♪ ♪ romaine: the fed fueled rally began yesterday and is an extension of a rally that's in on hold in last five or six weeks. there was a relatively dovish. plot. jay powell yesterday added fuel to the fire. it's not the s&p 500 or the magnificent seven. it is the russell 2000, the s&p

400, it is all the beaten-down names with interest rate sensitive names in the interest rate sensitive sectors that have what they have been looking for and that is relief. you see that reflected in the two year yield, down 40 basis points over the last two days alone. further weakness in the dollar which works to the benefit of many of these corporations. look at the names that are moving. a lot of the interest rate sensitive names stocks like carvana and gamestop are higher on the day. real estate companies are up as well as the banks. jay powell and the fed, this is what they said in terms of interest rates and the idea the fed is now starting to see the market on his own terms and that's a market that wants to see lower rates. >> we did not discuss rate cuts at all.

>> clearly a disc -- a topic of discussion the world and a topic of discussion in our meeting today. >> no discussion, no debate on this issue. >> inflation is still too high and bring it down is not assured and the path forward is uncertain. >> should we lower our guard? we ask ourselves that question. no, we should absolutely not lower our guard. >> we still have a ways to go and no one is declaring victory. >> our past interest rate increases continued to be transmitted forcefully to the economy. >> i think you can say that there is little basis for thinking the economy is in a recession now. >> the economy is expected to recover because of rising real income as people benefit from floating inflation -- from falling inflation and great rates and improving foreign demand. >> given how far we have come, the committee is proceeding carefully.

romaine: jay powell and christine lagarde among the bankers we are from this week in what could potentially be a big pivot the market has. as you heard in those comments, both of the leaders making it clear that the fight against inflation is far from done. claudia sahm joins us now. this is the perfect time to have you on the program because i want to start off with jay powell because i think that took market by surprise. i think most people expected some moderation in the fed stance but this was clear, it was a pivot. at least based on what we saw in that dot plot. >> i absolutely agree. i think jay powell knew exactly what he was doing going into yesterday's press conference. he sounded a lot more like christine lagarde at the october fomc press conference and saying were not even talking about the cuts. things move pretty fast and reality is on jay powell's side.

there's been a massive amount of disinflation in the united states with unemployment low and growth strong and the fed sees it and they got good news on inflation just as weak as they went into their meeting. they are paying attention to it and it's the message he should be giving. romaine: when you consider how far with come in terms of inflation coming down in the idea the fed feels confident not to signal that the rate tightening cycle is over here, was that lock or was this about the way that powell & co. navigated this policy tightening cycle over the last year and a half? >> jay powell is not the person landing this plane. the entire cycle has at next to nothing to do with the fed. we got the inflation because of covid in ukraine and we are getting the disinflation because workers came back to work and the economy is opening up and he

didn't drilled oil or any of the things that need to be done to get supply going. that's what took the pressure off. the fed is having an effect but they are not the disinflation. it's happening and it has room to run still. romaine: i feel like the fed conversation is a good one to have because you can look at the economic data and see why the fed had to say what it said yesterday. when you look to the rest of the world to killian europe and we heard from the boe today in the bank of japan later, it's a more complex story. if the fed's signaling is done raising rates or to start cutting, does that take pressure off of those other central banks? >> maybe pressure -- i think it's complicated. >> the united states has led europe in particular on inflation. our inflation picked up faster and has come down faster. in someisturbances and it thinke

will catch up and make even further progress a we will get there but they are absolutely signaling patience and caution into next year. romaine: this gets us to the idea as to whether if the fed moves forward with this and the other major economies maybe don't find the ability or willingness to also follow them, does that create a disparity that could have economic consequences? >> to some extent, we are all in this together. the united states of the largest economy in the world and fed decisions had an effect on the interest rate risks around the world. it's not that europe, the ecb and the bank of england -- england will be bound to the fed

to cut but the reality is going to bring them all to the same place. the disruptions are widespread. i don't want to say the fed is leading the way in terms of what the ecb and other bank should do but it's further along in the unwinding of the distribution romaine: romaine:. do you think the fed will be the first big bang cut rates? >> i think the markets got too excited yesterday with jay powell. i am highly skeptical of them cutting in march. they are going to want to really see it painfully clear in the data and they will get two more inflation reads before march. given where they are at and you see it in the summary of economic projections, you had a big shift in the participants moved their risks. i think it's more balanced in terms of inflation up or down but this is the first time since

early 2021 when inflation picked up. that's a step toward being comfortable. they want to see more data and it's hard to tell. they will all cut next year. it will be the right time to cut so i don't know who and when but i don't think it matters so much. we've got a lot of strength and padding to deal with with the fed and europe doesn't have that same margin of error. romaine: christine lagarde certainly has a complex task than jay powell which says a lot given the navigation the jay powell had to do over the last year or so. always great to talk to you. looking at the ecb, the fed and boe and others. the bond market particular he has been in front of this group for quite some time. u.s. rate strategists -- strategist ira jersey joins us

now. i want to get your thoughts because i know a lot of people were looking at the moves in the bond market prior to this meeting and saying it was too extreme and too many cut in christ in and too many people saying the peak in rates was behind us. it seems now a validation of those moves. >> up some level but we priced and even more cuts so it's not that the fed caught up to the market, is that the fed caught up to the market in the market said we want more. right now, we're talking about maybe six rate cuts being priced into the market starting in march. i think maybe the market has gotten a little bit of ahead of itself. at the same time, the market is not very liquid now not only because it's how they season but the pipes the bonds have to go through are much smaller now than they were as compared to the size of the market. you're getting some of these extreme moves like the 26 basis point move into year yields we

had yesterday. everyone who is sure it now getting flat and now we will try to find a new level here to consolidate at least for a little while but we are not quite there yet. romaine: where could that level potentially be? we are still far from the lows of the year but we think we are still headed in that direction? >> are year and forecast were made back in september was about 3.76% so another 10 basis points from u.s. treasury yields. the big surprise has been how much to year yields have drifted lower. it's been about 50 basis points in a couple of days. that's really a sign that the market is really trying to discount a very dovish fed and i

expect the risk here is the fed will not be as dovish as with being -- as what is being priced into the market right now. i thought we were mispricing that a little before yesterday. the market definitely wants to seem to lean only in one direction now. near term, it's hard to fight the momentum at least for the next couple of weeks. romaine: always great to talk to you. the big move in rates is causing a big upside move in equities and could potentially provide a little bit of a ballast for the real estate market. we will talk about how new york real estate could be bullish next year. we had a chance to hear from ken griffin at citadel. he has >> >> a different outlook. new york is the financial capital of america today. it's new york to lose. having said that, miami i think represents the future of

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romaine: welcome back to bloomberg markets. looking at the big moves in the interest rate market which is already starting to take pressure off the stressed real estate market. earlier today, we learned u.s. residential mortgage rates got below 7% for the first time since august, commercial real estate rates also started to come down as well. let's talk to real estate developer nikki naptali. also abigail doolittle. great to have you on the program. coming out of the pandemic, there was a lot of gloom and doom about new york real estate and the city was over and we know there's been more

resiliency. when you look at economic conditions and what now appears to be a significant drop in interest rates, how does that help the situation in new york? >> thank you for having me. going back to 2020, i had one of my projects was on madison avenue and 79th street at. the time , i didn't know to sell the units. everyone said new york is dead and no one wants to live here. then i started to get phone calls from brokers and buyers that were calling our office. in september of 2020, the day after i got phone calls from some of my colleagues asking me if i feel good or i need to be referred to a doctor. re: you really opening a sales office in the middle of covid? we were sold out by the end of the year. since then, we did multiple projects in new york and all of

them sold out and i have now a pipeline i'm launching a 24 and 25. the interesting point of the market is there is not much inventory. there is not much inventory because the credit market is very tight. we are very lucky and fortunate to end 2023 with $850 million in construction notes on various projects. it is a very tight market. because of that, there is not much that is being ongoing and the inventory for the next year or two is really tight. abigail: in terms of the fed indicating they will lower rates next year, one of the first thoughts of my mind is that we could weekly see the real estate market overheat again. it sounds like the lack of supply maybe makes that not the case? >> it depends where.

in high demand cities like new york and miami, it -- you might start to see some movement in price. some of the buyers were just sitting on the fence waiting and mortgage rates were too expensive. i think we all agree in the next year or two, mortgage rates will start to go down. because there is not much inventory, the demand will continue to grow and when inventory is tight, it makes sense the price will go up. abigail: you mentioned tight credit out there and you are one of the only developers to have received so much credit, 850 dollars and other developers are having a tough time especially in the office space. do you think this indication we will go lower for rates will flow through or does it not work that way? will the pain for commercial real estate be fixed over the next 12-24 months or not? >> the commercial banks are very

conservative and they are very slow to react to changes in the market. the reality today, if any developer can get financing, it's really 50% from a commercial lender. how do you get between 50-100%? no one is bringing 50% equity to a deal. you step into mezzanine financing and other types of financing. i think it will take more than just a few months for the credit market to ease up. i think it will take may be between 12-24 months before the commercial banks will step in and start to open their gate to funds developers. romaine: i have to ask you about the interplay between new york and miami. i know you have big projects

down there as well. there was a fear that the boom was temporary. how is that working out? >> it's very interesting. definitely, some of the north easterners that moved to miami came back to new york. miami became, the way i see it, miami matured to a point of no return. there is basically almost everything you want in miami almost like in new york between culture and restaurants and sports and they have the beach. there is a lot to offer romaine: and jobs. >> exactly, to your point there is so much to offer, there is a flow of people moving into miami and south florida but not necessarily from new york. overall, the future of miami is very bright but it's all about supply and demand.

it's too much will be built, it will slow down because there is a certain demand. if you oversupply it, it will slow down. abigail: bringing it back to new york and how people say it will never be dead. you in prior projects converted offices to residential. we had this glut of class b and c so how easy is that to do? could that create supply for residential and help office issues? >> between 2000-2007, i converted a lot of office buildings to residential. it's very difficult, very, very difficult. it's more difficult than just building a new building. when you open a building that is 100 years old, it's so hard to predict how much it will cost because once you open walls, you find things

abigail: no one wants to find that. >> the floor plates are too big for residential. in residential, it's all about light and air. you can't create apartments that are way too deep because then they are dark and not efficient. a lot of the big office buildings are not convertible. you can't really convert them to residential and that's part of the problem. romaine: a great conversation and great to have you. someone knows more about real estate than anyone out there. our thanks to abigail doolittle as well. stick with us, we will continue to cover the big rally we are seeing across major assets including safe havens and commodities. that conversation is next. this is bloomberg. ♪

romaine: welcome back to bloomberg markets. a closer look at oil which right now is climbing off of the five month low. a bit of a two day rally after the fed aggressive right -- rate hiking campaign is over. commodities are more attractive as well. we will talk more about what's going on. a 4% rally on the day in a modest rally yesterday as well but it doesn't ignore the fact we had a huge selloff the seem to be driven by the fact that no one is buying oil anymore. >> this is a front month price rally becausecta's are jumping in and trading because of broader market sentiment. if you look at the time spreads which is the difference between front month contracts in the next one, traders still see a lot of bearishness going into next year. it's interesting to see the

front month prices are soaring. 4% is nothing to scoff up a when you talk to traders, they say is because everyone is waiting on the sidelines. romaine: so most of the price action is just opportunistic. they are not necessarily making longer-term bets? >> romaine: romaine: that's exactly it. we had the iea out earlier this year saying -- earlier today saying they are seeing a >> >> slowdown. opec is saying we will have strong demand next year but that's in contrast to their production cuts. some traders like the opec ones better because they have better research but as of now, it seems demand is to looking slow. that's with the time spreads romaine: romaine: are showing us. what is the supply situation now which has been disjointed by opec-plus trying to massage things.

in the u.s., i guess we are still pumping it out as fast as we can. >> at the end of the year, there are gulf states that have end-of-the-year tax requirements was has refiners and producers pushing oil on the market is much as pious test possible to put as much oil on the market as possible. that's flooding market and making more than ample supply in december and january. romaine: $72 per barrel right now. our most of the forecast would gotten so far for 2024 below or above that? >> they are a little bit above that. we are still on the lower end of things. people see an acceleration going into next year. romaine: a great conversation. a closer look at oil prices in the u.s., wti and nymex crude will cost you about 4% more than what it did yesterday. we will continue to break and

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>> welcome to bloomberg markets. romaine: let's get a quick check on the markets. the post-fed rally continuing on this thursday. some of the gains on the s&p 500 are fractional but at 4710, you are talking about the flirting with a record high. the dow jones yesterday closed

at a record high and it looks like it could do that again. the nasdaq at one point traded at record levels. the russell 2000 has a long way to go to get to a record but the performance we are seeing today is a good sign. it didn't -- it is a broadening out. another drop in the two-year yield coming on the back of an almost 30-basis point drop. in the u.s., back below the 4% level for the first time going back to july of this year. that is a look at some of the broader macro moves. i know you are looking at some of the individual stocks. jon: you have seen movement in energy stocks. the oil traders tracking what is happening in the bond and currency market. the fact we have seen a move in wti, more than 4% the last few days has helped chevron, which is up 3%.

top of the leaderboard within the dow is goldman sachs with investors generally putting money to work right now in wall street related players. let's talk about technology. that sector has had huge gains this year. adobe is not finding its groove. those shares are down 6%. the ai boost could take time. there are some worries about what the ftc might ultimately try to do. moderna has been a fascinating stock. up 9%. this team up on a skin cancer vaccine that is showing promising development is inspiring investors. romaine: a big move today with moderna. something we have not seen a while from that stock. we go back to the broader market conditions as the markets embrace the fed's clearest signal yet that the tightening campaign is now over. that is the pivot.

>> the die has been cast for this for a little bit of time because inflation is slowing more recently. the fed is following a rules-based framework where they are taking changes in inflation and the unemployment rate and translating that to expectations around the federal funds rate and that is basically what is happening. jon: let's discuss the market moves with a bloomberg -- opinion columnist. i was talking with a former fed official earlier today who said as much as there is agreement between fed officials now in the markets on the possibility of rate cuts, the market has some big expectations on a reverse policy compared to what was outlined by the fed yesterday. what do you make up where the

market is now and how it reacted to yesterday and what the future may hold based on what we are positioned? >> good to be back. i think there are some knowns and unknowns. the fed took a victory lap. they have handled inflation about as well as you can. the evidence for that is the breakevens. you have the five-year breakevens and tenure breakevens , both close to 2%, the fed's target. if the fed once a positive fed funds rate, let's say the market was right about 2%, that gives them a lot of room to downshift and the expectation is they will downshift. that is generally good news for everyone because that means lower borrowing costs, lower interest expense for companies. all of that is good for stock

prices. the rally we have seen recently is not surprising. however, i do not know if it answers the bigger question in my mind, what are we seeing from the market? a fear rally or a greed rally? you could take one of two interpretations. . you could say the reason the market is expecting a lower fed funds rate is it is expecting a softening and that could affect company earnings. and that is what ultimately will give the fed room to move interest rates down. or a could say something entirely different. the fed has engineered not a soft landing but got inflation under control without interrupting the economy at all. you could continue to expect strong economic growth. here is what i think people should look at if you want to know the answer of which of these two things it is, keep an eye on how quality does relative to value. .

if value does better than quality, you are looking at greed. if it is the other way, you will be looking at fear. romaine: it will take some time. value has risen up the ranks over the last couple of weeks but not the dominant market mover. i do think the question you pose is important. when you look at what is driving the rally, if it is indeed about the drop in race and the severity and that drop in rates, if you are -- fixed income and equity duration, would that give us a better sense that we are reverting back to what we were or will this be the start of a new cycle? nir: that is a good question. it will depend ultimately on where investors decide to play. will they play credit or term? will they try to play duration or credit?

that will go to what they think about the economy. in general, i do not think we set it enough, but it is important to say that historically credit premiums have been higher than term premiums. the exception issue have gotten paid well on term if you have been able to forecast for interest rates are going. i do not think anyone could do that reliably. that opens a door for people to put bets on the books and where you will see the bets expressed is on the yield curve. we are in a situation where the yield curve is inverted and with rates pushing down, we are effectively keeping that yield curve inverted. what that tells me is there has not been a lot of stomach to change the bets on the table but that is another thing to keep an eye on, the shape of the yield curve. that will tell you what the stomach is among investors. romaine: when you look at the health of the economy, is it really as healthy as it seems?

aggregate numbers paint a relatively rosy story or a story of stability, but there has been so much anecdotal evidence over the last few months where there are huge pockets of the economy suffering. households that have dialed back spending, they are not seeing the same levels of savings in their bank accounts and are not necessarily seeing the same wage gains they hadn used to. nir: it is a really important question and it points to two different things. you have structural issues and cyclical issues. the cyclical issues, to some extent what has kept this economy going is consumer spending. that is probably a hangover from the excess savings and stimulus we got from the pandemic. now that it is largely out of the system, we will see if consumer spending can continue going the way it has. there is a bigger structural problem, in my opinion.

macroeconomic signals about the economy, productivity has become disconnected with what is happening to everyday workers. when you look at wages underneath and in terms of what is happening in the median and on both sides, what you see is a lot of people in this country -- whatever is happening in the broader economy is not trickling down to everyday workers. you do not have to care about that from a wage perspective necessarily, but you do have to care about that from an economic perspective in an economy where 70% of the economy is consumer spending. romaine: always a wonderful conversation and always too short. nir kaissar over at bloomberg opinion. a discussion about macro conditions fueling a rally. we will take a closer look at the crypto space where fred thiel will be joining us. the ceo at marathon digital

holdings to talk about the bitcoin mining business and what is next. that conversation up next right here on bloomberg. ♪

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all so you can trade brilliantly. jon: this is bloomberg markets. time now for our stock of the hour segment. stocks tied to cryptocurrencies like marathon digital has had a huge move in the last couple months. we have talked about the big gains from bitcoin, part driven by etf excitement. bitcoin itself has rallied 150%. marathon digital's gain has been more than double.

romaine: we continue to see the rally with a lot of those crypto assets pushing higher. joining us right now is the ceo of marathon digital holdings, fred thiel. one of the largest bitcoin mining companies. he joins us in studio 2, live from new york. the moves we have seen from crypto assets seem to be tied a little bit less to general speculation that may be drove other rallies and more tied to the regulatory aspects. . a bitcoin etf might finally be in the cards. maybe regulators will show their cards, put them on the table and give the market, the industry the guidelines they have been looking for. fred: we have seen the bifurcation of bitcoin from crypto. the regulators seem positive toward bitcoin. we are seeing discussions between the sec and the etf providers down to the technical details of how they will do a reimbursement, cash, etc.

the recent filings blackrock has done with ap's and the banks being treated as ap's. the market is pricing it in with a 90% certainty. jon: against that backdrop, fred, in terms of the investing landscape, how does a company like marathon digital, as a stock that is tied to crypto at a time we are talking possibly about the proliferation of bitcoin-related etfs, is there more investor awareness for marathon the come through that process? fred: absolutely. what investors tend to look at is if you are looking to stack and put your savings in bitcoin and etf is a great vehicle. if you are a traitor, you want something with a bit -- if you are a trader, you want

something. warren buffett famously said i do not buy gold but i buy gold miners because your cost of extraction is fixed. bitcoin miners are hugely profitable. as the lead into this segment, you saw bitcoin was up 150% and we are up more than double. romaine: what is the relationship you have with the crypto holders and some of the other funds that are not necessarily on the mining side. fred: we do not have a relationship, per se, with them. but if you hold bitcoin, you will only get the appreciation. if you hold the miner, you also get a portion. a stock like ours, we trade anywhere from 30 million to 50

million shares per day. we are attractive to be able to do that. romaine: does having an etf spot, multiple etfs in that space, does that take away from the attractiveness of buying marathon digital directive leak? -- directly? fred: there are only 21 million bitcoin that will ever exist. we have already mined 19.5 million-plus. jon: what can you tell us about your own plans on the mining front given there is so much a bullish conversation around bitcoin? how is that impacting 2024? fred: we had two goals in 2023. energize. think of that as crippling our capacity and optimizing our cost

for bitcoin. we will do more of the same in 2024 and 2025. we intend to expand considerably. we will. . be a consolidator in the business acquiring potentially miners and assets that are attractive and owned by people who want to exit them or cannot afford to keep them. romaine: that is my turn. do not worry, i am paying attention. as we get into next year, let's say we get past some of the approvals a lot of people are looking for. the other big overhang was the regulatory rules themselves. who knows if we will ever see those before the administration's term is up. do you worry that the folks in washington, whatever they are cooking up could work against the industry? fred: i do not worry so much about the sec. bitcoin is different from crypto.

crypto is where the regulators' focus has shifted. romaine: you are confident they made the distinction? that was the criticism early in the process. everything was under the same umbrella. fred: bitcoin, clearly -- he says i do not regulate bitcoin, it is a commodity. is anything you have to look at the market participants. exchanges, brokers, dealers, and the sec is focused on trying to separate brokerage custody from trading. where i think you still have some risks is on the banking side. senator warren has been vocal about her belief that bitcoin is funding terrorism and bitcoin miners should register like financial institutions, which we think is totally wrong. romaine: does it bother you? it seems like some of the bankers -- some of them were anti-crypto -- what the entertain the idea that if their clients wanted it they need to

entertain it. but they seem to be shifting that this is about terrorism. fred: it is unfortunate that the dialogue has started that way. much more terrorism is funded with u.s. dollars and traditional wires. bitcoin is fully transparent. you can see who has it, where it is going. the department of justice loves bitcoin because they can track every single dollar. the israelis love bitcoin. hamas effectively told their people, do not trade in bitcoin. jon: we have to leave it there but we appreciate the perspective. fred thiel, marathon digital ceo, joining us. coming up, some of my conversation with scott thompson. this is bloomberg. ♪

jon: this is bloomberg markets. time now for today's for what its worth. how about 25? the number, at least, with which scotiabank operates. the canadian bank is known for its international focus. the new ceo, scott thomson, just announced plans to focus more on north america, including the u.s. here is more about what thomson told me about what he sees in the u.s.. scott: 10% of our net income comes from the u.s. we are the 10th largest foreign banking institution in the u.s. it has been a big part of the bank. we have done a really good job over the last three or four years building up those capabilities. point 2, the u.s. provides a great opportunity for us to connect platforms.

one thing we talked about was reallocating capital from latin america to north america. part of that will go into the u.s. the u.s. business has bigger feed pools for our organization. there is an ancillary business that is greater than in latin america we have a chance to build a greater relationship in the u.s. than what we have in latin america. another area we will focus on his wealth. we have a great canadian platform. in latin america, we also have a great international wealth business that is a 30% roe, growing at mid-teens. creating that connectivity for our clients in canada, u.s. and mexico will be really important. jon: the fact that you have this focus on north america at a time when there is a lot of questions about the geopolitical landscape

going forward. we have heard a lot about a more deeply integrated north american economy because of some of those global stories we keep hearing about. was that one of the considerations in the back of your mind while you were leading out the strategy? scott: it was. our competitive advantage is we have a great bank in mexico. we are the fifth largest bank in mexico with about a 10% share. we have been there for a long time and it is great returns for our shareholders. that is point 1. point 2, the megatrend of the u.s., canada and mexico is real. 800 billion between canada and u.s. and mexico and u.s. i was in mexico city a few weeks ago and we had a client event and the amount of capital coming from china to mexico on the back of near shoring is material.

that is point 1. point 2 is a lot of are commercial clients in mexico deal in the u.s. and a lot of are commercial clients in canada deal with the u.s. similar to what you see with the pipelines and the rail companies, there is an interest in connectivity across those three countries. jon: the scotiabank ceo scott thomson talking with us earlier today. you think about making bigger bets on north america. this is a new strategy from a new ceo based on capital allocation and a higher for longer interest rate environment and he is seeing more opportunities in north america. romaine: that was a great conversation. one of the biggest banks in canada. i will have an interview tomorrow morning with the oldest bank in the u.s. which traces roots all the way back to alexander hamilton in the 1700s.

alexander hamilton not leading the bank anymore, robin vince is. i will have his take on where things go in 2024. jon: we look forward to that. this is bloomberg. ♪ (announcer) enough with the calorie counting,

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romaine: this is what it sounds like when doves fly. i am romaine bostick. katie: i am katie greifeld. we have an interesting market on our hands. we started higher today and we just turned red on the s&p 500, currently off my .1%. big tech currently down .6% on the nasdaq 100. even though you have the bond

rally