mark: welcome to the bloomberg and bnn audiences. i am mark crumpton. jerome powell says the central bank will not be a climate regulator. chairman powell said the fed has a narrow duty regarding climate related financial risks. chair powell: without congressional legislation it would be inappropriate for us to use our monetary policy or supervisor tools, for example, to promote a greener economy or achieve other climate-based goals. we are not, and we will not be, a climate policymaker. mark: chairman powell did not comment directly on the economic

or monetary policy outlook. new york democrats are demanding a house ethics committee investigation into the financial disclosures of republican congressman george santos. santos has been under fire for lying about his background. he says he has done nothing illegal. in california, a historic drought has given way to flooding that has killed 14 and set residents fleeing for their lives. winds were expected to hit 65 miles per hour in the mountains and foothills. heavy rain and thunderstorms ripped down power lines and trees. 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.

jon: i am jon erlichman. welcome to "bloomberg markets." kriti: i am kriti gupta. we ended yesterday's session unchanged. similar dynamic today. we are not seeing a ton of conviction in either direction. s&p 500 up 0.3%. that is green on the screen but let's not get too excited. that real selloff when it comes to the notes, 10 year yield at 3.62. jess minton will break it down for us, but in theory, the dollar should also go higher and it is unchanged. how much of this is repositioning and how much is sitting on the sidelines? keep an eye on the commodities space because there is green on the screen. nymex crude up 1.3%.

jon: you touched on some of the macro themes and we will weigh that inflation data later this week. let's come back to that developing story, the bloomberg team reporting on possible activity by bluebell, maybe shaking things up at bayer? trading up about 7% today. bloomberg also doing reporting on the possible cvs oak street deal. cvs shares off in the neighborhood of 0.8%. bed, bath & beyond, a company that had quarterly results. the market has seen so much volatility. still uncertain on the road ahead for a stock that was north of $20 last year. now reporting a possible layoffs. a lot to watch with bed, bath & beyond. coming back to the earnings story, these days it is about

profit. alumina not giving the profit picture. that name off 6%. kriti: we have an interview with the alumina ceo later this month. let's bring it back to the market. we caught up with morgan stanley's matt hornbach. matt: i do not think 2023 will be as easy as 2022. a handful of factors drove markets the same direction more or less. 2023 will be the year of multiple trends, multiple opportunities. jon: let's bring in jess minton who has more on the ups and downs of 2023. are you hearing similar commentary from other players about the year ahead? jess: when i have been talking

with my sources, they are talking about a tale of two different halves. markets and the economy could potentially recover in the second half but i have talked to a few contrarians, like sam stovall, and he was thinking if you have this cohort where everyone is thinking the same thing, what could market, technicians or even other money managers might be getting wrong? say, for instance, if things do not go well and the economy suffers more of a contraction or things come in better than expected. how is that going to affect money managers? i thought that was interesting commentary. but looking at today, the s&p 500 above 3900. but still, the s&p 500 is below the downward sloping 200 day moving average and below that downward trend that started last january. even though we are at tricky

technical indicators right now there is a lot more room to go, even though the s&p 500 is above 3900. kriti: what does that mean in terms of what is driving the trade? it felt like yesterday the comments from the atlanta fed changed the game. we heard from chair powell on climate but is the federal reserve driving today's trade? jess: we did not get a ton of clues from powell today. the big thing we have cpi on thursday but looking toward the last report, the equity market did not have quite the volatile moves we had seen last year. seven of the 12 cpi reports were down days in on average the last six months the s&p 500 has moved to .6% either direction. not quite the same momentum with that last cpi report. bloomberg intelligence does not expect to see the same swings because they think the market is pricing in those big moves

already. when i have been talking to strategists, a lot of money was stocked around that 30 not hundred level -- 3900 lab level. kriti: thank you for your insight as always. coming up, we talked to the finance minister of ontario. developing the province's investor base. that conversation, next. this is bloomberg. ♪

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jon: this is "bloomberg markets ." i am jon erlichman with kriti gupta. on a day when the white house announced president biden will visit canada in march the finance minister from canada's most populous province is in the u.s., making his case to wall street. peter bethelenfalvy has made the trip to new york this week. we thank him for being with us and want to get your perspective on the fact that we now have this white house announcement that president biden will be coming to candidate in march. what was your initial reaction? peter: i think that is fantastic. we have a 200 plus year relationship with the u.s. it is great for ontario. we have 18 states and ontario is the number one trading partner. another nine the number two trading partner. that is over half the states number one or two trading partner.

what is good for canada is good for ontario and what is good for ontario is good for canada. jon: while you are ontario's finance minister you previously lived and worked in new york. very familiar with the story of wall street. when you go in this capacity to wall street to get your message out there, what is your message about the storyline for ontario's economy? peter: ontario has a plan to build. we went through with my budget and the people endorsed it. a larger majority than the first. a clear vision to rebuild the economy, invest in manufacturing, to do the supply chain for electric vehicles, battery production, critical minerals in the north. we have over 200,000 people end up to 300,000 people that will be coming to ontario from outside canada. we need infrastructure. rhodes, public transit, we are building that.

hospitals, schools, broadband, housing and labor. we are investing in skilled trades and creating bigger paychecks out of that economic growth plan. that is our message to the u.s. and abroad. kriti: you have lived in new york, worked on wall street. talk about your messaging to investors. what kind of additional financing are you looking for? peter: we have been a frequent issuer in global markets, including the u.s. we plan to come to the u.s. market again. we have a significant amount of funding. our deficits have dropped. less than thought six months ago, but we will be issuing bonds in u.s. any euro markets. ontario leads canada in issuing green bonds. there are about 28 green projects and the world is

looking for jurisdictions that are taking real action to create a green environment so the capital and manufacturing can excel and compete in the world. kriti: talk about that bond issuance. what kind of maturity? what amount? peter: typically, we fund domestic market in canada where we get long-term deals done and shorter term deals in the u.s. and europe. sterling we looked at. the green bonds have been canadian but we are seeing more and more appetite for sovereign bonds and ontario has provided a lot of liquidity. shorter terms for the outside canada market. our average maturity is 16 years. we have been frequent issuers and a long-term issuer. jon: when we think about green we think about the push toward electric vehicles. within a province like ontario the automotive industry is going through a sizable transformation.

it is an area of growth you have been focusing on. just to tie it back to the news about the president's trip to canada, they would seem to be the opportunity, based on discussions taking place in mexico city, for more alignment on the automotive industry cross-border. do you anticipate more progress being made head of that trip in march? peter: absolutely. if you look at the investment in the auto sector just in ontario, over the last two years over 16 billion new investment in the auto sector. we saw auto sectors leave ontario. we have the critical minerals. we have all the components and minerals that go into the battery manufacturing. the president does not have to call china or russia for a safe, secure supply of critical minerals that will go into the batteries into the electric vehicles that help us with emissions down the road.

i think it is long overdue the president is coming to canada. we work very closely with all the governors and many of the states i mentioned we do business with, i am here in new york, we are very focused on doing more trade and good, bilateral trade with our friends in the u.s. jon: before we let you go, on the fiscal side as well, on the health care front there are constant conversations between the province and the federal government. how would you characterize the fiscal picture on that front? peter: well, we, like every jurisdiction, face global uncertainty in terms of the economy and the impact of higher interest rates. but one thing i know is our deficits have been coming down. we are actually improving our deficit picture significantly then even the april budget we took to the people. our debt to gdp is actually

lower than before covid. while we spared no expense in getting through covid to support people and businesses, we have been able to be responsible with the taxpayers' money and will continue to be responsible. i believe you can be fiscally responsible and make the long-term economic investments in the economy and of his structure and labor that will make us even more competitive and grow our economy. jon: peter bethelenfalvy, thank you. he is the finance minister of ontario. as we track the headlines on that front, we are going to talk more about the road ahead for dealmaking in 2023. how many lost steam in 2022 and we get perspective from mark shafir of citigroup, next. ♪

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kriti: this is "bloomberg markets." i am kriti gupta alongside jon erlichman. 2022 saw a loss in momentum for m&a. what can we expect for the coming year when it comes to dealmaking? joining us as mark shafir, global head of m&a at citigroup and ed hammond of bloomberg. ed, take it away. ed: thank you. 2022 was pretty bleak toward the back end.

is there anything you are seeing in 2023 showing we will get back to a robust m&a market? mark: the second half when you had the $2 billion run rate, that is pretty low after a first half. we were concerned about the run rates but it was more about specs. you go back to 2017 it was not the 2018, 2019 levels. it was lower than 2021. not by any means cataclysmic. as we look forward, what are the things i look at? there is a ton of liquidity on the equity side of the market, infrastructure, private equity infrastructure. that market has had its issues. we are seeing, potentially, good

things. you have a ton of direct lending and private capital. almost half the broadly syndicated markets. liquidity is part of this that is important and powerful. the activists made a lot of money last year. clearly, that is something we see more activity. we think it will continue and i think that will put clients and companies in a position where they have got to look at portfolios. we are seeing more corporate separation spins, splits, ipo or sale carveouts. the average rate of capital has gone up and clients have to look at their portfolios. really look through the analysis, stock price. if you have a company -- if the parent is trading at five times and the business should trade at 10, that is positive. if you are trading eight or nine times and you are at three or four, that is not natural. ed: the one word i did not hear was "conflict."

conflict is key to m&a, especially doing large blockbuster trades. is there anything that needs to happen to really get that back into the marketplace? mark: i think the thing we are looking at is inflation and gdp. depending upon your view of whether we are going to have her session, soft landing, moderate landing, deep, i think a lot of that will drive confidence over the next several months. i think it is early days. there seems to be a belief coming through the equity markets that we are going to see something like a soft landing. i think that is bullish for m&a. i think the first half could be more muted. but if things go well, from a macroeconomic perspective, we could see a strong second half because of the things i cited. the other thing that is helpful is with the equity market decline people have been looking

at 52 week highs. as those roll off it becomes easier to get buyers and sellers together. kriti: what is interesting about this cycle is so many people are expecting this to be a shallow recession, which means a lack of fallen angels, lack of bankruptcies and zombie companies. but if you're talking bullish m&a, is that more of an indication of more expansion? or is that a signal of pain in the underlying markets that are not going to be captured by outright bankruptcies? mark: it is interesting. frankly, it could be both. right now, we think we are seeing better tonality in the equity market. if you are going to monetize, m&a is largely the game. whether it is straight up or structured transactions. that is not unhelpful. but ceo confidence is lower. consumer confidence is higher than i would have thought.

i believe if we start to see a feeling that we are in a soft landing/moderate recession, i think confidence goes up and the desire to transact should increase over time. it is not as if people are not transacting. we saw amgen, kroger, large transactions. but it slowed and we are sitting here on the 10th of january figuring out where it goes. i think it is early to prognosticate any upside, but there are positive things that could help us. jon: when it comes to the debt financing world how much is that going to play a role in the indecision on doing deals were not doing deals? mark: you have got to break it down between the investment-grade market that is wide open and has been very strong. i think the leverage finance market, the direct lending market, private capital, we have been on tougher times. a lot of private cap got put

out. we are seeing -- i think we will see smaller transactions initially. we will see transactions that get over equity ties. but there is a strong belief in our shop that something is well thought out with decent documentation, not the wild time documentation, could get done. and it could be done with $3 billion, 4 billion dollars, $5 billion. we are in a position where we have work to do on the leverage markets. kriti: something we will be keeping an eye on. mark shafir and ed hammond, we thank you for your time and insight. something we are closely watching in the year ahead to see how the m&a plays out. let's get a quick check on the markets. green on the screen when it comes to the equity markets. the s&p 500 is up in the nasdaq outperforming. the benchmark up 0.30% and yields are higher. the bond market selling off.

interesting to see those interact. 3.62 on the 10 year easily yield. for jon erlichman, i am kriti gupta. this is bloomberg. ♪ as a business owner, your bottom line is always top of mind. so start saving by switching to the mobile service

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romaine: hold the line. 3900 on the s&p 500 has become the fulcrum point for the bulls and the bears. they remain oscillating in a tight trading range. romaine bostick alongside scarlet fu. i do not know what to make of this. scarlett: jay powell did not give us anything. [crosstalk] no mention of terminal rate.