>> welcome to "bloomberg: markets." let's get a quick check of the markets. green on the screen. s&p 500 up .7%. earnings stories, really starting to shine. we will get into them during the course of the day. 10 year yield back towards 4.15. it has slowly been climbing higher. many investors debating the value of that longer derated

bond. the u.s. down .4%. new york crude. interesting movements. 1.9% higher on the day. it has been volatile. we are back above the $75 level. we have not seen levels this high for weeks since the end of december. i want to look at the midday movers. things moving the equity market. netflix earnings beating expectations. the stock up 12.2% higher on the day. it is not the only place you see love in the technology industry. microsoft hitting fresh records. $3 trillion in market cap. meta platforms as well. up to .2% nearly on the day. fresh records propelling its market value to $1 trillion for the first time since 2021. both companies reporting earnings next week. asml on the rise by more than 10%. a gainer in the semiconductor index. nasdaq 100 and getting so much

love. some economic data showing encouraging lines for the fed rate path. abigail doolittle is here to explain. >> we do have pmis out for the u.s. manufacturing pmi back in expanding territory. it had been in contraction. the composite pmi for the month of december, i think that is a preliminary for january -- 52.3. from a global perspective, we still have some uneven economic activity. u.k. is in expansion. the eu below that 50, 47.9. the eu economy still in a contraction. germany a big piece of it. a little bit of an expansion in japan. let's break down u.s. pmi ahead of the ism release in two weeks or so. there is not an overall composite. there is manufacturing that has been in contraction in services.

we are not moving in the right direction off of the pandemic peak, where we had the overall pmi close to 70. a booming economy off of pandemic lows. sort of trough lining here. but going into the 40's in that contraction area. the expansion on the 50 or so, above 50. probably just right for the fed. enough economic activity, but not too much. people are thinking we will have this soft landing. something i have not heard folks talk about is the commodity index last year in particular down more than 10%. this is the bloomberg commodity index in white. in blue, the nasdaq 100 off of its october 22 lows, nearly 6% -- up nearly 60%. you can see the divergence. the red trend line marking the line for commodities. both for vincent piazza and mike

mcglone, both say the move lower for commodities is demand driven. which means the global economy is not as strong as we would expect. the pmi's still in contraction territory. i've heard some of these experts say they think there is a chance commodity weakness can suggest there could be some sort of recession ahead. what would that mean for stocks? let's see if we get that recession. everyone seems to think there is a soft landing. the commodity complex in a world of hurt. sonali: but a lot of green on the screen. conflicting signals. we will discuss those conflicting signals with claudia som. we were talking about that weakness and what it signals ahead. you have been pretty confident a soft landing could be achieved. if you see these signals in the market, you draw concern? claudia: i think the news we got today is encouraging. what the fed has been looking for is a rebalancing.

those manufacturing pmi's in 2021 was because we had the massive shift from services to goods that was disruptive. that is not balance. to see us getting into something that could be sustainable, that is extremely heartening. there are mixed signals about it. i'm glad there is more flashing green than flashing red. yet nothing is guaranteed as we go forward. sonali: flashing green over flashing red. when you look at the data and what you see in the economy, how much confidence does it give you that things are running at -- not too hot for the fed to start to cut? claudia: the fed finally, after an experience last year with huge disinflation and growth stayed solid. frankly, above trend. at the last prince conference of december, -- press conference of december, jay powell said we don't believe we need below trend growth to get inflation down. that is a big deal. they can look at it as rebalancing and not wow, this

will be so hard to fight the last mile. that has not been the case. there is good reasons to expect it not to be a problem going forward. this does not look like overheating. sonali: let's talk about some other indicators. just this morning, -- at apollo center wrote a note that said the fed had used the taylor rule framework to understand funds rate. at the current level of inflation and unemployment, it shows fed funds should be 4.5%. that is the case for the march fed cut. what do you think of that? >> ben bernanke tells the fed what they should do. that is not how the taylor rule works. it is an imperial regularity, the fed looks at it, they look at a bunch of different versions of it. to see relative what the feds have done in the past. but right now is not like anything in the past. i'm encouraged to see it. it makes sense given the improvements we have seen. we have the real fed funds rate,

the inflation-adjusted. we are on track to have that peak. the taylor rule is like no, inflation is down lower, unemployment is a sustainable place. it is a good piece of information for the fed. it is one that they have and will continue to override if they think it is appropriate. sonali: how do you think through the upcoming economic data, particularly the fed's preferred gauge? >> the consensus forecast for both total pc inflation and core pc inflation is to have a two handle on both of them. the target has a two handle, also. we are getting close. it is not a slamdunk. i have argued, and i think it is appropriate the fed begin cutting. they said they were going to do it before 2, and we are not that far. we will take the data. inflation is what everyone is looking at. the fed is. it makes sense. we are getting good data, finally. sonali: you believe the fed

should start cutting, how much and how soon? where do fed funds end this year? >> the fed is going to want to proceed gradually. i don't have a problem with that. i have a problem with them waiting until it is painfully obvious that inflation will be too. i think that is a mistake. monetary policy has some lags, we can argue short or long. but there is some. they are putting millions of jobs at risk by digging in their heels and not cutting. once they get going, gradual. but if they wait until it is painfully obvious, they may have to go faster in the second half of the year. fast is disruptive. let's just get it going. 1.5% in a year off makes sense. they have at least 2% above what they think is neutral. sonali: feels like a long year ahead when you think about the risks to that soft landing scenario. what are you concerned about? claudia: the fed.

it is not the fed going straight at consumers. american consumers are going strong. retail sales look great, jobs are holding together. but some worries, some signs. there is still a lot of pressure on credit markets. it was a big increase in interest rates. some products will have to be refinanced or renegotiated, like the commercial real estate loans. it would really help the markets of the fed backed off a little bit. i'm worried they will break something in financial markets. that could feed back through to the economy. so far, so good. sonali: you think about march of last year, a lot of people did not see that coming. consumer credit just in credit cards has surpassed $1 trillion. and you're barely feeling the bite of that. you're just starting to see the delinquency rise to pandemic levels. do things get bad from here? >> no one can predict the financial crisis.

something breaking. there's always something lurking if enough pressure is put on it. i don't want to hazard a guess what that is. i will say in march, the fed and other regulators move really fast with silicon valley. they have to contain -- they put some really generous terms on the landing to get it under control. we might not be that lucky next time. i just think they are pushing their luck. and we have not had a real great run of luck the last four years. sonali: claudia sahm, thank you very much for your time. a lot of economic data still ahead and a big fed decision. coming up next. we will talk to tyler dixon of citigroup to discuss the 20 for ipr outlook and the m&a outlook appetite. this is bloomberg. ♪

sonali: this is "bloomberg: markets." corporations around the world are banking on a remount of almost every deal market. but is it here yet? is it coming? to discuss more is tyler dixon, citigroup's head of banking. there has been this big talk about a return of the m&a market in particular. what does the future look like at this point? the pipeline moving forward? is it as significant as people think? tyler: the backdrop is very favorable. we are optimistic about m&a, equity capital markets, and debt capital markets activity. it is early to declare victory. what we like the secondary market conditions.

we have spreads and rates and equity prices where we want them to be to create a constructive backdrop. when we talk to corporations, the ceos and boards we are talking to want to take advantage of the market conditions. if they see that continue, we will see more activity. if we see continuation and m&a off the back of the progress in the second half, more technology, more health care more energy deals. we are more excited about clients being prepared to act. sonali: those are a lot of sectors you named. one big question has been the private equity industry. can they get deals done in this environment and for the valuations they would like to with the financing terms they want? tyler dixon -- tyler: great question. the backdrop of stable interest rates and stable spreads, and the view that we are past peak interest rates and the likelihood rates come down creates a backdrop or tailwind for private equity to step up. many have a responsibility to return money to their lps. so we are seeing a big uptick in

activity of them wanting to divest and monetize. we are frankly also seeing it in the equity markets. if they continue at this pace, we will see more ipos on the sell side from financial sponsors and with the strong bid we are seeing in dcm, the story has been about dcm, we will see investment grade markets work. more portly, leverage finance markets will work. if they were, our financial sponsor friends will be active. sonali: ecm, let's start with that ipo market. we have names coming to market. even in a week from now and the next couple of weeks, it is interesting. do you think investors are going to be happy? the ipos we saw at the end of last year kind of struggled. tyler: we talked about it, we thought we saw some green shoots, then light green, then yellow. we are in a different market. we have several billion dollar plus ipos on the road. i think ipo market is ready.

i think we are seeing secular growth stories that have a combination of profitability, scale, and growth. the kind of things that will open this market. it is premature for us to predict how this will play out. we have a strong equity market backdrop. you know the story, high valuations, high multiples. if we bring these deals at fair prices, we will see the data points we see in the first quarter to create a foundation for the second quarter. most of the ipo committee we are working on right now is scheduled for the second quarter. but we are pulling it forward. if the market holds, we will move faster. sonali: is it partly fear? you look at the market and think why is it so calm? there is a lot going on in the world, also a u.s. election around the world. do corporates feel like they need to move faster to get to market? tyler: i don't think it is fear. i think it is opportunity. as we talk to the clients who are moving forward, i think they see a robust market backdrop that gives them the opportunity to move into a position of

strength. certainly we are in an uncertain world. what has happened is the corporations and sponsors we are talking to and investors on the other side have come to grips with the fact we will be in an uncertain world. folks are ready to act. the disconnect between buyers and sellers is coalescing into a shared view of valuation. understanding there is risk out there. and if they can get the job done at fair rates for both sides, we will see activity in the first half. we are in an environment where geopolitical risk is an issue. we know when the u.s. election is important, we also have 50% of the free world doing elections. politics will play a role in the second half. adding our business done in the first half is a priority. sonali: you mentioned ecm. now dcm. we are in a month where we are close to hitting all-time records in investment grade issuance. do we had that mark, and does it continue into the end of the year? tyler: i hope so. $170 billion january year to date is off to annex ordinary

start. with rates where they are, where spreads are, and with pricing working how it is, primary new issues coming through, that will pull forward a calendar that we think will make sure the first quarter is very busy on dcm. it has been pretty much an investment grade story as you know. as these conditions prevail, you will see more on less than investment side and less meant -- leverage finance market with additional financing in front of the wall of debt coming in 2025 and 2026. sonali: leverage financing is an important question. private financing has been hoping for the banks to stay in business to get into these deals. how are you interacting with that rivalry that has crept into the market? tyler: it is a great question. we think there is room for syndicated bank deals. we think there is room for private credit. we certainly see different companies having different needs, finding each of those paths appealing. you also see creative ways where

the combination of banks and private capital who have been good partners in recent years being even stronger partners in finding hybrid solutions in this market. we are excited about the opportunity. there is plenty to play for. the banks will have a lot to do, private capital will have a lot to do. in many cases, the private capital firms are some of the best market clients. sonali: i will mention something we have not talked about, the spac. the reason i'm talking about it is two fold. one is the sec is coming with new rules that make it harder for spac issuers, make it more family for investors. we also see a lot of spac bankruptcies. how do you feel this whole story in the spac has played out and do you think it is a word we will see much of in the future? tyler: from our perspective, in the right place with the right sponsors, spacs, what we call it, prepacked ipos -- with the right sponsorship, can and will

play an important role in the markets. probably not at the peaks we have seen in the past. but it is almost back to basics. spacs existed for a long time before the boom period. they fit into a particular set of companies with a particular set of needs. they work well with sponsors who have a track record. i believe it is important to make sure they meet the needs of regulators, investors, and in those circumstances, you will see activities. rumors of their death are greatly exaggerated. at the same time, the likelihood they play a small role rather than a big role in capital formation is argued. sonali: a lot of hope under this market, even areas that have struggled lately. i will make you do something you may not want to do, pick your favorite child -- your investment bank. if you had to pick the first half of the year what investments would drive the year, what would it be? tyler: in this favorable market, i have 4 children, so i get 4 picks. tech, health care, industrials,

energy. i love my children differently in real life, and i like them differently in the capital markets i live in. sonali: tyler dickson, thank you so much. still ahead, tech is roaring higher today with a number of magnificent seven stocks reaching new all-time highs. this is bloomberg. ♪

that first time you take a step back. i made that. with your very own online store. i sold that. and you can manage it all in one place. i built this. and it was easy, with a partner that puts you first. godaddy. how am i going to find a doctor when i'm hallucinating? what about zocdoc? so many options. yeah, and dr. xichun even takes your sketchy insurance. xi-chun, xi-chun, xi-chun! you've got more options than you know. book now.

>> as the legacy media companies pull back on their own streaming efforts, they are seeing their legacy businesses -- cable, television, under pressure. they are licensing more content. last night, you saw warner bros. discovery's licensing -- everything is for sale. so the amount of content flowing onto netflix is exploding. we really come full-circle. it is like back to the future day.

five years ago, everything was on netflix from third-party companies. then there was nothing. now we are really right back to it. sonali: that is rich greenfield last hour on bloomberg technology speaking with caroline hyde. sectors ripping higher. a number of stocks and valuations hitting an all-time high. caroline is here to discuss whether the heat can keep coming ? when you look at the love netflix is getting. it is one of the biggest gains since october. a significant rise. if investors are thinking about what is going to drive the company forward, what ultimately is it about this play that is so attractive? caroline: netflix is firing on all cylinders. this is not so much a question of what netflix is doing right, it is how much they will take away from the competition. the fact so many other companies, think about paramounts, warner bros., how will they do the streaming, or should they call it quits? at what point will they, and how

much more money will they pulled into it? but netflix, how many more subscriber growth can we see? they are downplaying how much growth we are seeing in the current fiscal quarter. but netflix has recovered and 2022 was an absolutely disgusting year for the stock. it managed to power higher. analysts thinking you should be buying the stock. but look at some of the market moves on other key tech names. meta above $1 trillion for this time again. we have not seen since 2021. a $3 trillion market cap for microsoft. vying for the top spot. alphabet at a record high. there is just no end of ambition and exuberance from an investor base. even though we see the relative strength index is of some of these companies showing they are way overboard, they continue to rise. sonali: some big catalysts coming up. meta or microsoft have not

reported earnings. other tech players have not and are still rising on the day. how much interest is it for investors who are plowing into the stock? caroline: these are the members of the magnificent seven that have led 2023 to be this stellar year it was. how much can you keep on getting? for many, zero analysts on alphabet or on microsoft say sell three say sell meta. people feel you should be putting money into these companies. tesla comes after the bell. will we see any read across ai exuberance? we can see them coming after the numbers drop after the bell as well. what will we hear in terms of revenue streams being pulled from generative ai? that will be a fly in the ointment. but for now, analysts say keep on going. sonali: it is a new day. that is caroline hyde. thank you so much.

shifting gears to the global shipping industry. it is in flux as red sea risks forced tankers to take alternative routes. we will discuss the risks to inflation next. this is bloomberg. ♪ when you automate sales tax with avalara, you don't have to worry about things like changing tax rates or filing returns. avalarahhh ahhh

you can make money the hard way as a bullfighter or a human cannonball... or save money the easy way, with xfinity mobile. existing customers can get a free line of our most popular unlimited plan for a year! not only will you save hundreds but you'll also be joining millions who have connected to america's most reliable 5g network. sure is a lot safer than becoming a stuntman for money. get a free line of unlimited intro for a year when you buy one unlimited line. plus, get the new samsung galaxy s24 on us.

sonali: this is "bloomberg: markets." we are looking at hot markets. nasdaq 100, stoxx semiconductor index hitting highs. s&p 500 very close to the highs of the session. abigail doolittle is here to break down the midday movers. abigail: we do have the nasdaq 100 flying high. the s&p 500 on netflix up after they put up a great fourth quarter and included 13.1 million subscribers. they had been looking at a decline in growth, the showed

growth, -- slowed growth, password crackdown. those shares having the best day since october of last year. you can see the entire complex, the magnificent seven. peace is doing well ahead of reporting next week. microsoft itself above the $3 trillion market cap. it is not just technology. the first few stocks we will be looking at that are higher our technology. asml holding. it is up 10.5%. the best day since 2022. a great quarter. orders for the equipment to make chips were stronger than expected. that can be a positive sign for the chip industry overall. and the economy, quite frankly. tesla up one point 2% before reporting. earnings expected to be down 39%. sales up 6%, pointing to the price hikes weighing on margins. but boosting sales. to the downside, it is interesting.

talking about chips being the potential side for the economy. dupont preannounced this morning ahead of reporting two weeks into the future, basically saying their first quarter is missing what was expected, the guide for it. that has to do with weakness in china and some of their clients are overstocked in terms of inventory. it sort of reminds me of 3m, all of these tentacles in the old world. some ceos are talking about weak demand. banker he was, a disappointing quarter. for the most part, we have strength, but there is a balance in terms of disappointment around earnings. sonali: earnings suit -- earnings are not over yet. a big story of today. donald trump on the cusp of clinching the republican presidential nomination after a victory in new hampshire. nikki haley's only remaining challenger faces an uphill battle next month in her home state of south carolina.

here's former house speaker kevin mccarthy and what he had to say on bloomberg surveillance. >> she's losing south carolina. at the end of the day, i don't think nikki haley wants to lose her home state that badly. i think she will pull out. i think it is difficult for her to win the majority. sonali: kailey leinz is in new hampshire and joins me now. set us up for the south carolina issue. kailey: it is four weeks away, a month from today. on february 24. the message from nikki haley was even though she did not win in new hampshire, fell behind trump by 11 points, even with the large base of independent and more moderate republican voters, that she has every intention of taking the contest to her home state. she has the resources to do it. she raised $1.1 million after ron desantis dropped out of the race over the weekend. she had a lot of cash on hand before that. in new york, there will be a big

fundraiser for her led by well-known names. stanley druckenmiller will be participating in that. if the money keeps flowing, she can stay in the race. the question will be whether or not she wants to. as we heard the speaker saying in her home state where she's pulling more than 30 points behind donald trump. is she going to want to face the political embarrassment? and she withstand the tax increasingly if she's likely to get from trump space of supporters and more establishment republicans coming out and saying everyone should get in line behind trump as he is the presumptive republican nominee. sonali: another question i have about geopolitical news, is the conflict tied to the middle east coming up on the campaign trail? should nikki haley have been playing up her expertise more in international affairs? kailey: what we have seen is top of mind for voters is not foreign policy, it is the economy and immigration tops the

economy for many voters when it comes to the issue of border security. nikki haley still was playing up her former -- foreign-policy experience to the u.n.. what was interesting in new hampshire, if you look at the exit polls that came out for those voters who said foreign policy was the issue that mattered most on primary day, 62% voted for nikki haley. only 37% for donald trump. it is an issue. one for biden as he navigates the conflict and has to worry about what it could mean for the u.s. economy because of the inflationary risks it presents. sonali: kailey leinz, we will keep an eye on your coverage. moving to today's big take. after two months of missile and hijacking attacks against civilian chips in the red sea, it is causing controversy of international trade, pushing up cost for shippers and fueling fears of broader economic fallout. if it is not a campaign issue, it is a risk to the market. we will discuss it with the

managing director of national industrial research at newmarket. there is a lot at question. commodities very volatile on the back of a lot of these issues. we see an impact on shipping routes. what does it mean for pricing moving forward? lisa: thank you for having me. geopolitical issues are supplanting economic efficiencies as the primary driver of goods moving through the global supply chain. not just at the suez canal, because it was happening in the red sea, but you add the canal with drought conditions. you ultimately have an impact to travel time and cost. so we are very focused on watching where the cost go over the next few weeks to months. they've already increased substantially the baltic index, which is a great indicator of global shipping costs overall.

139% since mid october to present day. so this really does have ramifications going forward. depending on how long the issues persist. sonali: it is worth pointing out some of the numbers, the 500 container ships that would have sailed are now adding two weeks to their routes. it is about a quarter of all container ship and capacity in the world. do you think investors and companies are not realizing the delayed effects? lisa: we are unfortunately bound by delayed data in a lot of respects. i keep watching to see what the import impact will be on the u.s. ports. while we have data for september, october, november, some data is still coming in. we probably will not see those impacts and import volumes in the u.s. until three or four weeks from now and going forward.

it is a difficult situation because delays are really driving a lot of uncertainty as to where i should bring goods in, if i should divert goods, deploy more ships to bring cargo forward sooner. there's a lot of questions and scrambling. ultimately for the industrial market, the diversification of gateway markets really adds optionality for shippers. so you need to prove it because of unforeseen circumstances. you have space in place to mitigate the biggest impact from those delays. sonali: people are looking at inflation and inflation data and seeing signs of cooling. how does what we see in the shipping rates and other costs tied to these delays throw a wrench in that?

particular when you say we might not even see the ultimate effects for another three or four weeks? lisa: i do want to point out while we have seen shipping rates increasing, skyrocketing, i would say. we are still in a much better place than 2021 and 2022. when you're talking about spot rates being a couple thousand dollars, that is a substantial increase from october. but it is also a fraction of the height of the pandemic. i think we are in a different place where the impact ultimately, and it depends on how long it is. but the overall impact will not be anything like we saw in the height of the pandemic. it is just a matter of the path of least resistance to get goods and how expensive it is going to be. for example, there are a lot of segments of retail that are very time sensitive.

and do not have the opportunity to sit around rerouting between good hope. so you have to pivot to air travel in that respect. airfreight costs are five to 10 times more expensive than cargo shipping across the state. it really does depend on how long this particular set of circumstances persists and how retailers respond to demand from consumers as well. another difference from where we were at the height of the pandemic is demand has normalized. we are still seeing very resilient consumers in the u.s. but nothing like the peak of 21 and 2022. sonali: lisa denight, managing director at newmarket. coming up next, we will talk about tesla's targets for private and cash flow. they may need a significant reset for 2024 following today's earnings. our stock of the hour is up next.

this is bloomberg. ♪ to elevator music all day or deal with payroll compliance? payroll compliance, for sure. gusto automatically calculates and files my taxes for me. hold up, compliance? easier? choose payroll compliance without the ups and downs.

it's easy to get lost in investment research. introducing j.p. morgan personal advisors. hey david. connect with an advisor to create your personalized plan. let's find the right investments for your goals okay, great. j.p. morgan wealth management.

sonali: this is "bloomberg: markets." it is time now for stock of the hour. the nasdaq 100 sitting near session highs. it could get a push in either direction after tesla reports earnings after the bell. the company's outlook for 2024 deliveries are under the spotlight. so are signs for more affordable models down the road. bloomberg technology cohost ed ludlow joins me. how are investors position for today? ed: going into this week, tesla has been the biggest drag in

2024 and the s&p 500. from a percentage basis, it is the third biggest decliner in the s&p 500. it is interesting, the fourth quarter was a record quarter. they beat there for 2023 goal of producing 1.8 million ev's. but the story around ev has changed. even if we expect growth in sales, we don't expect as much this year. the outlook or guidance, look for tesla to either reiterate or leave out this idea of 50% compound average annual growth. if they stick to it, it would mean they are on track to produce or build 2.5 million evs in 2024. but as you see there, the estimate is well below 2.5 million from a production standpoint. sonali: e thank you for your time. d, -- ed, thank you for your time. we will bring in dan leavy. you are a man to be swayed. in either direction. when you think about the bell,

what are you most concerned about? more downside risk? this is still a stock that doubled last year. dan: thank you for having me. i think tesla stock was quite interesting last year. you had this very unique dynamic that while the stock doubled, you saw quite significant negative revisions to 2024 earnings estimates. 2024 earnings came down by roughly 20%. the set up into earnings right now is you will have further deterioration and fundamentals. three dollars of earnings for 2024. consensus at roughly 370. you downside on both the volume and the margins. the set up into earnings is you have this quite negative fundamental outlook in terms of how tesla manages through this ev slow down and challenges in capturing their growth. sonali: how do you think tesla

starts to navigate the price cuts? dan: tesla is being nimble about this. they have changed their tune slightly versus what we heard last year. in the sense that you previously heard tesla being much more aggressive on cutting price. elon said on the one q call that tesla can possibly sell cars at no profit. we are not really seeing that in now -- that now. they want to be nibble around pricing. but they are also trying to show some floor on where they want margins to be. they are not pushing volumes unnecessarily. elon changed tone on the third quarter call when he said there are some macro concerns. we will not be ramping supply as aggressively as in the past given these macro concerns. sonali: to your point on the macro challenges, they are of out of tesla's control. dan: you are right.

they are out of tesla's control. in some ways, tesla has to be receptive to the underlying market that you have. that you do have broader questions on auto sales growth. and we are in a flat-ish environment from a light vehicle production standpoint. on top of that, from an ev standpoint, there is slowdown that has to be managed in terms of subsidies that come off in different regions and other price cuts they have to navigate. there is a tougher macro environment that they will have to navigate through. that has to be factored into the volume and margin outlook. sonali: also worth asking, we don't often ask the specific stock analysts to get into the macro. if the economy were to return from a soft landing into something harder in the future, what kind of impact would it have on tesla? dan: certainly, weaker macro would play a role.

i think for much of tesla's history, it was much more a story of supply constraints. regardless of the broader macro environment, the volume for tesla was a function of what the production output was. you are seeing for the first time, and this played out last year, certainly the set up into this year is it is a demand constraint volume outlook for tesla. the effect it is a harder landing and outlook for ev's is tougher, that will be significant for tesla. sonali: we've had a lot of conversations on the byd and ability to become a significant competitor. is there more on that front? dan: the competitive landscape really varies by region. if you look at the u.s., tesla still has a clear lead. what has happened in the u.s. is

the legacy automakers have pulled back on some of their ev aspirations because they simply don't have the call structure tesla has. in regard to the u.s., they are well-positioned. if you look in the u.s. as tesla competing against combustion vehicles, there will be price downs they have to navigate through that will be pressure. china is a different scenario. byd clearly took the ev crown. when you take the plug in hybrids and full battery electric vehicles. it is a more competitive environment. byd has figured out the cost side of it. the main point i would say is it does not necessarily have to be an all or nothing outlook. healthy share, even if byd and other domestic chinese automakers are gaining traction. sonali: you had so many revisions leading into this moment. where would the upside be if you

saw more people come into the stock? where would it come from? >> this is a question we are getting a lot from investors. there are a couple of things you can see that allow people to look past the choppy near-term fundamental outlook. number one would be on model two, the low cost model. we got a line on that this morning. reiterating mid-2025 timing. the more that the model to trade comes into focus, that can be an opportunity. people see model two as an opportunity to get into mega scale. the other area is potentially around full self drive. we've gotten different announcements from tesla on that front. anything that shows tesla is gaining traction, that is part of the evaluation, that can be something that allows people to look past the near term fundamentals. our view is it is the fundamentals that are in focus.

dan leavy, thank you for your time. a close eye on those earnings after the bell. if you can't get enough on tesla and elon musk, check out bloomberg's podcast that covers his business ventures and influence anywhere you get your podcasts. coming up next, we will talk about the private equity industry. it is looking to shore up cash reserves to shore up 2024. this is bloomberg.

sonali: this is "bloomberg: markets." it is time for the wall street beat. my favorite bead. we look at what is buzzing on wall street and the world of banking and finance. looking at the moves in private equity. they are looking to shore up cash reserves. for more we are joined by allison mcnealy. so much of this is lp's.

investors in private equity funds want their money back. describe that pressure to return money to investors. >> used exactly the right word, pressure. one private equity goes well, it is like a flywheel. money going out the door making new investments, and money coming back. hopefully three or four times what you put into the companies or you can return that money to your limited partners, to the investors who gave you cash and say look at the money we made for you. now please give us more money so we can do more deals. sonali: you say two or three or four times your money. but valuations have changed. aside from big tech, you are not seeing the same multiples you saw in the boom days of 2021. are they resetting expectations, and how drastically do they have to look up at the light? >> there is some movement of expectations and the idea things are not what folks paid for them. but when you have money locked

up five or 10 years, you have time to see the market recover and see interest rates come down in the ability to improve so you can ideally get the valuation, at least what you paid in 2021. sponsors are under pressure from investors to return capital to them. in order to return capital, you have to transact. we might start to see some of that capitulation. sonali: thank you for your time. that is allison mcnealy all over the private equity industry. taking a quick look at markets. we are watching record highs. -- new highs for many stocks in the nasdaq 100. the s&p barrel higher about .7%. we are looking at the 10 year yield just below 415. just one basis point higher on the day. a lot of movement in crude, 1.2%. it really is the tech indices that are getting most of that love.

i'm sonali bass, that does it for "bloomberg: markets." we have a lot of earnings after the bell. this is bloomberg. ♪ thanks to avalara, we can calculate sales tax automatically. avalarahhhhhh what if tax rates change? ahhhhhh filing sales tax returns? ahhhhhh business license guidance? ahhhhhh -cross-border sales? -ahhhhhh -item classification? -ahhhhhh does it connect with acc...? ahhhhhh ahhhhhh ahhhhhh and your store was also the first time you realized... well, we can do anything. cheesecake cookies? the chookie! manage all your sales from one place with a partner that always puts you first. (we did it) start today at godaddy.com

get over here kids. time for today's lesson. wow. -whoa. what are those? these are humans. they rely on something called the internet to survive. huh, powers out. [ gasp ] are they gonna to die? worse, they are gonna get bored. [ gasp ] wait look! they figured out a way to keep the internet on. yeah! -nature finds a way. [ grunt ] stay connected when the power goes out, with storm ready wifi from xfinity. and see migration in theaters now.

air travel can feel like a nightmare. but for one in four americans with disabilities real nightmares happen every day no accessible bathrooms on most flights. 31 wheelchairs damaged daily by airlines. disrupting lives, sometimes for months. so many other barriers to safe travel. change isn't easy, but we can build the world's most accessible travel system. help us make sure airplanes connect everyone. to family and friends. to opportunity. to possibilities. we're easterseals.

>> from the world of politics to the world of business, this is balance of power.