mark: welcome into the bnn bloomberg audiences. i am mark crumpton. kevin mccarthy will not claim the first round as house speaker. it is the first time congress has required more than one ballot. as voting got underway, at least 11 republicans cast ballots for someone else. more than enough to deny mccarthy majority. earlier in the day, mccarthy acknowledged to his colleagues he expected to lose on the first ballot. china is vowing to hit back at countries that plays covid

restrictions on its travelers. a foreign ministry spokesperson says they lack scientific basis and were imposed for what she called "political goals." the u.s., japan and other countries are requiring a negative test before they can enter the country. benjamin netanyahu is stepping up efforts to derail the nuclear deal. he said they would act powerfully on the international level against the movement. he returned to the prime minister's office last week after 18 months in opposition. lines of people wanted to honor pope benedict xvi's service to the catholic church. benedict died saturday at the age of 95, 10 years after retiring from the papacy.

the third day of viewing is set for wednesday. on thursday pope francis will lead the funeral mass in st. peter's square for his predecessor. global news 24 hours a day on air and on quicktake by bloomberg. powered by more than 2700 journalists and analysts in over 120 countries. i am mark crumpton. this is bloomberg. amber: i am amber kanwar. alix: and i am alix steel. it is not pretty although it could be worse. we are off the lows of the session. tech getting hit the hardest. it was about 1.5% up an hour ago. two other asset classes to pay

attention to. the dollar-yen is lower. yen gaining a little bit of strength. we have not seen this since may 2022. and something that would typically help areas like tech is lower yields. but in the backend in particular. amber: let's look at some individual movers. tesla, the pain continues. it is trading at the lowest level since 2020. it delivered fewer cars than the market was hoping. on the flipside, you have green shoots. take paypal. catching an upgrade where truist is touting a potential ceo transition. wynn resorts is participating in this china enthusiasm rally. its big exposure to the gaming

area, macau. you have gold prices the highest since june. alix: on the first trading day of the year we had to talk about what the biggest risks are for 2023, what happens where the opportunities are. franklin templeton's katrina dudley spoke to me earlier. katrina: these investors have not had to focus on investments for a long time. they have been riding the lower inflation and the rising stock prices. tech investors are having to do the work that we have been doing as active stock pickers our entire career. that is why we think there is a lot of opportunity but you really need to be stock pickers. that is the key message. you cannot take this blanket paintbrush and go, i am going to go all in tech.

amber: for more on the markets let's bring in jack caffrey, portfolio manager at jp morgan. i assume you always do the work but is 2023 really going to drive at home? jack: i think you are going to see much more of a market of stocks rather than the stock market. whether it is the dispersion with valuations, which are getting to be above average. whether it is what winds up driving the company's top lines. i think the challenge we have over the next two or three weeks is so many companies are in their quiet period. they might be more reactive rather than responsive to the news we wind up getting. alix: if you look at the outperformance in values, how do you dig beneath and find the opportunities? jack: i think what we have seen is we have started to have normalization. the future is worth less than it

used to be. i think investors are putting more of a premium on the here and now rather than what you could earn in five or eight years. i think investors want cash flow. it makes sense to make sure you are getting paid something in the equity market. at the same time, you want growth because you are trying to take the longer-term perspective. one place you get all three of those things is health care. some parts of health care are very much earnings into the future and some parts the pharmaceutical space. you are looking at stocks trading multiple teens, single-digit multiples, dividend yields of 2.5% to 4% and businesses that have improving pipelines. amber: you mentioned earnings season. some skeptics say we have not seen the full extent of the market rally. they are still pretty robust

considering there is an expectation of recession. what do you think? jack: i have been doing this 30 years. the first 10 years it was an analyst trying to understand where companies might see their earnings power. since the early 2000's, you basically have come to a situation where companies are driving the narratives around their outlooks. to the extent that you still have been waiting for company ies to have confidence in their backlogs, which two or three months ago they were saying, my business is solid and my backlog is holding up. until you start seeing that change i think management will be close lipped and i think equity investors will be twitchy for anything that might make them think they may have to revisit that. for the most part, it comes back to what we wind up hearing. alix: which brings us to the recession we may see.

i feel like this is the most telegraphed recession we are expecting. better in the second half and may be upside at the end of the year for the s&p. to me, if everyone agrees, that is a worry. jack: agreed. alix: how do you look at it? jack: this will be a different recession. this is not the covid recession where we are told, go home. this is not the 2008 recession. what i think is interesting is so many companies have been remarking on how hard it was to hire people coming out of covid. they have indicated their non-willingness to let people go. we might start seeing more operating leverage this time around. we have not really seen that play out going back to the early 1990's. if you want to keep the

workforce, you might have to cut your hours. that might make it a more shallow recession. but you are seeing layoff announcements concentrated in technology, the financial industry, and those are higher wage categories than the average worker. but with that -- to the extent we have seen job losses in tech, which us been such a powerful engine for wage creation -- losing some of those jobs could be painful for the macro numbers. but if people are comfortable they have their job, they will spend. we are well trained. if you have it, you will spend it. amber: what will that mean? we are looking at the energy sector which outperformed the last two years. do you think 2023 will go for three years of outperformance? jack: i think we have the makings of that 30 year and that

wildcard might be china. with china having moved so aggressively from lockdown control to reopening and aggressively reopening. let the virus run wild but let people move back and forth. in an economy which has been refined products exporter, they might have to become another importer of crude. the economies in the u.s., and to a lesser extent europe, continue to muddle along rather than fall into some sharp recession. energy demand can remain robust and we have largely taken one of the largest suppliers largely out of market. interesting to watch. a sector that has earnings in the here and now and returning cash to investors. alix: good to catch up. nice to see you. jack caffrey, portfolio manager at jp morgan. kevin mccarthy has failed to obtain speakership in the first

round of votes. laura davidson is on capitol hill with more. can you walk us through what happened, what is currently happening and what happens tonight? laura: the vote is ongoing. house members are standing up saying who they are voting for. almost 20 republicans have voted against mccarthy, picking of the republicans. jim jordan, andy biggs are two big vote getters. if this will fail, there will be no winner. two things could happen. one, they go into a second ballot. or they could recess which gives mccarthy time to twist arms. but it also gives an opportunity for someone else to throw their name in the ring to gather support and galvanize their supporters. this is going to be a lengthy process. there could be multiple ballots to come and there is a big gap

between where mccarthy is and where he needs to be. he can only lose four and losing 19 or 20 so far. amber: who might those other options be? laura: a couple names that we will probably hear about jim jordan, andy biggs. they got some votes on this first round. unlikely that they are going to be able to get the majority of the republican caucus. they are very conservative. the other names that are more likely are steve scalise, the current number two house republican, patrick mchenry, chairman of the financial services committee. but there is hesitation from those people to throw their name into the ring until it is clear mccarthy will fail because they do not want to create this rift between themselves and kevin mccarthy. alix: thank you very much. laura davidson on the update. coming up, sam bankman-fried on the verge of entering a not guilty plea. the latest from the courthouse.

this is bloomberg. ♪

[office sounds] ♪upbeat music♪ ♪♪ ♪when the day that lies ahead of me♪ ♪♪ ♪seems impossible to face♪

♪a lovely day (lovely day)♪ ♪(lovely day) (lovely day)♪ ♪(lovely day)♪ a bank that knows your business grows your business. bmo.

alix: this is "bloomberg markets ." i am alix steel with amber kanwar. sam bankman-fried is expected to plead not guilty to criminal charges at his arraignment in lower new york. this is one of the high profile fraud charges in recent years. sonali basak is in lower manhattan with the latest. what are you learning? sonali: there are a fair people out here. an hour ago sam bankman-fried walked in wearing a suit and a

north face backpack. he will start this arraignment process very shortly. it is expected to start around 2:00 p.m., about 15 minutes from now. he is expected to plead not guilty to eight criminal counts. this would leave the groundwork to continue onward for a lengthy trial process as he faces these charges. some of his deputies have already pled guilty. the beginning of a long road ahead. separately, there was another action in which the judges filed to have names kept secret of co-signers of the bond package that he has been let off on to stay at his family's house in california. why did they do that? they say to prevent any potential harassment and media scrutiny of the signers.

but again, there is a lot of people who have questions about, as this process goes on, including the other deputies that have not come forward. amber: thank you so much for bringing us up-to-date on the latest. we await that plea and the clock is taking to finalize one of the mergers in canadian history. rogers communication will take over shaw communications, closing at the end of the month. let's bring in managing editor for canada. this has been two years in the making. unofficially a decade in the making. talk about the latest and how close these are to finally getting the deal done. derek: two years in the making

and inching closer to the finish line. there is a january 31 deal deadline that can be extended but only if the three companies involved agree to extend. the antitrust's are of canada. matthew boswell is trying to extend this court process and taking it to the federal court of appeal to take one last stab at blocking a merger he say is anticompetitive and could hurt consumers. in a lower court last week, he lost quite resoundingly. the court siding with rogers and shaw. we will see if canada's federal court of appeal takes up the case. amber: what happens from there? derek: the court has to decide whether or not the lower court made a major error and if they do and they agreed to hear the

appeal, we are looking at weeks or months before this thing closes. and the companies have warned it is possible the deal could fall apart if it is extended much further. it has been almost two years in the making. amber: thank you so much. we appreciate your context around the story. coming up, blackstone getting a major cash infusion for its massive real estate fund. we will hear from the firm's president jon gray. this is bloomberg. ♪

amber: this is "bloomberg markets." i am amber kanwar with alix steel. it is time for "what it's worth." blackstone is getting a $4 billion cash infusion from the university of california for its massive real estate fund. this fund has faced heightened

pressure from investors and has been forced to limit withdrawals. it is an interesting story on how this came about. when we saw this, largely because it was distressed, the investor decided to put in $4 billion. alix: but it is a sweetheart deal. they will get a minimum return of 11.25% over six years. you lock up $4 billion and you will get reimbursed, but that is a pretty nice return. the idea is there were so many withdrawals because a lot of their customers needed liquidity. not because they did not like the product, supposedly, but they needed liquidity and there is the issue. amber: and it is important, and you mentioned, to get that guaranteed return. they call it a sweetheart deal or warren buffett deal. in exchange for providing stability you are going to give me a guaranteed return.

alix: it is juicy. sonali basak caught up with jon gray earlier and talked about the deal. jon: their investment is $4 billion. a typical b-read investor's $700,000. these things are very different fundamentally and the additional considerations coming from blackstone, they are paying the full fees that any of the traditional b-read investors are. we think a big affirmation and a real positive for them. sonali: 15% over almost three years but last year hedges helped the portfolio. to those start to decline this

year and what is something that will bring you upward this year? jon: i think the key when you look forward and ultimately is the performance of the assets, we did get a big boost from the hedges. we hedged out the debt 6.5 years. when rates were lower when we were concerned about inflation that gave us $4 billion value gains. it was very helpful. as the long end of the curve comes down, we will not have the tailwind from that, but we will have the tailwind from lower longer it's helping this portfolio -- lower tailwinds helping this portfolio. the market rents have continued to grow. they were up in this portfolio

10% in november and longer-term what we expect to see is a lot less new supply. you have seen it in the housing market. i think you will see it in the logistics space. those are our two big holdings in be read -- breit. alix: i have got to say, it is the first day of trading in the u.s. and it is not pretty. we are looking at some real losses, especially if you are a tesla investor. amber: and i think if we take a look at sentiment, there was the thought we would be starting out the here a little bit different. that was the case at the open. but it looks to be more of the same as a lot of those issues we were concerned about, inflation being number one, it did not go away with the fireworks. alix: definitely did not. how sticky it is seems to be the question for 2023.

oil stocks are also getting hit along with tesla. it has been a pleasure. for amber kanwar, i am alix steel. happy new year, everybody. ♪ when people come, they say they've tried

lots of diets, nothing's worked or they've lost the same 10, 20, 50 pounds over and over again. they need a real solution. i've always fought with 5-10 pounds all the time. eating all these different things and nothing's ever working. i've done the diets, all the diets. before golo, i was barely eating but the weight wasn't going anywhere. the secret to losing weight and keeping it off is managing insulin and glucose. golo takes a systematic approach to eating that focuses on optimizing insulin levels. we tackle the cause of weight gain, not just the symptom. when you have good metabolic health, weight loss is easy. i always thought it would be so difficult to lose weight, but with golo, it wasn't. the weight just fell off. i have people come up to me all the time and ask me, "does it really work?" and all i have to say is, "here i am. it works." my advice for everyone is to go with golo. it will release your fat and it will release you.

romaine: a new year and a new you. unfortunately, the same old market. the s&p 500 started off the year down on the date. happy new year to our viewers. not so happy new year for financial markets, at least in the u.s. we are kicking you off to the closing bell. i am along damian sassower our. happy. what a great way to start the new year. one of the great minds. damien: you are talking about yourself.