>> welcome to bloomberg audiences. i am mark crumpton with first word news. in indonesia, at least 46 people are dead in about 700 others injured after a 5.6 magnitude earthquake shook the western java region today. several homes, stores, and public buildings are damaged. landslides have been reported, following the roughly seven second earthquake. tremors were felt in nearby cities, including the capital, jakarta. oil declines as saudi arabia and other opec countries were reported to be discussing an output increase alongside china, tightening its anti-covid

curves. for the first time since september, global benchmark fell below $85 per barrel after the "wall street journal" reported opec-plus was considering an output increase of 500,000 barrels ahead of the eu embargo of russian oil. saudi arabia has since denied discussing and output increase. former u.s. treasury secretary lawrence summers warned policymakers to focus on building the country's own economic strengths and contests with china rather than attacking its adversary. >> we in the united states probably need to be careful about our evangelizing influence. i don't think it is really for us to tell china how they should organize their entire society. mark: secretary summers also

warned against tightening ties with taiwan. nessus moon capsule came with an 81 miles of the surface. it also went over the apollo 11 landing site tranquility base, were astronauts first landed on the moon in 1969. the lunar approach is part of nasa's ms -- artemis 1 mission. it is the first major mission in the artemis program, which aims to send the first woman and first person of color to the moon. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. i am mark crumpton. this is bloomberg. ♪

>> i am in for jon erlichman. welcome to bloomberg markets. kriti: but stepped right into the price action. if you look at the dow, it is inching higher. everything to do with disney. we will dive into that story for now, s&p 500 down about 0.3 percent, repairing the losses from earlier. we're looking at 3.82 in the 10-year. it is a holiday week, so you have quite trading, low-volume, all that factoring into the bond market. more volatile than expected is the currency market. check out the dollar, stronger to the tune of 0.8%. it's not even hitting the commodity market by a bigger margin. crude trading in at an 87 handle. those rumors of an increase moving the market lower, then denial from the saudis, moving the market higher. we will dive and all of that in the next 30 minutes.

amber: absolutely. i am tracking m&a monday. let's look at biotech in the housing sector in canada. getting taken out, not bad for a country that just went public last summer. housing slowdown in this country help a major investor willing to skip up home capital at more than 60% premium. i'm also tracking shares of draftkings, which are under pressure on reports that some user accounts have been hacked and money is missing. just a proxy in the crypto space continues to be ugly. if you take a look at coinbase, now down more than 80% so far this year. >> certainly something we are going to keep an eye on. one of the major movers today is disney shares surging today as they plan to bring back former leader bob iger as ceo. it is a move investor seem to be pretty pleased with. earlier today, holding a100 for a five dollar price target. he spoke about his full case on the stock. >> we are probably the last site

still doing some of the parts on disney. the b.i. site has essentially given up on dtc. if you are generating losses, they are not going to put a multiple on that. i think that's crazy. if you put the same revenue multiple that netflix gets, it is worth $45 per share. that is essentially the spread between hundred dollars it trades at today and what we are saying it is worth. there's nothing about disney's streaming business that won't be as valuable as netflix. the problem is for disney and a lot of other companies, they are unwilling to accept losses in the current regime. that's fine. for the logical implication of that is to say disney's streaming business, which does over $20 million revenue is worth nothing is a bit extreme to me. kriti: let's bring in a u.s. media analyst with bloomberg intelligence. i think there is a lot that the market is hoping that bob eicher

can do. maybe we can start with what he can do in the short term and may be what might be a bit of a stretch for him to fix, given some structural issues that are going on with disney. >> amber, i think the number one order of business for bob iger is reinstated ceo is to really take a hard look at the streaming business. streaming losses is really the number one headache for disney. we kind of saw this when they reported their fiscal for key results. we saw losses that came in way over what they were expecting. we saw them lose about $8 billion so far. while they have said they will kind of achieve profitability over the next two years, that path is not going to be smooth. i think the first thing for bob iger to do is really take a look , see where he can cut costs, and articulate a strategy where investors are convinced that in

game economics is going to be very, very viable. amber: but it feels like the issue is industrywide, not just disney paid netflix is having this issue, where most of the growth isn't coming from here in the states, but from abroad. disney specifically, most of their growth is coming from india, ironically, from their hot start partnership. when do you see that growth in the u.s. speaking, if not already? >> is really a tale of two cities with streaming everywhere across all platforms. you have subscriber growth, and for that, they have to go to developing markets. he brought of india. that's a great point. 35% of disney's base comes from india. but those just bring in a fraction of what u.s. consumers bring in, in terms of -- in terms of revenue. broad, it is about $.75.

here in the u.s., it is six dollars. what they are wanting is a focus on higher revenue-generating customer, making sure that it all flows to the bottom line. don't just chase subscribers for meeting targets or having the sake of a big subscriber number. at the end of the day, you need to make sure this is a viable business. that is what investors have kind of been indicating. those are really some of the hard decisions that media executives are having to make across the board. >> we thank you, as always, for breaking it down. we are going to get a little more insight and bring in ken leon. he has an opinion on disney, with a price target of $110 per share. ken, thank you as always for joining the show. let's start with bob iger specifically. a lot of people are putting a lot of effort into his 15 years of service at the helm of disney. yes, he has had a good track

record, but has he done it post-pandemic? i wonder how much of that is going to be an issue. >> it's a big issue because he was ceo 11 months ago. it's a much bigger story here than just streaming. i think some of the major shareholder activists are on him. disney has not back any stock since 2018. it doesn't pay a dividend. lo and behold, this has to be a blue-chip growth company, which it is not. in terms of storage of capital, bob iger's message has to be that we are going to make pragmatic decisions about all the businesses and certainly put our capital where we can get an attractive return back to shareholders. that does not exist with disney today. it's not going to be impossible for him to do that, but part of that will be shrinking their ambitions with video streaming. i see them with great quality

portfolio, no different than warner bros., discovery, or paramount, or they are going to make money in film, broadcast, and lastly something in streaming. it is a very different priority for bob iger. shareholders want a return of capital. amber: could this be achieved through operational excellence alone? from what i am hearing about people, it is about tinkering with the business. generally, disney is headed in the right direction, they are facing the right market, they just need to do a better. or is there a major strategic shakeup that needs to happen, whether it is the form of m&a or rethinking their approach to streaming altogether? >> i think it gets back to management 101. they have to look at certain assets that are either mature or not going to be attractive for their strategy. and they need to sell those assets and reward shareholders.

secondly, operational excellence means certainly that they will cut production over content, but they have to be careful there because it is in a highly competitive industry. it is one where you have tremendous competition to get the attention of viewers. third is really convincing advertisers across broadcast in streaming that disney is a place to be. it certainly is dominant, like netflix, and they have to say that you are better off putting your advertising money in disney than some of the other competitors. i think it's a number of factors that management has to put on the table and it's not waiting for 20 24. these are actions and a plan that has to be executed in 2023 with the backdrop of a recession. kriti: that doesn't even take into account their entire business when it comes to cruise

lines or amusement parks. something to dig into time. ken leon, we think you as always. let's zoom out a little bit. our concern the right at the moment. what will sustainably put them in the green? we will break it down with philip orlando. that conversation is next. this is bloomberg. ♪

kriti: this is bloomberg markets. stocks lower to start the week.

investors starting to wonder whether the carnage in the stock market is truly over. peter oppenheimer says no. take a listen. >> there have been some good pieces of news that markets have absorbed over the last few weeks. opening up in china, gas prices have fallen, and of course evidence that u.s. inflation is reaching a peak. but we have to acknowledge that markets are really pricing that. let's not forget that the s&p, for example, is trading at a multiple of over 17 times pretty much where was at the beginning of the year, despite the fact that real interest rates have already doubled since then. we are still looking at around zero earnings growth in the u.s. next year, less in places like europe. i think the markets are going to be exposed to more difficult news coming through, particularly on growth over the coming months.

we don't think we have yet hit the sort of conditions that we would typically see at a trough in a bear market that helps to form the base for sustained rebound. kriti: let's get the view now from phil orlando. at the core of what peter was saying was this idea that the carnage just is and over at all. overall, valuations really support that thesis be a you in that same camp? >> peter is a smart guy and he made some good points. the stock market, we had a nice rally here, about 15% or so over the last month or six weeks or so. that is pretty typical in a midterm election year. you get this side of relief that the election is behind us. in this case, we have been able to orchestrate a change in control of government and supply, a check and balance on some fiscal policies. market typically likes that.

you now pick it back to the underlying fundamentals, the inflation numbers which we think of as peaked are coming down very slowly. we think they will get back to the fed's targets, but looking out over the next two years or so, not the next two months or so. that means, what is the federal reserve going to do? our best guess is a 50 point basis rate hike inset -- in december, maybe the same in the first quarter of next year. here's the rub. historically, the federal reserve continues to tighten policy, to raise interest rates, above the level of inflation before they stop hiking. right now, nominal cpi of 7.7%. the question is, how quickly is inflation going to come down by next year? if that is still up around 6.5% or 7%, which is where we think it is going to be, does that mean the federal reserve keeps hiking rates into the second quarter, third quarter of next

year? that is the 64,000 dollar question that i don't think they even know the answer to. ultimately, what is going to direct the market successfully or unsuccessfully is going to be how quickly inflation comes down and how aggressively the fed needs to continue to tighten policy to combat inflationary problems in the economy. amber: yet, when you look at what the market is pricing in, there's the expectation that inflation is going to go back down to 2%. there will be a recession at some point next year. you have had people deciding to play both sides, this so-called barbell approach. some defensive, but also keeping beta risk in case the markets pick up. how do you want to be positioned going into what you are thinking and what the market is pricing in? >> we are currently playing -- we are clearly playing defense right now. we were 5% equity overweight at the end of last year. we had a 4800 target. what we thought this was going

to be a very choppy year, and it has been. we have taken our equity exposure down to a 1% underweight, relative to neutral. within that equity exposure, we have got a significant overweight to value. the low pe, low beta stocks with high dividend yields, we are decidedly underweight growth. technology, consumer discretionary, the areas we felt disproportionately were going to be hurt the worst. we have a very large cash position. we have 10% allocation of cash right now. the largest we can have in our models, which is also the largest cast position -- cash position we have had since i've been here. we are hunkering down, preserving capital, trying to ride out this category five storm, if you will, looking for some clues as to the direction of both inflation and fed policy. amber: thank you so much for that perspective.

that is phil orlando joining us with his market outlook. coming up, shares of home capital. the canadian mortgage lender that nearly collapsed five years ago, surging after it said yes to a takeover deal. more details when we come back. this is bloomberg. ♪

kriti: this is bloomberg markets. now in today's "for what it's worth" where focusing on the number 1.7 billion dollars canadian. that is the takeover offer for home capital, then mortgage lender that nearly collapsed five years ago and was bailed out by berkshire hathaway. today, smith financial is offering a 63% premium to home capital's closing price on friday. shares of home capital or surging to just below the offer price of 44 canadian dollars.

let's get some more details from bloomberg's kevin portland. kevin, it was a big surprise to see this deal, someone who has been in the space for decades, shelling out what is definitely a full price for home capital at a time where we are seeing a slowdown in the housing market. kevin: that's right. this is a classic by low strategy. between inflation and rising interest rates, prices are down 10% off their peak in february. home capital stock is down 4% from its peak last year. stephen smith is someone who has been around a street quite a bit. he cofounded another mortgage lender, first national financial corporation. he knows the space really well. he saw that this is the moment to be able to buy this company on the cheap, and maybe that's not fair, because he is paying a substantial premium, but that is still where shares were around

the end of last year. it's an opportunity that he saw to buy this company, add it to his stable of financial investments, largely canada focused, and this was the moment for that. kriti: it's interesting he is picking this moment, at a time when canadian home sales are actually slumping. he is betting on a complete turnaround, when it feels like around the world, people are betting on a bubble bursting in the housing market. how do you square the two? kevin: that's right. i talked to stephen smith today and his rationale is that sure, home prices are down, but canada has a high level of immigration. it actually has one of the fastest population growths in the g7. a lot of immigrants who come to canada are wealthy, they are skilled. these are people coming here with money and they want to get into the housing market pretty quickly. there is also a variety of reasons that canada's housing supply is constrained. it is harder to build new units here to meet that demand. his argument is that that will

set a floor under canadian housing prices going forward. second, while the price of mortgage lenders like home capital have fallen a lot this year, he thinks that that is sort of a mistake on the market's part. the health of mortgage lenders is determined by employment. that will determine if people are able to keep paying mortgages. while they are losing some revenue as house prices are falling and sales are drying up, they are not going to see a lot of losses because people still have jobs and are able to keep paying their mortgages. that's his rationale for why there's not much farther down for the stocks to go and why longer-term, the canadian housing market should be a good place. kriti: certainly something we're going to keep our eye on. the ripple effects to other housing markets around the world. kevin orlan, bloomberg news, we think you as always for your reporting. get a quick check on the markets. we opened bunch lower than we are right now. a lot of losses are getting

paired. the s&p 500 down 0.3%. the 10-year yield, 3.82. the dollar is absolutely moving. up about 0.8%. brent crude trading at about 87 handle. this is bloomberg. ♪

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mark: here is the first word. ukrainian president accused russia of trying to kill power and heating for millions on the set of winter as germany agreed to send patriot missiles as part of a air defense deal. the poland's prime minister -- defense minister said the muscles will be deployed near the ukrainian border. less than a week after an explosion killed two people near the ukrainian border. barack obama plans to return to georgia to campaign to