prepared at this point to see a faster rate of inflation. the market is still extremely low. the fed looks like it's going to move a couple, three times next year. we've already seen a lot of reaction in stocks. some of the high multiple stocks pulled back. that started early this year around february. i think a lot of that is in the prices at this point and so really, it's going to focus more on what the economy is going to do in terms of how the fed is able to get control of inflation and whether that's going to curb

economic activity. the way things look right now is we still have a lot of recovery to do. automobile production is still con trained and other entries are. we steam to have several quarters to get to supply for all of these other industrials and that is a good sign for economic growth continuing. row mainly: a lot of what you just said would lead to higher inflation, right? when do you think inflation will peak here in the u.s.?

joanne: yes, those things are all in shortage and that is behind the inflation we're seeing. in 2022 i'm seeing more and more semiconductor capacity coming online so more supply enabling more supply for charles and all that other stuff. it should dampen the inflation fled we're seeing. that with less accommodation from the fed should start to ease wages but the big factor is the wild card. krity: joanne, i heard more supply and how quickly can that turn into an inventory sur plus and what the you would that -- does that mean for growth? joanne: that's a good question.

right now we know inventory is low in a lot of users of those semiconductors. some companies are able to maintain control over semiconductors but because of the shock of what happened last year, companies are switching to a mold of keeping more precautionary inventories in place so inventories might end up running higher than preview covid because a lot of companies have learned their lesson a little bit. we seem to still have a lot of room to not just as much higher demand but also to refill inventory and push them even above previous levels because it looks like precautionary intorrey is going to be the way of the future for a little while now. roamed main: i want to trial to end on a highly note. what are you optimistic about?

a client comes and says i'm freaked out, it seems like the world is caving in. what do you do to reassure them? joanne: we like to ben come passing when we talk to clients. one point we definitely like to make is that companies produce more stuff over time. they make more sales, create for earnings fund mentally over time and that tends to support higher and thigher inflation. yes, there are risks like inflation, like gio politics, like covid but we've seen companies continue to power through those things and if investors can stay in it for the long term, particularly long-term secular growth companies and markets over the long term, they should see their

portfolios appreciate. romaine: since 2021 that's happened. joanne, thank you for joining us. tim: romaine, i want to go back to the quiz you-game me in the last hour. the biggest m.n.a. transaction. romaine: i told you. it was the universal deal. tim, you're jumping the gun here. there are qualifications here. have you ever been on jeopardy and they can overrule you if you add an extra syllable or something? tim: i haven't been on general dim. you're listening to bloomberg tv. bloomberg radio. this is bloomberg. ♪

by the mid 1950's, japan's post war recovery was staaling in one key area -- housing. the country needed to build 3 million homes. the government established a japan housing corporation to previewed public housing for blue and white-collar workers pouring into urban areas like tokyo. these would form the backbone of the new middle class, the danchi were not just inexpensive, easy to build complexes.

they were fitted with amenity virtually uncontainable elsewhere. stainless steel sinks, a toilet and kitchen, people jumped at the channels to participate in this modern lifestyle and the grand social experiment. a reorientation of living space would elevate women, promote privacy and encourage consumer lifestyles. these complexes were essentially groundbreaking suburban commuter towns with their eastern shops, police office. it 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 star house which offered better natural

light and surgerylation. the danchi's true selling points were their amenity and is floor plan, 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 design were a radical departure from tree world war housing. the old style wasn't just unsuitable for modern life but reinforced geudal social structure. the new model penetrated the social consciousness. in 1960, chris and his wife visited a tokyo danchi, cementing the middle class values it symbolized. but women's initial euphoria over i want was followed by a sense of confinement as husbands

left to work in the city. the liberation promised gave way to isolation and a away from community. as housing launched in the 1970's, danchi's centralled off and led to many being demolished in recent years. some are being renovated. and some are remodeling public spaces around the units. the project in yolk hama is once again trying to put these complexes at the forefront and provide a model for the future. danchi remain a testing grown ground for the intersection of attack and social manning in --

planning in japan. japan. >> history is filled with almosts. those are almost adventured, who almost achieved. then there are others. the ones who embrace the moment and commit. they calm their mind and steel their nerves with four simple words whispered since the time of the ropens. fortune favors the brave.

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>> wow. we're here. >> where's gentlemen jeanna? >> i invested in a fund that gives me access to nasdaq real innovation by c.g.i. don't worry, i got it. >> become an agent of innovation with invesco qqq. ♪ romaine: this is bloomberg markets, a essential simulcast all week along across -- across our bloomberg broadcasts and youtube too. krity and tim are joining us.

most of the stocks flipped into the recommend as we got to the closing bell. s&p 500 down tracksly about .3%. that's raul the story for all of the major inindeckses as well. the dow jones industrial average was trading near a record nigh. slightly higher by about .5%. the mean stocks that we saw earlier this year have kind of been in the doldrums for reasons completely unknown. you saw today a lot of those neil stocks but also draftkings, peloton, pin tryst are all -- pinterest are all higher here about% on the day. something to keep an eye on moving toward the end of the

year and, of course, 2022. 2022 all eyes are going to be on the bond market and inflation expectations. 72, 73 basis points only a two yield deal is basically what's being priced in right now. on the other end of the curve, you have a 30-year still believe 2%. and then you look at break evens. two-year break evens. you go on the short side, you're still looking at 3.2%. that's expectations two years out. five and 10 years out, it's lower. a lot of people still do buy into the transitory theme but you'll want to look at the 10-year yield territory, which is still negative 1. investors are not quiet. buying into necessarily the economic growth thief sis or the inflation thesis as well. tim: so much of this is tied to what happens with the buyers and

variants around the world. let's bring in bloomberg quick take's madison mills. i want to start with the news we got earlier from the "new york times" that the u.s. regulators are set to clear the pfizer vaccine for kids ages 12 to 15. that could come as soon as monday, according to the times. how important is this given the spread of the am karon variant? >> great question. thanks so much for having me on. this is going to be a huge game changer as we continue to see that unvaccinated children are continuing to get more and more sick do you to the surge of the omicron. the c.d.c. does have to approve these booster shots for 12 to 15-year-olds but it's likely they will. studies show that kids don't have the adverse reactions with the vaccine.

92% said the only reaction is a little pain in the arm. the other study showed that most of the kids who got ready sick from covid last year were unvaccinated. it is likely we're going to see approval for kids getting booster shots. first with the 12 to 15 yields that's pike likely to expand to 2 to 11-year-olds when we get more data. krity: a massive headline for cruise lines. the biden administration is asking the supreme court to keep the vaccine rule in place. where else can the biden administration target aside from cruise liens? >> that's a great question because hearing the c.d.c. come out so strongly against getting on a cruise. of course, stocks tumbling today for carnevale, royal caribbean

and it brings up the question of breakthrough cases. a lot of these cruise lines had vaccination requirements to board and they're still saying it's not safe enough. that blimp, up the question are we save save -- safe in work places and restaurants? dr. fauci addressed this earlier today. i want to play a sound bite from him. >> you can get people safely back out in a five-day period so long as they wear a mask if they are without symptoms. that is is the since. the impact of that is to try and not be in a situation where we essentially have to shut down the entire country. this was not done because of any statement by any c.e.o. of niche company. >> so when we hear dr. fauci talking about that it does sound like the health regulators in the u.s. are pushing for people to be in the work place and

that's one of the reasons we saw this isolation guideline change earlier this week for those who do test positive who don't exhibit symptoms, the isolation period was moved from 10 days down to five and one of the things behind that was keeping our economy going, keeping people in the work place. there has been a lot of backlash from that. >> a big thank you to bloomberg's madison mills with the latest. thank you so much for joining us. it's so clear that regulators, policymakers right now have no interest in shutting down the economy. in fact, the opposite. bay hash they will want people to get back to work because look what happened with air lines? they don't want that happeningsr industries. romaine: absolutely. other things, you talk about new york and all the broadway shows that have shut down. not because of any mandate but

their workers got sick. if your workers get sick, we've -- you can't operate. and we've seen that in a lot of places. tim: when we come back, we're going to be going from earth to space and talk a little bit about why space stocks have fizzled this year and what 2022 has in store. we're talking with chad anderson. founder of space capital. this is bloomberg. ♪

>> i think over time because of the learning people had during the pandemic, there is going to be thinking about how do you globalize your supply complain? do you concentrate to a few countries, do you diversify? we started a program a cup of years ago, using lasers to finish your denim product. it used to be done by hand and 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 so i think people need to think about different ways of doing it and i believe technology will play a key role.

>> how are you thinking about your footprint as people want to return to the office? >> it's the new apollo. i think flexibility is the name of the game. when it comes to us and our business, i think we have passed the mantra and prove that even in covid we can be highly effective. if you look at our bottom line, we've proven to be more effective than ever. as we approach the fall, we've

preached everyone to go where the market goes. run a competitive industry. there are very competitive labor environments and i think businesses that just wants to go back to the way things are are missing a huge opportunity to learn from what's gone on the last 18 months. >> engine number one was able to do on the observation zaun fight. it opened a lot of people's eyes to, i guess, the power smaller investors have had. i'm curious to see if you use that as a template or a guide as to how they can approach their relationship with other companies? >> we founded the company on the idea that we take the data. the environment, the climate, the social worker data and we look it -- at it to look at the valuation of companies and over

a long period of time. you own these companies. everybody that owns the company, whether you're a big institutional investor or a retail investor, you own the company. you have a volleys and an ear. engage in the companies over time. >> but that's always been the case in theory. romaine: this is bloomberg markets. special simulcast this week across you tube and bloomberg. the call that president biden and president putin were scheduled to call has apparently ended. it started at about 3:35 p.m. in washington and ended at around 4 : 25 p.m. in washington. so about 50 minutes, this is according to the white house. we don't know specifically what the two men talked about but

we'll bring that to you as soon as we can. tim: 2021 is was a big year for someplace space, at least for billionaires like jeff bellsos and become begso -- bezos and elon musk. chad is with us. 2021 was all about billionaires getting themselves into space. what is 2022 going to look like? chad: you can't talk about it without talking about space x and they had a huge year. 31 lawrence, more than 0% only flight-proven boosters, rockets they had already thrown to space. they ended the year with three lawrence in three days and they had the 100th, 100st recovery of a booster before anyone else has figured out how to do i want once.

this has been a huge year war -- for space x and a huge year in investment, particularly for space infrastructure. it looks like for the whole year, 20 1 we have over $14 billion invested in infrom structure and $39 billion across all space technology stats so we have $214 become in space over the last 10 years and we expect that growth to continue. krity: that all sounds great and progressi. let's talk about the risks. yesterday we got news that china has filed claims with the u.n. about spacex and some of their satellites getting into close contacts with some of their own astronauts. talk about this risk and how this playsout in 2022. happened: the number of satellites that were launched in 2020 was more than 20 times the number that was launched in

2010. there's 3,000 satellites in orbit today and that's projected to grow anywhere between 50 and 100,000 in the next 10 years so there's a lot of growth and new business happening in space but there's over 100 times more pieces of debris in orbit. this is an issue but we've been operating on pretty archaic technology. we have much better data today. companies like leo labs have a net work of ground-based radars allowing us to track on things two center meters in size which is speeding into star link and that's a very advanced system for collision avoid analysis and all the mated collision avoid analysis and we're also operating with some cutting-edge technology here and space is big. romaine: yeah, that's an

understatement, chad. let's go deeper into that vastness beyond the satellites or bitting earth. you have china talking about setting up a facility on the noon within the next five years. elon musk saying there's a possibility we can have a human setting foot on martian within a decade. what's the end game? from perspective. we know what it is from the gentle sci-fi, fantasy and fashion face on what humans can achieve but from a business perspective, what's on the moon, what's on mars? chad: this is big information. the first commercial mission will launch next year. one of our important foalo companies, astrobotic is just finishing up to ship out their lunar lander to be integrated onto. rocket. multiple commercial missions to the moon. and this is a first. these are robotic precursor

missions to nasa's artemis missions and those being talked about by spacex. this is a big deal and it's happening through commercial companies if pipe. is star ship is key to all of this. space k's -- x's landser. the vehicle that's going to land on mars as well. i think probably one of the biggest stories in 20 2 is going to be space x and star ship. they're expected to reach orbit in early 2022 and this is going to fund mentally change how we operate in space. it is a match vehicle and fully reusable. spacex changed the economics of space fund mentally 10 years ago and has enabled all of this inover vacation to come in.

romaine: chads, speaking of space x and you are an investor, still a privately held company. what does 2022 have in store for space companies? chad: i think spacex has plans to stay private for the foreseeable future. if company has said they plan to stay private until they have a regular cadence of lawrence and landings on mars but what the starling program, they're lower orbit satellite broadband is meant to be rented out commercially in 2020 this is -- 2022 which is something we'ring are looking at. there's a match opportunity here. we can see 20x the time come online. they're funding their deep space aspiration and is will we see star link spin off in an i.p.o.

in 2022? i think we'll have to wait and see. tim: all right, chad anderson, founding and managing partner. thank you so much for joining us. krity, would you go to space if given an the wasn't? krity: i'm such a weiss, i don't think i would but i think there's definitely an market for it. tim: romaine? romaine: absolutely. $10 million bucks. maybe. i'll do it with you. coming you have next, we're talking robinhood, the company making some changes to its apps. this is bloomberg. ♪

while we've seen some easing of that over the last few months, we still have a ways to go it's something we're working very hard on. it's a complicated issue. it's hard throughout this, there's been health concerns. people don't want to go to places where others are congregating. a significant issue on childcare. schools weren't open. people had nobody to take care

of their children. federal policies that compensated that were unemployed this ways that provided some disincentive and is there are some people who have been reevaluating life and what they want to do and some of those folks have said i'd ramp go work in a warehouse rather than clean rooms and other things so it's a complexequation that's going to take a significant amount of time to work through. we're of lot better off than we were even three months ago and i think when we look back over the next year we'll be able to get labor back. >> people like me have gotten used to using dom. so instead of traveling across the country or the world, people will say the zoom experience is really pretty good, i don't need to travel.

>> it's not a big concern for me and i think the world is figuring this out. a year ago i think people were saying gosh, this work is so first quarter and maybe i don't need to do the things that i was doing. i think a year later, at least everybody i'm talking to has realized there are limits to it. don't get me wrong, it's great technology and it's -- it's facilitated our ability to communicate during this crisis but this is an unstoppable force that is with humans, and that is they want to interact with other humans. they want to build culture, they want to cultivate, network, to grow their business, to build relationships so i have no real worries. every time as we've been recovering, if you look at the minute people start to feel like

we're through the crisis, the demand for meetings and events, which is the longest lead, skyrockets. people are dying to get out.

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>> by increasing the spending ability of the country. i've been waiting for this legislation for months, since i became transportation secretary but various presidents have been hoping to reach this day for decades and it hasn't happened for all kinds of reasons. the american public has been weight patiently and now we're getting it done. part two of the president's agenda of the build back better act has even more that will help beat back inflation by lowering the cost of child care, health care, housing, prescription drugs. while also making sure we ease

some of though labor issues by making it easier for working parents to afford to go back to work. ♪ romaine: this is bloomberg markets, special coverage simulcast across brook bloom berg tv, radio, and youtube. tim stenovec put on a tie and he's been bragging all day about the return he got on the

semi500. you could have still made 20% off of that as well. tim: what was i thinking? romaine: let's bring in eliza. this was probably one of the best years for distressed markets. what drove it this year? >> just a few standout cases. the problem for the stress investors for several years has been that due to an abundance of symmelus and strong economic growth there hasn't be big enough pool of distressed trades to play in. and they make their returns there when more traditional investors don't and they get to grab stuff at a discount and ride its improvement. that's been lacking for the past grew years but this year there were a few standouts because

once they got out of bankruptcy, their rebound was really robust because of everything that came into play later. tim: i'm wondering what 2022 looks like and what your sources in reporting have told you what to expect. people we talk to every day say the economy is going to continuing to recover in 2022. what does that look like for distressed trades? >> distress investors are contrarians. so they're excited about the inflation development and supply chain disruptions and especially the fed's tinkering. so all three of those have the potential to make assets take a hit. to buy a bigger array of assets

to snatch up so they can jump in and buy the difference, ride it you have. krity: are we just looking at distress debt perhaps targeting some of those sectors still battered by the covid-19 pandemic. oil in particular comes to mind. energy comes to mind. what is the equivalent for distress debt? >> the equivalent for a long time was retail. it was sort of the perform child of distress. there were all those apparel companies had been bought and leveraged but then went into department and then when there's a change in shopper behavior, they couldn't sustain their debt anymore. past few decades we've seen retailer- after retailer go into

interruptry but -- bankruptcy but they're looking better now than they have in a long imtoo. romaine: one of the biggest of those distressed was the federal reserve. they're not going to be there next year, right? >> presumably. we'll see. romaine: time some would say it kind of saved some of these industries. whether the retail or some other sector out there. >> absolutely, the down side is when industries get saved, that creates less opportunity to invest. investors would ramp see it go into bankruptcy and then they own it for return. romaine: if you've ever partied with these guys, they're actually way more fun than equity distress investors. thank you, eliz --loaiza, for

joining us. tim: i want to go to that party. 2020, the rise of the retail trader. robin hulled is working to let more traders use a feature for its mobile app, a mechanism that allows straight aheaders to extend their options. let's bring in annie, bloomberg asset manager reporter. robin hood that has -- has come under scrutiny for having complicated ways to trade. what is this move and how does that fit into that narrative? >> that's right. robinhood has being become a big topic in the retail trading boom we've seen since the beginning of the pandemic. this new feature that was found in a belta version of the app, it's called options rolling and allows you to close out a position while you're

simultaneously opening a new one with another date and price on the option so it's adding to their option-trading platform. zooming out robinhood's option trading platform is a huge revenue driver, driving more than 60% of the company's revenue in the third quarter so they're -- expanding the platform is big for robinhood. krity: speak to that more about how robin hulled makes their money and how much they've really struggled recently. how are they addressing that? >> robin hulled makes money mainly from trading on the platform and you've seen over the course of this big retail trading boom, the -- the components of that trading revenue has shifted. sometimes more towards crypto currency. so adding the options trading platform is important to robin

hulled and the company as it tries to add more revenue, however, it's already brought some scrutiny to the company. for example, the settlement that came out this year with robinhood. it was a sweeping settlement but one of the key pieces had to do with options trading live pledgr robinhood may have been extending that to traders who shouldn't necessarily have been using that. romaine: interesting moves by robinhood. we'll seal what's in store for this company in 2022. this has been quite a year. robinhood futured a lot of interest among retail traders. do you remember naked brands? it was a swim wear company that inpoliticsically rallied like 800% in january? tim: what goes up must come

down. if you invested in it on that upswing a few months ago. it's down from its february highs, more than 76%. romaine: yeah, we should look back. we're going to be here tomorrow, i'm told. the markets are open because of what tim told memory, some sort of quirky rule they came up with here. back a year ago, the stocks we were talking about were stocks that nobody ever talked about before and these were huge moneymakers for those brave enough to get on that train. krity: web -- remember, january is a seasonally volatile month so maybe we'll see that happen again in 022. romaine: pop quiz. tim, best performing stock on the s&p 500 year to date? tim: i have no idea. romaine: devon energy.

romaine, krity and tim. this is bloomberg, simulcast on tv, radio and youtube. ♪ >> trying to ensure that inflation expectations

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