>> welcome to bloomberg markets. let's get a check on the markets as we hit 12:00 p.m., 12:30 rather new york time. hanging out above that 6000 level but getting closer to it. pretty interesting to watch. nasdaq 100 also down .4 percent after seeing a lot of rotation away from nvidia into other ai stocks. people talk about what's been

happening. the 10 year yield now below 4.40. we were just under 4.38, two basis points lower. there was some intraday volatility in the bond market. new york crude below 70, 1 .4% lower on the day. mid-day movers on the equity side. we will bring in abigail do for that. >> 5-0 right now up four point 4% on the update at the company has provided on its 2025 outlook. citi is saying is in line with this outside side but better than the buy side. the stock very well. we also have bmo saying this guidance is achievable. separately, the ceo said president-elect trump is committed to pbm reform. that, cvs, unitedhealth are up.

in the last hour, nikkei saying honda and nissan in potential merger talks. could be negotiations starting soon. one reason they cite for the possible combination, to better compete with the likes of tesla and chinese ev makers. nissan up 5.4%. interesting that you would have honda and acura, nissan and infiniti all coming under one umbrella. turning to quantum computing, not looking at the laggards contributing to the decline of the s&p 500. rally up 32% after the company received a contract with nasa for imaging and data processing. there is a bear interest here so i suspect some of this could be a short squeeze. and the stock on the year, if you think microstrategy is doing well, up more than 500 percent,

this one is up more than 1600% year to date including this rally. sonali: thank you. investors are eagerly awaiting the fomc decision and the jay powell news conference tomorrow. here is how federated armies is approaching the trade. >> we expect short rates to come down come along way to stay where they are. that means shorter duration fixed income, one to three year fixed is in the sweet spot of total return. we expect this market will brought it out and shorter duration equities will see relief as long rates stay high, short rates come down. we think that yield curve steepening is the big market story of 2025. sonali: tcw is still betting the fed's elevated interest rates are about to crack the economy, even though that trade so far has not paid off. here to explain is michael mckenzie, who wrote about a tcw flagship fund. brian whalen, the ceo of the

fixed income group, has been sticking to his guns, why? >> tcw believes eventually they can keep rates high at least for another year and then eventually the economy will start to crack. there are signs with subprime borrowers, weakness in commercial real estate, even today's retail sales were not as strong as expected. potentially this could go quite quickly. past cycles, we have seen the economy slowly slow down and then suddenly dropped. the positioning which tcw talks about, they are long on the front end of the curve, two to five years, the fact of steeping trade on, a lot of mortgages which will also benefit from rates coming down more than what people in the market anticipate. eventually, they have a big underweight on corporate credit. they think corporate credit spreads are way too tight.

as he explained to me, you don't even need to see a recession to see corporate spreads widen out. that is how they are position going into 2025. sonali: it's been a painful trade but they start to see more people coming around to their point of view. still a large camp against them. how have investors been reacting? michael: fund outflows have been striking for tcw. we pulled the numbers from morningstar direct. they have had in their flagship total return fund, the biggest outflows amongst the top 10 outflows so far this year. clearly, clients have not been happy with what is a number of years of underperformance. looking into next year, tcw thinks if the economy moves in their direction, this is going to be the redemption moment for them. sonali: how does this compare to other fixed income manager as you see out there? i would reckon there is some pain out there.

so many managers pouring into the long end of the curve but you see the 10-year still flirting with 4%. michael: that is the big concern when you ask economists. what will the economy look like next year with the trump administration coming in potentially pushing inflation higher with tariffs, increased spending, which stirs up deficit concerns. if you look across the board at fixed income, what is interesting now, investors are beginning to pull away from total return funds, even though the tcw total return fund has had big outflows, it is striking, when you look at pimco and others, they are also having outflows. you are seeing more of a demand by investors to go into core and income funds. incidentally, the pimco income fund has done well. people want less credit

exposure, more high quality bonds, limited in interest-rate risk. sonali: we were talking earlier, and our guest said that dynamic is pretty decent if you were short. how many managers have that conviction to be shorting the longend? michael: i guess a lot of managers have been under waiting a longend. less interested in buying 30 years. that sums up how managers have begun to position themselves. there are deep concerns about the deficit picture. an acceptance when you talk to fund managers that washington really isn't committed in any way to curtailing spending. there will be a lot of focus on what the trump administration can do. talks about how they can cut to trillion dollars in spending. a lot of people dismiss that as even plausible. if you look at the bond market, a lot of managers are focused on

that two to five-year part of the curve. pensions and other longer dated institutional investors do by the 30-year, but that will be a sticking point, one area that worries managers. sonali: a lot of risk in the bond market right now. keeping track of all of it. we are watching another story catching the attention of wall street. many think the next trump term wil be a bost for dealmaking and global transactions a already up compared to lst year, up 16%, hitting $3.1 trillion. for more on this, we are joined by michelle davis, senior correspondent. really going to have a busy year it soun like. w were talking to barclays earlier. they are trying to prepare for these deals coming back. are you hearing the same thing from your sources? >> it is the outcome that it

seems like all bankers were waiting for, they want to trump to win because that means an easier environment at the ftc. president-elect trump says it he will be replacing lina khan, so the bankers are saying they are hearing from companies who want to do these deals that maybe would have been difficult during the past administration. sonali: how do you think about this across sectors, what might be the most busy parts of the year? michelle: tech is one area where we will not see as much as we would have because that is still an area of scrutiny. that is where you see some of the mega deals. but it is energy, health care, consumer. you name it, there will be deals. sonali: what is interesting to me is the push-pull of the ipo boom i suppose people are expecting and this conversation around privates that could happen next year. on aggregate, do you see more

people putting money to work, to take companies private rather than taking them public, given how much dry powder there is on the sidelines? michelle: this year we also saw take privates taking off. part of what is happening, valuations have gone up, and that makes sellers more open to selling because they are not nervous about selling too low. interest rates are still higher than 2020 one when we had this massive m&a boom. that was a euphoric environment, record levels. i don't know if anyone is predicting a return to that were private equity is really aggressive, but because they are getting this pressure from lp's to put money to work, they will be doing more selling and buying. sonali: how much do you think about company preparing? cnn and warner bros.. are more companies starting to separate things just to get ready for a potential deal

activity? michelle: it does seem like companies are laying the groundwork for bigger reformation of activity, maybe not next year but i hear from next year, after some of these spinoffs close. if you have a simpler structure, it may be easier to go after something adjacent. sonali: always looking around the corner. that is michelle davis. coming up, president-elect trump is having an effect on health care stocks today. we will tell you why in our stock of the hour, next. this is bloomberg. ♪

sonali: this is bloomberg markets. i'm sonali basak. time for the stock of the hour, looking at shares of pfizer up after the company issued guidance it expects to meet its best case scenario for the coming year. the ceo also met last night with president-elect trump and after the meeting, trump told reporters he plans to " lock out drug industry middlemen." it's why we are also keeping an eye on cvs and other benefit managers which are all lower. we are joined by don tunzi who covers cvs. down 42% this year, another 5% today. you have seen the ftc already go after them and other managers for insulin pricing. does the ftc posturing still

stay tough on these pbm's even in a trump administration that it would otherwise be light in other industries? don: a lot of unknowns about where the ftc will specifically come out in the next administration. i think what is clear is that probably there has been scrutiny and pressure on these companies. pharmacy benefit managers also own insurance companies, pharmacies. cvs' stock has been impacted by their insurance business. a lot of discrete business problem but also political scrutiny on these companies. sonali: is it fair to say that these pbm businesses are universally hated? you have politicians as well as now the companies, pfizer, novo nordisk in a testimony against them. the companies are fighting back. john: that is putting it strongly.

they have always been at its with pharma. not surprising to hear pharma companies criticizing pbm's. they are on the opposite sides of negotiating tables. what is not often understood broadly, pbm's see themselves as the counter to unchecked drug prices. in a free market, companies could set the price as high as they want. pbm see themselves as bundling purchasing power and trying to negotiate discounts off of the prices that the manufacturer set. sonali: john tozzi, thank you. looking forward to your reporting. i look at real estate markets through the lens of giant planned communities, as bill ackman looks to take howard hughes private. an interview with the company ceo is next. ♪

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sonali: howard hughes is the real estate company behind massive planned communities

across the sun belt. some have population the size of small cities. now investor bill ackman is considering taking the real estate giant private. abigail doolittle caught up with the ceo and joins us now. what have you found in your reporting? abigail: it was such a neat interview to speak with david o'reilly who has touch point in all parts of the economy. he is talking to homebuilders, big employers, schools, hospitals, retail. they are bringing a movie studio to nevada. one of the biggest issues is needing a big parcel of land to expand. >> there are so many companies out there that own a little piece of dirt, will talk to ceos and they will say i can build you an office building. i am not just building an office building, i am finding a place to live, their employees a place to live, schools, the right houses of worship, outdoors time that they can spend with their family, give them the quality of

life outside the walls of their office that most cannot. abigail: what is the biggest draw? the commute? >> a lot of it is the commute, overall quality of life. i have worked in connecticut, new york city, i know what it is like. that was two hours every day of my life that i didn't get to see my kids. if i had those two hours back for the 15 years i lived here, what a difference i could have made in their lives. that is what the employees are looking for when they come into our communities. they are getting those two hours back. much better quality than they would be sitting on a train car trying to get work done. abigail: that is the quality of life angle. now we have to talk about the homebuilding angle because there is something that you offer. there is a private public aspect to your communities. you are able to buck some of the housing trends. we hear about the affordability

crisis. how does howard hughes step aside from all of that? john: within the states that we build in, there are municipal bond financing available for land developers. as we put in water, sewer, other infrastructure, we are repaid through the municipal bond financing structure. that allows us to sell land to homebuilders at a lower price than we otherwise would and translates into more affordability. but we also thinking about generational planning, making sure that when we sell land to homebuilders, we are dictating the size of the home, the price, design of the home, so we are heading price points across the spectrum from entry-level to your executive housing. that way we can keep affordability intact, make sure we can attract a wider swath of residents. abigail: bill ackman has expressed a desire to take howard hughes private. is that going to happen? john: great question. i cannot answer for bill or

pershing square. i have read the same filings that you have. bill has been a great chilled shareholder, has been an incredible chairman for a long time, stepped down a year ago, still a large stair holder. -- shareholder. abigail: he would be able to take it private as the largest overall owner. if it does go private, what is he going to unlock? what value? john: he has had his hand on the steering wheel of the strategy of howard hughes since it was formed. i don't know that it changes in a private setting. if you ask my opinion, bill sees what i see in howard hughes, the opportunity to create generational wealth, to have unique influence over these cities across the country that creates values for decades to come.

as a 37% owner, i'm sure he wants to own more because of that. that is all within his control at this point. abigail: how often do the two of you speak? david: not often since the filing. abigail: before the filing? every day? david: perhaps a couple times a week. his ability to retain details and knowledge in this business is beyond anybody else. abigail: photographic memory? david: may be. he knows the intricacies of this business, usually intimately involved in the results. abigail: if you were to go private, how would your day change, would you be managing howard hughes in a different way? david: you would need to ask the owner of the company or the board of directors. i woke up this morning and still have a job, so here i am. abigail: based on our conversation, like myself, you are an early riser. unlike yourself, you can get by

on less sleep. you where a lot of different hats, speaking to the employers, residents, homebuilders, trying to buy land. what is your take on the economy right now, is there any sense of a softer session coming? david: we are optimistic about that but we are still dealing with election uncertainty. not just about who wins the race, but what the real platform is versus the campaign platform, and then whether or not that real platform can get passed through the legislature. until those other legs of the stool unfold, it is difficult to say. i do hope we see a soft landing, that we see rates continually modest decline. overall, the housing market has seen the benefit of new construction and the demand for housing being absorbed in new construction while the existing housing stock is on the sideline due to the lock in effect. until rates ease, the supply

side will remain constrained. abigail: interesting to hear you talk about a softer session as optimism, implies that maybe you are seeing some storm clouds out there. relative to president-elect trump taking office, is it going to help, will his administration, based on what you know now, going to help howard hughes or make things more difficult for you? david: both candidates as they ran and thought about the election cycle, one of the main sticking points was housing affordability. as sexing that shortfall of homes that exists out there today, anything that comes productive out of this administration to help address that will be supportive of, and we will continue to benefit. sonali: our thanks to abigail doolittle for that excellent interview. also want to clarify a point made earlier. comments made by president-elect trump around the pharmacy benefit managers was yesterday

but the meeting with the pfizer co and other executives was in recent weeks. that does it for bloomberg markets. markets are down on the day but a big fed decision out tomorrow. stick with us through the close. this is bloomberg. ♪ ♪ ♪ ♪ something has changed within me ♪ ♪ it's time to try defying gravity ♪ ♪ ♪

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

live from washington, d.c. kailey: still waiting to see the government funding deal. welcome to "balance of power" on bloomberg tv and radio. i'm kailey leinz. the clock ticking loudly toward the deadline on midnight friday. we will go live to capitol hill in a few moments where republican congresswoman nicole malliotakis will be joining me. also on the hill, rfk junior, trump's nominee for health and human services. we will get into his prospects with our political panel and we will talk about his vaccines use specifically with dr. cantor of rutgers university. an important headlines coming out of israel and ukraine today. it is all had this hour but we begin with a check on the markets and charlie pellett has a look from new york. charlie: we have the dow, s&p, nasdaq very much in the red.

this is