>> stocks up, bonds up. those yields are dragging the dollar down on the day. marcus, digesting that cpi data in two ways. i'm kriti gupta. bloomberg markets starts now. kriti: let's dive into the price action. we are seeing green when it comes to the equity markets. the nasdaq outperforming. on the surface this does look like good news. it looks like the equity market is smiling on that cpi data. you look at the bond market and it is telling a different story. bonds are bid as well. seven basis points lower.

it is interesting to see the bond market price in more and more steps toward a closer and to the fed tightening cycle. arguably the equity market is thinking the same thing. you're going to dive into the details with quincy krosby and mike mckee in a moment. look at what those yields are doing to the dollar. down about .9% on the bloomberg dollar index. that weakness is having that domino effect into the commodity market. we are trading at crude with a 78 handle up. a crucial part of the declining cpi story, which, speaking of, one of the first voices we heard of after that uscp i relief was patrick harker, who still sees the central bank raising rates. take a listen. >> i expect we are going to raise rates a few more times this year. in my view the days of us raising 75 basis points at a time are surely past. in my view heights of 25 basis

points will be going forward. kriti: joining us is mike mckee. this is such an important topic, because we are starting to see division when it comes to how people inside the federal reserve are really thinking. patrick harker versus someone like esther george. walk us through that. mike: it is a question of tactics. they all want to get the federal funds rate up to about 5%. the question is how fast? then the question is, within degrees how high? jim bullard, reminding people today the fed had forecast back in december that it would go over 5%. they intend to keep to that. harker saying today, over 5%. i think that is going to be the goal. now you back off in terms of the size of the rate increase, so you can judge the economy as it develops. and try to avoid the idea of

tightening too far. kriti: is this step down now getting priced into the market, going from 50 basis points last month to 25 basis points, and we are looking in the 90% probability. is that too much too fast? mike: it depends on who you are and what you are looking for. for the fed it is not. they do know there is a combined impact on the economy from all of the increases they have done. the bond market, however, and the equity markets, or a question. now they are pricing in rate cuts toward the end of the year, and more of them. the fed has worried that if it is seen as backing off its commitments that the markets would run away with that, and lose the ability to keep credit tight enough to bring inflation down. it is going to be interesting to see how this plays out. kriti: inflation data is coming out.

it is decelerating andeffects are helping a. and you have numbers coming out of the labor market like real wages, and looking things like -- looking at things like the housing market that remains sticky. is it fair for economists to say, ok, you're coming toward the end of the hard path we have been treading for the last year? mike: that was exactly the message jim bullard tried to give today. you're getting ahead of yourself if you think this is anywhere close to finished. even if you are looking at the results of the core today, that is still 3.7% more than the fed's 2% target. they have a ways to go. expect that housing will start to fall out. it is a matter of the way the index is constructed. they are looking beyond that, there are other areas in which there is inflationary pressure, and they have to keep working to get that out. kriti: that is just the u.s.

side. we have not bothered to open up the pandora's box that is china. michael mckee, we thank you for your time, insight, and the information you have. joining us for more of that, quincy krosby, a strategist of lpl financial. i believe her first time on the show. thank you for joining me here on bloomberg markets. let's start where mike picked off. are we looking to step down too fast when we are looking at still a very hot housing market and hard labor market? quincy: no, 25 basis points, the market has been pricing that in, despite some of the more aggressive rhetoric from the fed. 25 basis points in february, then march again, 25 more basis points. then rate cuts at the end of the year. initially as we started to hear the fed talk about stepping down , they had priced in two rate cuts for the end of the year.

over the last couple of weeks it has moved toward one rate cut at the end of the year. that is a question mark. we don't know. the fed doesn't know. we are data-dependent. the one thing that the fed has to see is wages continuing to come down. they are an important input cost . it manifests in higher prices. higher prices represents under flank -- represents underlying inflation. kriti: if you are looking at the immediate reaction in the equity markets, have green on the screen. i don't see that kind of conviction we have seen in past cpi reports. what is the equity market pricing in? quincy: it is interesting that yesterday the market looked as if it had some very heavy bets in a cooler inflation report then we had today. that is why i think you saw in the morning the red in the futures market, and we opened down.

what this market today is telling us is that the market does believe that the trajectory is in the right direction and that we are going to go ahead and be finished with inflation, probably sometime in 2024, where the fed wants it to be. that being said, take a look at the sectors. yesterday and today they were cyclical. not the value side of the equation that most of us are sitting in, because we are worried about something else. we are worried about an effect on earnings. and the effect on the downturn. that is the next leg in this market. do we have a significant downturn? is it a recession or do we stall for a bit? the market has to go through that process, and as the earnings season unfolds i think the guidance is going to help us make that determination. kriti: which then brings what i feel like is the question of whether the dog is wagging the tail. the dollar and where the dollar

falls into this, given that the negative correlation with the stock market is so high, and it feels like the dollar's case is dependent on external expectations. if they are stalling out, doesn't that build the case for a more sustainable bull market? quincy: it certainly does. take a look at yesterday's market. bed, bath & beyond kept going higher and higher. that is a risk-off market. that is something that the minutes mentioned. don't want an unwarranted market, unwarranted tightness and easiness in the market. risk-off market. that may be one of the reasons we heard from raphael bostic, and made it clear, we are staying on hold for a long time. it makes the job more difficult. let me just add, we have got a big package coming through from the physical side of the equation.

that is something the fed is going to have to work its way through, because that is going to feed even more inflation. kriti: it was interesting to see how far that goes. once again, quincy, we have not talked about china yet. certainly a topic for next time as well. quincy krosby of lpl financial. get a check on these markets. the stock market, green on the screen for the s&p 500. you are seeing some real outperformance not only in the nasdaq, but russell as well. which tells you there is momentum at play when it comes to equities. you are seeing the 10 year yield down about 10 basis points. monumental move in the bond market. some special guests coming up. stick with us. this is bloomberg. ♪ ♪ ♪ - if you're thinking about going back to school this is for you. ♪ ♪

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kriti: this is bloomberg markets. investors are seeking higher yields as they pour money into private credit. turning the asset class into a $1.4 trillion market. churchill asset management is one of the biggest players and has announced a record number of activities in 2022. joining us now is ken kencel, president and ceo of churchill asset management, along with sonali basak. >> thank you for being here, can -- ken. to the point you're making about new investments and things not being as bad as it seems, is all of this contingent on a soft landing? ken: hard to tell. i would say as we think about the market environment today, the fed is going to continue to fight the battle with inflation. but that has turned out to be a good thing from a private credit

standpoint. what we are seeing is the better companies are raising financing. the market is active. as a firm this year we invested over $11 billion in middle-market companies. we actually see the current environment is a very attractive one for investing in middle-market businesses. surprisingly, more active than we would have expected. at the end of the day it is creating a tremendous opportunity for investors and private credit. sonali: some of the leverage you had at the end of last year was that uncertainty you saw in liquid markets. what other liquid markets telling you about the path forward? ken: the liquid markets effectively today are closed. it creates a tremendous opportunity for direct lenders like ourselves. private credit has become the source of financing for midsized companies. if you look at the ratio between private deals done and public deals done in the fourth

quarter, they reached an all-time high of 4:1. you are seeing companies turn to private lenders, and it has created that would say is one of the most interact -- attractive environments we have seen in decades to invest in private companies. kriti: what does that mean when it comes to existing leverage? ken: one of the things we are seeing for sure is that with rates higher than they have been in many years, is reducing leverage. companies that may have borrowed at six time leverage, today that number is closer to four times. so, increased borrowing costs are translating into lower leverage. they are certainly translating into gator covenant protections and wider spreads. a loan we would have made a year ago at 6%, that same loan today is 11%. so, yields are much higher. it is translating into lower leverage, but also translating into lesser-quality companies

not transacting. is this is cannot show they can pass on price increases, or otherwise address the dynamics of inflation really staying on the sidelines. the quality of companies we are financing is higher than it has been in many years. sonali: what does that mean for the companies that are not that strong? what does it mean for the default cycle into the next 12 months and the cost of financing going up? there is a lot of questions about margins. there is layoffs happening. are there going to be a lot that don't survive through this? ken: i think the ascot -- the excesses over the last several years, and financing companies at levels that is not appropriate, is going to wash out some of those businesses. as investors think about investing in private credit, i think it is a good idea to be investing with a more conservative approach, for sure. you're going to see other lenders that focus on portfolios.

ultimately i think it is a function of sticking with the larger, more scaled players. today i would say the industry is consolidating, from the standpoint of lenders, the larger lenders taking share. kriti: let's talk about the m&a market. it looks like churchill raised about $12 billion for its senior loan program. were still talking about a slower m&a market in the back half of the year. is that a concern in deploying capital? ken: i think we will see a slower environment in the first half of the year. given the dynamics, there is no syndicated loan market today, that is widening the runway for direct lenders. yes, some lower volume, but correspondingly a real increase in direct lenders taking share of the marketplace. so, we are super busy. we had a record year last year. we expect to have a good first quarter.

m&a activity will moderate. at the end of the day we will see plenty of activity. kriti: we have to switch to some breaking news. ken kencel, president and ceo of churchill asset management. you're listening to the internal general -- the attorney general give a statement. >> informed him that the white house had notified the archives that documents bearing classification markings were identified at the office of the biden center for diplomacy in global engagement, located in washington, d.c. that all -- that office was not authorized to store those documents. the prosecutor was advised that those have been secured in an archives facility. on november 9 the fbi commenced an assessment consistent with standard protocols to understand whether classified information had been mishandled in violation of the law. on november 14, pursuant to

section 600 of the special counsel regulations, i assigned u.s. attorney lausch to conduct an investigation. mr. lausch has served in chicago since 2017. for that he spent more than a decade as assistant attorney general in that office. i selected him because i was confident his experience would ensure it would be done professionally and expeditiously. on december 20, president biden personal counsel informed mr. lousch bearing markings were identified in the garage of the president's private residence. private counsel informed mr. laotian that those were records from the. -- the period of the president service hasbro -- as vice president. the fbi went to the location and

secured those documents. on january 5 mr. laotian briefed me on his investigation and advised me that further investigation by a special counsel was warranted. based on mr. lausch's investigation, i concluded it was in the public interest to appoint special counsel. in the days sense, the department identified mr. herr as appointment for special counsel. president biden's special counsel called mr. lousch and stated an additional document was identified at the president's personal residence. when i first contacted mr. laotian, he said he could lead the investigation but would be unable to accept any longer-term assignment because he would be leaving the department in early 2023 for the private sector. u.s. attorney lousch have

conducted this with professionalism and speed. i am grateful for them. earlier today i signed an order appointing robert herr as a special counsel. the document authorizes him to investigate whether entity violated the law. the special counsel will not be subject to the day-to-day supervision of any official in the department, but must comply with the procedures and policies of the department. mr. -- mr. her as a distinguished career as a prosecutor. he joined the department's criminal division, where he worked on counterterrorism, corporate fraud, and appellate matters. from 2007 to 2014 mr. h.e.r. served as a u.s. attorney for the district of maryland.

in 2017 mr. herr rejoined the department as the associate deputy attorney general. in 2018 he was nominated and confirmed to serve as a u.s. attorney for the district of maryland. as u.s. attorney he supervised some of the department's more important national security public corruption and other high-profile matters. i will ensure that mr. herr receives all of the resources he needs to conduct his work. as i have said before, i strongly believe the normal processes of this department can handle all investigations with integrity. under the regulations, the extraordinary circumstances here require the appointment of a special counsel for this matter. disappointment underscores for the department the commitment to independence and accountability, in particularly sensitive matters, and to making decisions

indisputably guided only by the facts and law. mr. herr will carry out his responsibility in accordance with the highest traditions of this department. thank you all. cracks have you spoke with the president about this investigation, sir? kriti: we were just listening to merrick garland speaking about the documents that were found in a private office by president biden. it looks like the doj is going to appoint a special prosecutor for that probe. the doj naming robert her as a special -- robert herr as a special prosecutor. one of the criticisms as the doj -- at the doj was whether he would treat president biden a similar way president trump was treated. nick, what did you take away from this statement? nick: exactly that.

the tone and tenor of what merrick garland said was aimed at rebutting the notion that the justice department has a different standard for joe biden, which is what republicans had immediately claimed than he did for donald trump. obviously there are big differences between the two cases of these classified documents, you really saw that he essentially in the end had almost no choice but to appoint a special counsel here, because presumably the uproar from republicans would have gone through the roof. very much his intention there to make clear that the department of justice is not politicized. it has integrity. it can handle these matters in an evenhanded way, and he does what i think was largely expected. appointing a special counsel. kriti: talk to us about what this means for president biden's reputation. when it is compared to president trump and the probe he is dealing with, legality is at the core of the issue. what is he potentially charged with?

that could affect some of the issues and process in terms of his 2024 presidential bid. to what extent does that same concept applied to president biden? nick: sure. we are a long way off from delving deeper, even thinking about speculation of what dental charges could be. that is a long way off. given the differences with president trump, there were dozens of documents. it looks like there were relatively few in the case of joe biden. there is obviously a level of what republicans are saying is hypocrisy. president biden and his administration, democrats were outspoken about how president trump handle classified documents. they said he was careless. they said he obstructed the department of justice and fbi. and you can almost see the relish on their faces when president biden is found to have had classified documents as well, because it was such a point of attack and criticism by democrats.

we have already heard from kevin mccarthy, the house speaker, that republicans will investigate this no matter what happens. you can expect this is going to be a major theme for republicans going forward, given that president biden expected to run next year. kriti: talk to us about next steps. now that we have that special prosecutor, robert her, who merrick garland said has a long history and career. what can we expect next? nick: the big question is figuring out what was actually in the documents that were found at the biden center and joe biden's residence. again, a relatively small number, the question is going to be, what did they contain? a lot of the conversation around the documents at mar-a-lago with president trump was that these were highly sensitive national security documents. he could have exposed u.s. sources and methods. they could have insight into all

sorts of issues around north korea's nuclear program, for example. that is where the scrutiny is going to come, and is going to drive the narrative in a lot of ways. if it turns out there was not much in these documents -- i mean, there has been a long time criticism that classification markings are overused by the u.s. government. they stand that label on basically anything they want -- stamp that label on basically anything they want. if it is found the use were highly sensitive documents and having them in a non-secure setting was extremely dangerous, it is going to reflect poorly on president biden. kriti: certainly something we are going to monitor -- to monitor. nick wadhams, with immediate reaction. let's get a quick check on these markets. we are still seeing green for the equity market. up about .7%. the nasdaq lagging. the russell is flying up, 1.4%.

the bond market also in the green. you are seeing a 10-basis point move lower. stick with us. this is bloomberg. ♪

>> welcome to bloomberg markets. kriti: we are seeing green when it comes to the equity markets. when you are looking at the stock market, it was up a lot more. it looks like things have changed in the last five minutes. up only about .2%. but the bond market stays bid. a 10 basis point move lower. the message is changing on the tape. the take is in the dollar. that is where you are seeing the

ripple effect. the dollar continues to weaken. and crude really taking its crew -- it's q from that weaker dollar. trading with a 78 handle. >> looking sector-wide, some of the staples and utilities, that has offset some gains in sectors that are outperforming in canada. broadly speaking we have also got stocks to talk about as we roll into earnings season. a profit picture from american airlines ahead of its official quarterly results about travel during the holiday period, helping performance. that stock is getting a nice pop right now. with disney, we will see how that nelson-peltz proxy fight plays out. those shares are up about three percent. on the others we are continuing to track the latest on china, specifically tesla and whether that shanghai planned expansion will not be as robust as what may have been thought. those shares are off about 2.5%.

to give our audience a sense of the economic uncertainty, katie home with a reminder that warders have taken a hit in their quarterly results. investors seeing reasons to be concerned, especially in a week where we have started seeing some buying interest in homebuilders. kriti: just as we were doing those market checks the equity market fading just a little bit. sources telling me it is a function of options activity. we are going to jump into it, but to your point, it has been all about the inflation data in today's trade. take a listen to what some of our guests had to say about the report. >> we got an inflation report exactly as we expected. >> very much in line with expectations. >> inflation peaked. >> i think the fed is going to say we are not done. >> they will not be looking to slow down the rate hikes. >> they are going to be reluctant to start hiking.

>> the fed has a clear path to 25 basis points. >> i think the narrative and the attention should turn to how far down are we going to go, not, has inflation pete? >> today is the day that inflation jumps the shark in terms of its importance on the market. jon: a lot of viewpoints there. let's get another one. joining us now, bloomberg intelligence chief equity strategist gina martin adams. you have been writing about inflation and higher rates for longer as the broader investment landscape we have to prepare for. now that we have gotten through this inflation report, what are you left thinking? gina: i think it is about growth now, frankly. i think it is still about inflation and how sticky it may be and whether or not the fed can ease policy. most of us have come around to the thought that we are not going to get a mass of that

easing unless the recession is much worse than we are anticipating. if it is, are we going to see inflation really plummet to the degree it normally does in a recession is a huge question mark. we are left with, where does our upside come from? it's going to come from some degree of growth recovery into 2024. and it is very difficult to read the tea leaves of recovery for the market. market is focused on recession. how deep, how durable is this recessionary malaise going to be? into 2024, what does that look like? it is a lot of questions to answer over the course of the year. kriti: we are seeing a quick fade in the markets. it looks like some of it is coming off that technical resistance. to what instance should be shed -- should today's trade be technicals as opposed to cpi data? gina: the fed is largely based

right now on prices. cpi, the market, you could argue that the equity market is already priced in terms of valuations for cpi to fade down to 2% over the course of the next 12 months. the equity market has considered this inflation story. the fed has the potential to shock, but the bond market does appear to be getting much more confident in the outlook for the fed. we have seen bond rates stabilize over the last several months. no upward momentum in ideals is generally viewed as confidence around the fed. we are starting to rotate into this environment about growth. it becomes, what are earnings going to do? are companies going to cut costs enough to create a margin low? what does the outlook look like? companies tell us that margins are stable enough to create earnings growth in 2024? the earnings recovery is supposed to start in the third quarter of 2023. will companies be able to create

that kind of momentum for stocks? i think that is going to be a lot of the context we are going to have to follow. kriti: certainly something we will be following for much longer. gina martin adams, head of bloomberg equity strategy at bloomberg intelligence. she is a very valued member of the bloomberg team. we are talking about the federal reserve at the core of it all, on track to down shift to smaller rate interest rises -- raises. joining us now, wells fargo senior economist sarah house alongside cameron crise. sarah, i want to start with you. your initial reaction, is it going to get faster and faster deceleration from here? is that something we can count on? sarah: it is hard to completely count on that, given we are in an -- in a volatile environment. we are going to see a strong downdraft and inflation numbers

over the coming months. we got some of that with good declines in prices we saw on today's report. energy has come in quite a lot. we still have a lot to figure out and determine about where inflation ultimately settles, given that we still have a type jobs market, and i think there is also some questions around the timing of this. do you get that decline or easing in shelter prices? is that come after you get that correction in goods prices, taking it difficult to settle all the way back down to 2%? jon: cameron, i want to come back to what gina was saying about growth. if we are starting to look for signs of growth in this environment, wei du weakened up looking for those? if are about to enter and earnings period, can we bank on any companies sharing lofty enough expectations on the growth picture to justify market buying right now? cameron: i tend to think we are

in for a dreary period in terms of the growth outlook. at least on the corporate side, for the next few quarters. you can perhaps argue that the consumer is actually looking ok, in the sense that the job market is relatively robust. the downdraft in commodity prices in particular, energy prices represents a positive income shock. at the lower end of the scale you are going to see things like social security payments ratcheted up for seniors, and among wage increases in a number of states starting this year. so there is an argument that if there is going to be an upside surprise it will come from the consumer sector. kriti: sarah, let's bring this back to something that is not being talked about enough, which is the china question. there is a lot of assumptions that if you see a chinese

reopening that is going to be inflationary, and something that will be pulled over into the united states. what if it is not inflationary? then what happens? sarah: i think that still helps that downward trend in inflation if it does not prove to be an inflation bond. when you look at u.s. inflation and the u.s. economy it is still very insular-looking. so much of what we think about is that underlying trend of inflation. so, when will inflation get to a point the fed can be comfortable with? it depends on what we are seeing in the labor market. that remains too tight. we have seen the fed increasingly worried about this source of inflationary pressures being more persistent, even as we are getting help in the goods sector from ease in supply change, and softness in commodity prices. jon: as much as people want to get a sense on where the fed is headed, there is so much focus

on the bond market heading into today. you were writing about the fixed income frenzy we saw playing out. can you walk us through some of the messaging we are getting from the bond market right now? cameron: rates are going down. [laughter] i, at the beginning of the year it is always pretty interesting. it is as much about behavioral factors as fundamental factors, as new capital goes to work. there has pretty clearly been an allocation into financial assets. generally fixed-income in particular. today was an interesting litmus test. while the cpi was in line with forecasts, i think traders were actually leaning toward a slightly softer number. so, the fact that we got something i was probably a little bit higher than the number people were hoping for, we tried to see yields go up, and that has been firmly

rejected. they have come back down. he just had a 30 year auction with the highest investor buying, in terms of the percent of the auction in history, at least through 2006, when they started up the long bund auctions. it is clear people are putting money to work in the bond market. probably because of the sense this year is going to see the fed and its tightening cycle. people are pricing in a pretty good chance of cuts by the end of the year, fed rhetoric notwithstanding. fact is relative to the post gse period, if you can get something with a three handle on fixed income, that is pretty darn good. we have been sort of force-fed zero interest rates for most of the last 15 years or so. i think people have said, hey, this is a level i am prepared to

nibble, or take a larger bite of the bond market. jon: sarah, want to come back to you as we continue to navigate the data points that the fed will be watching on the inflation front. what becomes the wildcard for you? what do you look the most at? are we talking about the picture on the wage front? sarah: i think that is increasingly important, and notably we will get one more very important labor cost of data prints before the fed's next meeting. we will get that employment cost index number on the tuesday morning that the fed meets. if you recall, in 2021 this was one of the reports that changed the fed's thinking, in that they decided they needed to taper faster. i think that will be an important data point to watch, since ultimately that is the question hanging over the inflation outlook now. kriti: sarah house of wells fargo and bloomberg's cameron crise.

coming up on the show, we are going to take it to the markets. we are going to speak with the ceo of agecroft about how hedge funds performed in 2023. stick with us. this is bloomberg. ♪

kriti: this is bloomberg markets. we are getting some breaking headlines. this time from the richmond fed president. of course, joining the chorus of fed speakers that are starting to weigh in after today's cpi report. he favors an all-treasury fed balance sheet and possibly higher, but he sees wage pressures to at least the first quarter and expects inflation to be more persistent. perhaps more on the hawkish sector -- section. something to keep in mind, what the markets are pricing in. the bond market, still extremely bad. it is interesting to see the bond market pricing in the fact that the fed may be getting close to done. and you hear comments like this from tom barkin, says maybe we have some ways to go. how do you position for?

how do you position for the year with all of these moving parts? hedge have been good at it. in the last year commodities seem to be the go to bed, but this time clients profited by investing most in multi-strategy funds. many looking to do the same this year. here going to dive into the topic and talk about the industry trends for 2023. let's bring in donald steinbrugge. thank you, as always. it felt like the commodity market was kind of the go to macro hedge. led by a lot of these hedge funders. what happened to that? donald: obviously commodities did extreme the well. they decoupled from the equity and fixed income marketplace. people that allocated a lot of money to them did extremely well. i think going into this year you were going to be -- there is going to be a lot of demand for global macro and quantitative global macro managers, which are

cta managers. they tend to have a 25% allocation to those markets. jon: in terms of reassessing risk in the new environment we live in, how is that playing into hedge fund strategies this year and beyond? donald: you know, most people when they put a portfolio together and they have multiple asset classes, they put it together by coming up with their return expectations for each asset class, what their volatility expectation is, and what the relative correlations are between asset classes. you have a situation now where the fed is continuing to raise interest rates, people are predicting a moderate recession, and people said over the years, don't fight the fed. when you have the type of environment it increases the risk of tail risk. what does tail risk mean? it means the volatility that people are projecting for each of the various capital markets

and the correlations between those markets goes up significantly. you can have a much greater loss than you anticipate. so, reevaluating risk is trying to figure out how your portfolio will do if the market sells off. don't want to have another 2008 if you are a pension fund, you lost a lot more money than you expected. kriti: let's talk about that volatility. we are looking at a fix -- vix dropping to a 19 handle today. it is something expected to come down further, how do you factor that into a portfolio right now? donald: i think volatility is very important for performance. during the last decade we had pretty low volatility, and indices are active management. last year volatility picked up a lot. it was much easier for long/short equity managers and

fixed income manager thaad value to a trade. basically when you have high volatility you have a situation where an equity manager may buy a stock at 10, want to sell at 20. in a low-volatility environment might take a while to reach that price target. in a high-volatility market it is much quicker. hopefully that michael well below its intrinsic value, creating a better opportunity to generate returns. jon: also in a competitive environment the one we are in, where returns can be more challenging, talk to us about what you are seeing for the industry itself. it sounds like based on what you are hearing that a lot of the big bands are getting their fair shy -- fair share of the pie. donald: the hedge fund industry has kind of evolved in a similar fashion that the mutual fund industry or institutional investment manager -- management

industry has evolved. it is going to the largest managers, and that is not a positive. smaller, more nimble managers outperform. the reason this is going to the large managers is there is 15,000 hedge funds. institutional investors are being bombarded by telephone calls, emails, and they cannot sort through all of these managers, so they gravitate to ones they know. a lot of these managers are managing more money than their strategies can handle, which is causing the largest managers to not do well over long periods of time. to generate returns in hedge funds you have to do your due diligence, find the next stars, not the people that have done well over the past 20 years. jon: great to have you back with us. a lot to chew on. dan steinberg, founder and ceo of agecroft partners. a prolonged rally in the price of bitcoin giving crypto enthusiasts a smidge of optimism.

we have the details next. this is bloomberg. ♪

jon: this is bloomberg markets. i'm jon erlichman. time now for today's for what it's worth. we have a percentage for you. 10%. that is how much bitcoin has risen this month. the cryptocurrency has been on its longest winning streak since 2020. welcome news for crypto enthusiasts. we have just reported that two leading crypto exchange platform operators in canada have been in merger talks. that is according to multiple sources. if this deal comes together it would create a leading player at a time when volumes have been down and regulatory costs have been rising quickly for a lot of

these platforms. kriti: we know that is an issue you are starting to see around the world with a lot of these platforms, as fewer people are actually taking part and participating in the crypto market. we were talking about those falling volumes. take a look at some of the earnings coming out of robinhood and some of the ftx commentary. jon: in an environment like that consolidation seems inevitable. we talked about the competitive environment with hedge funds. arguably you get the same kind of dynamics in the world of crypto platforms. a lot to watch whether it is in the u.s., canada, or the rest of the world. kriti: i'm going to pivot to breaking news. we are getting comments from special counsel robert herr, saying he will conduct the probe on president biden with fair and impartial judgment. comments that we expected from him. that announcement made earlier from the attorney general's office, that robert herr is

going to be the special counsel for that biden probe. stick with us for more markets coverage ahead. for jon erlichman, i'm kriti gupta. this is bloomberg. ♪ we just got an order from a dinosaur, colorado. start an easy to build, powerful website for free with a partner that always puts you first. godaddy. tools and support for every small business first.

>> it is ppi day on the market. at least for now it seems like they like what they heard. another potential retest on the 4000 level on the s&p 500. will you remember where you are at 8:30 a.m. this morning? katie: big time, i was sitting on my couch, six point -- 6.65%. romaine: you have a couch in your office?