>> from new york city to our audiences worldwide, welcome and good morning or good afternoon in europe area its bloomberg markets live on bloomberg television and radio. caroline: what a day of muted trading and trying to digest how

much of an impact china will be. paul: we got some news out of hong kong that it will be easier to travel in and out of the city which was a global financial hub, is potentially losing that purge sows is interesting to make sure they remain a significant global financial hub so we will keep an ion that -- an i on that. caroline: tesla for once is managing to get a little bit of arise. paul: there is data coming out this morning that richmond, virginia, the richmond fed manufacturing index came out a positive one. the survey was for a -10 so it came in a little better than expected.

i've been surprised to resilient u.s. manufacturing economy has been. caroline: no ease up in the pain and pending home sales, falling to the second lowest level on record, negative or percent. the market had been expecting a slowdown of 1%. we are seeing the continuing contractions in the housing market because of interest rates and mortgage rates going up so was more expensive to buy homes but the sixth straight month and this is a november number so it's backward looking. we've got a great desk to dig into it. he is the head of real estate strategy. once again, manufacturing looks

better it would seem for the data put the housing data once again is painful so where are we in the cycle? this was a challenging year for real estate investment trust. they were down around 25% through the close of business at the end of last week area inflation is usually good for real estate to what it's challenging, it's stagflation. it's an environment where rates are rising and growth is slowing and that's what played out for most of this year. the fed had to raise interest rates to combat inflation at its highest level since 1980. it was a backdrop of higher interest rates, widening credits reds that has pressure the real estate backdrop. folks out there watch the fed and think the rates will come down the back half of the year. what is thereit outlook for the

back half of the year? >> we believe there is potential for low double-digit returns in the year ahead. that's pretty good compared to the -25% we had so far this year. there are three things driving this. growth will undeniably slow in our view given recessionary pressures but it will be well above trend versus a prior recessionary environment. the second point is that we do see it better inflationary backdrop. stagflation is really challenging for real estate but we see a backdrop where growth is slowing next year but rates will begin to come down. recall that a stagnation every backdrop. that's a much better backdrop for real estate in general. the third point is when the fed stops raising interest rates and

that will likely occur at some point over the next 12-18 months. reits usually do pretty well. we think the backdrop of transitioning from static elation to stagnation is good for real estate and as the fed stops raising interest rates, it should replete -- should produce 15 plus interest after that. we see a better backdrop. caroline: not all real estate is created equal. we were breaking the pending home sales and talking about a consumer and where they want to live. talk to us about the most appetizing parts of the market in the bitsy that you still don't want to go into. >> one of the sectors of the market we like is multi family particularly in the sun belt, single-family rental. what has happened to the housing market speaks to the

single-family rental market. buying homes is really unaffordable now but if you conserve rent single-family rentals, we think better. if you can't buy a home, you have to live somewhere. we like data centers and we like health care as well. of the other end of the spectrum, maybe sectors we are more cautious on, maybe the office sector. hotels we are cautious on as well. paul: we are ensconced in midtown manhattan. as we look around, we see a lot of empty office buildings in midtown manhattan. if i am in office reit manager, what do i do?

is there a solution? >> i think we paint office with too broad of a brush. a new clean and green offices very well positioned. you can see some of the newer buildings are doing quite well. suburban office well well-positioned, but to clean the sun belt where there is more of a challenge is classed dnc properties built in the 1970's and 80's and there hasn't been a lot of money put into them. we have to find a way to redevelop them. there is no easy ones transitioning into multifamily properties but it will be more challenging for entrepreneurs to find a solution. the easiest one is redevelopment of the multifamily. caroline: but that's superhard. >> it's very hard. the land underneath most of

these properties is pretty valuable. i think we will find a solution but it's really a question of where the net offering is how much capex do you have to spend the. caroline: you mentioned offices but the hotel sector as well so wiry are you worried about them? >> i think the easy solution is that maybe travelers coming down from peak levels of last year. travel is coming back up but there are major issues that many people don't think about enough and that's how much labor costs are rising. to run a hotel, it requires a lot of labor so that maybe keep this on the sidelines. expenses and labor costs are going up. matt: as i drive down to the

jersey coast, i see tons of warehouse space. paul: is that business over built? >> some aspects of industrial are still a very good growth story. if you can find the locations that are new properties, that's well-positioned. there has been a significant amount of supply that is, into the logistic space over the past 5-10 years. if you own an older property in a high supply market, wrote is probably going slow. it's not a one-size-fits-all market anymore. we're still bullish on the high growth return -- high return. maybe the older properties are not well-positioned and they could be facing challenges. caroline: i'm looking at your

$84 billion assets under management. talk to us about where you are thinking globally is attractive in reits. >> we think the best opportunities are in the united states. as you think about other opportunities whether it be in some of the chinese locations opening up, some of the major markets in europe are interesting but i think we see the best value in the united states right now. paul: if i'm an entrepreneur and want to buy an empty office tower in midtown manhattan, where do i get the money? do i borrow money from jp morgan? >> it's an interesting question. the debt market is not frozen by any means but they are not wide open. i think there is debt capital available for a high quality property with a good sponsor.

there is also a tremendous amount of money on the sidelines that has been raised and not yet deployed in commercial real estate, around $300 billion. the debt markets are there. they are not wide open and the easy money is gone but i think it's a combination of finding cheap debt capital and that's on a relative basis plus some additional equity from money on the sidelines. i think lenders are being more selective than they have been in the past and are being focused on what property type state lend to but making sure the sponsor is well-capitalized. paul: on my lunch break, i will walk over to jp morgan and see if i can raise some money.

thanks for checking in with us. let's go to real news. ritika: in western new york, the number of fatalities has risen from the record-breaking snowstorm, at least 31 people have died in the storm dumped nearly four feet of snow in buffalo. a nightmare for travelers on southwest as they have scrapped 60% of today's flights. some have waited days. the retired pope benedict health is getting worse because of his age and that pope francis will visit him. benedict is 95 and served as head of the roman catholic church for almost eight years and in 2013, he became the first open 600 years to step down. in the u.k., a spokesman for the prime minister acknowledges the nationwide strikes are causing massive disruption. railway workers and order workers went on strike today and ambulance workers plan further

cuts in january after striking earlier this month the prime minister once paid hikes that could boost inflation. global news, 24 hours a day and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. caroline: thank you. looking at the british pound up by 0.6%. we are seeing a little bit of a push higher. more of a sour mood across europe. they put up a little green yesterday so we are off about quarter of a percent. yields came down a little bit and i will add that volumes are nowhere to be seen. paul: i was looking at the real strike and europeans strike a lot. there unions are very strong.

caroline: trains aside, in general, and strike action is not been this bad since back to the 1970's. the postal service, the border -- paul: and they know the right times to strike. caroline: they are just working from home. meanwhile, we had towards a little bit of a break so join us in a moment as we digest the run-up to the european close. ♪

caroline: welcome back, this is bloomberg markets live. kind of an extraordinary time upon us as we come to the end of the year which has been appalling.

as we come to the end of the year, we start to talk about a silver lining were some optimism with china reopening but many feeling more concerned about this. paul: it's the pace of the reopening that's so sudden and so brought we are not easing into this. it's all doors open and the neighboring countries are trying to react and adjust and see if the proper controls are in place. caroline: hong kong has had a different perspective. the u-turn that happened in china and hong kong has lifted a lot of its restrictions at a slightly slower pace. nagel people are shocked that they can gather together and gather outside in unlimited numbers. they still have mass on but let's discuss about what japan and the u.s. and other countries are doing in reaction to the news that china is turning on

its covid zero policy but what hong kong is doing to reopen to become the financial hub it was recently. talk to us about the news overnight about what hong kong is doing to welcome back travelers internationally? >> i was just in hong kong a few months ago so this is a big shock to all of us. we've been watching the hong kong covid policy and overnight, they just announced they are finally going to lift this restriction on people gathering in public as well as requirements for inbound travelers to test after they arrive and before they get there. what is remaining is mainly the mask mandate as well as daily test were kids in schools. paul: is there a sense that hong kong is playing catch-up and maybe they were caught off guard

by china's reverse pivot on this zero covid? >> exactly, there has been the sense that hong kong has been trying to synchronize its policy with china partly because the administration has been very concerned about reopening the border with mainland china. with china suddenly pulling a u-turn, that cave hong kong and opening to relax its policies. it feels like hong kong was taking a relatively measured risk wants. it's still a big step for hong kong to lift those restrictions on public gatherings but ultimately, it's not going from 100 to zero. there is still the mask mandate and the testing requirement for kids. paul: an ever-changing story and we have reshaped your time. tremendous reopening and that's quick and that's affecting all

the neighbor country so we will stay on top of that story. we've got a little bit of green on the screen but people are saying i cannot afford to look backward, it was an ugly year and they want to look over to see with the opportunities might be. boca capital partners is with us. a lot of investors are like me and they say 2020 in my rearview mirror so i need to look ahead. how are you feeling after a brutal year in stocks and bonds? >> it was a remarkable year, we will give you that. especially if you had any of the former fang stocks which did not do well or you were into technology like semiconductors. these are areas that have gotten hit and that's for many reasons but mostly at least in the u.s. is because of the bed quickly raising.

your last segment talked about china opening quickly and we try to get a handle on inflation. any kind of growth oriented stocks just got killed. should you care? if you need the money this year, and you are forced to sell, you probably do care but you really shouldn't if you are a long-term investor. we know growth will come back at some point and computers really aren't of bad and semiconductors are going to be something that companies turn to in the future to give them enhanced productivity and people find computers entertaining as well. it's not in the game for technology. caroline: dovetailing those ties -- those two ideas -- two ideas, the fed and china, there is tension in the u.s. and off a lot of business was done between

the two so how are you looking toward that for next year? >> i think it was the natural out come, not a surly the disagreement with china and the u.s. but i think a lot of companies are rethinking their supply chains. i don't know that everything will end up in the u.s. area i think it's smart to make a more distributed supply chain. what happens if a continent does get shut down for whatever reason? it could be a geopolitical disagreement, a large earthquake. it seems crazy to have a whole lot of manufacturing in only one spot in the world. paul: since the great financial crisis, technology has really led the market. just big tech in general has led the market up and down since 2008.

there is a concern that maybe this market will take off in the back half of 2020 through but that might not be the case. how do you think about big sec. leadership role? >> first of all, the low interest rate environment that we find ourselves in in the world really has driven growth companies and buy that i mean companies that traditionally didn't have to have a suit star balance sheet war were newer in the market place and people were buying them on the prospect that they would one day grow into their valuation, that the cash flow catch-up. a lot of these companies are big enough to actually have profitable cash flow. i think some of them will come back because they have done great dishes great job to convince customers to use them like amazon.

others will probably never reach that he is people have moved on. technology is best look that as a productive item. it increases productivity so it's hard to understand what will catch anybody's imagination online. caroline: the news has been the pressure on tesla and elon musk. >> elon musk is one of the most fascinating people on earth. let's shortcut that. he is in space, the next wave cars and now he is turning his attention toward twitter. i don't think we will be able to escape that but it is a concern

for tesla. are they a car company or technology company? i would say the valuation asked reflect whatever it is you believe. i personally think it will come back but whatever he is doing through twitter is tarnishing his image. also, the u.s. is in a contentious space with china and a lot of his revenue has come on that and it looks like the to between the u.s. is affecting tesla as well. i would look for rebound would catch about either. caroline: always great to have time with you. she's been looking at this space for a while. thank you so much.

let's check on the markets. tesla is actually helpings stocks get up downs. paul: after seven days of selling, a bit of a bounce and real reputational risk is there so what does it mean for its brand? caroline: the nasdaq is currently losing its gains and we are lack on the s&p 500. in europe, negative across the board apart from the united kingdom. from new york, this is bloomberg. ♪

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caroline: welcome back, we are simulcast across tv and radio. the markets taking a turn at the moment. paul: a little bit higher earlier taking a bit of a turn. i want to get the details of what's happening in this early market trading. abigail doolittle joins us here. what you looking at? abigail: earlier we had the s&p 500 hire solidly on its way to a santa claus rally. at this point though we have the s&p 500 down. caroline: do we still call it the santa claus rally when he's like asleep? >> the rally is officially the last five days of the trading

year and of the first two of the next year so we are three days in. santa comes to town for stock investors. typically it bodes well for the next year. 75% of the time that santa claus rally, stocks or higher. on the day, a one stock to look at is taz laprade though shares are higher. there best day, i believe the best day since november 30 because of the massive selloff we had from the top down within 60%. technically the stock is starting to look interesting. valuation is interesting when you look at revenues growing. something that a lot of folks overlook. finally as we look at southwest, of those shares yesterday tumbling in a big way today and i'm doing this on the flies so we often have technical difficulties here in the bloomberg radio station cutting onto my terminal. though shares once again 1.8%.

tomorrow more than 50% up and we have the ceo apologizing sing the will get it straightened out. and really hold this company accountable for what is an outdated computer system and that's why they can help people fly with a need to go. >> we thank her for her insights on the market. >> dovetailing on what's initially been southwest issues were not technical, they were very much weather-related. >> the airlines all had issues but southwest was so much more pronounced. the weather was a big factor but they need a lot of investment, a lot of their systems to make sense -- make these flow better. caroline: some say investment is me -- needed with the infrastructure of energy provision in and of itself. extraordinary reporting across

the bloomberg today. many still hard work talking about the record output slump in the top u.s. gas base in particular. deadly winter storm as well really perhaps exposing some flaws with the infrastructure, the provision of energy in the united states. one man who was exposed to a lot of what was occurring as the president of ee qt. we know and you've come on bloomberg tv and radio before to discuss the fact you feel more infrastructure is needed in the pipeline. let's take a step back. we've seen pipelines fail. we've seen gas pipe supplies completely plunge driving up prices. how was he cute hit. >> what we've seen across the country is natural gas production fell about 10% due to these freeze offs.

which is normal in the industry responds quickly. one thing i would note though is the reliability of natural gas in the share powered generation, natural gas performs in the end, and whether an specifically compared to renewables where they just don't show up. thank goodness that we get natural gas flowing and keeping the lights on. caroline: it also froze. freeze offs or happen. they are normal but i'm interested how e.u. t1's particularly affected. did you have wells freeze. what was your experience? >> in appalachian we saw about four bcf a day. little bit over 10% of our production. specifically around 1.5. those are expected to be resolved by the next couple of days.

this is part of the winterization preparation plans we were able to put out. clearly the solution here is to produce more natural gas in greater abundance and the key to do that so we can have some cushion in the system when things do hit like whether we note will show up every year. the key is to get more natural gas production and more pipeline infrastructure so we create the industrial capacity that this country needs to run because what you are seeing across the board is our industry is pretty much redlining the committed infrastructure we have right now and that's really making performance absolutely critical. it would be great to have some relief that will come from building more pipeline infrastructure. >> this a lot of folks saying more investment needs to be done to improve the weatherization of the existing infrastructure if we assume we will have more extreme weather events going forward.

it's not just more production it's better more robust production. how do you respond to that? >> i think you can look at places like new england which is a great example of the shortfalls that we have with energy systems in america. we have the biggest gas field in the world's, a couple miles -- a couple hundred miles away but they are burning oil. 30% of their electricity has come from oil. the solution there is very simple. it's billed more pipeline infrastructure so we can connect with our low cost natural gas with demand centers in you see the lack of infrastructure, of the reason why you have prices in different parts of the country like new england with her averaging prices over $20 this winter and will be selling that same gas here in appalachia

for a cost of five dollars. these are the remarkable things. if you want to focus on correcting the issue it's getting more pipette infrastructure and the industrial find ways to make the energy we produce more reliable for the winterization efforts that are already in place. >> given the pipeline issue is an ongoing issue between the government and industry in the marketplace in general. give us a sense of where we are with that argument here, do you have a better platform to go to certain regulators in certain states to say we really need more investment here. >> here's what's changed with the conversation in 2022. heading into 2022, when people think about energy, of the number one people are thinking about is the impact on emissions, each cutie we put audit plan which would be the biggest initiative on the planet. what 2022 has shown us is energy

security is absolutely critical just as important. you can look at what's happening at what happens when energy security slips away and the conversation above energy transition is really important for people to understand it will be impossible to transition if you don't have energy security and that's what -- natural gas brings to the table. both energy security and the key to lowering emissions around the world. and so with this new perspective coupled with the fact that now americans are facing much higher energy bills because of lack of pipeline infrastructure. that's another thing that's changed, americans are feeling the brunt of this, of these energy prices are unnecessary and there's things we can do about it. >> to your point, holster power prices surged over this crisis. i'm interested in whether deq t

benefit from the prices. we've been -- >> we been jumping up and down sing these high-energy prices are completely unnecessary. we would like to see more pipeline infrastructure so we can add supply and combat these high prices. it's absolutely amazing that we are sitting in the biggest gas field in the world and we cannot grow production because we do not have access to more pipeline capacity. that's the root cause of the issue and that's where people need to focus his work and we get more pipeline infrastructure so we get the cheapest most reliable energy in the world onto the playing field and that really is the focus. >> texas last year had some issues. talk abut the texas grid. we had the texas gas market. the infrastructure there. have they made some changes over

the last couple of years, some upgrades in terms of the weatherization. >> one of the biggest issues that they faced during the winter storm was that some of the compressor stations rely on electricity, of those compressors moved natural gas to the power plants were not deemed is critical which was an oversight and that's what had electricity shut off. and you look at taxable forms of natural gas on the grid this past week and you'll see very strong performance of natural gas. other places that have really struggled to provide reliability you're seeing this with utilities across the country. morning and telling people to pinch back their energy needs is because we have lack of energy flowing into the areas and that energy can only flow if we have more pipeline infrastructure. the biggest gas field in the world in appalachia. we just have more infrastructure

-- need more infrastructure to connect with demands but we know will continue. >> loud and clear we hear your call. you want more infrastructure in terms of pipelines. but just go back and we will end where we started. the weatherization. you said there's a lot of depleted, but did the world -- why did so many wells freeze in and of themselves. if you say the weatherization is already on its route and being invested in. >> freeze office happen because when we produce this energy out of the ground it's a mixture of natural gas, water and water vapor. you couple that with some pressure changes and it creates freezing temperatures and that create some ice blockages. these are things that can be solved through drying out some of the equipment and gas we have flowing through. and then also making sure we have those in place. these are things we been dealing with it we had tools and

techniques to combat that. caroline: why did so many freeze? >> that's important, when we have winter storms, we need to get water trucks to our locations so produce -- so we can produce water tanks. when -- that means we have to shut production not because of freezing but because we don't have the ability to produce any more water on location. it's a little bit of time to get the dozers out. safety is our number one priority. all of these things are temporary. we will have those resolved in the next couple of days. paul: appreciate you taking us through that. with our news let's go to ritika gupta in london. itika: -- ritika: stranded travelers could take long for

the destination with southwest airlines. >> i want everyone who is dealing with the problems we've been facing, whether you haven't been able to get where you need to go or you're one of our heroic employees with a massive effort to stabilize the airline to know that we are doing everything we can to return to a normal operation. please also hear that i am truly sorry. >> that's hit the shares of southwest down some 6% on tuesday. the biden administration will comply with the order that keeps them play sweeping coronavirus border controls. the court ordered the restrictions known as title 42 stay in effect well the lawsuit goes forward. president biden says he will enforce the order but believes implementing the measure was overdue. 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'm ritika gupta, this is bloomberg. caroline: let's get a quick check of the news markets. maybe once again it's the bond market that leaves the equity market. yields being pushed up across the twos and the tens paid only two or three basis points across the curve. nevertheless it when we see yields rise it feels like the wind and receive the stocks just erase some of their earnings losses. the s&p 500 down by 2/10 of a percent. this is bloomberg. ♪

>> we welcome you back across tv and radio. it is a simulcast. caroline hyde and paul sweeney for your digestion or indigestion. whether you celebrate the holidays in whatever form. once again a market that's

nervous in anticipation of this week. paul: we have a little bit of a selloff in the market about 2/10 of 1% on the s&p. the vibes are very light, a 20 to 30% low recent averages. what you'd expect in a holiday issue way. >> some of the economic data earlier. some of the data coming in stronger-than-expected. not so many are looking at the housing market once again weaker and just absolute plummeting in terms of sales in the united states. let's talk abut the nerves creeping in generally. there've been a whole load of headwinds. most prominently has been inflation in the interest rate reaction function to that as we see yields pushing higher which perhaps pushes down on equities today. once cycle yields pushing higher for companies in access to a market that's been so limited in the high-yield space and perhaps amid the slowdowns some great reporting from larkin who joins

us about companies we need to be watching as we head towards 2023. is the tough bind the access to liquidity going to get easier? >> thank you for having me. it remains to be seen but there is certainly a tough situation shaping up for many companies on our radar. our companies have a lot of debt and rising interest rates will be tougher to pay down. we've a sagging stock market and consumers are just changing what they are spending money on. they are more budget conscious looking for different types of experiences, cheaper purchases, that's can it a lot of trouble for some of the companies in our space. >> tell us about carnival cruise lines. i'm not a cruiser but i'm fascinated by the business model and the economics of the business. i remember clearly the beginning of the pandemic when that industry was shut down. they got some cash on their

balance sheet and put a lot of debt on their balance sheet. what's the outlook there? >> it's a great example to start with. carnival cruise lines or than tripled its long-term debt in the pandemic. as you said they were closed for the rest of the cruise industry for more than a year. they were on sale. they had a tough situation right now, they have to win back customers and they have to get them back with prices that will help them turn profitable again. that's our expectation next year that they will be profitable prayed they have 30 $2 billion in long-term debt. that's an awful lot of money they will have to make up. caroline: for me, one of the business stories that's been overlooked as sam bankman-fried and elon musk have sucked up the oxygen was beyond meat, extraordinary fall from grace for this leader in terms of sales and demand and also scandals involving the key executive.

and also the listeria contamination linked to a key area in pence -- >> plant-based meat was expected to be the next big thing a few years ago. that stock has fallen 95% from its highs in 2019. we looked at a lot of companies that had struggling share prices . they have a lot of questions they have to answer and it's the whole market of plant-based protein that seen a decline this year. it's expensive, it's not as popular as people thought it might be. even a fast food partnerships have not resulted in full-time menu offerings. it really remains to be seen if this is a company that can stick around. for the ceo really has questions to answer. all of those additional

challenges you mentioned, the coo being arrested, many executives departed, they have to do something to show investors that this company is in it for the long term. they promised they will be cash flow positive but we are also skeptical of that coming to fruition. paul: great stuff, kathy. i have to admit for disclosure, i'm going to new york city steakhouse and i'm not ordering beyond meat. caroline: i had some impossible chicken nuggets last night. they taste like school food chicken nuggets for me which is very comforting. paul: good stuff. let's get back to one of the stories caroline was mentioning. at the forefront in the back half of this year, ftx. hannah joins us from bloomberg news. every evolving story, new news

is breaking here. give us the latest on sam bankman-fried ftx and what's going on. >> we have this class action suit from customers want to be first in line to get their money back with ftx bankruptcy proceedings. they are arguing they have precedence over ftx top lenders, that the crypto they have on the platform belongs to them, not ftx. it will be interesting to see what happens with that case moving forward. caroline: i don't know if it's just me but i'm sure you are almost becoming numb to scandal after scandal, a shock aftershock. when i read the headline regarding the research and perhaps some borrowing being done, some loans just help sam bankman-fried, i just thought of course. hannah: we know both sam bankman-fried and gary borrowed five under 46 million dollars to

buy need percent stake in robinhood, they borrowed that from alameda. we know that from bankruptcy documents. these robinhood shares are important and it's unclear who has ownership here. a lender that filed for bankruptcy in the wake of the ftx collapse argues they are a road the shares because they were used as collateral in loans. paul: we do not have a plea from sam bankman-fried in this case. is there any understanding of when he will next appear in court and when if then he will enter a plea? hannah: his next court appearance is january 3. i think before then he has a lot to think about. a plea deal could be possible. we have those with gary wang and the former alameda ceo. they are cooperating with authorities and putting the pressure on sam bankman-fried. prosecutor seem to have a strong

case so that may make him consider taking a deal on his own. caroline: i'm looking at cryp and across-the-board coins are on the downside. it's been so affected by sam and ftx. now we understand certain protocols are moving across perhaps companies in different business models moving across to different sort of areas to grow. this is not the place you want to be trying to expand. hannah: we have been closely watching solana because it has close ties to sam bankman-fried and ftx. both alameda research and ftx invested in projects based on solana and both have massive holdings of tokens.

i think this sparks some unease amongst holders of sol tokens. and the question is whether they want to offload their assets. caroline: we did not get to the plunge in and ftes. sales in and ftes down 89%. it's been a pretty painful year. thank you, hannah miller. let's look at what's happening across your more traditional pool -- traditional -- that's what defy called them. i think it's rude. paul: i'm on the last year of the boomer wave. caroline: good. i'm clinging desperately to the millennial title.

i am just within it. sadly all i am by heart and by soul. nasdaq off by 5/10 of a percent. we did see a turnabout as bond yields pushed higher. may be a similar change of effect in europe as well and we are building towards the european close. stoxx 600 -- euro stoxx 600 does better on the factor of how it is allocated across europe. really the only beacon of green is the united kingdom. german yields flat to a little bit lower so still managing. we saw a five basis point move earlier. the bond market losing some of its winning formula for the day as well. from new york, this is bloomberg. ♪

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caroline: from new york city to our audiences worldwide, if you're lucky to be with us, bloomberg markets live on tv and radio. it's a simulcast. it's been a fascinating year and continues to be an interesting

trading day. we see a turnaround in effect once again the bond market is the tale wagging the rest of the dog. >> a little bit more on the nasdaq. very light volumes as we been noting 20 to 30% below the recent averages here. so a vacation type of field to the marketplace here and people resetting for 2023. caroline: also was so fascinating to me as we get the news the covid u-turn happening in china the fact it was meant to be a last three opening trade. all of it seems to be priced in. every once getting more nervous of the short-term and travelers were rather than the long term reopening story. i look at the key events of this week when i go to the top on bloomberg. initial jobless claims in the ecb publishes its economic bulletin on thursday. that's where we've sworn to turn to next. as we march towards the close of trading europe, it looks as

though we are still seeing some bit into german debt markets but overall a little bit of nervousness when it comes to the equity market. let's talk about the ecb, some of the warriors in the european economy. the outlook for 2023. is the chief european economist of morgan stanley. he comes to us on vacation the checks is emails and joins us live. happy in between christmas and new year's. and just tell us a little bit about whether you are gathering around family tables and being peppered with questions if 2023 will be as bad as 2022. jens: thank you for the kind words. this is the time of year where we are getting tough questions in terms of what will it be like next year.

my wife is spanish so we are in spain. we a lot of questions on spain, the first time i got a tough question was run the housing crisis and the banking crisis. that was when house prices were unsustainably high. and some sympathy around christmas but it turned out to be right. this year i would say according to our forecast is probably doing relatively well with the set of countries in the area. we are looking for a recession. in terms of overall year on year growth which is slightly at a rough consensus. dutch had a rough consensus. but you know i think the main

point here is the short-term dynamic is pretty much telegraphed so we are looking including the ecb looking for projection in q4 which is in the pmi's and looking like the -- confirming that and then the debate starts. is it relatively strong or more muted. we think will be more muted. the ecb things it be much stronger and probably one of the key ingredients in their relatively strong rhetoric where rates have to go. >> here in the u.s. as people think about different scenarios, consumers in pretty good shape, a consumer retail sales continue to be pretty decent here, give us a sense in europe how the consumer is faring right now.

jens: i think this is a key question also for us here. clearly the consumer side of the economy is not as strong as in the u.s.. it's still a very important part of gdp but just not as high as the u.s.. second, we have seen a lot of impact on things like consumer confidence surveys especially since the start of the war but none of that has materialized. since q3, the last we had for the euro area driven by consumption. the debate is on if that's a reflection of -- or if it's still opening of savings. there are elements of all of them there but it's clear the consumption and our expectation

is very difficult -- it is difficult to deny there is weakness to come but that's essentially the backdrop of our growth expectation. essentially the hit to disposable income due to inflation will be such that consumption will take a big hit. caroline: we had charles on yesterday talking about he thought that would maybe be the wild-card of 2023, the consumer would be stronger than anticipated in 2023 for europe. i wonder therefore, what for you might be the upside risk here? would might be something that comes in that we hear about inflation, the ecb managing to understand the impact of that. is there any way you think some of the energy markets might be better than expected. russia ukraine being the ultimate wild-card. jens: it is good to go back and

look when essentially it became clear that russia won't turn off the gas supply. -- will turn off the gas supply in an aggressive way. during the summertime we saw a huge increase in natural gas prices and extrapolating that and associating with the increases in electricity prices and we've seen this for the first time that for one or two years out in the future space, electricity and natural gas trading at high prices. lots of clients raising the questions what is the future of your industrial base given these prices. now of course against this or relative to this backdrop things have improved markedly. so i think this specter of rationing energy electricity, that has vanished. so we've seen a significant drop

in oil and gas prices. now, the consumer tends to be at this stage protected depending on the government by significant fiscal measures. i would characterize this as the biggest upset in the short-term and the near term. in the medium-term we have this relative to summer, the energy backdrop looks better. but monetary policy looks decisively more progressive. i would say in the short term this very little you can think of to take away from the dynamic you have that essentially consumers are hit by this huge inflation that eats into disposable income. there is a little bit of an element of fiscal spillover than maybe is needed and you can get a bit of consumption. but overall it's relatively muted.

the discussion before is really focusing is the energy side giving way, having essentially a better outlook and better prices. is this dominating or is the monetary policy response dominating. paul: in the last few days a big change in china. zero covid dropped. seems to be reopening extraordinarily quickly. that has to be good for the european industrial base. our good friends in munich, they will be feeling pretty good as they think about their opportunities in china. how does that factor into your outlook. >> we been looking at this in terms of scenario analysis of course we've been in touch with our china team, with the outlook that was one of those relatively early and now we have consensus

in terms of growth and they were relatively early in calling for reopening. now what happened there is if you were looking closer in terms of what would be the new sources of growth in china to bid more domestically oriented and elasticity is not as near as big having said that, it's a positive but it's really not a game changer in a sort of generalized state of affairs. caroline: i've got some recency bias that i haven't been in spain for my holidays but i was back in the u.k.. talk to us about the strikes. for me there was a sense of just lack of hope coming from various members of my family. what you see from an economic

perspective at the moment? jens: the u.k. for us if you look at the european spectrum, it lily lagging things most. simply because it has the worst of all worlds. both investment and consumption weakness. again sky high inflation, not very significant or not very high range gains can sort of go against it. plus you have the additional tightening coming through the bond market. so all in all we see this economy shaped to the euro area economy. in that sense it's a little bit of a sign of lots of structural reforms needed and lots more

adjustments. it's also a question of migration, how much can you get into the market and i think continent and european labor market is better to get through these tight -- moments of tightness. paul: great stuff, really appreciate it, really on her -- on your holiday. chief european economist for morgan stanley. let's it over to london, england. ritika: here in the u.k., spokesman for the prime minister acknowledges the nationwide strikes are causing massive disruption. border force workers went on strike today. nurses and ambulance workers plan further walkouts in january. rishi sunak as opposed to granting large pay hikes that he said could boost inflation.

you are looking at live pictures of vatican city. the vatican sing retired pope benedict's health is getting worse. benedict is 95 and served as the head of the roman catholic church for almost eight years. in 2013 he became the first pope in 600 years to step down. in hong kong the government is making an overhaul of covid policies as an attempt to revive the city's reputation as a world economic center. 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'm ritika gupta, this is bloomberg. caroline: we remain under pressure whether looking at the bond yields perhaps pushing higher and stock markets drifting lower in the united states and across europe apart from the u.k.. i'm looking also at what's

happening in terms of commodities. interesting we need to collect lower off by 2.4%. don't need to tell you the natural gas for means incredibly volatile. off by 12% but i can tell you volumes are off by almost 97% than the usual average. i'm looking over the market that remains on tender hopes looking at what russia is doing, what china's reopening means in the long term for oil prices. all that and more with rebecca joining us next. this is bloomberg. ♪

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caroline: cross asset and cross-platform we go. bloomberg tv and radio joining forces. it's a joy. paul: we've got the s&p off

about 7/10 of 1%. we are off 180 points. nasdaq tech stocks feeling more down. caroline: overall equities take a leg lower. interesting though commodities have been, copper is doing well on the hopes of china. oil has been more under pressure. paul: crude oil off 2.5 percent, 2.7% actually. let's bring in nat -- natalia on what's happening. liquefied natural gas, it's not easy to do. >> the story we would like to talk about more broadly, yesterday we heard from vladimir putin who said russia will not send crude to countries who support the g7 price cap. the question is where russian crude goes right now so if you

look at flows from russia, the g7 implemented the cap on december 5 and started from that data, flows really collapsed per they are now down by more than 54% overall, i'm talking about seabourn russian crude. talking about europe starting from the early january, europe consumed more than 1.5 million barrels a day of russian crude. now it's less than 150,000. only bulgaria consumes russian crude but overall shipments to europe have halted. when it comes to asian markets. the three biggest countries are consuming russian crude now is china, india and turkey so they are the biggest buyers. flows to china peaked in july. flows to india increased over the last few months and we are

seeing an unknown destination, this is a destination where a lot of russian crude goes now so it's an open question who is the final buyer. the question is also will these countries continue buying russian crude at this level and what happens with prices. we also heard from russia's deputy prime minister who says russia will decrease output by 500,000 barrels a day or maybe 700,000 barrels a day. caroline: we want to thank natalia for bringing us up to speed with what's happening on the band. the factories reporting -- responding to the ice -- price cap. ultimately prices are remaining so low and indeed in europe as natalia was putting as basically stopped by from russia anyway. let's dig into the pushes and pulls.

one is lower despite calls to ban from russia prayed you thought it would be higher because of the reopening story. ci beep private wealth group senior equity trader, great to have time with you. what you think is behind this? >> i think the move lower today is in reaction to the world's response to the china reopening. we saw chip and put travel restrictions on many entrance from china and italy is made some headlines that are similar in the u.s. is weighing precaution so this is what's happening, we have the euphoria of a china reopen to the crude market has been waiting for with bated breath for six to nine months now. saying this will swing demand when it happens. how it happens has yet to be determined. and that's what the market fights every day.

right now how it's happening is disorderly and it could result in travel bans from other countries not wanting to let people with covid potentially new variants into their countries. so it's not this linear we are going to get one million barrels back on the market from the reopen its we might see a drop-off in demand initially and then things pick back up. and i think the battle there today we are seeing is from those headlines around the u.s. weighing travel cautions and other countries doing the same. >> this has to be a long-term bullish case for the demand side. i just think about this is a country that's been effectively shut down often on for three years.i have to be net along ths stuff. >> that's a very consensus trade. i'm glad you brought it up. they are saying this is going to be huge. this is one million to 1.5

million barrels. it's generally between 12 and $15. so it's a real number, it can really lift crude. i think most analysts are saying get long crude for the second half. we've gone through the speed bumps of how the reopening takes place so you all right, but against that you have to keep in mind the risk factors. we have russian supply which has been resilient. analysts are projecting losses that alexander novak has announced. analysts projecting 500 to one million barrels of supply off the market. i think that's fairly well baked in. then you have the global economy and how that affects demand and the rest of the world. it's not as straightforward as china will reopen let's buy it. the last thing i will say is if you think about how bad people

got burned in the beginning of 2022 when everyone was saying this is the trade we almost gave back all those gains in early december. this can to be some scarring from that and may take people longer want to jump back in. caroline: talk about scarring in the market. >> it's super volatile. if you look at open interest. it's at 2014 lows for crude oil so there is not a lot of market participation and there is a massive amount of hesitancy to put money to work in something that's been this volatile. even if you have the potential to make great returns. if the tail effects are so extreme do you look somewhere else to put that thesis to work. paul: why is liquidity low? i hear it everywhere. >> i think the guys at morgan

stanley want to take as many trades as they can. i think it's an overall risk appetite. if you are looking, if you did not have an alternative but could look at treasuries and there's more draws for cash you will look at other vehicles and frankly if you have this much uncertainty coming out of a year where you don't feel like you a lot of confidence in your calls may you take it slower and is not enough -- not as much money chasing trades. caroline: how do you think of the dollar amidst all of this? >> i try not to think about it. it is something you have to watch prayed i've been surprised at the move we've seen lower in the dollar has not in crude at all. when the dollar was ripping it totally was a factor for crude so it's something i watch closely and i know it's on the periphery of how crude will trade. i don't use it as dollar weakness will be what makes commodity go.

it will help and support it and hurt it if it's ripping. but fundamentals are what drive it. the slowdown in the u.s. is also a huge factor. paul: what about our friends and open plus. are they may be taking that supply away. >> they have been quiet. this of they are not meeting again until june. i think opec-plus is watching and going to be very strategic. my guest -- my best guess is they are anticipating a cut. i would assume that they come out and cut in january. crude may be testing the low 70's. and they see some economic data they don't think will help demand, they may lower os peas into china. they are seeing softer demand. i think they will be preemptive

and act. paul: rebecca, great stuff as always. private wealth group senior equity trader joining us here in our bloomberg's studio. we like people coming out into the studio. we will check in with gareth mccarthy, a ups global head of capital markets. there haven't been a lot of ipo's for these folks to put out on the street. will the outlook get better for 2023? this is bloomberg. ♪

caroline: simulcast, tv and radio joining forces. we are looking at this moment at the european market the closes to the downside. up by 1/10 of 1% previously in trading we saw equity markets in the green with likes of retail stocks and media companies but overall technology, energy and auto parts drag a slower as oil rolled over. markets fizzled in terms of overall leg higher. yields coming down some but overall we close up some in terms of the german bund market. prices higher. elsewhere the u.k. yields were to the high side, a u.k. stock market the only one ended the

day in the green after it appears to have a catch-up yesterday. let's look at what the markets mean as we close with trade. volume is very low. let's talk about the year overall. gareth, a joy to have you on amid the in-between period between the holidays. talk about what the mood is like for buying into these stocks. miners getting a higher desk adding a bit higher due to china. gareth: 2022 was a perfect storm. the generational repricing of interest rates, extensive geopolitical risk and we were also coming from covid. so you had all of that together, investors left to deal with high volatility. i think looking forward it will be a stock brokerage market. the theme of value would be a lot less easy to into 2023.

paul: as a thing about my friends on the street in the equity capital markets business i imagine him sitting at their desk playing video games. you guys had nothing to do this year. talk to us about the business in 2022 and what you guys think about for next year. gareth: i see 2023 as a gradual path to normalization. i think there'll be no magic bullet in january but we will translate into a significant pick in volumes. but there are quite interesting themes under the surface. i think one bully balance sheet discussions as we translate higher rates what does that mean for corporate centers of their equity debt balance. will we see more spinoffs we think we will. is that the natural driver of growth for ceos. we also see that market is an opportunity to raise equity as well. so yes it will be quieter, it

will be challenging but there are significant opportunities under the surface. caroline: a little bit of action for certain tasks in investment banking as well. talk to us about spinoffs and is this industry agnostic or across-the-board we are likely to see that. gareth: ceos will look at their portfolios and a macroenvironment that continues to be very challenging with growth being scarce, difficult to find an uncertain, it's natural that you would look at the existing portfolio and where you can realize value or an ipo based business. you will see a very positive response i suspect from investors to crystallizing the value when we look to the previous year as a very good example of that. paul: is the spac market dead? gareth: i think dead is a strong

word and quite binary. they've been around for 15 to 20 years. we saw a clear super cycle through 2021. i think going forward is with the broader market it will be a normalization and returning to what we see in the past. not sick of you lower volumes then we saw in 20. caroline: those rare -- what will we need to see for the gate to suddenly open and for them to come through? i know the volatility and the fear gauge is many an enemy and even a bond market participant keeping. what you think will be the desk keeping an eye on. gareth: what we need to see is a vic's closer to 20. we spent most of last year at 30. secondly if you look at the

financial crisis we saw an ipo market closed for six quarters. with four quarters of closure this time around so now we potentially hint at that just in time for this to be worked through the second half of 2023. really we need to address the core factors and they are in unwind or uncertain geopolitical environment we see. a market with much more clarity on what the terminal rate is. and we need to see further evidence that we are working through a reopening post-covid in china. they are really the causes of volatility and if we were able to work through some of those and saw the vix back towards 20 we can see the fundamental reopening of the ipo market. paul: is there anything in terms of visibility a big marquee deal

of the streets are waiting for that maybe opens the floodgates that's just sitting there. that that would be a good moment for the ipo market. gareth: i think you hit the nail on the head. i think it's best done through marquee transaction. if we look back last year, we have seen those marquee deals. i think looking to next year there is no shortage of high quality assets in the private space, whether in private equity hands or founders. but really we have had to deal with an unusually challenging secondary market and for me it's less about a one-off transaction to spark activity and more about fundamental addressing of the challenges in the secondary market which will facilitate

lower volatility and allow investors to price ipo's which by definition are longer lead time in the market. so no specific asset but more just market recovery and the gradual normalization of assets coming through. there's no doubt investors have appetite and will even in difficult markets be able to show up for the big marquee events. caroline: we love having you on because you are global and you mentioned the key marquee names in europe, u.s. and asia. do we see appetite coming from asian investors, european investors, u.s. investors? gareth: to have a healthy global ipo market you want the u.s. investors fully engaged. there's no doubt in my mind they will start by re-engaging domestically and that's why think the u.s. market will lead

us out of it. there's been no signs of a healthier market in asia of last year. i think they had less macro concerns. for me if you look at the european market think it's a my lead from the u.s. they will start in the u.s.. and we see more volumes that will then translate into europe. >> in terms of trying to figure out the source of supply of ipo issuance. we have stuck with a private equity players. they have holding periods and the exit strategy has been effectively closed for many of these guys for the last three years there has to be pent-up demand for liquidity events via the new issuance market. >> i think what we are hearing is a very sober and very patient mindset. they are sitting on very high

quality assets which they know and we know the public market would be very well open to receive. they are equally realistic with valuations we are seeing in the market at the moment and they are not under big funding pressure. they raised significant amounts of assets and also hugely active in monetizing those during the 2021 market. so they are in a pretty good position. they hold good quality assets and they can be patient because of the assets they have been raising and how much they monetized in 2021. i imagine we start to see them using that market and the latter half of 2023 is a given impact in 2024. >> i know the ipo process comes down to valuation and the issuer has a certain view in terms of valuation.

we really haven't seen a lot of market to markets on these private investments. how concerned are you and other bankers about that valuation problem when this market reopens? gareth: it's a good question. i think it's specific grade we've gone through significant derating of the technology market which is really the poster child for the growth environment that we saw, the low interest rate environment support so heavily through 2020 into 2021. as we look forward i imagine for the tech sector actual valuations are quite attractive and that's why we see every point ipo market over this last period. so i think for some specific growth rotated assets that violation conundrum will be quite challenging and it will either be a significant derating

and i think if you look at the broader market and we are expecting to see the sector representation in the market when we reopen i think that would be easier for vendors to manage. in many cases secondary market evaluations have been attractive. paul: is it fair to say maybe more of the same in terms of activity in the first quarter, the first half. is that the way you are thinking about it? >> i think a patient approach into the beginning of next year. primary equity being raised as people address their balance sheets. we expect spinoffs. but overall he gradual normalization and we would expect to see the ipo market follow likely in the second half of 2023. caroline: gareth mccartney, ubs global head of equity capital markets.

it's been a tough year. >> look at that nasdaq headline. paul: just crossing the bloomberg terminal. oh weakness going in, not what investors wanted to see. a lot of folks turning their attention to 2023. we will see how that plays out. ritika: exports from the russian gas giant fell almost in half this year. the companies flows to europe were slashed following the invasion of ukraine. a number of european countries were cut off entirely after refusing for pay to gas in rubles. the rush to take advantage of post-christmas sales lifted -- on boxing day. inflation is pushing consumers to cut back on spending.

retail tracker springboard says numbers were 39% higher than a year ago when some covid restrictions were still in place. air travel is roaring back. there just aren't enough planes. an estimated there's a order backlog. boeing and airbus are sold out for the most popular single arm models through 2029. airlines -- 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. this is bloomberg. caroline: let's have a quick check on the markets. the nasdaq 100 falling to its lowest level since november 4. i'm looking at the single names dragging it lower. some of the chinese adrs. currently off by 6%. people start to digest the china

reopening trade and some of the nervousness around. that being reflected in the tech market. gareth: i don't know -- paul: i don't know if the chinese know how this will turn out. do you let your citizens get on a plane to go anywhere in the world. i don't know. caroline: japan is not to let you in if you don't take that test. we are going to dig into what's driving these markets at the moment. from new york, this is bloomberg. ♪ what if tax rates change? ahhhhhh filing sales tax returns? ahhhhhh business license guidance? ahhhhhh -cross-border sales? -ahhhhhh -item classification? -ahhhhhh does it connect with acc...? ahhhhhh ahhhhhh ahhhhhh

caroline: let's welcome you back to our global simulcast. caroline hyde -- markets trading lower. paul: we were trading higher earlier but just rolling over here.

as you would expect in the week between christmas and new year's. let's get some details on the markets with abigail doolittle. abigail: it's a pretty interesting day. the futures had been higher suggesting we would see the santa claus rally in full effect but we have stocks lower. a low-volume day, 22% below the anemic volume. not a ton of conviction but there is that selling. some of it related to the sentiment around tesla. maybe taking the markets higher. caroline you were talking about that china weakness weighing on some big tech weakness here. the official santa claus rally is the last five days of the trading year. we are down a half percent so santa has not come to town. earlier today santa had been here. it's interesting to note that.

tesla is interesting. it's coming off that level rising higher suggesting you could season technical buying. oil down about 2% taking that sector with it. one big question for 2023, can energy be the top sector again. it's amazing. paul: i was nowhere to be found. good stuff. appreciate getting the market update. a little bit of weakness today. caroline: i think we need to just take a pinch of salt and maybe more long-term focus as well as we look into 2023. what about the startup culture? companies looking for some sort of exit.

we had a fascinating conversation with a ubs key member, talking with gareth, of the discussion of capital markets, ipos. but already list it businesses spinning off certain assets. what about the startups that are out there, enemy, ipos as well. we the great conversation a little bit earlier in the year in mid december as we started to wind down the show. she said what she was expecting for the year ahead. >> i think we are still in for a long ride with 2023 ahead of us. many would say the exuberance that 2021 needed a correction with a bit of a surprise to some but also met the expectations of others. it was in many ways a long time coming but i think we are at the precipice of understanding what the impact will be on valuations across stages and certainly for

us it's an area where we think is a real exciting opportunity to continue being bullish on long-term opportunities. >> i'm good ask you a slightly dull question about economics. >> the funny thing is if your venture capitalist to assess a broad range of data just as a public market analyst would or investor, inflation and the fed every day for us, inflation and the fed. what is it mean to you. at this stage in the cycle. >> we are long-term investors. obverse of there's no denying the impact of the macro on the micro. we seen that in terms of opportunities for exits for venture backed companies. when you're investing in deep technologies, we have to look at the longer perspective. 2023 does not look promising although none of us are nostradamus.

those opportunities are extract -- exciting to be invested in. >> you've just made general partner, congratulations. you focus a lot in health space, a focus on female businesses as well. is that more recession proof than other areas. some saying this is one to be invested into with higher interest rates. what do you see in terms of the now growing industries? >> i've often said health and digital help is recession proof. it's not immune to the macro conditions. no matter how well they are faring. it's very clear that they are not. that being said, people will continue to get sick, have babies, we will continue to have needs for therapeutics and intervention care. i think as a result what we are

seeing is expanded interest and a slightly better opportunity than you're seeing. pitch book yesterday posted a report showing this is up 33% year-over-year which is an interesting take with where the rest of the market seems to be sitting. one of our companies was on your show and that was a really exciting one in women's health where there's a lot of continued interest. caroline: we were so pleased to start the new show with them joining the show. i'll ask a sensitive question. i know you don't want to shy away from these. lux capital embroiled in the ftx situation. not you personally. i'm not can ask about your own due diligence but what you think are the lessons you've learned when you look at writing checks

in a difficult environment we are currently in. how are you looking for companies to be building their corporate governance to ensure they are giving you all the accounts -- accounts that you need. >> i think it's something not necessarily unique to the situation. there are other cases across health care that have put a lens on the importance of due diligence. so there is no doubt that continues to be important across the board and i think perhaps some of the slowdown we are anticipating in terms of the exuberance of 2021, vis-a-vis what we are expecting in 2023. and the space to do that which is a positive thing. caroline: speaking with both ed low -- ed ludlow and i a few weeks ago. very pleased to welcome ed ludlow in the heady days of in between boxing day and new year. lovely to have some time with you.

fascinating conversation all things private markets but let's talk public markets and in particular looking at the nasdaq 100. the lowest since november 4. what are you looking at in technology today? ed: we flash the headline this was the lowest level since november 4 which is my birthday by the way, but november 3, 24 hours previous. that was are low for the year. so ever since that fed meeting a week ago we reassessed our direction of travel. the market still clearly does not agree with either timing or long-term projections for rates. there was this idea a 5.1% rate by year end 23 and then we cut down to 4.6 in 23. it caught the market by surprise. we go back to basics.

particularly for tech. i'm sure you have been talking about this, china. a lot going on with china that reopening is great but the spread of this virus is so significant that it's not clear if it will re-fire the economy as intended. paul: other nations figuring out how they are going to deal with the reopened china. is there an expectation it will be net positive to gdp growth. i would have to think it would be somewhat net positive. ed: the reopening of the chinese economy, the easing of covid zero policy was basically done to induce demand but also ease up supply constrictions. now if you read the bloomberg terminal there's a report today that there's labor concerns

because apple would find its workforce getting sick and not able to operate that foxconn facility and as a consequence, one forecasters downgraded their shipments for the full year because they think there won't be enough workers to make the iphones. there's an irony because the demand was weak anyway. it also gets back to the idea if the lesser of two evils or you basically want to give freedom on policy that's been restrictive. most of the market is concerned it will slow down the economy. caroline: once again weighing the most on the s&p. drag to lower by six points. thank you for spending what is still a very -- spending time with us. from new york, we thank you. this is bloomberg. ♪

>> from the world politics of the world of business this is "balance of power," we david westin. david: from bloomberg world h