>> 2023 is likely going to be the year of recession. >> we might start a recession and if we do a recession in is relatively light. >> it is an opening quote -- it is an open question of when we will have a recession and how deep it will be. >> if it -- if inflation is not on its way to 2% the market will struggle. >> the market is being overshadowed by the slowdown. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. matt: good morning from new york city for our audience worldwide, this is "bloomberg surveillance" and along sign kailey leinz on national log side kaylee morning -- kailey leinz i am matt miller.

john, lisa and tom are on vacation. let us look at what is going on in the markets. we have gains across europe, and you would think that everywhere else will be risk on, i would say, in terms of what we see on futures. we have a little bit of rise, .6% on the s&p mini, so we could be on for a belated santa claus rally. kailey: we were up on friday had three consecutive weeks of losses on the s&p 500. we will see if we can eke out a gain on this final trading week of the year. china is trying to have a hand in that, releasing the last covid zero curve and they are relaxing the quarantine requirement for inbound travelers on january 8. basically reopening the second largest economy to the rest of the world that has been shut off and that is what is feeding into

the commodities rally. matt: that will be our top story and we will talk a lot about what is going on in china. the last few sessions we have had this kind of news about china but it has not always helps or meant that people are out there buying stocks and selling bonds because there is concern that there is reopening and infections are on the rise. 37 million people got covid in one day last week. kailey: that is a gas -- guesstimate. but china is changing the way they calculate the tally of contagion and as it whips through so many areas it is a question of if it will bring economic optimism, i will say coming through or if it is worth -- worse in the near term given how money people will be homesick, definitely a question. when china reopens and it is backed up, that will mean more

commodities and that could be fortifying force. matt: january 8 is the day they are expected to open fully or at least as fully as we have seen in the last three years. they will still be masking i am sure that there will be testing to get in. you have to have a test at least 48 hours ahead of your flight. the question i have is how much demand will there be? international flights have been kept to a low level. so when the cap comes off, does that mean airlines will schedule more international flights or are the travelers not really demanding those tickets? they have not factored it into the plans so they will take time to ramp that up. kailey: well we are talking about airlines i want to shift to domestically. if you are traveling over the holiday weekend i hope that you got where you are going to go

and if you are coming back you had a difficult time. southwest was responsible for three quarters of canceled flights canceling more than 3000 and that could continue for days of -- for days to come. matt: a lot of people are calling it south worst. it had a lot more of a difficult time than the other airlines so we hope it can recover for everybody who is traveling. 80% of their flights were canceled or delayed and that is a real problem for southwest airlines will be watching that. stocks let us bring in the chief try to just and interactive brokers group, steve who joins us to talk about the good news, out of china. it good news good news? we are used to economic data, u.s. economic data in a positive way offering optimism for the economy. that has not been good news for markets because the concern is that the fed will go with stronger rate hikes.

what about the china news? that has been undecided. is it good when they reopen? steve: there is a lot to unpack. in general, he flipped a good news is good news and bad news is bad news and the reason for that is that we have come to grips with the idea that the fed fighting inflation. the idea of deposit -- the idea of the pivot, pause, or peak of the fed backing off of its desire to restrict monetary policy has finally gotten through to people. now the worry is what we go -- will we go into a recession or will he have a soft landing. any economic news on the positive side is helping non-recessionary worry and is therefore being treated as good news and of course the inverse and opposite. china is more of a wildcard because we want to see the economic growth coming from china but we do not want to see

them contributing to inflation. i think this will be a muddled story because as you noted the full reopening occurs in a couple of weeks. and then a couple of weeks after that it is the chinese new year and it will be the first time for everybody to be traveling and that is going to be very interesting in terms of how covid spread in that environment. i do not think we can take our eyes off of that story and that is a wildcard. matt: if we do have china opening up and coming back in terms of growth, five or 6% growth out of china in 2023. how helpful is that for the rest of the world economy? are they still a driver of global growth or have we seen enough deglobalization that they do not contribute as much? steve: we have seen some deglobalization but hardly fully decoupling. remember that china was more or

less the earlier part of the century, as a lot of the other world economies were muddling along, china was pulling the rest of the world up. there is a hope that they can do it again and it remains to be seen because they have their own issues in terms of shadow banking and overextended real estate and a whole bunch of other issues that need to be reckoned with. i think china is not as clearly a black-and-white story as it used to be, so china is growing it helps the world economy and there is a lot of shades of gray and that is what bears watching. kailey: as we talk about the world or u.s. economy there seems to have now formed a real consensus that we are going to have a dire economic picture in the first half of 2023 therefore the markets will have more downside in the first part of the year. the consensus is that into the second half things get better and we could rally to the levels that we are at now.

are you worried about how much consensus there is around the idea? does that essentially mean that is not what is going to happen? steve: that does make it tricky because consensus tends to be wrong and markets have a nasty way of penalizing the largest number of people at the most opportune times. -- in opportune times. the fed funds futures market is not protecting a riproaring economy. they are pricing in a bit of recession. something has got to give in my experience and gut tells me if you are making a bet on the economy and you have to choose between the stock and bond guys, the bond guys usually have the economy sussed out better than the bond people. the bond people were drastically wrong about 2022 because they had a terminal rate below 1%. so take that with a grain of salt. kailey: very valid point and

what we got was more than 400 basis point hikes. how quickly things can change. you mentioned what is actually priced in and what is not. what would represent a buying opportunity? at what point would we know that the signal -- at what point is a signal that the bottom is actually in? steve: one we are no longer fighting the fed and we still are. and even if the fed stops raising rates they are still doing quantitative tightening. problem number one is that we probably want to find a point where it is obvious we are no longer fighting the bad. secondly, we want to find a spot where it appears that earnings revisions will start going up. right now the big fear is that were -- is that earnings will be stagnant or improvise lower and everybody is worried about when earnings season rolls around again what we have to say. it becomes evident that the

earnings have started to turn a corner or at least not get materially worse and again u.s. companies have been remarkable in their ability to be responsive to bad economic times. those are your two big signals. i do not see them yet that does not mean they cannot be around the corner. matt: what about valuations and earnings? we are trading at 17 times, how loaded we need to go before a bear market ends, and what kind of earnings do you expect when we talk about forward earnings? steve: in terms of what sort of valuation, given the current environment, if we want to see a washout we are talking about 15 to 16 in terms of pe. in terms of actual earnings numbers that becomes economically dependent, ideally we could go back to double digit growth and if that is a consensus projection that could be realized that is a good sign.

in terms of valuation, my bigger worry right now is that a lot of investors are in the cult of the growth should just -- of the growth stock. what 2022 showed us is a difference between growth and value, the arbitrary difference is more gone. what we need to be doing is thinking of our classic road stocks. how do they shape up and that is the important thing going forward. that is taking a look at what you consider your growth stocks and are they decent values. if they are it is a great situation. if they are not that is still harboring a lot of risk and that mentality needs to get a little more washout for we turn up. matt: thank you so much for joining us. steve of interactive brokers talking to us about these markets and i think the question will be for most of our guests

today and this week and over the next couple of weeks is when do you know? what is your sign that it is time to start selling and start buying the debt. kailey: none of us have a crystal ball so any hands that anyone has, we will take them. matt: coming up at 7:45, dan ives talks tech with us after the horrible, awful, no goodyear that 2022 was. this is bloomberg. ♪ >> keeping you up-to-date with news around the world. china is reopening its borders to the world by removing the final covid zero restrictions. starting january 8, and bound travelers will not be able to quarantine they just need to obtain a negative covid test within 48 hours.

they also might reduce the frequency of reporting cases, changing to a monthly report. in western new york, 28 people are dead and one of the worst weather disasters ever to hit the region. more than four feet of snow fell on buffalo. cars were buried in snow drifts and emergency crews could not respond to medical crises. president biden has offered president -- federal existence. -- assistance. southwest airlines expects the chaos the last for another few days. the ceo says it expects to operate stover one third of its typical schedule so we can get crews into the right positions. southwest canceled 3000 flights on monday. russia's foreign minister warns that ukraine must surrender were faced continued or. he spoke to the state run news agency task saying that it was for its own good as russian troops are forced to retreat in

a series of damaging defeats. in south korea the military said it set rooms and to north korea for the first time. it is an unprecedented move that followed the decision to send five unmanned aerial vehicles into south korean airspace. kim jong-un made -- opened a major political meeting to set policy. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. ♪ site and your store was also the first time you realized... we can do anything. cheesecake cookies? [together] the chookie! manage all your sales from one place with a partner that always puts you first. godaddy. tools and support for every small business first. at booking.com, finding perfect isn't rocket science. kitchen? sorted. hot tub, why not? and of course, puppy-friendly. we don't like to say perfect, but it's pretty perfect. booking.com, booking.yeah.

>> we anticipate a strong recovery especially from china and for commodities. and to differentiate that from other types because china, by far, we believe that the fiscal support required to get there gdp growth goal will be significant. infrastructure spending can make a significant difference. matt: that was the dws portfolio manager and head of commodity is talking to us about his outlook. it will be a very different year indeed because the gigantic economy, second biggest in the world and fastest growing, the chinese economy is opening up.

alan is in shanghai to talk a little bit about what is going on. what do we know, first of all in terms of the headlines, what has been dropped in terms of the covid curves and what remains to go? >> i mean this is the last big one. from january 8 the government is in quarantine for the revivals and this policy has hurt the economy and left china isolated. that said, china will still require arrivals to show 48 hour pcr tests result. that is nothing compared to what we have right now which is at least five days of hotel quarantine or three days at home for home monitoring. i have done two long quarantines after leaving china and coming back. one for 10 and one for 14 days and they are pretty brutal. matt: i believe it. we were talking earlier about the international flights that were cap in terms of the number

of planes that could come in. is there demands to lift the cap? allen: for sure. i think one of the things that they were saying as well is that they are going to remove the cap. i will have to double check. right now, there is such huge demand for flights into china and hong kong. i was checking this out. the online search as per flights from hong kong to mainland china have surged sixfold on some of the websites like c-trip and trip.com compared to where they were a week ago. kailey: there is the question of people traveling elsewhere from china. japan will require testing, given the rate at which infections are climbing with all of the restrictions suddenly released and the vaccination rate not at what it would need to be to insulate the population from the effects, do we have a

sense of what the numbers actually are given the reporting of this is in question? allen: that is a great question. china has been officially been reporting a 3000 4000 daily infections which is flying on the base of what some of the proxies have reported. they reported one million covid actions and expects more before it peaks. in terms of what china is going to do about it, i think right now it plans to increase icu beds and increase the number of hospitals. they have to retrofit a lot of quarantine facilities into hospitals to deal with these patients. kailey: it raises the question of what is the feeling he's population because we know a november -- what is the feeling of the chinese population because in november they were

protesting. it was so outspoken under the rules that people were being forced to live in the government has responded directly saying that they will make all of those go away and now that it has, i wonder if sentiment has turned the other way. what do people feel right now? allen: there is a lot of what -- mixed emotion and people are getting whiplash. no that covid is ending and the next second it is let it. it seems like a lot of people have had covid according to the national health commission. about 18% of the population, 248 million people. a lot have already had it, and they have gotten through it and they are getting accustomed to the idea of moving along, but there is still a lot of old people who are actually have not

been vaccinated and we are seeing a surge of old people going to hospitals and old people dying. there is a lot of concern for people who really care about their appearance and your grandparents, they are afraid that they might get covid and if they are not vaccinated they might die so there is a concern about that. by in large people are heading used to the idea that covid zero has ended and that is a good thing. there will be bumps along the road. i hear that beijing is reaching the peak or near the peak and other places are not quite there yet. nevertheless people are sort of, younger people are getting used to the idea of tubing passed covid zero. matt: it is interesting to get the inside take because here we get a different picture. the idea was those protests represented people fighting to get out and they were being held in and they wanted to escape

these restrictions. and then what we heard here was as soon as they started to reduce the restrictions the same people were staying inside. they are terrified of getting covid because infections shot up so it is interesting to get allen's perspective about what people really feel on the ground. kailey: it is a question of moving or not moving because you are mandated because you cannot leave your home versus having the personal authority. maybe that is the distinguishing factor. allen mentioned hospitalizations and that older people are going into hospitals. our the hospital systems repaired for this? allen: unfortunately no. i believe it is like 14 -- 10 to 13 beds per 100,000 people or something like that, it is pretty low compared to western standards and that is why china

is rushing to get older people vaccinated and the icu beds. they are downgrading covid from highest double to entice level basically saying that covid is no longer as leave it people or serious but it is more like the flu -- lethal or serious but more like the flu. china is trying to downplay the seriousness which is what we have been seeing in the west as well. in terms of hospitalization they are on the rise. and, unfortunately, a lot of old people are not vaccinated. and it is very serious. matt: thank you so much for joining us and stalking us through reduction of the covid zero restrictions and the end of that policy. i have been following the twists and turns of these headlines through the oil market because every time restrictions are

lifted i expect to see oil shoot up in price assuming that they will be another couple hundred million people filling their cars. we have not seen that but we have seen a ton of volatility and looking at rent crude up to about -- brent crude up to $100 so the volatility has been incredible. kailey: it is a question of is more growth able to offset a lack of growth entirely and other parts of the world. the oil market is singularly focused on the list of -- on the risk of recession bring demands down versus apply. i would say that the china story is rippling across oil -- about -- about commodities. pretty much everything is positive. copper is up a couple of percentage points. matt: everything except for aluminum looks like it is gaining this morning and we have real jobs in natural gas prices

in the u.s. as well. we have been used to seeing that in europe and it is a real concern that we get a cold winter and they have limited supply. in the u.s. the cold has caused real problems. numerous fatalities and natural gas prices are jumping. we will talk to an economist about this. the president and macro policy perspective. she has experience on the fed and barclays and she teaches at ut austin, this is bloomberg. ♪ when you automate sales tax with avalara, you don't have to worry about things like changing tax rates or filing returns. avalarahhh ahhh

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matt: welcome back to "bloomberg surveillance" i am matt miller with kailey leinz. lisa, jon, and tom are off. ari on the show all week together? kailey: quest -- yes, you and i will be here all week. matt: let us talk a little bit about markets. we have seen a lot of green on the screen in europe, gains not in london, london is still close. but the rest of europe is open and we are looking at gains and u.s. future as well. kriti just back from london is here with us to give us a look at the market on this i do not think there is an official name for today, the day after boxing day.

kriti: it has been a month since i was back from london. you are seeing the sentiment story across from asia and you can see that flying high. the f -- the s&p 500 up about seven -- .7%. the russell 2000 features well. if you look at the equity trade on the good days the russell outperforms and on the bad days the russell does not do anything. you are starting to see a little bit of this and pension, the idea if that the u.s. cannot hold its own or better than small caps be the place that are underpriced. we are seeing a little bit of that. to your point, european stocks are higher and the real outperformance in that continent coming from france and the entire index up .4%. speaking of europe this is a fascinating story and i was nourishing out about this. one of the major stories will be the weakness in the dollar, and

the bear case building as the fed gets closer to ending their tightening cycle which means that the euro will be the biggest beneficiary because the ecb is likely to lag. we are seeing up point -- 1.06. as we talk about that case it will have a ripple effect which is dealing with a double whammy when it comes to the china stories. the reopening story is showing up in copper up 3.3% and we are hovering around session highs. the entire commodity complex is benefiting. the brent crude is a trademark we like to look at. higher by 1.2%. still green on the screen in line with the risk rally. i will end on gold because the lunar new year is coming up so the idea that the reopening plus lunar new year demand is fueling

gold as well. kailey: thank you so much. of course the china story feeding into the commodity story meaning that higher prices that could fuel inflation, something that central banks have been trying to fight over the course of 2022 and likely to be the defining story in 2023. let us get over to julia coronado, president at macro policy perspectives joining us from a chilly austin texas. we were speaking to steve of interactive brokers and he was talking about markets now that are still waiting the fed. how hard is the fed going to have to fight back in the new year? julia: the fed has short of that has sort of shifted it strategy and signaled both a hawkish stance at the december meeting in the sense that the consensus of the committee is higher than the market is currently pricing but they also signaled a

downshift in the pace, another downshift to 25 basis points per meeting. and that allows them to both proceed with caution and feel their way to what is the right restrictive -- degree of restriction to put in place and hold the threat of rate hikes over the market for longer. chair powell has been frustrated by these rallies, is undesirable -- these undesirable rallies that ease financial conditions by holding a longer string of rate hikes they hope to prevent that relief rally that you are alluding to that they can hold markets and check for a little bit longer and make sure that the economy cools down enough took -- to close underlying inflation pressures. if it comes down to the projector he of inflation i love

how our team put it, saying that the story of 2022 was how fast inflation rose. the story of 2023 will be how fast it falls, what is your expectation on that? julia: i think it will really gather steam in the latter part of the year and we know that. there are leading indicators of housing and rental inflation that have really rolled over what we know there is a lag from the time that happens to limit official nation metrics, and that should be kicking in towards the latter part of 2023. in the first half of the year they are dealing with stickiness , the second round of sets from higher wages and prices in the pipeline that ripple through in services. they have broken inflation into the goods inflation disrupted by the pandemic, rental and housing

inflation, the single biggest component of core inflation and all other services inflation and that is where they are taking the temperature of the labor market and of consumer prices, that really has stabilized at a high rate. and they would like to see that come down and that will take time. matt: isn't the third bucket the hardest. services is the hardest piece of inflation for the fed to affect because with goods certainly with something like car sales or home sales they can easily raise rates and limit the number of buyers. in terms of services, do they have to because real economic pain to bring prices down and knock mom and dad out of work and put people on the unemployment line to get service inflation down? that is one possible out.

we do not really know. the pandemic disrupted service inflation as well as goods inflation. think about hotel rates and airfares. they have done a lot a busting and booming through the various opening and closing waves. and we have seen that, one of the key tests is that when will consumers become more price-sensitive like they were before the pandemic. before the pandemic it was notorious that consumers were budget conscious and they wanted deals and that one away when they could only buy goods and lockdowns during the pandemic. and then reopening there was this revenge travel ibf. and now we are settling into a normal consumer and we saw that this holiday season. consumers wants deals and they are aware of the limitations of the boom we have been in.

there are more aware that there are clouds on the economic horizon and they are it responding accordingly -- they are responding accordingly. that is key to inflation without a deep recession, consumers start demanding deals and that companies are going to have to meet them in the middle. we -- when they have not had to. think about the pass-through of car costs, unimaginable a couple of years ago. the consumers to simply accept a 50% increase in used car prices. but consumers now have a broader basket of goods and services. we saw that with airfares and that somewhere around the fall consumers started canceling trips if they could not find the right airfares. they were deal hunting and airlines responded accordingly so we are getting back into a more normal zone of price sensitivity and that is really key because that would allow the

fed to crew -- to cool services inflation without a deep and -- without a deep recession? matt: a lot of people in the housing market currently are on the sidelines because they are looking at six or 7%, 8% mortgages. i want to buy this year or next year i want to buy the last dodge challenger hellcat, 2023, that is the 15th year of them building that gigantic musclecar and they will never build one again but chrysler is offering me 7.29% and i will not finance at that rate. if i wait are those borrowing costs going to come back down? julia: by the end of 2023, but we have to go through the soft patch or recession first before we get to that relief. the rates are high because the

pain in the reaction of you know what i will not buy the collar be cut -- a car or the house because rates are too high because that is the demand cooling that the that is looking for and we are seeing it and we have seen despite better production of new cars and better availability, and the car sales have been languishing because rates of financing have shot up so much and consumers are looking at a big jump in payment for a new car or any car, so they are responding accordingly and we are seeing used car prices fall pretty consistently after soaring in the last couple of years. and we first saw some softness in new-car pricing in the last inflation report. we would not expect that to follow through in the first half of the year so the actual discounts on msrp, imagine that.

kailey: julia coronado, thank you so much. i sit next to you every day as we anchor together and i know that we shop for this car commercial breaks and you are considering two colors, have we decided on the green or blue? matt: frostbite blue. my other choice was the f8 green. kailey: i love the names of cars mine is a shadow metallic. matt: i feel best names with mango red -- blk eye which is a purpleish color. frostbite i think it is going to be it for my challenger hellcat. coming up we will talk to isaac, the policy research director and it will be interesting, he will talk to us about legislation we can expect to pass or not to.

everything from cannabis to financial regulation and we will talk about crypto as well. this is bloomberg. ♪ rikita: keeping you up-to-date with news around the world. president biden declared a state of emergency in new york where a massive storm dumped four feet on buffalo. 28 people have died. southwest airlines is struggling with the effects of the storm canceling almost 3000 flights

monday. they expect the chaos to last a few more days. power grids in western europe will get a break. warmer temperatures will reduce the strain on energy systems that were stressed by the first cold snap. forecasts call for high temperatures of 16 degrees celsius in frankfurt, 10 degrees higher than the 30 year average on new year's eve. in ukraine, the foreign minister is calling for ap summit at the united nations within two months. he tells the associated press that he does not expect russia to take part. moscow must face a war crimes tribunal before ukraine engages in direct talks. a u.n. spokesperson says that antonio guterres can mediate but only if all parent that all parties want him to. taiwan is sending a signal to the u.s. and china that it is serious about defending itself. it is extending compulsory military service for men from

four months to one year. taiwan has been working to strengthen its defense as against a potential chinese invasion. peloton has begun serving refurbished bikes 500 below new model prices costing 1100 to $2000. peloton disappointed investors with a lower than expected holiday forecast. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. ♪

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to 2% it is falling naturally in 2023 and 2024. matt: that was the president of iago research -- bianco research and talking about market reaction. one thing that i did not get to ask julia about is the possibility of the fed inflation targets, letting it load up. this is a type of thing that makes people angry. people will comment on twitter and they have strong feelings about it but it has been put forward by a lot of credible economists that we might need to have a 3% target or something a little bit softer than a single integrator. kailey: it is a valid question because you can have price pressures easing and cooling but cooling to target is something entirely different and that 2% it might just be for a world that we no longer 11 when we talk about a more permanently

decoupled world when it comes to the u.s. and china and about lingering supply constraints. 2% is much -- is something we might not be able to get down to so white -- what might be enough for the federal reserve or can they take the off of the gas maybe not hit the break but say that we have done enough and we are sufficiently restrictive that we do not need to go further. but maybe 2% is not where we get back down to. matt: a lot of that will be gauged from the market. equity index across the board in europe and london is closed for a holiday and they are so good about giving extra holidays. the rest of the continent is open and up and we are looking for gains in u.s. futures up .2% so it looks to be a risk on start to the day after christmas and boxing day. let us get over to the did -- to the big smoke.

ed ludlow is in london on loan from san francisco for a few games and a chelsea game. what are you looking at over there? ed: the idea that we have a few sessions left in the month of december but me being focused on technology it has been a rough month. we are on track for the worst december in 20 years. i think the market is trying to look back at history and particularly the nasdaq 100 for a sense at where we will go next. we are talking about the fed and inflation. the chart shows the nasdaq 100 on a 182 session streak where it has failed to breach its 200 day moving average which tells us nothing about the outlook for corporate earnings, but it does give us a broad gauge of sentiment and i think there is not a lot of optimism that we will break out on the nasdaq 100 and an upward trajectory anytime soon and then you, i, and kailey

can talk about inflation or if it is a strong jobs market data on this dour path. kailey: when we are talking about the nasdaq 100 we were talking about the mega caps, amazon, nvidia, tesla, met up. but those altogether you have one third of the index so putting together those stories for the individual names to have been given brutal punishment this year. ed: it is interesting because historically in times of recession we are trying to see how these companies they are in a recession. you will argue that some of the names that you mention have the strongest balance sheets with entrenched market positions. you look at the stocks, the worst performing stocks that you see, there are still questions around valuations and the basics of the rate narrative which is that higher rates discount the

present venture of future profits. when yields are pulling back they are still elevated making the names on your screen much last -- much less attractive propositions and i am broadly thinking about the nasdaq 100 trading at 20 times 12 months of forward earnings which is off of the high of 2021 and halfway through where we started, not against historic trends are averages it is pretty high so the market its thinking actually valuations have a way to come back down. matt: against old economy stocks. 20 times earnings if you are talking about faang stocks it has to be low and obviously with nothing which to compare them because there was not a previous facebook or tesla, really, i am sorry meta. i guess the kids are going with meta and alphabet but i am still a facebook and google guy. it is still interesting that you

are looking at 20 times but for the whole nasdaq 100 but that is the majority of the weighting. maybe 20 is not so bad? ed: you raise an interesting point which makes me think about the private markets, the private markets still uses the nasdaq 100 and appears to base their evaluation on the biggest private sector names and looking at the projections for 2023 and the impacts of higher rates and companies reacting in real terms to inflation, the risk for attack on inflation is that operating expenses outpace revenue growth and in this environment it is not palatable, but the public and private market sectors look at that valuation level and say yes, we have a little way to run. kailey: speaking of one valuation and it was one of the stocks on the board, tesla down 65%.

this was a trillion dollar company at the start of 2022 and it is less than $400 billion. there was a headline that crossed from tesla running a reduced tesla -- at a reduced schedule in january and there been a lot of questions around demand and that is a fundamental factor of the company putting aside elon musk and all of the risk. how does the stock turn things around? ed: again, tesla we always forget is a stock that trades at 30 times forward earnings or slightly below that. it is still caught up in the narrative around higher rates. the most recent anxiety appears to be related to the questions of demand. i do not think anyone has drawn a conclusion that there is a demand warrior -- worry for tesla and we have to wait for the next earnings call. there are signs. in china they cut prices and there has been very reporting on

why they shut down production in shanghai in the part of it they do annual me and they pause production in order to make upgrades that improve the long-term. and then you have the $7,500 incentive and doubling in the inception of -- of the incentive of the model three, but there has not been a definitive statement from tesla and all the while, elon musk is tweeting about the fed quite a lot in the fed's path to raising rates. so that is his suggestion. matt: the margin of that. i thought this was interesting when i sigh headline elon musk warning about margin debt and saying this guy must of had a ton of it himself if he does not have any left now. he has liquidated $40 million in tesla shares. ed: yes he has. the most recent report three weeks ago was that elon musk was considering through his bankers swapping out some of the unsecured notes of the 12.5

billion dollar original package to buy twitter for margin loan. you would remember in the early days in his efforts to buy twitter there was a margin loan component that was scrapped. the issue is when we reported that the margin loan could come back was when there was a most downward pressure on tesla stock and the margin loan would be collateralized against tesla. that caused anxiety as to why he was doing that. he tweeted and appeared on a podcast over the weekend saying that that is an error of the market one should avoid sing one's stock as collateral for a debt even though that is what has been reported what he plans to do. matt: quick car question. you mentioned that tesla is offering $7,500 off for the model x or y if you sign up. next year do we know -- that is the same size of the tax credit. do we know which cars get that next year?

ed: the biggest change is to look at the treasury guidelines that were postponed and that is delaying the battery composition requirements otherwise the origin of the metals, that provision was delayed so a broader basket of vehicles should be eligible. matt: excellent news. always good to see -- good to hear. thank you for joining us from london. i know you are supporting chelsea and he is a lifelong chelsea fan. kailey: go soccer. matt: thank you. that is the extent of the knowledge that we have. does he play for chelsea still? i think that is long in the past. 7:45 and we will talk more with dan ives, senior equity research analyst. this is bloomberg. ♪

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>> 2023 will likely be the year of recession. >> we might start a recession but if we have rss and it will be relatively light. >> it's an open question, how deep and long-lasting will the recession be. >> if inflation is not on its way to 2%, the market will struggle. >> right now the market is struggling with the slowdown we anticipate. >> this is "bloomberg surveillance." matt: live from new york city,

this is "bloomberg surveillance." i'm matt miller, in with kailey leinz. good morning. jonathan ferro is out, lisa abramowicz and tom keene are off , kaylee and i are here for the bulk of the week. looking at the market kicking off the shorten holiday week, on the upside we have gains in the european indexes that are open. london is still closed. it seems more civilized to me, to stay closed for a couple of days after christmas. kailey: wouldn't that be nice? not that i'm not excited to be here with you, but sleeping in would have been a nice gift. matt: the 10-year is at 3.77 52. we had come down substantially from the four point 25 high that we saw back in november, down to 350. now we are back up at 378. interesting there.

nymex crude is back up. we have seen a lot of volatility across commodities but right now i guess the idea is that china is reopening and as a result investors are buying commodities again. kailey: not just a mystically but reopening borders to the rest of the world after years of being shut off they will be backing away from the quarantined requirements of inbound travelers. that was the last covid zero policy remaining. now we are dealing with the prospect of a fully reopened china and cases seem to be surging across the country with the death rate rising as well. it raises the question of once we get past of the surge and people are back out being active, demanding commodities and other goods within the chinese economy, what does it do to the global inflation story? matt: last week we had the headline of 38 million cases in

one day, mind boggling when you consider that they are not testing. kailey: testing differently. matt: not nearly as much is how they put it. the question of the day i think and to the question of the week is going to be do you start to buy the dip now if you have been selling the rip and raising cash? the director of equity research at ameriprise joins us. justin, it's the turning point we are wondering about today that a lot of our guests are talking about. known as a crystal ball, timing of the market is difficult. at some point you have to make a decision about raising enough funds. prices are low enough, valuations are low enough that it's time to get back in. when do you see that point? justin: thanks for having me. i agree with you, a couple of days off would be nice for once. it's so, i think if you look into 2023, our take at

ameriprise is play defense going into the year. you have got your 2023 earnings yet to come down to a reasonable level. they started at 250 back in june. we think that they will come lower. that analysts are still too optimistic. they are playing defense going into 2023. kailey: how much lower is lower, just in? at what point do you say it's time to start deploying capital? justin: we have a target in that 210, 220 range for earnings and if you look at where it comes from, sectors that are hit hardest, that's discretionary. on the backside they continue to work lower throughout the year. we had this thesis on moving into more of a buy what you need versus what you want. if you can get into that 210 to

220 range, it will happen, it might be painful, that's why we think we play defense from a sector perspective. kailey: the equity market as a whole, you mentioned discretionary. we are talking about the heavyweights of the equity market. the ones that led the rally for so long. if it's not coming for them, what leads the equity market? what can support it? justin: good question. our overweight sectors right now are a barbell. we have that traditional defensive sector of the market, staples, health care. then we are overweight on financials and tech. three out of four of those have worked very well. it comes from staples and health care. i don't know if there is that talk around staples being too expensive but those are the ones producing earnings right now and it's hard to come by.

that's where we think we stay, in that defensive part of the market led by staples and health care. matt: in terms of dividends, i read through your stuff, i know you have this 3d strategy for the end of this bear market, right? you want to buy defensive stocks. that's why you are talking about consumers moving down to into what they need with dividends working well. you want to diversify, obviously. you want to move at some point from an absolute dividend level to country -- companies that grow dividends. how do you stream for them -- screen for them? what sectors are you looking at? justin: you are absolutely right. what makes it hard is let's say you've got a 50% on a 10 year and a two-year at 430. you can't go with a razor dividend.

companies have the ability to grow the dividend in double digits are past that you can buy with growing dividends with a growing range year-over-year. matt: what do you think about fixed income? what are you telling your clients? they have had i guess the worst year on record for rates. rates are now being seen at levels that provide a decent return. if the yield is becoming a bigger component of total return, do you advise clients now to get in? justin: our aim is fixed income is back. you don't have to go out 10 years, you can go out three or four years for a phenomenal yield you haven't seen in decades. it is set up for a good run in

2023. you can keep your duration relatively short and you can get pickups in a good yield. kailey: in other words, rip to tina. do we ever see a revival of that? justin: maybe, sometime. you know, you have, it was years or decades when rates were coming down and down. you think about, you think about the set up for consumers. if you graduated college around the financial crisis and you are here today, you are 40 in change -- not me, but some people are. [laughter] kailey: let me either. [laughter] -- not me either. [laughter] justin: you have this expectation of zero rates but that's not coming back anytime soon. that inflation will be stickier than people think. what's one of the risks in 2023 is the sticker inflation there. matt: i will just clarify the

acronyms, right, maybe not everyone knows. tina stands for there is no alternative. the idea that you had to buy stocks and there was nothing else. there was a new acronym, tar a. there are reasonable alternatives. in any case it feels like we are moving into a completely different era, justin. because as you point out, people basically a little bit younger than me all the way down to the youth of kaylee and ed ludlow, they have never seen anything but if not zero, at least near zero interest rates. does this mean we are not going to see 10% a year gains in stocks from here on out? are we never going to get back to that? justin: i think expectations need to come down, right? it's been an incredible run but it doesn't mean that you have a big massive selloff.

you just have to temper expectations. maybe it won't be in that 10% annual rate of return but you still have decent rates of return if you combine good quality dividend names with income generating 4%, 5% over two or three years. that makes for a pretty good set up. matt: all right, justin, thank you very much. there from ameriprise talking his strategies for what they are giving their clients at the end of the year, especially if we have this kind of inflection point. obviously the real inflection point that people are waiting for is that move from bare marketable market. we have had a few head fakes. we are not in one right now, we are still under 4000. the year-end target was strategists expecting under 1000? kailey: as we looked ahead, the average was 4950.

matt: for the s&p 500. kailey: on your screen right now, 3891. matt: it's a 1000 point gap between expectations and reality. granted there are so many things they couldn't have seen coming. the war in ukraine. so many forces working against of this equity market in a way that i don't think anyone could have anticipated but it raises the question that if consensus were so wrong this time around, could it possibly be right in 2023? the consensus is that it will get better on the back half of the year and a lot of that is predicated on a federal reserve that is going to pause and pivot and there is this question of if we have persistent inflationary pressures, could the market be wrong on it? matt: it's also interesting that our strategists are not expecting things to get better by next year. from bloomberg news we had a compiled expectation coming for us right now and out of 22

strategists surveyed, the average for the close is that 2023. 12 months and what, four days from now, that's 4078. right now we are at 3891. not much above that. earnings are at 210. doesn't look like we will get a lot of movement next year if you go by the strategies that have been put together on your terminal. futures are up half of 1%. coming up at 8 a.m., matt bailey joins us. -- maley joins us. this is bloomberg. ritika: keeping you up to date with news from around the world, i'm ritika gupta. china removing its borders to the world by removing the final covid zero restrictions. people will need only a negative covid test within 48 hours to

travel there and they will reduce the frequency of reporting cases, ultimately changing in western new york at least 28 people are dead and one of the worst weather disasters to ever hit the region. more than four feet of snow fell on the city of buffalo. emergency crews could not respond in time to medical crises in the snow drifts. meanwhile, southwest airlines expects that the chaos caused by the storm to last for another few days. the wall street journal was told that the carrier expects to operate at one third of its typical schedule so that it can get crews in the right position. they canceled almost 3000 flights on monday. and south korea the military says they sent drones across the border into north korea for the first time, an unprecedented move following the north korean decision to send unmanned vehicles into north korea and airspace. kim jong-un just set a major political meeting for policy.

despite well-publicized layoffs in the tech industry, most affected workers are finding new jobs quickly according to a survey from zip recruiter. the survey says about 79% of those hired found new jobs within three months. global news 24 hours per day and on quicktake -- 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'm ritika gupta, this is bloomberg. ♪

>> i still think it is an open question of whether we have a recession and when will it be, how deep and long-lasting might it be. there will be some disconnect here between the equity markets, where they are and where the bond markets are. it will be hard for equity markets to price in what's more noticeable that the rate of inflation is flowing. matt: head of bank of america u.s. securities there talking about a number of the issues we have been covering this morning and we will continue to probably cover for the neck year. what happens with inflation. how does the fed react? the market continually fighting the fed it seems like with these little rallies that we have and then being put back in its place by jerome powell at each

consecutive meeting. right now we have optimism on the street. s&p futures are up. gains across europe. stronger euro against the dollar. and of course when you have the dollar weakening it's always good for risk assets. the 10 year yield, right now up to 37733. gaining strength as investors feel like they shouldn't let go of the perceived safety of government debt with nymex crude trading at $80 per barrel even, up right now about half of 1%. kailey: of course a lot of that has to do with the china growth revival story. here in the u.s. we are talking about a federal reserve that has type policy this year and is expected to continue next year in the first part of it. a recession is seen as the likely scenario at some point in 2023. as you have growth interior

rating and the removal of monetary accommodation will you get any kind of fiscal accommodation to offset the weakness in the economy as we have seen over the course of the pandemic? at the same time in 2023 you will have a divided congress and can any of that realistically get through? matt: typically gridlock is good for markets but on the other hand, the fiscal stimulus, the mountains of fiscal stimulus over the last couple of years have been necessary to drive the market. when the tap was turned off it seemed like that came down as well. i should mention that we are in for tom, john, and lisa, they are off on a well-deserved -- are they together? i think they went together for a sabbatical. a sabbatical of one week. let's talk about what to expect in terms of policy in the divided congress that we will see sworn into kickoff 2023.

the policy research director at btig joins us. isaac, you have looked deeply into what's happening in terms of the legislative agenda next year, even before we are finished with the agenda for 2023 -- 2022. do we finish everything here, congress calling it quits and starting afresh? are you concerned about the business that hasn't been done yet? >> this was actually a very busy congress. they accomplished a fair amount, from infrastructure to ira to this massive one point $7 trillion spending bill that just came through. we are still coming through that 41 hundred page document and it reminds me now that i'm saying it, campbell is just a horse that has gone through the legislative process. a lot of things are crammed in there that we are still figuring out.

but it's the last and final part of this congress and they need to start again next year and that is going to be materially different next year given the composition that we are all now focused on. so next year there are a number of smaller issues i'm focused on. cannabis, the safe banking act. different for people with the state and local tax seduction. will we get that back? then there's the crypto regulation to look forward to. other financial industry regulation. energy policy we have to focus on. will we be able to drill more? will the administration be eight more friendly to that sector as we need more stock? what are you most focused on for 2023? with divided government we won't have the big massive legislative vehicles like we have seen. what's going to be the equivalent of this legislative wrap bag? what can be attached

to the appropriations bill on page 900? we are still optimistic that we will get a degree of permitting form. it remains to be seen what shape the legislation takes. it's something optimistic about. i also think that we should expect some crypto legislation. here i don't think we will get a massive comprehensive bill like someone said. i think it will be more narrowly targeted to stablecoins. it's something that congress understands. like a money market fund. beyond that i think i'm mostly going to be focused on how congress interacts with the regulatory state here in d.c. we have ackerman names that will play a big role here like ftc, cfpb.

a lot of these regulatory entities are going to get far around. kailey: macroeconomic policy, we were talking about these dynamics that were so common a few years ago. it's obviously a different story now and when you have a republican house the likelihood of getting a sped -- spent through is small. without recession what would you expect the reaction to look like? 0 i think it's -- isaac: i think it's going to sound like crickets, i really do. history doesn't repeat itself but often rhymes. the last time we had a republican house with a democrat in the white house was 2011 to 2013. during that time we had legislative logjam, fiscal

brinksmanship, fights over the debt ceiling and a pass for fiscal austerity here in d.c. with something called the budget control act that had mandatory sequestration. just as we talked about the fed this appearing, i firmly believe the fiscal congressional expires the minute the new congress is sworn in. kailey: to get your take on george santos, the republican in new york who has now admitted to essentially embellishing his resume about his college degree, working at two major firms. matt: left something out as well, previously married? kailey: there's a lot of different stuff contention. he says he plans to take the oath of office on january 3. i'm wondering about your reaction to these revelations.

isaac: it's shocking and not at all surprising as we whittle away the truth of our political discourse. these things will continue to happen. it will be interesting to see if he makes it. part of his strategy now is the hope that the story dies down. i struggle to see that happening. once he gets into congress, and i think it's going to be difficult for him to legislate effectively because he will carry a degree of toxicity with him from these stories. in a lot of ways this is the new lyrical discourse normal. matt: i am not a criminal, he said those words in an interview with "the post." never good words to have to say. isaac boltansky, telling us what to expect in 2023. thank you very much. futures are still up half of 1% here, kicking off the shortened trading week.

we have gains across the continent with the exception of u.k., london closed for a holiday but we are seeing gains in france and germany. paris, s&p futures at 6/10 of 1%. the 10 year yield trading at 3.7714. we will talk to dan nieves, major securities analyst about when those stocks will come back. this is bloomberg. ♪

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matt: welcome back to bloomberg.com -- "bloomberg surveillance." i'm matt miller here with kailey leinz. gains in terms of futures, european equities are up across the board as well. the london is closed right now. let's get over to kriti gupta. priti -- kriti: across the ocean here you can see s&p futures are up with outperformer is in the small caps that will be a theme into 2023, remember, you want a broad rally to have a sustainable turnaround. we have early signs of that this week. russell futures are up 7/10 of 1% and across the atlantic in europe you mentioned london

closed, the rest of europe is indeed open with the stoxx 600 higher on the day. you are seeing the commodity effect coming from the china story, the reopening story, kind of having an effect. euro-dollar is at 106. this is important because as you start to see the case for the dollar building it will go into those cyclical currencies. the euro is one of them. the others are those aussie canadian dollar currencies that are stronger on the day following the story you are seeing in brent crude and the entire complex higher. forgive me, i got a bit wonky, you know i have to, the bond market is still not changed at the moment, closed over in london as well, we have a chart that's really important, the two tenants of inversion relative to the bank index on the calls getting louder and louder into the inversion is likely to get deeper and deeper. at least that's the story from

the bond strategist and as it does we see bank index stocks, because of the pressure on the loans in the interest margin, those are dropping as well. potentially more pain for the financial sector in 2023 that is all dependent on the bond market. all right -- kailey: all right, i don't think that was too wonky. it was the appropriate level. talking about the banks, it strikes me we need to get through 2022 but two weeks into the new year we will start earnings season again. the big banks will be reporting and that tells on the consumer will be fascinating. matt: absolutely. deposits are at a high-level level but personal savings have come down. that could start to roll over. credit card debt climbing as well. as more consumers are running out of cash and putting stuff on plastic it's not good heading

into a recession. kailey: leveraging up to do christmas shopping. talking about the consumer conversation, goldman sachs is set to be cutting 4000 jobs in january. this as their consumer banking division struggles to be profitable after the bank had been steadily hiring since 2018 when david solomon became ceo. our own sonali basak got to sit down with him for an exclusive interview less than three weeks before rumors of the job cuts began circulating. take a listen to what he said. david: it's an uncertain time given the changing economic monetary conditions and it is having an impact on slowing down economic activity. if you run a big financial services firm you have to assume we have some bumpy times ahead and you have to be more cautious with your financial resources, your sizing in the organization. you have to respect that activity levels will be more

constrained. we have businesses that are very correlated to economic growth in the world. our economists predict 1.9% around the world in 2023, which is obviously slowing growth in the big question is as central banks tighten monetary conditions to control inflation that you've got to be cautious and compare. sonali: how do you prepare your staff around all of this? people are worried about jobs. they are thinking about pay as well. it's bonus season coming up. we have reported that you were thinking about having lower bonuses for businesses with rising revenues this year. how are about? insider decision-making assets and what are you telling your staff right

now? david: we have to pay our most important asset every year, our people. it shouldn't be surprising to people watching the performance of a business this year that 2021 was exceptional, a record. it's a record year for the firm. the highest ever year for the firm. compensation would naturally be lower. we are early in that process but like every year, we pay for performance will pay people based on overall performance and the firm and especially for the senior people, we consider the overall performance in the form -- firm. sonali: this year you reintroduced the natural culling of headcount. how do you balance that with the straight up from not just a year ago this talent war that we saw, the bleeding market for people. what's happening next year going into tougher times, how do you

balance retention and difficult conversations? david: we take a long-term view with everything we do, you make changes on the margin and at the same point you take a long-term view and you try to think about your business over time. we are extremely focused on serving clients and core businesses who have been active. it's important for us to strike the right balance in protecting the franchise and making sure that people pay-for-performance. on the other hand it's an environment that is tougher broadly, performance isn't as strong. people take a long-term view and that financial services forum. where i'm surprised by how resilient the competition talent is but it's not something we've seen across the united states or the world where labor is still relatively tight. the talent war, i think there are headwinds given the changing economic conditions but that

competition is still very strong. how that evolves is not known. certainly if we have a slower economic environment, it will have an effect. you can see it across all industries, not just tech. people are making pruning cuts or adjustments because they feel more margin pressure coming. we are not immune to that and we have to watch and make the right long-term decisions for our organization. sonali: headcount or otherwise, is goldman going to have to pursue another round of costs cuts? and if that were to be the case, where could you see that? david: we always size the firm to the environment. if the environment gets tougher we will be making decisions to size the firm appropriately. that could involve slowing down, which we have already done considerably, and it could come from pruning. sonali: switching gears a bit

here, brought her financial services, talent and whatnot, last year fintech crypto was booming. i'm curious if this collapse of ftx is making you think differently about crypto as an industry and your ability to potentially invest in some firms and purchase some assets here. david: i've been clear, the underlying technology around the block changes industry and there are opportunities for it to play a role in the infrastructure of the financial system. there is an and norma's amount of friction in the way that money moves and a variety of ways that the money can be used to provide more inclusive participation in financial activities, breaking down barriers. it has nothing to do with bitcoin or a cryptocurrency. i don't really offer a view on cryptocurrencies. i think they are highly speculative. they may hold value, they may not. but the underlying technology

and how it can help clients or customers and take friction out of the financial system and help to make it more accessible. matt: that was david solomon there talking to star reporter sonali basak. great interview covering a lot of ground there. obviously crypto is what piques our interest because we have a weekly crypto show. what a year two thousand 22 was for cryptocurrency on the way down. we just saw so many blowups and bankruptcies and kind of ftx i guess was the icing on the cake in a sense i guess. though very bad for people who had money on the exchange. kailey: absolutely. millions of dollars that evaporated or transferred and then evaporated to. definitely a year that has shaken the industry to a core because it was episode after episode. tara, the collapse of ftx, how do you do the rebuilding?

not just in terms of just stabilizing the players in the market frankly rebuilding trust. rebuilding trust on capitol hill, where sam bankman-fried had an incredible amount of influence on regulators and lawmakers who were frankly burned by his alleged fraud. it raises the question of where they go from here. matt: nobody really took it to head -- took it to heed. kailey: it's reputational damage, yes, but it's more that if you lend someone your ear and are listening to their recommendations, we know that he was pushing for the cftc to have greater regulatory control over the space, are you less likely to go in that direction because now you know it's a person you should perhaps have not trusted. matt: one of the most interesting arguments i've heard against regulation recently is the fact that if you regulate this space, opponents of

cryptocurrencies are worried that you then give a certain degree of gnome -- normalization to legitimize cryptocurrencies. the opponents of cryptocurrencies want to the cftc and s.e.c. and congress to stay away from regulating it further but nonetheless there has to be some sort of regulation in terms of stablecoin being used more and more. that's one of those things that we are told we will see by isaac. kailey: it's a matter of putting in some kind of safeguard or level of consumer protection that is lacking in the space and there is that let it earn argument where it is being allowed to self-destruct and it raises the question of this didn't bleed into broader financial markets. it shook cryptocurrency to its core and you didn't see any kind of real risk to financial stability. there was more -- no contagion. if it's more closely integrated, that's when the real contagion

could come through if you have an episode like this in the future. matt: it also doesn't seem to have affected crypto that much. bitcoin is still trading, tom is not here i can talk about bitcoin. $6,821 right now. exactly we haven't seen any volatility since the demise of ftx. euro-dollar trading at 100 640 eight with the 10 year yield increasing. dan ives joins us later in the program. the senior equity research analyst at webb bush talking about the mirrored collapse at big tech and cryptocurrencies. stay with us for that. this is bloomberg. ♪ ritika: keeping you up to date with news from around the world, with the first word i'm ritika gupta. president biden declaring a state of emergency in new york where a massive storm dumped

four feet of snow on the city of buffalo. 20 people have died in the region. southwest airlines is struggling with nationwide effects of the storm, canceling 3000 flights on monday. they expect the chaos to last a few more days. taiwan is sending a signal that it's serious about defending itself. the president there extending compulsive tory let terry service for men from four months to one year. they have been working with the u.s. to strengthen defenses against a attentional chinese invasion. in ukraine the foreign minister is calling for a peace summit to the united nations within two months. but at the associated press they said they don't expect russia to take part in the latest claim is that russia must face a war crimes tribunal before they engage in direct talks. the secretary-general is going to be allowed to mediate but only if all parties want him to. peloton has begun selling refurbished bikes at discount

for $500 below new model prices, anywhere from $1100 to $2000. last month they disappointed investors with a lower holiday forecast. 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 ritika gupta, this is bloomberg. ♪ ♪♪ what will you do? will you make something better? create something new? our dell technologies advisors can provide you with the tools and expertise you need to bring out the innovator in you.

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>> baseline>> is that the u.s. economy will avoid recession. we will go into a low potential growth rate scenario. we need to be humble right now. the market is tight. it's backing off the inflation fight because inflation is way above where it needs to be.

matt: there from high frequency economics, their chief u.s. economist talking about what to expect from the fed which has of course had a huge impact on the stock market this year. and i can't help but think about elon musk using the fed as an excuse for the underperformance of tesla relative to the resident -- rest of the market but it has also underperformed relative to other car mark -- carmakers. kailey: brutalized, frankly this year, trillion dollar company now worth $388 billion. losses are continuing this morning, stocks are down nearly 6% before the bell and i'm sure that some of that can be attributed to the broader weakness we have seen in technology, the fact that borrowing costs have moved up. but a part of that is fundamental. there are questions about the chinese market and demand their and elon musk over the course of

this year, granted it took most of the year to do it but he bought twitter and seemed to direct a lot of his attention there. matt: and overpaid. kailey: yes, something that he has admitted to, taking away from his focus on other companies he runs. there's a certain degree of key man risk. matt: and he continually seems to step in it, right? he really, he seems to make problems for himself. and certainly for his investors as well. let's talk to one of his -- i guess supporters and also opponents in some sense, dan ives joins us right now, senior managing equity manager at webb bush. you have been successful with your views on tesla and elon musk for many years. this year everything seemed to go off the rails. what do you think happened with

him and tesla and can he bring it back? dan: it was a tad striker movement for musk. and the twitter situation has been a train wreck that has gotten worse not better and like you said, he's almost doubled down, it's been a blackeye for tesla. brand deterioration and using tesla as his personal atm machine, it's been a big issue for the stock in terms of what is already a jittery macro. matt: striker, ted striker for those of you who are too young to know. kailey: i just googled it. matt: the main film -- character in the film "airplane," no excuse for not seeing it. any possibility that musk goes back to tesla and brings the valuation of his formerly trillion dollar company back to where it was? i hear a number of people saying it should be, tech bulls, valued

at $3 trillion. do you agree? dan: i think it can be course corrected. first, hands-off approach on twitter. not just a figure -- just being a figurehead. and then making sure that no more stock sales, actually, walking the walk. when it comes to tesla, clearly there is some demand happening. it had been a cinderella ride. the overall ev story doesn't change over the next four or five years. i do believe this is a stock that can regain its footing but 70% to 80% of it is self-inflicted. that's why it left a big piece of navigating through the storm for the stock to ultimately seated slows. kailey: of course, musk said he would step back from eating the chief twit at twitter as soon as

he finds a replacement. you were talking about the fact that we have seen deterioration in the value of tech companies across the board but when you think about the others, mega caps, they have lost 30% plus this year. how quickly can that story turnaround if we are still talking about a higher rate environment for longer after living in a world of zero rate for so long and these companies enjoying free money with rich valuations and low borrowing costs? dan: that's why it's this game of thrones battle. our view is that big tech is ultimately really oversold here. i think that in terms of some of the fundamentals, i believe that will be nagged -- navigable with streets anticipating it but the fed to a risk asset that's being thrown out the window and our views here that are oversold, i think we will ultimately be able to regain footing despite

obviously if you run -- yell fire in a crowded theater. kailey: that was a reference that i did understand, i did watch game of thrones. i will go home and watch airplane. matt: have you not seen airplane? surely, you can't be serious. this one is a classic. kailey: ok, well i will add it to my list. i have a very long list. matt: a lot of people telling us that this year will be a bifurcation, to use this overused surveillance term in terms of the winners and losers. is that true? do we get back to fundamental analysis? are those themes out the window for 2023? dan: i do think it will be a fork in the road. a lot of these enterprise names are going to hold up a lot better in terms of the trends that we are seeing in the fundamentals and in terms of

managing teams. i mean never underestimate just how bad a managing team can be or overestimate how good they can be. that's going to play out in these types of macros with some dark storm clouds clearly coming into the global economy. kailey: so if it is time for stockpicking, picture stocks, what are your favorite? dan: cloud, salesforce. i believe that activision will continue to increase in those are two names i'm really focused on. apple could be our top pick. it's this supply driven issue coming out of china. that's 3-1 here. we've got some under the radar names like zip davis. nice systems. another name would be quantitative labs. i think it's going to be a significant amount of m&a coming , tidal wave of it. right now, tacking back against

the wall, we have seen it. years from now there will be much more green screens than red given the set up. matt: overall, apple is your pick. why apple? what are we getting new from this company in 2023? dan: first of all it's three to one demand into the holidays with iphones. next year, finally drum all and gurman and others with apple glass, they will finally come out, that headset comes out potentially this summer. there are 2 billion reasons to own apple. it's the golden install base that cupertino has that no other company has. despite the haters right hating on apple, it's a stock that has had 40% to 50% upside here. matt: great to get your insights at the end of this year, hopefully getting you to kick

off 2023 as well. dan ives there, a big tech bull from wedbush, appreciate has always his insights. in terms of the markets and gains, tesla trading down 6% in the premarket, so it's not among those but the broader market is up, s&p futures are up half of 1% and we are looking at investors selling 10 year bonds right now. the yields are rising to 377. we are still well under 12,000, the year-end target for the strategists we surveyed throughout 2022. the target started at 4900 but has crept down to 4000. we have the same target for 2023 as well. doesn't seem strategists on the street are that optimistic for any kind of recovery next year. kailey: yeah well i think it's more they think there will be more downside to come. when you get a recovery from the actual deaths of the bear market

it brings us essentially back to where we are now, potentially limited upside for the rest of the year where there are only four trading days left. you and i are working but most aren't this week. i took a look at volume on the stoxx 600, 70% below the 20 day average. keep that caveat in mind when we look at money moves today and throughout the week. matt: and of course we have no trading in the u.k. but they are still open in the netherlands, france, spain, germany, italy. we are going to talk to someone next to says we will be lucky if 3500 is as low as we go into thousand 23. matt bailey joins us from miller tate back to give us his take on valuations. this is bloomberg. ♪

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>> the resilience of the economy is clear by the economic data. >> it will become unnoticeable at the rate of slowing. >> we expect positive returns. >> we anticipate stronger infrastructure spending and that could make a big difference in terms of growth rate. >> the market thinks they will

start growing -- cutting rates this year. >> this is "bloomberg surveillance." kailey: welcome to the last trading week of 2022. from new york city for our worldwide audience, good morning, this is "bloomberg surveillance." i'm kailey leinz alongside matt miller. tom, john, lisa are off for this holiday weekend are missing the final four days of the year but barring something insane happening over the course of the next four days it's still going to be the worst year for the u.s. equity market going back to 2008. matt: it's been a rough year. the fed continues to hike rates. adding 400 basis points so far this year and it doesn't look like they are set to stop anytime soon. at some point of course, they will plateau, but they may not pivot as the market has helped

so often throughout 2022 and that's one of the big problems, right? it's been a bear market where we get these little rallies every time the market thinks the fed will back off. they don't do it and it brings us back down again. it looks like you could go to 4000 but we are under that right now at 38 and change. futures are up a bit right now it will take a few hundred points to get us up to year-end targets and we are at the end of the year right now. kailey: we are almost there. 3883 is where we are. risk sentiment has lifted based on the news out of china, them releasing or undoing the last of the covid zero restrictions for inbound travelers relaxed as of january 8, lifting the asian session and by extension the european session futures this morning and because it is a holiday week where the u.k. is

closed for the extended weekend, volume is going to be really like. that's factoring into the foreign exchange as well. the dollar is still weaker against the euro. in the bond market, not much movement. 377 .52 is where we trade at the moment. -- 3.775 two is where we are at the moment. crude is up to around $80 a barrel. others like iron, palm oil, copper, all rallying on that china story. matt: and phish tickets. kicking off their four-day run for phish, i still don't have a ticket yet. if anyone has a friday night ticket, please email me. anything could happen, anything could happen this year. kailey: is this like a taylor swift scenario? what are the price tags? matt: much less money, the kids

don't really care about it. but i think wall street could. kailey: and this is phish ph? matt: yes, last year they had to push the april and everyone got covid. kailey: well, let's see if matt maley is going to phish. fan? matt: i'm a fan but it won't be attending the concerts, i'm afraid. kailey: well, your attendance that matters is your attendance here this morning on "bloomberg surveillance." matt was talking about how 4000 became the consensus and we may not reach that level this year but that was after expectations had to be dramatically reduced from what they were at the start of 2022. what we expected this year would bring. does that mean that expectations

for 2023 are also overly optimistic? matt: well it's funny one of the things we have heard a lot of is about the bearishness on the street the last couple of weeks. that sentiment has just changed dramatically but you are right, people have become much more bearish and talking about things dipping further. they said at the end of the year it will be fine. i am concerned about that, by the end of the year, the biggest problem that we face is whenever the market gets to an overvalued level, the bear market always lasts longer than just a year. often 18 months or just a little bit longer. that's number one. number two is that the evaluation levels, when you get to those extreme levels that we have, it takes a bigger decline for the market to get back in line with what would be a

natural level of valuation. i don't think it has reached the bottom yet. kailey: what is fair value? matt: that's the thing, to give you a number, at least 3500 and that's assuming we don't have a recession or get a decline in earnings in 2022. every bear market and every recession since world war ii has given us, or every recession, i don't remember, since world war ii has given us a decline in earnings. if there is a decline in earnings next year that takes us below something like 3500. people have to remember that when you don't have zero interest rates and don't have qe , 18 to 20 earnings, that's the fair value. matt: so do we need then to come

down? i'm interested really in the pe evaluations, because it's something i actually understand. looking forward pe, trading at 17.3 right now. do we need to come down to 15 before the bear market can end? is that something we have seen in every bear market? matt: exactly, every single one since world war ii, certainly the last 40 years you have seen 15 times earnings if not lower. that's the best we have noticed. 15 times earnings. and again when you get to these all-time valuation levels, we certainly had extreme valuations in 2007 and 2000, the very beginning of 2000, the problem is you get this additional leverage. when you dig deeper into that deleveraging process, it can take longer than one year. when people say it comes down enough, it's actually not until we get those valuation levels.

the leverage gets so far to one side has to swing to the other as people deleverage and i hate to say it, they get forced into selling and they sell when they don't have to because they are getting margin calls and such. it's not just a thing. there's a rational reason why we get that swing to the other extreme and we probably will get something below that before it bottoms. matt: how long will it take? i always think of "age of deleveraging," he took us a decade to get through that. are we looking at something like that again or is it not nearly as serious in 2023, the deleveraging? matt: i think it just happens at a lower level. i mean i guess i think the question is how much is the fed willing to let the deleveraging take place? what i always point back to is 2018.

everyone says that when the stock market started to crumble so bad that the fed had to pivot , it was the middle of december that year where they said the market is heading down a lot and we don't care. we will keep tightening. two weeks to three weeks later the fixed income market, the junk bond market imploded. that is when they pivoted to. they are much more concerned about what's going on in the fixed income market and now even though it's down quite a bit it's still running fine. we may get a pivot later this year from the federal reserve when they start cutting rates but that's going to happen when the situation becomes much more dire than it is now if we just had this slow grind lower. the fed will keep rates at high levels even if they stop raising them. kailey: while finally, none of us could have seen what the fed did the seer coming out of the start of it, the war in ukraine, so many things, many of us were

not anticipating 2022 as the full reopening of the chinese economy. many of us thought it was something that would take much longer. if you have unleashing of commodity demand from china, how does that fuel back into those prices and the energy sector that has run so far this year? how much more upside could there be? matt: there can be more upside. china reopening, commodities bouncing back and that could continue if the dollar continues to move lower. if there is one thing that is a good inverse correlation, it's been the dollar over time with commodity prices, especially for oil and gold. the thing is, though, if you look at the way the valuations are trading for the energy sector it is still trading with oil at 60 to $65 and it seems that want to keep it at 75 or higher where we could get

pushback and that will be bullish for the equities. believe it or not they have a ways to go to play catch-up to the price of oil, even though they have rallied so much this year. i'm still bullish on the energy sector this year. matt: matt, thank you so much for joining us. matt mele has been bullish and if you decide to cash out on those deals, we could get some nosebleed seats at madison square garden and we will stub down to the floor for the phish show this new year's eve. coming up, the associate professor of emergency medicine at johns hopkins is going to talk to us. this is important because when i went to the msg new year's eve run in april, i got covid and so did almost everybody else in the garden. even three out of four members of phish got covid and now it looks like it's coming back. kailey: anecdotally, it disrupted some of our christmas plans and if it's not covid

there are just a lot of other people who are sick, the flu or something else. even my dog has canine influenza right now. if we could all send grant the silver labrador our best wishes. matt: port grant. we will talk to the doctor about this rebound and covid infections and how it could affect your new year's eve celebrations, when we come back. this is "bloomberg surveillance ." kailey: we should play phish. matt: we should. we will player during the break. good morning. ♪ ritika: keeping you up to date with news from around the world, with the first word, i'm ritika gupta. china removing the final covid zero restrictions. january 8 beijing will no longer require travelers to quarantine, they will only need a negative covid test within 48 hours. meanwhile the chinese government

may reduce the frequency of reporting cases, ultimately changing to a monthly report. western new york at least 28 people are dead and one of the worst weather disasters ever to hit the region. more than four feet of snow fell on the city of buffalo. cars were buried in snow drifts, emergency crews cannot respond in time to medical crises. meanwhile, southwest airlines expects the chaos caused by the storm in the u.s. will last for another few days. they expect to operate one third of their typical schedule so that they can get crews in the right positions, canceling almost 3000 flights on monday. in south korea the military says they sent drums across the border into north korea for the first time, an unprecedented move following the north korean decision to send five unmanned aerial vehicles into south korean airspace. kim jong-un just opened a major political meeting to set

security economic and political policy. despite well-publicized layoffs in the tech industry most affected workers are finding new jobs quickly according to a survey from zip recruiter. saying about 79% of those hired after losing jobs at a tech company found new jobs within three months. global news 24 hours per day on air and on date powered by -- 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'm ritika gupta. this is bloomberg. ♪ when you automate sales tax with avalara, you don't have to worry about things like changing tax rates, exemption certificates or filing returns. avalarahhh ahhh

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>> you might start a recession but it will be relatively light. economic resilience is clear through the economic data and there is a lot of opportunity for positive surprises. kailey: that was john at oppenheimer asset management. this is "berg surveillance -- "bloomberg surveillance," we are filling in for john, lisa, tom. is this an in between holiday? matt: yesterday was boxing and we are coming up on new year's eve. today is just a bank holiday in the u.k., right? they just give that. christmas was on a sunday and they expect two days off for christmas and boxing day. they extend it. it's the right thing to do, it

seems civilized. kailey: i would like that very much but with the volume low like this, by and large the market action has been positive to this point in the future session, though we have seen gains getting smaller as time has gone on. nasdaq 100 futures are up 1/10 of 1% with bigger gains for the s&p 500, up to three point 886, which as we have discussed multiple times is far below where we initially thought we would end the year and still below where strategists had revised to lower their expectations. matt: yeah we need to see a rally of 4% to 5% in the next few days before we can get back to or achieve strategists median target for the end of the year, a bit over 4000. and then all the strategist we surveyed, or most of them as a group, let's say, expect us to

drop down. we just heard matt at tate back say that 3500 would be a good drop. we could drop below that and then recover at the end of 2023. so we are in for a bumpy ride at the beginning of the year is what a lot of people are saying. kailey: and of course it's been a bumpy ride in commodities as supply concerns have been replaced by demand concerns that seem to be being driven by the china concern as they have released their economy to the forces of covid, removing some of the last remaining covid zero restrictions and handing quarantine requirements for inbound travelers but we know that cases are surging as a result. let's bring in the associate professor of emergency medicine at johns hopkins. great to see you, been a while since we have spoken. if we could think about china in particular in terms of the remaining covid story, what's your expectation about what

could happen there given the entire removal of restrictions? when could china reach a peak in cases? ask to answer your question it's hard to say when they could reach a peak. we have no reporting their health commission. they traditionally do monthly reporting and we have not seen those numbers coming out of china. i honestly don't know and we will get a peek but at this point we are seeing a surge similar to the delta and omicron waves. in most countries we saw a peek at six weeks. i'm praying for them that this is fast, rapid, resolves soon. we also know that their high vaccination rate, nine .2% of individuals are vaccinated and that they have access to oral antivirals. similar to the u.s. in that

there is protection available for individuals and we know that they are likely sick with were very and -- sick with newer variants. matt: do we have a new name for this new variant and what else do we know besides the transmissibility? dr. han we have moved away from names into letters now. ea five, ba.5 .1. matt: lame. dr. hansoti: i know, right? we ran out of names along long time ago. we know that it has transmissibility within two to three days for individuals making contact if they are symptomatic. at five days individuals get sicker and will require hospitalization and treatment. we know that as quickly as it comes on, it comes off and individuals are most likely to be symptom-free within 10 days.

matt: i don't want to wear a mask. do we have to wear masks again? i don't think i'm going to. dr. hansoti: depends on who you are, right? i don't know you. but if i did know you and knew that you were immunocompromised or had a disease that made you vulnerable to getting sick from covid, these areas where the oral antivirals are unavailable, i would say wearing -- wear a mask. i know that wearing a mask is tough. we are exhausted as a nation and every american has agency to make those decisions. kailey: i was speaking with matt earlier about how so many people i know are covid positive right now. more than i have known in a year. but also a number of people are just ill. the flu or sinus infections. i myself feel like i have been getting sick more often than i ever did pre-pandemic. i'm wondering about long-term

health ramifications. it will are getting more sick because we have suppressed our immune systems? are we going to be more sick more often now that covid is probably going to be circulating in the population for a time to come as a seasonal virus? matt: the argument we have at the miller household is my wife wears masks all the time and constantly -- what do you call this? kailey: washing your hands? matt: no, not that. kailey: the hand sanitizer. matt: right, all the time. it's an addiction, i never use it and don't wear masks. i never get sick, she constantly does. have the people who are overprotective of their immune systems allow them to weaken because they get sick so much or is this just a coincidence in my anecdotal home life? dr. hansoti: again, no easy answers.

we joke that i have had more viruses than pumpkin spice lattes. but i have two young kids. i think what's really going on here is yes, we haven't been as exposed in the last two years as we should have been to common household colds, different enterovirus's, coronaviruses. also however if you look at the current strains of rsv and flu, they are more virulent as they have been previously as happens with the flu. every five to seven years you get a variant that is more aggressive than previous so it's a combination of last year we were not exposed, don't have any immunity. we have a flu in the rsv season that is hitting us really hard. are we about to become a nation that is constantly sick? i don't think so. does your wife have a weaker immune system compared to you? probably not. abc's exposed more. maybe she's out there doing

things in the community, going grocery shopping and you are in the studio and more protected. i think it all depends on what our lives look like and what our exposures are and what we are likely to be afflicted with. matt: all right, thank you so much for joining us. pleasure talking to you again although hopefully it's not too often because we in we are all healthier we see you less often. dr. bhakti hansoti talking to us there about this, well this wave we are seeing. i don't think it's anecdotal, right? we have the data to back it up that we do see it coming back in a serious way and hopefully it's just more transmissible and not as fatal. kailey: what i think is interesting with this wave is that there isn't as much of a push on vaccines and boosters. matt: i mean how many more can i get? kailey: you are supposed to

continually get boosted after your initial. to continue. matt: but i think we do that. no one needs to push us, right? kailey: well they needed them big-time at first. there had been a lot of outreach around that and that part of the conversation seems to have diminished somewhat. coming up we continue our conversation on these markets with diminishing futures, moving higher to start the next trading week, the last trading week. we are just shy of 3900. the 10 year yield at 378. this is bloomberg. ♪

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sonali: --kailey: we don't have too much big economic data or big catalyst events happening but we will get the small incremental data updates today in a couple moments. the first one being advanced goods trade balance for the month of november coming in at -$83 billion. that is less than the estimate. matt: it is less bad than the estimate.

the trade balance, it is interesting. something we always pay attention to on holiday weeks, when there is nothing else to talk about. kailey: this is also inventories, month-to-month figure, up 1%. yesterday, it was up 3/10 of 1%. it was a story we have been following some time. matt: ever since cathie wood says inventories would lead to deflation. kailey: we will talk about the merits of that argument but we have seen this borne out. we are coming off the holiday shopping seasons where there were discounts this year if he wanted to buy presents -- you wanted to buy presents. there is your economic data and let's keep -- get you a check on the market. kriti: no major moves when it

comes to the markets but in the last hour, you have seen a. --psiring. --pairing. the real outperformance starting to slow down as we get closer to the opening bell and in europe, it is the same story. there is one culprit leading to these marginal moves and that is the dollar which is starting to see a bid. it is negative on the day at the bloomberg dollar but it is climbing and the ripple effects are crucial, natch in the equity market but in the currency market. the euro is reversing its moves and down about 1/10 of 1% but the commodity complex pairing its original gains and copper up 2% relative to a 3% gain hour ago -- an hour ago.

kailey: kriti gupta with your macro picture. let's look at the micro picture and one company, uber. it's shares are down 34% in the company ceo is optimistic about the future. he spoke to a reporter. >> i want to start with the bigger picture. a ceo thinks a revolutionary -- revolution is happening. do you think a revolution is happening post-pandemic in the businesses that you run? >> there is a revolution happening in terms of delivery to your home. started with food and grocery all your iphone and in four years, are uber eats visitors

went to a $32 billion run rate. users want what they want at their home right now. a used to be that next day delivery was also in -- awesome and now it is about our delivery and we are empowering any local merchant to get anything you want locally to your home and within hours and users of it. -- love it. we think it is a trend that will continue. >> what are the levers you can and will pull to determine whether that happens this quarter or not? >> i think what is happening is our marketplace is becoming more balanced. if you look at you, the demand for moving around and getting things your home was increasing at a much faster rate than supply. we had to invest aggressively to bring drivers to the platform,

and you are seeing the benefits of that in q3. for the marketplace is more balance and our margins are coming back to normal. our mobility margins are equal to pre-pandemic levels even at lower volume because of the most that we have made in terms of automation. are uber eats business is on the top line but it is going to profitability levels at the end of the year and things are working well everything growth atop line and do so profitably on the sustainable basis. >> you are working on driver supply around the world and there are price surges that writers are feeling --riders are feeling. you set prices will use up but without that, do you see profitability rising? >> we are seeing prices

stabilizing and the surgeon levels are coming down and etas are the best they have been to the beginning of the year and conversion rates, as far as the percentage of uses opening the app and getting services that they want, whether food delivered or going somewhere, all of these metrics are moving in the right direction so we can be profitable delivering a amazing experience is to -- experience to writers immediate -- eaters and a good experience for earners. >> when do you see a better balance between supply and demand? >> what we are seeing in the u.k. is that demand in the u.k. is at 20% to 40% higher than pre-pandemic levels. it is amazing to see the drivers

we have on the platform is higher than pre-pandemic but it has not caught up to the growth in supply so we are going out in the u.k., and looking to bring 20,000 more drivers to the platform and opportunities are better than how they have been but 60% of the time, you're getting the right within five minutes and 90% of its time, you're getting the right within 10 minutes. we wanted to be faster but the service is working in the way we want it to end there are time -- a ton of work opportunities. >> doordash's market cap briefly surpassed uber. of former uber executive called that a nightmare and he invoked a comparison to yahoo!. how do you respond to that? >> i would not put any credence

to that former executive. if you look at our volumes, our volumes are twice as high as doordash's. we are growing faster and based on third-party better, are uber eats business is the fastest growing delivery platform in the u.s. we are confident to where we are going and this is the point in time in terms of relative pocket caps off that i don't think you will see again. >> doordash is getting into alcohol delivery. we saw the partnership with albertson's but when will we see your roastery efforts scale up and bear fruit -- roastery efforts -- grocery efforts scale up and bear fruit? >> and makes a lot of sense for us to follow us there and as far

as grocery goes, we have focused outside the u.s. first. we think we can be the winner in latin america which is quarter shop's home turf and we are aggressively expanding grocery in france and u.k. and taiwan and australia and in the u.s., we have a strong agreement with albertson's and costco and we will expand with partners on a local basis. >> a situation ruling in texas, uber left -- and left has said they will pay the fee for drivers sued under the new texas law banning abortions. if other states have similar laws, will you support them as well -- do the same as well. >> we don't think drivers should

be shoot -- sued by private clients. we will stand behind our drivers. >> are cto -- your cto step down and you have made the unusual decision to become acting cto so you have these highly technical executives reporting to you. how are you preparing for this new responsibility? that is a critical job. >> it is. i was an engineer back in school and i get to geek out and at uber, we had the best technical capabilities in the space and my working directly with our top engineers, we have an incredible bench. i am looking forward to it and we have a great bench. we can keep innovating and keep shipping products faster than any other local players. >> speaking of other bets, you made a visit to jobi and watched

one of their flying taxis take off and you have self driving with aurora. how do you see these other bets with self flying cars and flying taxis playing out? is this a travel revolution we need to wait for? >> all of these technologies are happening in the pace, i think it will depend on the regulatory authorities. the jobi bench in terms of sound is a shortened area. -- it is extraordinary. with aurora, we are thrilled to be working with them on the trucking side and the rideshare side and i think it is about safety and the technology leaves are encouraging. these are two best teams along

with lime. we have strategic investments in each of these important areas and we love our investments because we made the investment and what we believe are the best teams in each area. matt: coming up on the open, we will get back to rates as we watch the 10-year continue to climb. at three .8128, priya misra will join us and your son distance to -- gerstein distant felt -- >> i am ritika gupta. president biden has declared a massive energy in new york where there is a massive dump of snow. southwest airlines is struggling

with the nationwide effects of the storm that accounts for more than 3000 flights. taiwan is sending a signal to u.s. and china at that it is serious about defending itself. the president is extending compulsory service from form months to one year. taiwan has been working with the u.s. to strengthen its defenses about eight -- against a chinese potential invasion. adam fox could get a life sentence. fbi informants helped law enforcement wreck of the plot before he could be carried out and boxed's lawyer says he was manipulated by informants. latonya has an selling refurbished bikes at discounts and the bikes will cost anywhere from 1100 to $2000 and last month peloton disappoint

investors with a lower-than-expected forecast. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am ritika gupta. this is bloomberg. ♪

>> big deal is inverted like they are. so many indicators, -- the worse the economy is now, the better the market can be, because the fed will be out to lower rates before renewed expectations.

kailey: we are gearing up for the first trading day of the last trading week of 2022 and the picture is getting different and more exciting and we have features heading toward session lows. nasdaq 100 features have flipped into negative territory and they are down 2/10 of 1% and optimism around the china reopen story has been giving way to a pessimistic field. a lot of equity pain has been driven by the bond market and we are getting more movement there and attend gear guilt up seven basis points to 382 -- 3.82. . i am recovering from the loss of

my broncos to the rams on christmas day but eli manning is jumping into a different venture, selling used sports apparel and getting in on private equity. a reporter sat down with you on many to talk about the equity deal. >> everyone knows -- eli and many -- eli manning -- he has been on a rise on another business, private equity. i got to sit down with eli and pete leibowitz about the deal. tell me about sports and private equity colliding. you are the manifestation of it. how is it working. --? >> sports are becoming a asset

class in different ways that you can be involved in sports. there is apparel and equipment and real estate and the fan experience so it is an exciting time and i am excited to join the private equity road and also, the fact that the first deal i was in the sports world so it is easier for me to come in there and talk about and be passionate. >> steve, talk about this idea of eli being this canary in the coal mine for athletes in private equity. >> athletes want to have control over their brands and more control in general, and that we think is a real trend. that as well as thinking about private equity as opposed to venture which historically, my partner drew says, athletes are the mentality, they want to create the next three records.

with our companies, sometimes we have the opportunity to grow the company's without the same rich -- risk profile and we think that is appealing to athletes. >> your first year, a uniform company. tell us about discovering and working on. >> since i joined bbg, this was the first deal i was looking to acquire. i was excited because i love used sports. i purchased a lot of uniforms from our own kids and this was interesting because it is vertically integrated and they do everything in house and the price point is a lower at bubble up and other uniform companies. you can get a full kit for $80 to $20 instead of a family having to pay $100. it is interesting to learn the process of the private equity world and i have pitched many

products before but never pitched a company that i am encouraging you and tell you why to invest in this so being a part of this and how i can help grow this company and from the marketing standpoint, are all the things i am looking to get involved in. >> tell me about the pitch process because it brings you into contact with other former athletes as businesspeople. not looking across the line and worried they will knock your block off. more the idea you -- of saying, this is what you should do. >> we were talking to former athletes put -- and pitching in idea and they have a great appreciation of it. getting kids -- their kids are playing sports and it is a great business. there is more sports available to more kids now and it is of great deal and a lot of these athletes wanted to not only

invest but thought they had connections and communities they can help keep this company and involved in to grow. >> at feels like for the firm where you are validating something that you are seeing with eli as a single person but there is a network of people that you are in touch with that becomes a new business line. >> we saw opportunity there, given our network and the connectivity. with sports being a great industry, it is like $500 billion plus, and made a lot of sense. with the folks we know, not just athletes but with executives, who are involved with the group, we can cover the different aspects of the sports business. we feel like we are well equipped to offer value to these companies and bring value. we will not do something less. with that, it makes perfect sense. >> building on what steve is

talking about as private equity as a vehicle for former athletes versus being a spokesperson, what is it about private equity that speaks to you? >> it is the idea of acquiring and owning a company and i have pitched many endorsements. this is different. you have ownership in it and trying to grow and expand it. using your connections in ways where you can make a difference and do something good. that is the idea that we are trying to do. sports are so popular with many people, whether you have played it at a youth level or in college. there are ways to invest around it. >> where does it go from here, steve? >> has to be good investment -- it has to be good investment or we don't have a firm. it is the price.

it is the same questions we ask in private equity deals. we won't swing at a pitch, unless we are convinced -- >> that was a baseball mitt -- reference. >> i figured it out. [laughter] >> you have private equity and the mannings and endorsements, how do you put it together? >> it is about time management. i enjoy learning this world. it is very will -- new. i learned something new about it every day and talking with steve and this last year, it is my freshman year of taking five equity 10 one and getting involved in asking a ton of questions. i was doing football and i was so focused on it and that was all i did. i was involved in the game and

sit on my couch and watch football games and make fun of peyton, it was exciting also. learning private equity and learning the business side, culture around those businesses, it is very interesting and enjoying the learning process. >> eli's time management skills are unbelievable. we had a call on wednesday at 11:00 and before the call, he said i will not be able to talk to anyone during this call. after the call, he sends as a text picture of him as chad powers. he was having the makeup put on during our call. ? >> couldn't move my mouth -- i could not move my mouth. they were asking a few questions and i said i cannot call or text. >> massive bills fan. could we have an eli versus

steve football? >> we could take that scenario and it would be worth the awkward week of the game and the week after, we probably would not talk and say, let's have a cooling down. that would be a win-win situation. >> you and i talked, to go -- >> my bill -- the bills are an adopted afc team. the giants and bills don't play that often and we have a good experience and the last time we met in super bowl. >> there are two words i don't want to hear again, white and right --wide and right. >> thank you so much. kailey: thank you for tuning in arms -- bloomberg surveillance. matt and i will be here tomorrow. this is bloomberg. ♪

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matt: i am matt miller in fort jon ferro -- for jon ferro. the countdown to the open starts now and we're looking at sp futures unchanged. we were getting most of the morning and we come back to levels you see here. nasdaq features down as haslett drags the index down and the small caps are unchanged. we have 30 minutes until the open. >> everything you need to get set for the start of u.s. trading. this is bloomberg the open with jonathan ferro.