>> we welcome our audience with the first word news. the chaos on capitol hill continues. failing to rally house republicans behind his bid for speaker. mccarthy and his allies initially considered a plan to adjourn the house without taking a speaker vote to allow for more time for negotiations, but it was unclear if there were enough votes to follow through. the house is at a standstill and -- until the speaker of the house is elected. the struggles have been called an embarrassment to the country. the president hopes that

lawmakers will get their act together. hinting that the government could take a softer line. the country usually values public-sector workers and that he wants to see a reasonable dialogue. they will lay out the steps in the coming days. ferocious windows and soaking rain from the pacific is sweeping through california, ushering in another day of's -- of floods, mudslides. while destructive in some areas, the delusion helped -- deluge health california pull itself out of a year-long drought. 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 john holland and -- john

hyland, and this is bloomberg. amber: welcome to bloomberg markets. >> we are seeing green on the screen. the s&p 500 is flying. the bond market is also having some interesting moves. a little bit of volatility. down only about two basis points. 371 on the 10 year yield. the dollar does follow, dare i say tick by tick. now weaker by about .3%. weakness is not translating into strength for the commodities space. you are seeing crude trading,

down about 4% on the day. >> there are some stock specifics that we have our eyes on. sales are moving higher after announcing they will be cutting the workforce by 10%. a company like microsoft is a laggard on the dow because they downgraded, concerned about growth in the cloud business. alibaba is the poster child for texturing right now. it looks like china is giving the green light to go out and raise money. taking off the regulatory shackles. today is day one for ge healthcare. initial trading, they were received pretty favorably. >> it still comes down to the earnings story. mike wilson spoke about

concerns. >> we are going to get into a nasty earnings session. you have to fully price whatever the downturn will be. >> they will cut about 10% of its workforce and reduce real estate holdings. apple shares also hovering around the $2 million mark. let's start with the salesforce story. cost efficiency. a cut is not necessarily good news yet. it is driving some of the games. walk us through the story. is this another tech company playing catch-up? >> major layoffs and a tech company should not surprise anybody at this week. what is unique is that they are hit with this double whammy.

it has been about to be owed decades now. we want to see better profits, demand is slowing down. they are forecasting 9% growth. the ceo says, i am cool with any number. people are a little bit worried. >> you mentioned the investor part of it. this perhaps played a part in today's news? >> absolutely. they have been trying to improve their bottom line. they say, free cash flow is not bad, but when you compare it to the top line revenue, activists and investors say, maybe you should cut some costs. a lot of people expected av structure at some point, but

likely, this has accelerated. >> that is at the core of it. let's talk a little bit about their spending and investment budget. a lot of these cuts are simply a consequence of weak i.t. spending. >> a company like salesforce, they sell to everybody. what happens in a recessionary environment? people get scared and they do not want to sign software contracts. they are seeing tepid demand among people. i heard that tech and finance are -- things like energy, mechanics, automakers are really the growth drivers. companies that were hot last year are driving them down. >> thank you you as always.

shares the day, but how indicative is this of the larger economy and market? let's bring in linda. equity strategist. thank you as always for joining us. you heard the conversation. apple is also signaling a little bit of a warning sign. how do you look at the broader market, in light of those stories? >> the job market is very important for the fed and when they might pivot to start reducing them. that is what everybody should be focused on. these big companies, these companies that are laying off people, they over hired during the pandemic. what we saw today in the job openings numbers is a prelude into what we are going to learn at the end of the week.

we think it is still very strong. that how many job openings today versus how many unemployed people. the percentage of people quitting has been sticky and on the highside since july. you had a very strong labor force and the top half are still able to get increasing wages, but i really think that the market will be surprised, that inflation will be higher and much more persistent, for longer. the fed will not go away. >> how are you up? i assume that is not something that you want to lean into, if that is your view. >> i think your previous half hour, they were talking about how this is looking more like a stock pickers market, and it really is because there are big,

rolling corrections. it is heavily weighted to the big names. it makes the s&p 500 look stronger than what it could be. what we are looking for, you need to be patient and you need to be aware of the fed. we like cash and we like dividend stocks very much. one because they pay you an income and who are finally getting paid, but they are very inexpensive versus their history. in a market like this where we have to deal with having printed -- having to deal with that fallout, i think you need to look for these. we want to remain conservatively invested. >> at the beginning of the segment, we played a clip and he made the argument that cost efficiency will be at the core

of the market moves. something that you are seeing with salesforce, even though they are removing about 10% of their sales force, they are being rewarded for it. i'm curious about these unordinary times, as you see corporate america making those adjustments at the core of their businesses. will the market actually reward them for that or is this an inevitable downturn that we will see in 2023? >> it will be a downturn, but it will be a mild economic recession. that does not mean that every company will do well throughout this. it is good to be careful and look for companies that can still make good money. so, find companies that have good cash flow and are able to keep their margins up.

the labor cost is one of the biggest expenses. that is a good thing. important to remember is that for the consumer and businesses, they are much stronger than they have been in the past, if we must face a recession. for a large cap company, they had fixed rate debt. they do not care if the interest rate is going up. that is a big expense for many companies. as a stock picker, that is something that we look for. >> how are you thinking about dividend yield? i assume that is something that is really attractive in this environment, but you do not want to be caught up in interest rate sensitivity. >> it is interesting because

some of the sectors within the high-quality dividend space are very sensitive. utilities are interest rate sensitive, but they did very well. the way that we pick high-quality stocks is we look at the price to earnings ratio. the p/e ratio versus history and you can still find very inexpensive places. the most successful sector last year was energy. so we like energy stocks. they still pay a good yield and they can afford their dividend. another piece of analysis. you cannot just search for yield, you need quality yield. if you are worried about interest rates rising, people with interest rates are probably at or near the top of this

cycle. that is why people are worried about a recession. >> always a pleasure to have you on the show. coming up, oil slumping and a rough start to the new year. we will dive into the story, next. this is bloomberg. ♪ buried in receipts, invoices and other paperwork that's preventing you from doing what matters most? then get the all new epson rapidreceipt smart organizer to scan, digitize and organize your documents and receipts. receipts go in, and stress goes away. it's the only solution on the market specifically designed to extract and digitize key data trapped on receipts and invoices. and it integrates with financial software like quickbooks and turbotax. transform paper

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>> this is bloomberg markets. we are in toronto. oil has had a pretty rough start this year. some of it because of what is going on. let's bring in sheila to walk us through the story. it is an interesting story because on daylight today, a lot of the chinese stocks are also in the green because of this regulatory confidence. oil is taking a little bit of a beating. >> it appears to be that way. i noticed that whatever is happening in china, the resurgence of infections and rising cases, how the population

is dealing with it since they lifted all the restrictions has taken a toll on the way the market views consumption patents over the next short-term. we are talking about immediate needs. >> on the supply side, many are looking at a modest uptake. >> for now, there seems to be some concerns about how the russian flow situation is coming along. the u.s. little bit of disruption to some of their production. it was a brief disruption, but it was still there. we saw something similar in

texas, but it was modest. at the same time, we had all these refineries. they did not take a lot of crude that they normally would. there is a little bit of uncertainty in terms of producers coming up to their normal production volumes. >> thank you for those insights. while energy is a laggard, semiconductors are -- this is to compete with u.s. we are talking about a strategic imperative in china that has sucked up billions of dollars and now, abandoning or shelving a momentarily. what is going on? >> this is some good reporting

by our colleagues. what they are saying is that the chinese leadership is really frustrated with the situation that they are in. they have gotten nothing because they are still dependent on u.s. technologies at a time when the u.s. is cutting them off increasingly from that technology. the correct perspective is that south korea, taiwan, it took decades to come from a basically the basement to the competitive situation they are in right now. for china, they have not had those decades of concentration. >> one of the reasons they have been able to create such a dominance in the industry has been because of the security that they have had, being able to source materials from around the world. to what extent do those supply

chains get wasted now if there is an idea that they have to give up on semiconductors? >> if the u.s. and various other trade regimes will allow china to import semiconductors, the not supply chain not threatened, but we are seeing a creeping towards some of those restrictions, so it is a threat to china's role as the largest market for some conduct there's and the world's factories. we are seeing the beginnings of some sort of migration, but china has a lot of expertise with the making of the phones and computers. >> thank you for bringing those insights to us. we will take a quick break. when we come back, offering a

peak target ahead of the fed minute at the top of the hour. this is bloomberg. ♪ at fidelity, your dedicated advisor will help you create a comprehensive wealth plan for your full financial picture. with the right balance of risk and reward. so you can enjoy more of...this. this is the planning effect.

>> this is bloomberg markets. now for today's for what it is worth. he sees the fed pausing mates, once it hits 5.4%. those who hold a vote are merged as one of the biggest talks. he held a dovish stance. >> he definitely did. it is interesting that we are talking a -- talking about a 5.4% number. it was a crazy target to be talking about. a terminal rate of 5% that

everyone in wall street scoffed at. some interesting that he is going a little bit higher. let's bring us back to the here and now. the fed minutes, we are just going to get them in a few minutes. walk us through what to watch in the next few minutes. >> i would mention two or three things that you want to watch. it was pretty interesting today on the 5.4%. as he pointed out, it is a lot higher than anybody was looking at a year ago. the first thing that wall street will be looking at the minutes is any kind of signal on the february meeting. chair powell's press conference was vague on whether we would see another 50 basis point hike

or a 25 basis point hike. you could see some language in there that would suggest one or the other. right now, the options are open. sometimes they have been explicit about sending messages about the next meeting, so that is something that will be key. as volatile, they have talked about the peak interest rate of 5.1%. it will be interesting to see if they stick with that or get some clues as to whether it will be higher or lower. >> i know you will be all over this. amber, it will be about the reaction for me. we are looking at a 10 year yield that is only slightly lower, about four basis points. the equity market continues to rally.

of course, the dollar following the cue from the yield space. see what changes as we get those fed headlines. this is bloomberg. ♪

>> a sour start to the year for u.s. equities. this is bloomberg markets: the close. >> we are awaiting the fed minutes listened to. >> a february meeting up ahead. we know what happened with regard to the decision behind closed doors. michael mckee standing by with the readout. >> no real indication of what the fed is thinking of for the next meeting on february 1, but