>> i'm john hyland with the first word news. janet yellen says she is encouraged by progress on inflation. she told reporters energy prices and supply chain issues around the globe have been easing. she is honest -- she is on a three stop africa trip aiming on boosting ties with the continent. the government has killed himself. the attack took place in a ballroom during lunar new year celebrations. the gunman try to carry a second attack nearby. the collapses are happening more often even if the events occurring are a small fraction of machines. the problems add hundreds of

millions of dollars in costs for the turbine makers. a possible setback in the push to it abandon fossil fuels. macron, moving ahead with the pension reform plan . more than a one million people talk to the stress less started to protest the plan and more set for next week. the u.k. prime minister has ordered a probe into the conservative party chairman's tax affairs. he says he was careless with his tax affairs following a report he paid a $6 million bill to revenue and customs. no probe follows allegations about financial impropriety and the ruling party that have undermined the plan minister's pledge to run and administration be approach. -- beyond approach. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm john hyland. this is bloomberg. ♪

>> welcome to "bloomberg markets." >> let's dive into the price action. an interesting day for the equity market. the s&p 500, just minutes ago, hitting session highs. this comes down to not a broad macro story, but instead a tech specific story. the s&p 500, one -- up 1.5%. the nasdaq, outperforming. this is a tech specific story leading the trade today. even those yields, moving higher, not affecting it in the same way. the 10 year yield, higher by 45 basis points -- 4 to 5 basis points. this is not anything necessarily to write home about. but i think absolutely is is the commodity story. an 88 handle for brent crude. up 1%. inching closer to the $100 oil story. today, all about tech.

>> it is a great point. we've got some great guests lined up over the next few minutes to talk about some of those technology themes playing out in the market. as for some other storylines we are watching right now, obviously the story of watching your bottom line has been very much in focus on wall street through earnings season. you've got the maker of rubbermaid gear up roughly 6% higher, new will brands -- new ell brands. it is a sobering time on the employer front. wall street tends to reward anything that suggests better bottom-line performance. we have seen that with spotify today on the news about roughly 6% of its workforce being affected by job cuts. that stock price up about 3% at this hour. xylem shares, down. western digital, on a possible

spinoff of the flash business, up about 8%. >> certainly something we will keep an eye on. one of the big movers today is a salesforce. taking a multibillion stake in the company, the firm, swooping in after a round of layoffs last week and a deep stocks wound -- stock swoon. the details around this stake are a little bit vague right now. what kind of changes are you expecting from elliott? >> i think the first focus -- we have already seen salesforce go down this right. it is to be a more profitable company than it is. not spending as much on marketing and -- on marketing as it start over the past years. that could be one focus. the second focus could be by backs. to have been spending a lot on acquisitions over the last few years. we could see if some discipline

-- we could see some discipline there. they generate a lot of free cash flow. six to seven billion dollars. >> in terms of the environment we are in right now, the ability of this company to make changes as the macro headwinds are raging, what are going to be some of the things to navigate while they are perhaps addressing investor concerns on the one hand and also trying to deal with the realities on the top line right now? >> i think it is a very good point you brought up. software is a very different world today than it's been the last 15-20 years. this is a subscription-based model. unless you see massive layoffs globally, they will generate a good amount of revenue. a good amount of free cash flow. you will see growth decelerate.

but it's not going to get into negative territory because of the subscription nature of thi s. from a free cash flow point of view, it is ok. but we do need to see changes in terms of executives. we saw a bunch of them leave. is there an execution risk? perhaps. but a far more stable business model than it's been in the past. >> let's talk quickly about the stock itself. a 156 share price. up about 3% on the day. how high could this share move? >> that is a very tough thing to say, depends on interest rates and the growth rate. of you see right now, it is trading at 35% below its pre-pandemic average. there's a big gap between its long-term valuation versus today. but they have to show accelerated revenue growth in order to get there. >> thank you, anurag rana,

on the salesforce story. it would take a look at the valuation of chip stocks, and focus, the u.s. players, rallying today as chip stocks rally on upgrades. when it comes to capital equipment stocks, like applied materials, the firm, less bullish. let's bring in mandeep singh to do a deeper dive on the nuances within the sector. given that divergence in opinion within the group, what do you have to know when you are investing in this group? >> the sentiment has changed completely from last year to the first three weeks of this year. this is probably the best performing sector. i guess the two factors i would call out our china reopening, that's a big one, everyone is expecting a faster device cycle,

people upgrading their phones, etc. then the data center, suddenly because of this mania, everyone seems to be bullish on the newer ai chips. we talked about ai, gpu's in the context of bitcoin a lot last year. that seems to have kind of gone down. now it is more about the use of these kinds of chips. those are the two positive demand drivers. i would caution here that in terms of revisions, we have not seen much positive revisions for any of these companies because they have not reported yet. a lot will depend on earnings. we have seen multiples expand in the first three weeks of the year that will mean nothing if these companies don't bring down good quarters. >> you mentioned a crucial part of it which was a chinese reopening, i want to say a year ago that was a negative thing, that exposure to that given the supply chain issues and geopolitics as well.

now that we are talking about reopening, do we need to worry about that exposure? is that a headwind? >> look, and i think in terms of the device cycle, that will certainly be a positive. we know the chinese consumers like to spend on upgrading their devices. so clearly that is a net positive. the question is, how much was already there in inventory? these companies, amd, intel, they took inventory write downs. nvidia as well. it will take three to four quarters to clear the inventory and this sector is anticipatory, so the stocks will definitely bottom ahead of the fundamentals. but we don't know if the demand and the fundamentals will improve in the second half. that remains to be seen. >> mandeep singh, really a great person to have on this day where chips are really moving the market in such a big way. let's broaden this out a little bit. one of the big issues plaguing the tech sector is the currency story. we are looking at supply chain

stretched across asia, coming from those markets, what the dollar does next is even more crucial. with more perspective, terry wiseman, joining me right here on set. the story of 2022 and arguably 2021 was this nonstop strengthening dollar. is 2023 the year where we finally see that reverse in full? >> yes, if we are talking about the first half, almost certainly. for the first half of the year, it's really been a story about the rest of the world doing better than the u.s. we have seen all sorts of indicators coming out from china, from europe, unlike the second half of last year, we are starting to see real traction with respect to the economic growth prospects for the other two regions. the non-us regions. in the case of europe, it might be just as simple as getting through this winter energy emergency. we seem to be getting through it pretty well.

stockpiles of natural gas are high in europe. looks like they will be able to get there without rationing. i think people will be able to put behind them a lot of the concerns about the industrial recession in europe. in the case of china, it is just about the reopening. also about the stimulus the policymakers want to provide for the economy, with the fact that they were not any way going to meet their 5% targets if they didn't do that. that is a good story for china and for europe. at the same time, the u.s. is now suffering under a little bit too much of the strain and the pressure from high interest rates. we see it in industrial production data and retail sales that are we getting. this is the main story behind why the dollar is weakening the first half of this year relative to the rest of the world's currencies. >> let's stay on that thread. in terms of the roadmap for the u.s. economy, what has your team been talking about for the duration of this year? >> we are going to see a recession, that's what the economists have been saying. i know in the last few days,

nurse talk about a soft landing that's been all the rage -- the talk about a soft landing has been all the rage, but there have been two real soft landings, by that i mean situations where we did not see a recession despite the fact that the fed was hiking. we didn't see a recession in 1984 after the fed rate hikes and we did not see a recession in 1995 even though the fed had risen rates that year. if you think about those two episodes, it was very different than what's going on now. there was not an inverted yield curve in those episodes. there was very much -- there is very much an inverted yield curve no. what that tells you is the fed might have hiked too much in this cycle. you are seeing it with the weakening of the economy. and we have not really seen a flattening of the yield curve yet. it is still == quite inverted -- it is still quite inverted. taking that into account, we think the u.s. economy will slow dramatically. you will see more evidence of

that the first half. even as china and europe do better, that will not be good for the u.s. dollar. >> what is interesting to me is if you are talking about a recession as your base case, isn't that by definition able case for the dollar? >> it typically is. we have seen recessions in the u.s. accompanied by recessions around the rest of the world. we are all familiar with the adage of when the u.s. sneezes, the rest of the world catches a cold. but that is the old days. there are engines of growth that stand apart from the u.s. europe's recessionary prospects were driven by the energy crisis. euro continues to do well going forward even if the u.s. does not. they are not going to have an energy crisis, that's not relevant to us. they can continue to come out of this slump. so will china. the world is a different place now. we can see de-synchronous patterns across countries with regard to growth. >> before we go, we've got an interest rates decision in

canada this week. in terms of the central bank messaging from other spots around the globe, as we watch the fed, how do you think that will play into the currency story? >> all central banks watch the fed. it is inevitable, to see what the fed is doing when they are contemplating what to do. that's because to some extent, they certainly don't want to trigger money market flows by not hiking at the same time the fed does. by the same token, they will look at local conditions. you mentioned canada, the situation, for example, because the u.s. can see a recession, canada can also see recession. it could be a much worse recession there, given the problem with housing. if they are facing the same conditions as the fed, they will be inclined to stop there hiking. -- their hiking. that is not the case in europe. they are seeing a better upswing and more durable upswing. as you can see from reading the tape, the ecb officials, if anything, have gotten more hawkish about their outlook for interest rates.

it's not a uniform story out there with regard to the other central banks -- with regard to what the other central banks are doing. >> thanks very much, terry. when we come back, citadel, achieving record-breaking profits last year. we will dive into the performance next. this is bloomberg. ♪

>> this is "bloomberg markets." citadel has broken a record by bringing in $16 billion in profit for clients in 20, marking the largest annual return for hedge fund managers -- for a hedge fund manager. r bloomberg wall street correspondent is here to break it all down, sonali basak. how did citadel pull this off? >> the double-digit gain they made at their flagship hedge funds, they had made these profits on a tremendous amount of assets. usually when you see gains like that, you don't have that much to begin with. this is also in a year where most strategies were down. what did citadel make money off of? not just the equities business,

but a lot outside of that, when you think of fixed-income, citadel has done a lot in terms of pivoting itself to add different capabilities. its cio came from goldman sachs. so you saw talent really shifting that way for a while. it is not just the fact that they made money, but how much they made. when you look at the $16 billion of returns, as reported by lch, it's double that of millennium last year. it has catapulted them past bridgewater. the gain is meaningful, about $66 billion compared to bridgewater's $58 billion since its inception. . you have to take a look at not only last year's returns, but the fact that over time, it's brought citadel to this new height. >> on the differences between citadel and bridgewater, there also seems to be a story about a widening gap between the players

at the top and the rest of the hedge fund industry. >> big time. you look at these top 20 funds, many of them have eeked gains in a year where most strategies were really slumping here. but you have to go past that and look at the hedge fund industry at large, because the top 20 managers according to lch account for almost 50% of the gains, that is 20 managers giving you 50% or more of the profits depending on what your it is. 50% overall since its inception here. worse than that, when you look at the losses across the industry, overall the industry lost. to the tune of about $208 billion. so hedge funds certainly lost money last year. and so you see the consolidation just adding into those top 20. by the way, you have to think about it in relationship to not just any money being

brought in this year, the leverage they have, but also the fact that the banks are also consolidating when you look at their prime brokerage businesses. and therefore there's a lot of factors here that indicate the big will just get bigger here. >> helpful to be watching. sonali basak, thanks as always, on the hedge fund scorecard. coming back, my social media interaction with elon musk over the weekend. we got a historical nod to the one and only delorean. this is bloomberg. ♪

>> time now for today's "for what it's worth." the figure today, $25,000, the price of the delorean when it first rolled out in 1981. that would be around $75,000 in today's u.s. dollars

the delorean had lots of fans, including elon musk, when i tweeted about that car on the weekend, he commented that he always liked the design and after christopher lloyd who played doc brown in the film, saying, he, too, was a fan. >> when you saw that, did you jump out of bed and to a victory dance? what was your reaction to that? [laughter] >> it's the watercooler affect that elon musk has one -- effect that elon musk has when he stirs the pot with his comments. many thought his cyber truck was heavily influenced by the delorean. many are wondering if there is more he's going to do. the other thing is you've got the entrepreneurial story of john delorean, elon musk. have been a lot of failed entrepreneurs building auto companies. maybe he always had john delorean in the back of his head as well. >> might have. i think the pricing to me is interesting. is that $75,000 in today's money, that is more expensive

than your average tesla. so, john, pretty exciting for you. i wonder if he's going to start getting a little bit closer to that design as we get a little bit more information about his back to the future fandom. >> no doubt. the delorean itself, trying to make its own come back. speaking of come backs, after the weakness we saw last year and technology stocks, this is going to be one of those key weeks in the market. we have tesla reporting results. you've talked about microsoft reporting results. ahead of those, technology stocks moving higher in the trade. >> shares are up about 9% for tesla in the regular market trading. $144 a share. green across the screen, the s&p, up 1.6%, the nasdaq, outperforming. yields up only about five basis points. nothing too exciting to write home about.

more markets coverage, ahead. this is bloomberg. ♪

romaine: a broad-based rally on our hands, are you excited? katie: there is conviction as we start the new week. romaine: not just the round number of 2000, the s&p 500 has reclaimed, the nasdaq which is out in front, only a few points away from its moving average, it would be more meaningful recapturing that we have been seeing on the s&p. katie: technology leading the way again. look at the