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00:00The most crucial moments in the trading day. This is Bloomberg Markets the close with Caroline Hyde Romaine Bostick Ken Taylor Ray. It is 2:00 p.m. in New York 7:00 p.m. in London. We are live from New Meg's world headquarters. This has been that markets the close and Caroline Hyde. I'm Romaine Bostick. I'm Taylor Riggs and equities guys. They're in the red. Tech drives stocks lower in the Nasdaq 100 snapping its three days of gains remain on the rolling rotation. Taylor tracking the latest Treasury auction. We've got your Covid. Plus inflation front and center again is low right on testifies before the Senate Banking Committee. We'll break down the Fed speak for you and what the producer price lead is telling us. And bank earnings. They kick off in earnest tomorrow. This is Goldman's commodities desk. Well it puts a banner year with revenue skyrocketing. What does this tell you about where Wall Street is raking it in. We'll break that down and so much more on this hour. Yeah but let's go back to Brainerd because that appears to have put a little bit of pressure downward pressure here on this market. You can add Lael Brainard to the long list now. Well Fed members that are basically saying March it's going to be a live meeting. And more importantly there's a lack of ambiguity in the way that they've been speaking. Lael Brainard Mary Daly Patrick Harker. Yesterday we heard from Loretta Mestre all basically saying that they're in favor at least would support a serious discussion about a rate hike as soon as March. James Bullard talking about potentially for IBEX this year. Christopher Wallace also we know back in December said he was in favor of potentially hiking in March. And even Neel Kashkari one of the most dovish members of the voting committee here also saying that he would support a couple of rate hikes in 2022. That's the setup right now. That's the repositioning right now 47 0 6 on the S & P 500. High value tech stocks are continue to be pushed lower just a high multiple tech stocks continue to be pushed lower. One of the bright spots so Taylor is some of the transport names a lot of these names that we're seeing right now in the travel sector moving higher here on some optimism for a return to the skies. Yeah. And then no return to the season as Bob going to take a look at the cruise lines in just about two hours times. In the meantime remain as we always do on this program. Take a look at where we are in terms of bond yields. I'm taking a look at the 30 year because you had a strong three year auction a decent tens and then a 30 year auction today. It was sort of right in line. It was adopted a 2 spot 0 7 5 bid to cover ratio in line with some of the averages. But we are now down in yield on the day by about three basis points or so. A 2 0 5 8 2 0 6 percent is something that's been a little bit lower off some of the late numbers that we have seen as of late. You change up the board though. Caroline Hyde. Really all of the notes I read this morning we're folding in some of the yield dynamics into the dollar dynamics as well. Typically we do Beebe D X Y today of course will migrate over and do the D X Y really talked about how generally currencies don't do well in countries with high inflation. And if we are looking at fed hikes typically that would lead to dollar strength except if it means an underperformance of U.S. assets. And that could be why the dollar is under pressure. Is this a story of global growth versus U.S. growth. Tate A great setup great set up. Also with remain really talking about this March Fed rate hike that everyone is now bracing for. Inflation is front and center for the Federal Reserve. Just listen to some of our guests about that lift off in March. The CPI. CPI numbers 7 percent CPI. It does lean force the message that we have been getting from the. From the Fed. A March rate hike. March meeting is very much alive. I don't really think anything stops them from going in March. We're not looking at a seven handle eye popping inflation numbers. You're getting tapering. You can rate hikes and potentially actually run off. The Fed cannot escape the inflation issue. They are going to chase this thing. They want to appease financial markets convinced market players that they're going to control inflation. They're going to need to thread the needle here. It is going to be the Fed's responsibility to basically fulfill the market's expectations. His march is where it's at. What does it mean for broader fixed income Covid Nicholson as the man to ask Riverfront Investment Group Global Fixed Income CIO It is always great to have you on the show Kevin. I mean you you braced for March and what does it mean getting out of treasuries and into other corporate credit. Caroline we have been buying corporate credit for some time now and from our perspective you know the Fed is going to do what they're going to do. Right now it looks like they're talking up to four hikes. I know that when you look at Fed Fund futures there are three hikes. Dan right. One hundred percent. And there's about a 53 percent chance of a fourth hike. So we continue to kind of have a bar about take a barbell approach where we are buying corporates in the front end and we buy treasuries only in the long term when we need to for to act as a shock absorber in our portfolios. But by and large we continue to be short duration relative to the AG. Well when we talk about to the potential tightening of monetary policy the amount of support over the last few years at Fed monetary policy sort of underpinned the corporate bond market. We also have to talk about the idea that the economic conditions also underpin the corporate bond market. When you look at the economic conditions here how supportive do you see them going forward. You know Ramon I think that the economic conditions are set up well here in the U.S.. One of the things that we notice especially with our large cap U.S. companies is that they are. They have had pricing power throughout all of this through this supply constrained environment. And they're continuing to have pricing power. And so we think that that's going to benefit them down the road. Additionally even if the Fed raises rates or when they raise rates because they're definitely going to raise them even if they do for hikes this year you're still only talking about a Fed funds rate between one to one and a quarter percent. We don't think that that is going to hurt equities and equities should be able to grind higher. So you combine that economic strength that we have here in the U.S. along with the fact that rates are not going to move that much. We think you know it's still a attractive time to be in the equity markets. Talk to me about the role of treasuries as you've just said as a shock absorber. Has it been doing that. Is that behaving the way it's supposed to. In a portfolio. So Taylor in the last few weeks no it hasn't. Because you start seeing yields went up rather rapidly. But you know the market right now has been in a tug of war. It's been in a tug of war between risk on and risk off. It's been in a tug of war between value and growth. And right now we're kind of at a standstill with the risk on risk off because we have some days that we're going up in other days that we're going down today as it pertains to risk off. Today is a risk off day as you've seen Treasury start to rally here. I mean this is why we have kept a short duration relative to our benchmark in treasuries because it had we know that the trend is for Treasury yields to go higher over time in the coming months. It told us given about how much higher because we've had such a powerful twit the fact that at a sudden level will foreign buyers come in. All we ultimately range bound when it comes to the U.S. Treasury. Caroline I think that we are relatively range bound because when you know our base case for two thousand and twenty two this year was that the 10 year Treasury was going to in the year at 2 percent and that was based upon the idea that we were going to see inflation peak in the first half of the year and then we were going to start to have those foreign buyers come in. Now if we have more hikes I don't think that that is going to be conducive with inflation peaking in the first half of the year. And if that occurs then I think that we're going to get outside of what we are deeming to be range bound and we're going to come to the higher end of our expectations for the year which is around two and a half percent on the 10 year by year end. If you know inflation doesn't come get under wraps. Well let's just play a hypothetical here. Kevin if we get into next year into 2023 and we're still dealing with persistently high inflation what's the setup then. The setup then is that the Fed will continue hiking rates. And the problem that we that I'm afraid of is that they're going to make a policy mistake that they're going to overtime too much and we're going to set up or set up for a recession down the road. Kevin I'm curious when you think about a two two and a half percent on the 10 year of course if they don't get inflation under wraps. Does that start to present a relative value conversation relative to a dividend yield on the equity market. Oh definitely it does. Because you know over the last year or so everyone has automatically gone and defaulted to the equity markets because the dividend yield has been somewhere in that 130 to 140 range. And because the 10 year Treasury was right around there were in some cases at certain times lower than that then it was attractive to just automatically go into equities. But that dynamic as yields go up and rise. That dynamic is going to change and you're going to have to change that calculus. And at that point I think that you are absolutely right that there is there will be a relative value analysis that has to occur. All right Kevin always wonderful to catch up with you. Kevin Nicholson their CIO over at Riverfront Investment Group helping us kick off the show today of course on this Thursday afternoon. A lot to talk about Fed Governor Lael Brainard. She was on Capitol Hill today for a confirmation hearing. The big news though saying she's open to raising interest rates in March to fight inflation. We're going to have the latest on what she said before that Senate Banking Committee. Plus here to talk about Goldman Sachs the commodities trading desk. I've been in the doldrums for years but it managed a massive turnaround last year. We're going to talk about its best performance in a decade and staying on that theme. GOLDMAN The firm is delaying its return to office plants once again. We're going to discuss some of the best strategies for managing the pandemic with Stephen Shoal. He's the CEO of the H.R. firm Light. All that more coming up next right here on Bloomberg. Inflation is too high and working people around the country are concerned about how far their paychecks will go. Our monetary policy is focused on getting inflation back down to 2 percent while sustaining a recovery that includes everyone. This is our most important task. Federal Reserve Governor Lael Brainard testified today at her confirmation hearing for Fed vice chair. For more insight on the challenges facing the Fed let's bring in Michael McKee Bloomberg's international economics and policy correspondent. Mike how are you thinking about. Tip toeing the line this sort of not putting inflation over employment but knowing you can't have full employment if inflation is running hot. Well as I said just a moment ago Bloomberg Radio inflation is a little bit like the 2 by 4 that whacked them in the head. They are aware of a problem and they're going to take action. And you know with the unemployment rate below 4 percent and probably going to keep going down the way participation rates are going there's no problem with unemployment right now. And we're seeing wages rise which on the one hand is a good thing on the other hand contributes to inflation. So at this point the Fed is pretty free to focus on the inflation question and that's what they're going to do. Adding to that inflation in question was the PPA number today producer prices sort of showing that maybe they've peaked. If you strip out food and energy maybe they haven't. I mean this is such a confusing read. What did you make of it. Well we can make whatever we want out of it. It's the Fed who has to try to figure out what's actually going on. And it's difficult because you can see in the chart there the month over month change in the API was smaller much smaller in case of headlines in December than November. But that's because as you mentioned oil prices went down. Now oil prices are heading back up again. So do you think that things have peaked or do you think that things are going to get worse. And of course everybody's keeping their eyes on China with the lockdowns of cities. There it is. It just seems logical that we are going to see more supply chain interruptions that will keep pressure on prices longer. And as both Powell and Brainard said today not a lot we can do about that. Well well I don't want to talk about that little bit more because I mean we we focus on the CPI numbers. Powell made it clear that some of their blindside had to do with some of those supply side issues here. What we're hearing with regards to the rhetoric out of Brainerd and some of the other members of the Fed have they made a case for monetary policy really tamping down some of those issues. It depends on what you mean by really tamping down. I mean they've made the case that the Fed is going to act and enough of them have spoken out now saying three times at least this year couple say for and the markets bought it. So it looks like the case has been made and people are okay with that. It would be a question of moving up the timing or going more than three times. But we're not going to know that for some months. You know how how the economy's going to react both to supply chains and overcrowding and how it's going to react to the Fed. Just real quickly do you think we'll get a little bit more clarity about what they're going to do at the January 26. I think they basically draw a roadmap for everybody at that meeting. That's that's what they like to do is have the markets be able to anticipate what's going to happen. OK. And I'm sure we'll all be confused by it. And we'll bring Michael back on to break it all down for us. Bloomberg's Michael McKee there. Coming up we're gonna talk about commodities once again drawing interest and investment on Wall Street. Goldman Sachs had a thriving commodities desk back in the day. It kind of fell by the wayside but it boomed to 20 21. That's coming up next. This is Bloomberg. Earnings season is coming due for earnings. We're going to be awesome. Bloomberg is back with the numbers and analysis. Amazon crossing the Bloomberg terminal where investors see the weakness. That means profits down the earnings season on Bloomberg television and radio. Bit of a volatile market is it a good time to IPO. Well TPC thought it was and in fact managed to surge in its trading debut. Let's get more on the private equity group as it will join some public markets. Wall Street reporter Sonali Basak always love it when a private equity company decides to go public exactly what they know how to do best take companies public. But the interesting thing about TPP is many of its peers went public more than a decade ago and the conversation around this IPO has lasted just that long. The interesting thing is you have a company like Blackstone which doubled their stock last year is actually on the decline this year. So there will forever be a question on whether TPP went public at the top of the market and whether they can continue these gains on from here. Jason Kelly. It is a theme of private equity going public and they're just the latest to do so. Yeah it's really interesting because you have more firms now paying their employees in stock. So Apollo now is not relying on their global carrier pool as much which is a traditional way to pay private equity employees and more equity awards. And so long as the stock keeps going up that's very enchanting for talent to be brought onto the firm. Remember what is TPP have that others don't have. It has a very early entrance and some of these high flying businesses that many other firms are getting into. I think life sciences think it's Silicon Valley Internet. So let's see how that benefits them moving forward. But the talent attraction is a big part of that. Based on the small handful of other PE companies that are public here. How does it change the dynamics of their business model if at all having the public scrutiny. Well the talent is one thing but on the other hand can they continue to attract investors to a private equity business while those firms as you mentioned Romain are all diversifying into other businesses. Think credit at a larger scale insurance wealth management and really taking a different form that's away from private equity as we knew it. So this is a firm that we knew. David Mark Gurman Jim Coulter John Winkle Reed titans of the pioneers of the private equity universe especially as it pertains to these Internet companies. But can they can they transform RTS going public 29 50 was the sale. Thirty three was the open. They're basically trading right around there right now. Question Ali Wasik given us that update on TV. You want to switch gears now over to Goldman Sachs of course executives over there. They were once worried about the future of the banks commodities desk but it had a major comeback in twenty twenty one two point two billion dollars in the final months of the year. Let's bring in Bloomberg Shery Ahn Rajan from Wall Street. This was a massive turnaround. You talking about a desk that was I think flirting with something like three or four hundred million dollars in revenue just a couple of years ago. And its future was very much in doubt inside Goldman Sachs. Now remember the commodities. This was not just like any other desk inside of the trading operation in any of the big Wall Street banks at Goldman Sachs. This is a fable that this is the group from where you had people who went on to rule the company for over a decade. You had you at one point you had that trading investment management even human resources and all of the company with Lloyd Blankfein and Gary Cohn running Goldman Sachs. All of them came to the commodities business. But it had hit a very rough patch. And in some ways it was in parallel with all the troubles you had seen in trading operations across Wall Street. There was a real fear that there was a secular decline in the commodities business that Goldman Sachs seemed to be the biggest proof point of that. So you know I mean history Kato Street on the story but also to Ed Emmerson of course what your story sort of surrounds a lot. As he stuck it out he weathered the bad times manage to find himself in a position of power in the good times and also a bit of a prankster as what it would seem. I mean it is a good window into how Wall Street's fortunes have changed through the pandemic. Right. At a time when all of his colleagues were leaving all of the supported bosses were leaving. He remained at the firm managed to avoid the massive shrinkage of the business that people were worried might have to take place to make it viable. Instead Goldman stayed committed to the business. And with the onset of the pandemic the negative oil price had the follow great failures the wild frenzied price movement of European gas markets to the end of last year. This has become a real lot of money for Goldman Sachs in the last three years. The businesses brought in over 5 billion in revenue and even as revenues were to normalize as we talk about a commodity supercycle that's going to last decade. It is still indicative that this business will play an important role. And when that's the case executives like Ed Emmerson and others will have a lucrative future continuing to trade commodities inside the big banks and pushes forward. We're going to get insight into those numbers on the 18th here. How were you expected to read these numbers in light of the big commodity boom. The problem is it's the story of two horse straight. We will have to look at the 2021 numbers and adjust as the commodities business has done well inside Goldman Sachs. They've had good success across fixed income and equities. We'll see if this is going to be a new record or if it is going to be at about the same level as 2020 which again was phenomenal. You had two fabulous years of trading at Goldman and across Wall Street. But what we want to pay attention to is what will happen in 2022. Just earlier Jeffrey schemed with their numbers. And when you looked at what happened with their fixed income numbers in the fourth quarter you saw what their stock price did at one point when done or with 10 percent on the day. And people wondered how what they read through will be for the big banks. Maybe it might not be that bad but analysts investors are certainly interested in figuring out what the future looks like and not the plus Shery Ahn horizon. A great story. I read it. Meanwhile I mean he was talking about quantities desperate stuck more on commodities. Talk about the oil market fragility fragility that once was. Why seize the surplus by 2023 at most. Up next. This happened back. This is Bloomberg Markets the clothes. We have some breaking news regarding the Supreme Court indeed blocking the President Biden proposal for a workplace vaccine or test rule. Remember this is about the Occupational Safety and Health Administration whether or not it had the authority to acquire 80 million workers get shots or get regular tests. Now the Supreme Court is holding that OSHA rule that Covid those 80 million workers that they do allow a U.S. vaccine mandate for health care workers remain important step being taken from a legal perspective and to the authority of the administration the federal government. And when this was announced I mean we immediately heard from legal scholars said that this is going to be an uphill battle. But we should point out and I don't want to read too much into what he proposed but we saw a lot of companies actually get ahead of this in anticipation that this could stick. So even though there may be a symbolic victory here for those who are opposed to this at the Supreme Court a lot of corporations of course have already instituted their own mandates stealer. Yeah really interesting. As Caroline was saying some of the 80 million workers who no longer maybe fall under the mandate of that one. But to your point allowing that separate rule to take effect for nursing homes hospitals other facilities that mandate is intact for those that receive Medicare or Medicaid payments from the federal government. So perhaps maybe a little bit of a divergence there from the Supreme Court. All right. We're going to keep an eye on this and bring you any more details as soon as we get them. We do want to check in on what's going on in the commodity market as we normally do at this time. Settlement and time exclude just below 82 bucks a barrel. We're basically in a little bit of a holding pattern right now. Some concerns here about what's going on with those talks between the U.S. and Russia. You see that reflected on the third a lot of your screen. Those are natural gas futures over there. Those are UK prices I believe up about 14 percent here on the day. The idea. Those talks effectively came to what some folks are calling a dead end or raising some concerns here about whether we're going to see anything flow through that Nord Stream pipeline any time soon. And then keep an eye on gold futures. Gold futures took a lay down Caroline off of that PPA data. Great story right now on the Bloomberg terminal talking about how gold is kind of trapped in limbo right now between bonds and the dollar. Be interesting to see where gold goes. And a more importantly you've been focusing on this a lot of course where the dollar goes as well. I thought you guys say digital gold. Guys I know you're not calling it that yet. Crypto is down by the way. Meanwhile we continue with the focus on commodities. Citigroup out with a note saying that oil markets will be in a fragile balance for the first three months of the year but then moved to surplus by the end of 2023 at most. Of course you know Citigroup global head of Quantities Research. Joining us now. Ed it's always great to have you in particularly the start of the year when we try and read the tea leaves in the direction of of oil which has actually been up above 80 dollars again increasing some inflationary pressures. Why do you think we're gonna head to a surplus. What does that mean for the price point. Well there are two things one is we're moving out of winter and winter has been pretty pretty vicious. There's been kind of a change in the relationship between oil and gas prices. Normally on an equivalent basis oil prices higher than natural gas. We've had natural gas prices higher than oil which gives rise to a switch to propane switch to diesel for heating purposes here and there. That's several hundred thousand barrels a day. We've had actually disruptions to supplies and weather related some not between Ecuador and Libya. That's a million barrels a day out of the market. A little bit of a scare in Kazakhstan. But I'd say these are temporary seasonal factors and we're moving out of winter eventually. And yes you've mentioned all of the issues associated with the uncertainties the natural gas Europe. But natural gas has been incredibly tight. It's been a cold and normal winter. The winter is turning normal. We're expecting mild temperatures in January February March in the heart of Europe and Germany than we had in October November December. That should ease up this much more LNG going to Europe than there was in September and October. And that should ease. I think it's up also. But you just don't know where the Ukraine talks are going to go. Ed interesting. We talk about the dynamics of nat gas. Come back to the oil markets as well for us here. When you look at supply and demand dynamics into this year and into next year is that a demand recovery story or a supply constraint story. So I don't think it's. It is certainly a a recovery and good man but I think it's a supply recovery as well. And people are focusing a little bit too much on the supply constraints. There is spare capacity in countries to be sure. If you look with the help that countries have been saying namely adding 100 and some thousand barrels a day per month to the markets they're shy of that by about one hundred and forty thousand barrels a day. That's because some of them you could name them like Nigeria and Angola. Algeria can't produce any more than they're producing but others can. There's some talk about Russia running out of spare capacity but we've heard that year after year. And you know they're their capital spending is up. It's easy to be the bottleneck. It's easy to bring on regional projects. And they've got a lot of brownfield. They can break that. So we think they can. They still have around half a million barrels a day right at the moment. And we think they can add another half a million to eight hundred a day by the end of the year. So we're not as concerned as others are about Russia being hamstrung with the market. Saudi Arabia is far away from its 12 million barrels a day capacity level increasing capacity. UAE is far away from its probably four point two million a day capacity now or about million barrels a day away from that. They've been hit with that as well. We have to get your thoughts as well on natural gas. And I guess what some people are looking at as an energy crisis over there in Europe certainly in the short term there is a crisis there. I guess the bigger question here is longer term do Europeans have anything to worry about. Well I think they have something to worry about. That's not exactly in the framework of what's happening in Ukraine. The European Union has been ambitious about moving more toward fossil fuels. They ban effectively thermal coal in power plants. They've made it very difficult to finance new combined cycle natural gas power plants. They're relying on renewables. And the year has not been good for India. They were down on hydro through the summer and through the winter. They've been down on wind power of the month of September and the month of December which means a higher need for fossil fuels. So they have a puzzle to deal with with respect to the reliability the rely their resilience the redundancy that's in their power system. They've been a little bit too aggressive for going off of fossil fuels and onto renewables. And they may be paying a little bit of a price for it. So we'll see what they do in terms of doubling down on renewables where there's not enough battery balance to really make up for intermittency. DAX whether they'll do something on on the natural gas that renewables shift to low carbon energy. In many ways Ed has fostered the growth that we've seen in base metals as well. Copper has been on a tear. Some of the other areas that have been IBEX in this transition where do you see metals going out for 2020. Two are we still talking about a supercycle up on our hands when it comes to commodities. We are certainly not. We are not talking about commodity supercycle but we join in with those who are talking about a metal supercycle. So there are a couple of elements to it. You need metals basically to decarbonise the planet. It is a very metal intensive operation. You need copper and aluminum for a power distribution. You need aluminum for four in the framework of cars particularly the more we go into these the Murray-Darling for lighter metals. So the demand for metals is going to be there in order to decarbonise so pretty dirty in the process of making one. So there is a debate that we think is solved namely that using metals may be dirty but cleans up more than dirty. So there is a net positive that we think is there. We're looking at a maybe a decade long process where demand for metals is going to go up and prices will rise. All right. Always wonderful to get your thoughts. Really appreciate you taking time to be with us today. Ed Morris one of the best in the business out there. Citigroup global head of commodities research giving us his take here. Where we can look for metals and energy prices in the years ahead. Still ahead our Stock of the Hour. It's coming up next. This is BOVESPA. All right. We're just learning that the U.S. Supreme Court has blocked a centerpiece of Joe Biden's workplace a vaccine or test rule. Joining us right now Bloomberg's Washington correspondent Annmarie Horden joining us right now. Emory what do we know. Well does is definitely a blow to the Biden administration given the fact that this vaccine mandate was part of their efforts to make sure the United States and everyone was getting vaccines and those booster shots Romaine. But what we are seeing now from the Supreme Court is that they are blocking this. And a lot of this comes comes down to what actually the authority o HSA has in terms of creating a safe and healthy workplace. And it does not look like what the Supreme Court is saying that vaccine mandates come under the statutory limit. It is a statutory limit of what the HSA is responsible in doing from Congress. So this really comes down to the law of the land and less so on what the Supreme Court is advising in terms of health advisories. But as I said it is going to be a blow to the Biden administration because this was really the centerpiece of one of their major pushes to make sure that they can get individuals vaccinated and stop the spread of the virus. Meanwhile of course medical workers nursing homes hospitals facilities they'll still be able to and we'll see how private corporate America reacts as they have been setting their own policies. Annmarie Horden great roundup there of what's happening with the Supreme Court. We've also got plenty of other cover stories to keep you abreast of Stock of the Hour. Taiwan Semiconductor spent a record 30 billion dollars last year on factories that churn out the world's most advanced chips. This year it's decided to up the budget. Forty four billion dollars. We're of course going to be digging into all of this. Were pretty good too. Who joins us now. I mean rocketing share price we actually sold the whole chip sector at the beginning of trade. React pretty well to what some of the demand strength coming from TSMC right. Well this is the 10th largest public company in the world by market cap. So it's no surprise here. They are reporting a record quarter rising 16 percent to six billion dollars. But the real highlight here is that they say that it's going to take years for some of this really strong demand to kind of fade a little bit. We're selling time on whether chips are transitory. These supply chain issues are transitory to TSMC saying we'll know they're not going to take years to really digest this. So they're tackling it by spending 40 to 44 billion dollars in 2020 to in CapEx. Now part of this is of course to address the crisis. The other part of this is to keep their market share lead against Intel and Samsung in particular. They've already been running near full capacity over the past year and are heavily investing in those new fabs. Let's just take a look at what did to us 80 hours because Carolyn you mentioned this TSMC those eight years hitting a record. That market cap now at six hundred billion dollars. Thank you. Is always there. Bloomberg's critic Gupta we want to stick with some of the chip makers stick with some of the emerging markets. We want to pivot to China because China's biggest lenders walking a fine line over the property sectors. They're curbing some of their property loans local governments financing vehicles. Let's continue with our emerging action conversation with Shery Ahn the co-anchor of Bloomberg Daybreak Asia. Sherry what do we know about some of those property loans and the curbing back of those loans. Yeah the focus now on these LG of these. You talked about the local government financing vehicles. This is really interesting that sources are telling Bloomberg that they're now trying to rein in some of the borrowing to those real estate projects because these are the vehicles that local governments actually use in order to be able to borrow money without it showing up on their balance sheets. So of course this is a huge a huge area where we could see some more risks. Now we're hearing that at least five state run banks have imposed new restrictions this year on loans to weaker LGA fees seeking to buy land and develop new real estate projects. We have heard from Goldman Sachs that the total debt level of these financial vehicles amounts to more than a trillion dollars at the end of 2020. So any tighter lending also heightens the default risks of these local government financing vehicles on top of course of the very stress developers as well. All right. Let's say on China for a second year Shery Ahn. A lot of folks at least in the U.S. are concerned about what's going on at some of the container ports over there in China and whether we can see kind of a repeat of some of the logjams that have really been plaguing the global supply. Yeah because that will really not help with the inflationary pressures that the world is seeing right now. Right. So we are seeing all of these ships be lining towards Shanghai the world's biggest container port. Given that nearby Ningbo has suspended some trucking services near that port because of another outbreak of Covid-19 we have seen these very strict testings of workers and truckers ahead of the Lunar New Year holidays. So there's a huge queue forming and there's ships also being delayed when it comes to getting those containers in and outside of China. And now we have two more cases of only case. Says in the state of Don Young as well and really expanding from that original outbreak and challenging. All right. Shery Ahn their co-anchor of Bloomberg Daybreak Asia helping us break down the emerging action today. We do want to get back over to the big breaking news here. Over the last few minutes the Supreme Court in the United States striking down a key part of President Joe Biden's initiative here to get more people vaccinated in this country. Bloomberg's David Westin the host of Balance of Power joining us right now to talk a little bit more about this. And David this was controversial when it was proposed and a lot of legal minds said it was going to be an uphill battle to get this thing through. Yeah first of all let's be clear. There are two cases. And the court issued very different decisions in the two cases. On the one hand the broader mandate coming out of OSHA which applied to all employers who employed 100 or more employees. That's been stuff that's been stopped that's been struck down as outside the authority of OSHA. Basically the Supreme Court in a 6 3 decision saying you need to go back to Congress and get it through or you don't have it. There's another mandate as well applicable to health care workers. The organizations are involved with Medicare and Medicaid. That was upheld by the Supreme Court. It was a split decision for the big demonstration. And it's a victory for business groups 26 of them for 27 Republican led states to this fall very much down it. Typical political lines or was this more complicated. Well I'm really reluctant to intrude politics the Supreme Court. But to your point the three dissenters are typically thought to be the so-called liberal justices. No question about it. So it did fall down that way. Absolutely right. But it really bases the dispute. This is relevant to the entire business group. How much authority do regulatory agencies have and how much has Congress delegated to them. And this was a case in which was the ocean the broader mandate. The Supreme Court said no more. You've got to go back to Congress. There may be a big problem here. Maybe vaccine mandates are a good idea. But that's for Congress to decide not for a regulatory agency like you. And it was relevant to the court in their reasoning. They said oh she's never issued this broad a mandate on any health issue ever. So that's some indication they took of that. Probably don't have the authority to do it. David you bring up an interesting point in bringing a similar piece in our Bloomberg opinion piece from the editor of The National Review where he says it comes down to not whether you're pro vaccine pro not pro mandate or not but the age old question in this country of federal mandates vs. states and states wanting the power and not these sweeping federal mandates. How were you thinking about then on a state by state case and how this plays out if they've firmly said we don't want the federal mandate controlling us. Yeah there are two issues here. I think Taylor and you would understand that. Well one is federal versus state. You're absolutely right. And we've seen across the country a real battle in a federal system. It's not too too unusual to have the federal government want to do things. The state saying no it's not your business. The other is between the regulatory branch which is delegated from Congress is sort of in between the executive branch and legislature the Congress and the Congress. And there is a thread through particularly I'll go back to what we heard earlier from Caroline about the so-called conservative justices are very concerned that we've gone too far in this country in delegating to those regulatory authorities who are after all fairly insulated from any political pressure. A lot of important decisions. So I think for example a Justice Kavanaugh is very strong on this and thinks we've gone too far. So there are two issues here. Staplers is federal but also Congress versus regulatory authorities. And one of your show of course is what the balance of power. And this is indeed a balancing act. David Westin great to get the read across what has been coming from the Supreme Court today. Meanwhile we move on and we discuss what Goldman Sachs is doing in terms of delaying its return to the office for staff in the US by another two weeks. Employees were told they could delay returning until February 1st according to a person familiar with the matter. Just another example of the challenges being posed by Mark Crumpton variant. More insight. We're going to be bringing in Stefan's show. He is of course the CEO of a light cloud based HL technology company. So as always great to have some time with you. And I'm really interested right now in what your view is. You are busy building the support systems for businesses from an HL capacity from a benefits capacity. How hard all the executives you're talking to finding it to to bring their combatant people back or indeed want to ensure and preserve the safety. It's great to be with you as well. And there's no question the employee people agenda is on the top of mind of CEOs and boards like never before. And I think you know if you look at Caroline this this last two years it's almost like a matrix moment for employees where the bricks and mortar of office space and free lunches and foosball tables was a great cultural dynamic that made people feel excited about being part of a corporation. And then of course the Covid pandemic happened. We all went home. And I think we all came in touch with the new reality. That said I'm not so sure about how healthy my family is and how secure I am. And the financial wellness piece. Anxiety and depression. You know all those categories came front and center and corporations to be truthful just were caught flat footed the last two years in dealing with this. And so that's caused a lot of question marks of employees about loyalty to their corporation. And what I will say though is in the last you know six to nine months since we served 30 million plus Americans and over half the Fortune 500 and 70 of the Fortune 100 I've had more CEO meetings talking about providing that integrated employee engagement platform. One place to go to really understand the health and well-being dynamics for an employee. So. So I'm super incurs. I mean the great companies that are putting employees first really are going to are going to set a new chapter moving forward. Well let's talk about some of the companies. And you know I mean we're not to talk specific companies but some of the companies that maybe are kind of behind the curve here as well and sort of what it would take to sort of convince them that this is a structural shift right now in our workforce in the way that people view their jobs and their careers and their health and their lifestyle and that they have to adapt or they're going to lose those employees. Yeah. I think the good thing is remain. There's there's history here. If you look at last 25 years corporations spend a lot of money building building digital door fronts for how to deal with clients. And now employee employees have woken up and said it's employees first. So how do we build one place one digital storefront which we called worklife. And CEOs have come on board. Board members have come on board. So it's really taking these 20 30 in some cases in these Fortune 100 accounts up to 80 different systems and trying to find one place for an employee to go. I mean we just finished an annual enrollment in December. So you can imagine it's our Super Bowl moment where 30 million people are coming in and figuring out benefits what they want for next year and the plans four fold increase in that anxiety and depression category whereas a psychiatrist I can go see doesn't cover in my plan. Can I work it out. Go to get help. These are what corporations are now incorporating better into their plans with our work with them getting better insight into what employers want. But that's a fourfold increase. It's such an important conversation Stefan. One we wish we had more time to allocate to so much breaking news today. But Stefan Charlotte really interesting to get the take of what CEOs are doing right now from the NHL perspective of course a light CEO that all about the artificial intelligence and some of the technology behind it all. We've only got one minute and three minute one hour and three minutes until the market closes. Stick with us. This is Bring Back. Come down to the clues Bloomberg's comprehensive cross platform coverage ahead of the US market starts right now. This is Countdown to the close. Just 60 minutes left in the trading session. Caroline Hyde. Romaine Bostick Taylor Riggs. Joined now by our colleagues Carol Massar and Tim Dynamic apparently hit the slopes. I understand you said we look at what's sliding right here right now and it's a slacker. You would never leave us like that dealer would you know. No comment. You cannot wait to get back out. I'm ready to come back. Can I come out a time out. Chair. Yeah. There's a lot of time out chairs today. We're dealing with a lot with Covid today. I keep watch on what's going on in the bank world. KBW Bank Index still up about a half a percent. It's been on quite a run this year already Caroline. But I'm looking forward to some of those big bank earnings tomorrow. Yeah. And he's gonna come thick and fast but it speaks to that rotation on again off again today as back home when it looks at perhaps value outperforming. The technology stocks were down one point sixty five percent. Currently one point sixty six to one of 52 points anyway lower on the Nasdaq. So big tech taking ahead as once again we confront a march rate hike front and center left right now seemingly once again reconfirming that viewpoint. The nine tenths of a percent lower for the S & P 500 off by 40 points. Volume is up some 13 percent that the Dow had been to outperform. I had been in the green but it slips into the red Wolf by 19 points. And the Russell 2000 just clinging to the gains maybe just some of those financial names helping push a little bit higher. Taylor Yeah you do. And see that at least here on a sector level as well. There's a lot of green some red here too. Take a look at some of the industrials and the utilities and the staples that's really here. What's in the green that really highlights Caroline as you were alluding to maybe the push pull in the market the industrials that risk on tone but the utilities some of those bond proxies up there in the green as well remain. It is not lost on any of us that it is big tech. Once again down at the bottom you're up one point eight percent on this sector level. Yeah. And I've been saying this for the last few days. I mean keep an eye on some of the software names as some degree of a barometer of risk sentiment. Microsoft down once again down three point three percent scalar. One of those high and multiple software enterprise value kind of names are down about 7 percent here on the day. Now if you're looking for a bright spot out there you're actually gonna find it in some of the chip equipment companies. Taiwan set me up about six point six and a half percent here on the day. Also relatively bullish commentary year that with all the disruptions going on in the chip space they're actually benefiting from it. You're looking at Lam Research and a few other companies also higher here on the day the TPP yet IPO come to market today. They're actually doing pretty well here. TCG shares higher by about 17 percent off of that IPO price. Meanwhile of course we want to look at what other data we got throughout the day and we are all so focused on inflation. We know that interesting reading coming. We had CPI yesterday 7 percent BPI actually slowing just a little bit on the overall and out now level. We saw it was up. Well I mean for a year rally at nine point seven percent still second largest faith in figures to 2010 but it did cools slightly. You strip out food and energy though and actually it didn't roll over as much. So all we therefore bracing for energy not to have peaked and therefore inflation not to a to the moment. I wonder what the Fed would make of this chart. Yeah. Listen we've I don't know but we've certainly heard from a lot of members of the Federal Reserve this week including Jay Powell in his confirmation hearing speaking confirmation hearings. Lael Brainard up on Capitol Hill today going for the vice chairman spot. And she had some comments to do to talk about inflation in particular but also the balance between Fed policy and making sure you don't do too much to slow the economy down. Here's what she had to say. Inflation is too high and working people around the country are concerned about how far their paychecks will go. Our monetary policy is focused on getting inflation back down to 2 percent while sustaining a recovery that includes everyone. This is our most important task. That's Lael Brainard up on Capitol Hill this morning. You know you guys are hearing more conversations but I am hearing more. Randall Kroszner was up on TV with David Westin just as balance. It's going to be very tough for the Fed to thread the needle correctly and get policy right. I think so. But I think talking balance I mean I don't hear balance in some of those comments. I mean she says that. But when you listen to what Brainard said when you look at the interviews that we had earlier with Michael McKee I think what Loretta M. and then some of the commentary we heard from Mary Daley from Patrick Harker even Rafael Bostic. There's no ambiguity right now at least about the idea that March 20 sic that march that March meeting excuse me is a live meeting that they are seriously considering lifting rates here. And I think the removal of that ambiguity is rattling a lot of markets as we speak right now. You got both of the NASDAQ indices on the lows of the day back down 2 percent here on the day. And you got a lot of folks out there that have to reassess here. What now. What the. That is going to do. But how fast they're going to do it hasn't happened reassessing since the start of the year. He got booed like tone for hikes. What does it mean. How have they not been hearing this already though. I'm kind of surprised if burnout was by no means the final sort of shoe to drop in terms of much being live. We've been hearing this again and again for the past three weeks. Why do we still have that slight dip buying in the last couple of days. And why then today do we revert and worry once again about a March rate hike when really felt like that was driving market sell off previously. Yeah that's a good point. I think Michael McKee had a good point saying that January will really help that January meaning lay out the tone for the year set the agenda. One other thing about pulling forward Kutty that roll off of that balance sheet which is a much shorter window than we had in the 2015 2017 cycle. I will just bring you one note as we are in the day to day and you see a NASDAQ that sells off 2 percent. It is a UBS strategist saying that rising rates they don't really change the narrative so much. You're looking at the first three months after a rate hike. The S & P on average has still gained about 5 percent. That is the push pull in these market and the tech that tends to be the outperformance. I want to mention Charlie Evans because there's some headlines crossing of course the president the Chicago Fed. He says the time between the rate lift off and balance sheet roll off seems shorter. And maybe this is what's worrying markets a little bit. We know that the Fed is going to start raising interest rates Caroline but it's that you know what's the time between when they do that then use another tool in their tool chest to start take some of the liquidity out of the markets. And that is of course is what roils stocks what overall has seen the inflation of assets worldwide. What's interesting remain is how much. Now we see the outperformance of emerging markets versus developed markets. How. Now we start to see though the dollar actually rolling over. The dollar seems to be priced in that we're going to get rate hikes. I think you pointed this out I believe last week and I think a lot of people need to refocus on what we're seeing in the affects market. And that gives you a little bit better of a read here even if I dare say daily than the bond market right now of where a lot of risk sentiment is right now. And you talk about the outperformance that we've seen of emerging markets that are down a little bit on the day today. But over the last few weeks you've seen outperformance here that could actually be maybe the narrative at least for the next few weeks. I'm not close enough to you to kick you onto the table remains that we let you get away with that comment Carol. Just quickly here Cameron cries out with a really good piece. Typically you would see some of the dollar strength in height hiking cycle except for the fact that if you hike and all of U.S. assets underperform that is the dollar weakness we may be seeing. All right. We'll continue this. That's going gonna do it for now. Gary back together live on radio TV and YouTube for Beyond the BALLOT Cross platform coverage are going to count you down to the close on this Thursday. All right let's continue our market coverage right here on Bloomberg Television Richard Wise CIO of Multi Asset Strategies over at American Century Investments joining us right now. American Century has about 240 billion dollars in assets under management. And Richard. Let's start off with I guess all the talk right now. Everyone seems to be if not afraid at least concerned here about what the Fed may do and more importantly how fast they may do it. Right. That's what's driving the markets right now. Right. Monetary policy which seems to be baked in the cake is three if not for rate hikes and possibly a reduction in the balance sheet after that. And the markets are adjusting day by day to comments like the vice chairs today etc.. But it's also in the hands of Covid still. And unless the Fed has recently taken on an epidemiologist onto the FOMC it's going to be a tough row to hoe here because you have to thread this needle not only of economics but of the medical issues related to Covid. And if there's another member of the Covid fraternity added on to Omicron then that's going to obviously throw a monkey wrench into monetary policy. So it's very hard to forecast where it's going but right now three or four hikes and then some duty after that. And what are you thinking about in terms of supply chain headaches and inflationary pressures going forward. We all look to. Well this is a global and having a global conversation that we have to have when China has a zero Covid policy. Then. Manufacturing. Well then some of the price headaches that we've all seen as a consumer. Well we're starting to see some relief in the supply chain disruptions. Some but not all. Baltic Dry Index truckers reports even the same prices paid. Which is generally a a leader to CPI. We're starting to see some relief there. We're obviously hopeful that that disperses across the globe. So we're hopeful and looking for inflation to decelerate here from its current levels and slow down. I think the market expectations as well as consensus expectations are still for around 4 percent year over year which means given our starting point we're going to wind up somewhere around two and a half percent year over year in the fourth quarter of 2022. That would be ideal. That would help average if inflation maybe has peaked if that's how you're thinking about the future. Have bond yields peaked as well. I know we're back down to a 170. It really does seem like breaking above one seventy five. One seventy seven. We can't do it. I'm not sure they're peaked quite yet. Especially with the Fed about to be shelling some issues at least sometime around year. And then that's going to have an effect if not a real effect in the markets. It will have an implicit effect. So we're likely to see 10 year bond yields hit with a two handle at some point this year. Let's talk a little bit about corporate earnings. I mean we ostensibly are starting their earnings season tomorrow with the big bank earnings. And of course over the next couple of weeks going to get a lot of those tech stocks which have sold off and some of the other retail names out there. When you look at the potential for margin compression when you look at the potential that some of the revenue growth that we enjoyed in 2020 and 2021 may not necessarily be there this year here. Do you actually adjust your general outlook right now for this earnings season. Yes. And we have corporate earnings as economic growth is going. They're both decelerating quite rapidly. So right now consensus expectations are for around 4 percent. Real growth here in the U.S. maybe a little higher in euro land and lower elsewhere in the emerging markets. Corporate earnings maybe eight to 10 percent this year after a double digit quarter we're going to see coming out. So it's going to decelerate pretty rapidly especially in some of the High Flyers sectors last year. So we're positioning more towards the value oriented stocks. We saw head fake last year from growth to value and then back. But we're expecting that rotation back to value and depending again on Covid in the Fed maybe even into defensive issues this year. We haven't made that move yet. So corporate earnings are a big driver but we have interest rates rising demand slowing corporate earnings decelerating. Really hard to see a bullish year here especially in the double digits for the S & P which should learn no you're not in control of supply chains. We did that while a few months ago when I sat out there in sunny L.A. with you. What about I know you can go global to talk to us about whether it should be a time to stick in the United States when you all seeming a little bit like glass half empty on some of the perhaps an hour to the west. Stocks and risk assets go. Is it time to get out of the US entirely. What about emerging markets for example. Yes exactly. That's exactly what we're doing. As much as we're restricted from physically traveling overseas. That doesn't mean your investments can't go overseas. And we're seeing starting to see much better values overseas. Euro land in particular and even in some of the emerging markets ex China. So in the emerging markets you have high commodity prices current account surplus. So both stocks and bonds and currencies there in euro land expected economic growth consensus expectations now asking the U.S. for 2022. And our numbers have been coming down recently. So the biggest opportunities we believe will be outside the US both equities and possibly emerge bonds. Richard Wise it's great to catch up with you again. Stay well. CIO Multi ISE Strategies for American Century Investments. Always great to get those really focused takes meanwhile. Well we talked about perhaps earnings. You didn't sound too optimistic about the corporate earnings growth there. But we've got plenty about to hit the tape. Bank earnings begin tomorrow. J.P. Morgan Wells Fargo Citigroup remembering already had Jefferies one of the most important things to watch in those results. Plus we'll talk with Chris CAC head of consumer banking at M.A. sounding almost 100 crunches with the aim of offering financial services in a variety of languages serve diverse populations. And we're keeping a close eye on of course the markets as we head towards the closing bell. Jim poses with us retail group chief investment strategist. That will not say much more coming up. Somebody back. This is the countdown to the calls of some 44 minutes off to go in the trading day. This Thursday afternoon. Right now stocks setting up around their lows of the day as we head in the final 40 minutes of trading here 46 75 on the S & P 500. The Nasdaq down about 2 percent on the day as a lot of those big cap tech names continue to show some weakness. The two year yield not really going anywhere today still camped out right around 90 basis points. Call it 89 on the day. And most risk assets including Bitcoin are here also on the day flip of the board. And take a look at some of those big cap tech names. You talk about Tesla down about five and a half percent on the day despite a little bit of a rebound yesterday. And a lot of those high multiple software names and enterprise names like service now lower here on the day by about 9 percent. If you're looking for a bright spot look too I guess what can be considered some of those value tech names you're gonna find that names like IBM Hewlett Packard Dell basically old school tech. IBM shares up a percent on the day and seen some bright spots out there in the travel space with Delta Airlines reporting a relatively bullish forecast here with the idea that they could reach profitability in the second quarter of the year. Expedia shares up about 3 percent here on the day. Let's bring critic Gupta into this conversation every day around this time we have our Options Insight segment critic stepping in today for Abigail Doolittle. And I know normally she takes a look at a lot of the market action out there. What are you been looking at today. Well we've got to talk about tech here because that's really been the story you have to check on your side to really post the pretty monumental gains you've seen in 2020 and 2021. Let's bring in a market expert though not of course. We go to Allan Tuchman joining us on OPTIONS INSIGHT today for he is the chief market strategist at Bulls Eye Option. Allan thank you so much for joining us. Tell us what's driving this here. Because tech really hasn't had a break since that Black Friday sell off. Is this simply attributed to those rate hike bets or is this simply exit of haven flows. What's driving this. Well we could talk about the rate hikes which been most widely telegraphed in the history of the world. And I trust what the markets are telling us and the markets are telling us we're gonna get four hikes this year and two hikes next year and no hikes after that. So that brings us to a whopping one and one half percent. Your last guest was talking about the 10 year yield being about 2 percent. That's not alarming to anyone. And it should be. Stocks are still the choice for yield. Now looking at the index. The index had a great reversal on Monday where it tested its support most. It tested or rejected and it came back up. We had sex 16000 yesterday which was a halfway point of the drop from the top. Now we've got to build on it. But every time in history the markets rallied and made new all time highs. When it's recovered half of those losses. So I don't talk about when the dip buyers are going to show up because at the end of the day sure they're rate sensitive. Sure. You have this kind of haven impact on about anything. These are stocks. These are big companies Microsoft Apple that actually have pretty fundamental drivers. So when do we see these stocks actually recover and to what levels tomorrow. Tomorrow's the start. We're going to get the earnings season kick in. We're going to get billions of pure profit from the banks and you're going to see the fundamental facts in full focus. And that's what's going to be a reminder that this is about earnings and how much corporations make. And we're going to see that from here on out. So we had a little bit of volatility as we often do coming into every season when there's uncertainty and there's things to worry about. But I'm excited to get this kicked off because we're to see how much money these companies are making. Yeah. Alan I'm with you there because I'm really curious about if you see that kind of big tech move does it trickle into some of the other kind of subsectors into ESG funds for example that are very tech weighted of course or if you see the semiconductors following suit but you want to trade that. I really want to walk through. Tell us a little bit about what you're thinking about how to play this market anything that's catching your eye. All right. This is a stock that's bad enough to buy. It's a SunPower. SunPower spent between 20 and 30 for nine months. It's down here on this 20 level to super support. It's 70 percent off its high. So it's a great risk reward. And it's also was down 40 percent last year. So what I'm looking at is an in the money option my simple stock substitution strategy. I want to buy them. June 15 call now. This option is five dollars and 50 cents in the money stream for about 650. So it's like being long from 15. It hasn't been done at 15 level since 2020. I'm looking for a rebound. I've seen bullish divergence where May new lows just last week. And it did not make new highs volatility. So this is the way I'd like to find a pick the bottoms. I've got June until June for this to turn around. If we get a modest move this option does exceptionally exponentially well. Well folks you hear heard it here first from Alec Nuck man joining options and said today he is chief market strategist over at Bulls Eye Option. We thank you so much for your time. Taylor back to you. Thank you as always there critic Gupta. In the meantime let's get a check on some of the other big corporate stories that we're following at this hour. And we talked about this an hour ago. It's a big story. Let's hit it again. Taiwan Semiconductor has underscored the overwhelming demand for new iPhones and chips that power everything from TV's to cars. TSMC projected quarterly sales well ahead of estimates. Apple's most important chip maker also plans to spend. Forty four billion dollars this year expanding and upgrading capacity. That's up for more than 10 billion dollars last year. Delta Airlines says that on Micron Varian will delay a recovery in travel by about 60 days and lead to a first quarter loss. But the carrier still expects to be profitable for the rest of the year. Delta's fourth quarter profit was a penny less than estimates. The virus in winter storms in December led the airline to cancel up to 10 percent of its flights. And if this solid were all leading at our desks is more expensive. Retail prices for lettuce they are soaring more than any other food item tracked by the U.S. government. Romaine lettuce is not the Romaine Bostick that we love in this program. Those prices are up 61 percent in the last year. Demand has been unpredictable. Do you understand the outbreak. Farmers of course are planting less so they're not stocked with all the excess. Is that fair. Lettuce though or romaine. Yeah I believe there's a correlation here between my life. And you would like that. The popularity of romaine lettuce population. I'm long kale. Sorry Hale but I'm still long. Romaine Bostick remain as the king of all lettuces. Look at that heart dealer. Is that how you make a hard case. Right. Sixty 61 percent increase in romaine lettuce prices in the last year. I feel like your wife should be having a rant about that. Remain not just about chickens but she needs to rant about the other remain. And that's a good thing. She never rants about me. I don't believe that. No she does. Believe it or not it's only one her and my mother. I mean we can get inflation into this story in any which way. And clearly the salad to get it. Maybe it's just new gear. Who shouldn't be trying to be big and at the same time is trying to be healthy at the same time tackle inflation. I had a slice of pepperoni pizza for lunch. See that is someone looking after that calorie content. Doing my part to dry January 2. But guess is it for you know things like this is bean bag. So apparently investors are betting that maybe the dollar has reached its peak already. Many advising now to put your money into emerging market stocks. Surprise surprise when dollar weakness. Gold as well may be getting a little bit of love. The main thing I love about this story though as it is written by Ruth Carlson and Joanna Singer is that there is a money management advisory called Brandywine Global Advice Investment Management. Brandy Wine says that fear ante dry January. Yeah. Vintage. Yeah. The idea that it's reached its peak. I think that might be it. A little bit overstated right. See that. The most crucial moments in the trading day. This is Bloomberg Markets the close with Caroline Hyde Romaine Bostick and Taylor Ray. Counting you down to the clothes just less than half an hour left the day tried. And unfortunately most stocks right now around the lows of the day. And you see that on a sector level as well. This is really interesting. Come and take a look at this because it's technology. I mean again getting worse just in the last 30 minutes or so. You're now off on the S & P tech sector index off more than 2 percent. That is the big red number at the bottom of the screen. There are a few up in the green. You could argue utilities industrials and staples. Some of that feels a little bit defensive. Industrial certainly doesn't. But overall it is mostly red and technology that drags this equity market down. Yeah. And one of the stocks is really emblematic of that is Netflix here. It's been mired below its 200 day moving average for quite some time now are now down about almost 3 percent here on this day. Remember. We get their earnings next week. So it's an interesting setup headed into that. A lot of the high multiple software and enterprise names continue to be leading this market lower. CloudFlare are down about 12 percent here on the day. Delta Airlines so moving higher here though we should point out. I mean it's been a pretty steep drop for a lot of these travel companies since they hit their peaks almost a year ago up about two and a half percent on the day after giving a forecast for a return to profitability in the second quarter and onward. In its words and let's take a look at Ford because this is really a bright spot here. Ford shares up two and a half percent on the day. Twenty five bucks a share. That's the highest level we've seen Ford going back to 2001. And more importantly it actually crossed the 100 billion dollar market cap for the first time in its history. And anyone who doesn't think that Jim Farley has just done a great job of turning this company around in a year and a half or so that he's been there this is really representative of that. A lot of optimism by investors for what the future holds for Ford. Future holds a Ford future holds for many a company mean look at earnings. You would just signaling out that Netflix. Look at this chart really caught my eye. And the fact that basically we haven't budged much when you look at where the consensus estimates if you look at the sell side all for fourth quarter earnings not changed in the last six months. Basically we remain flat. What does this mean in terms of there's too much optimism being cited by analysts summoning CEOs to a large extent and trying to steer us to the downside as we look towards the end. Well full throttle of earnings upon us. The banks of course kicking us off tomorrow. Yeah. Let's start with the bank earnings kicking this off tomorrow. Caroline Hyde as you mentioned J.P. Morgan Wells Fargo Citigroup all set to report. Let's do a preview with Allison Williams our senior banking analyst for Bloomberg Intelligence. And Alison it feels like loan growth is what everyone is talking about. What are you really focused at on these big earnings that begin tomorrow. So loan growth is a big part of it. And I think that's important for the industry not just the big banks I cover but especially for the regional banks that Herman Chan looks after as well. And the commercial side of things is really where we expect to see a pickup. Bank of America has been one of the more bullish on the outlook for loan growth. The industry indicators that we look at all look strong. And so we think growth will improve. The question is just by how much. Tomorrow when we hear from JP Morgan and Citi we think the interesting number is going to come with regard to card balances. That's a more important variable for those two banks. That's been sort of a reason why net interest income sort of drifted down the expectations for this year that card loans or I guess balances are increasing. But we just don't know how much of that is borrowing how much is that is revolving. So people spending by paying it back. That's why we've gotten the disappointment. Citigroup did say that payments were still elevated as of November. But if we could see a turn there that would be important for those two names. Alison talk to us about the rate environment here how that benefits some of these banks but also kind of connect that to the idea here too that there's some concern about economic conditions and I guess the quality of credit out there going forward. Sure. So keep in mind that the stocks have really run as the interest rate outlook for the banks have improved. But that's all looking forward to that. This quarter we're expecting to see some steadying of net interest income. But loan growth is a key sort of organic variable that's going to provide that path to the higher net interest revenue that sort of accelerated by higher interest rates. So if you think about the banks the when interest rates go up short term rates go up. Their variable rate loans immediately reprice. And it'll be probably a few quarters before they start to raise price their deposits just because rates are so low. So you can see that that goes straight to the top line and then fall straight to the bottom line. So that's great. Not just for revenue but also overall profitability and. So you know really what we're going to see this year is more of a transition to improving net interest income building through 2023 and the capital markets environment which will still be a highlight of for Q. Still some momentum and one. Q But that could slow a bit. It doesn't just make into us for us if you will where optimism is where you think the consensus lies. So banks whether a lot of these companies have they don't live up to expectations. I'm going to be punished. And it's stock market as we saw just yesterday with Jefferies. So I think you're Jefferies is a little bit of a unique story because their growth was so outsized compared to some of these larger banks for the four quarters through one. Q Twenty one. And so now we're sort of seeing that reverse. Now we're seeing the downside of that. Things in fact falling much worse through the prior quarter and 3 1. Q We don't expect to see that magnitude at the banks though. We do expect to see weak SEC. We do expect to see equity an equity trading better and fees very strong. We think that's actually going to be an area of upside. But I think in terms of the stocks where you really could get reactions or surprises one if we do get disappointment on the loan growth side if we do get disappointing net interest income guidance which would probably be related to the loan growth side of things that that could be a negative. But really I think the expense outlook is where you could get a lot of variability. We have a lot of macro clues. We don't. We know the banks are going to be spending more to compete but we don't know how much that's going to raise costs. All right. Alison Williams of Bloomberg Intelligence keep an eye of course on those bank earnings tomorrow. Citigroup JP Morgan Chase Wells Fargo for its Republic of Black Rock. All we're gonna actually hear from Mike Santa Massimo Wells Fargo CFO tomorrow after the bell. Most of those earnings are going to be out before the bell one of the bright spots right now on the day. Well that's actually bank stocks unfortunately for the rest of the companies out there. Pretty much everything is in the red. In fact stocks right now around the lows of the day. The Nasdaq 100 is down right now by about two point two percent. We are counting down to the closing bell which is just about 20 minutes away. Jim Paulson chief investment strategist over at the loophole the group going to be joining us. This is Bloomberg. 17 minutes until this market closes and once again big tech getting beaten up. This as we see it now at the lows. The benchmark NASDAQ the lowest since October the 14th. So about three months we haven't seen these sorts of levels of fourteen thousand eight hundred sixty. Down more than two percentage points. The pain being felt as the Russell 2000 also sings. It was the performer in the green but an hour or so ago now off by 5 10 percent. Bloomberg Commodities Edge index also sings as oil for once juiced pushes that little bit lower. This is the dollar to go slow. This is all as we really factor in what a March rate hike looks like and what that means for maybe inflation hedges. Is it one that but bitcoin a risk asset or by two point six percent. Let's go through the cross asset conversation. Jim poses with us chief investment strategist at the New Fall Group. Jim as we march towards this market close and another volatile one. Where are you on the rotation trade. It seems to be on again off again. But today very much sell big tech and maybe ISE some of the cyclicals. I actually think Carol and that's the biggest thing that's going on. We had a couple of these big rotations last year as well. The relative performance relative price of tech you know went a lot lower than it is right now. Couple of times last year I think more than about a market event. I think this is more about a rotation you know. Some of the biggest winners here of late has been international markets. And the bigger story of all of it may not be interest rates or yields or tech. It might be the dollar coming down losing maybe some of its safe haven premium it had last year and leading to quite an outperformance by both developed and emerging markets. But certainly it's a shift from large cap growth to small caps cyclicals and international markets more than anything else that's going on here. With regards to that move to the dollar Jim that that downward move that we've seen a lot of people seem to be attributing that to the idea that the Fed is a little bit behind some of the other central banks out there particularly in some of the emerging markets. Is there a general sense here that maybe the dollar could bounce back if the Fed is aggressive. You know I mean I I've kind of had a different go in that I think coming into this year everyone thought the dollar would go higher because the Fed's going to tighten and yields are going to go up. And I've got to one of the reasons I think it's weak is because you had a fairly strong consensus that it was going to go up. And that often happens when you get to meet people one side of the trade. But I think more importantly what I found was evidence of you know consumer confidence really collapsed last year and it peaked about in May and the dollar bottomed in May. And ever since confidence becoming down the dollar has gone up. And I think maybe we're seeing that a little bit of the reverse of that. All right. Sit tight for one second Jim. We need to take a quick break. Jim Paulson is sticking with us chief investment strategist over at the little group. We're counting down to those. Closing bell is just about 14 minutes ago. Stocks right now right around the lows of the day. We'll be back in a moment. This is Bloomberg. This is kind of to the close and Caroline Hyde Taylor Riggs. I'm Romaine Bostick he finishes his mouthful my IBEX mikes. It's a cookie. Actually it's a cookie this time. Meanwhile while I eat something sweet when tech is on the downside and remain lettuces cause so much wear on the down and down when you're looking at what's happening. I had this chop made originally to show you that actually the Dow Jones Industrial Average as sort of a cyclical play was in the green but it's now not and everything has when he pushed in the lower side as the day of trade has continued. We're currently seeing the NASDAQ off to the tune of 2 20 percent two point five percent. Now the Dow Jones thinking of a further two down six tenths of a percent remain. The pain is definitely in tech. Yeah it's definitely in tech. I do want to focus on real quickly here at the bottom of your screen the KBW bank index actually turning red here had actually been one of the bright spots here. The big set up of course into bank earnings tomorrow with JP Morgan Citigroup and a few others. Definitely keep an eye on that space. Homebuilders are still holding their own. We did get those CAC w preliminary numbers here and they were actually relatively good here. Land are actually boosting his dividend. Also some bright spots there. Of course as you pointed out tech is really leaning the slower the ISE. That's the second line in your screen. They're down 4 percent here on the day. Those software names continue to be a drag. Taylor on this market still with us of course John Paulson chief investment strategist at Left Hold Group. And Tim we're talking about some of the dollar weakness earlier. Can you expand on that the implications as you go across asset. Because typically we would think in a Fed hiking cycle you would see that dollar strength fund. A lot of the commentary says countries with high inflation generally do see some currency weakness. And as well as this overall notion that in this hiking cycle if that means big underperformance of U.S. assets that could be some of the dollar weakness that we're seeing as well. Is this a cross asset story. I think it is. I really do. I think it will affect everything. I think the dollar is going to continue to weaken it a good part of this year. I think the one of the bigger influences here if inflation does moderate and Covid we move that from a pandemic to an endemic I think consumer confidence is finally going to really lift. And if it does if you get more confident you move away from dollar denominated assets to some degree. You don't need the safe haven of the US dollar any longer. And I think we're going to see more of that as year progressed. If that happens it has a lot of implications. Of course it's going to make the Fed's job more difficult if the dollar comes down and continues to drive commodity prices higher over this over this year. But also it's certainly benefits the more cyclically oriented and those with large international businesses. And it certainly favors international stocks over over U.S. stocks just in general. So the dollar could play a big role in the sector rotation that we're getting a little flavor of so far this year. Sector rotation and geographical rotation as you say. Why are you liking it. Many people saying finally Europe perhaps plays a bit of catch up or is it more emerging markets which have had a lift for the previous week at least. I'm the biggest fan Caroline of the emerging markets but excluding China I'm not a big fan of China. It's going to continue to be a post pandemic loser for a host of reasons. But the E maxi ETF for example the E ex China has been outperforming. I think we'll continue to do that there. I think they're going to be big beneficiaries. Ex China from companies continued to diversify supply chains away from China. I think a lot of the frontier markets might might even lead the emerging markets and in that pursuit they have been a little bit and might even more so as far as developed countries. I do like the euro zone. I do think it's maybe finally a year of catch up for them. They're in the euro zone. If I had to pick another one outside of that I pray go with Australia. Maybe a commodity beneficiary in the coming year. The MSCI pretty strong outperformance here particularly versus the rest of the world here. A gem. When you look overseas here you know I understand the play in emerging markets. I can understand to a certain extent with some of the developed markets as well here. When you look at economic the economic recovery do you anticipate or do you sort of factor in the idea that it could potentially be very uneven with certain countries doing way better than others. And how do you sort of structure I guess in investments are trading strategy or investment strategy around that. Yeah I think we're going to see that remain but one of the things to keep in mind is that there's been a much more robust recovery in the United States than almost ever anywhere else. And to the extent that Covid does wine down to some extent at least in the developed countries let's say I think net net there's gonna be a better relative recovery in overseas economies than there will be here because we've had a bigger economy. So we I think we slow down this year to like 4 45 percent growth but I think other overseas economies will slow down less. So the growth spread is going to diminish which which will hurt the dollar in part but it also will favor I think more international economies. If if we move beyond Covid to an endemic I think it's going to benefit the rest of the world more than the will the United States. All right. We're in conversation right now with Jim Paulson over at the lethal group. Second with us as we countdown to the close less than five minutes ago stocks are around the lows of the day. The Nasdaq 100 Taylor right now down about two point seven percent. Going to get back to Jim in a moment. But Taylor you're taking a look at our Stock of the hour. Yeah. Let's take a look at. Well on this theme of this economic recovery Norwegian Cruise Lines is one that I was talking about earlier. You're still managing to stay in the red. You're up as much as 70 percent earlier still up about three point seven percent. This is after the CDC said at a Senate hearing on Tuesday that well they may let that no sale order expire on January 15th. That will permit cruise lines to operate again at full capacity given how much the industry has adopted two and adhered those CDC guidelines. So really thinking that it in a day or two is time you could see some of the resumption of some of these big cruises. Let's change up the and Jim I'd love to bring you back in here as we're talking about this economic reopening the recovery. I again come back to credit spreads both investment grade and high yield. Still pretty low still spotty tight. Is that based on fundamentals or is that part of the risk taking behavior that this Federal Reserve has encouraged. I I it's probably a little both. I think it is. But I'll tell you what the fundamentals remain spectacular. I think we're gonna have a really great earnings season here just starting here this week. We probably grew 6 percent real terms real GDP. We pray at 6 percent inflation which means we had a quarter of 12 percent nominal activity. That's going to feed through to powerful top line results for most companies. And when I go through companies look at the surveys all of them report a great ability to raise selling prices which means I think margins are going to stay remarkably strong in the face of a very strong top line. So I think one of the things that could bail out this tech rout at the moment and in some of those fears will be the earnings season. I think it's going to stay pretty good kind of keeping a floor under this. The other thing is don't lose track of the fact today that bond yields have rolled over or there are no longer going up for the last few days. That could help the tech trade as well. Jim Paulsen always great to get you across the asset perspective. Chief investment strategist for the lethal group. Stay. Well meanwhile this market is not looking well. Locked down two and a half percent. Yes tech not that far off the lows of the day. We're moving closer to those closing bell full market coverage as always right here on Bloomberg. As we take you to the bell and beyond beyond the bell Bloomberg's comprehensive cross platform coverage of the U.S. market close starts right now. And right now we are two minutes away from the end of the trading day. Romaine Bostick Caroline Hyde. Taylor Riggs counting down to the closing bell. Here to help take us beyond the good bell our global simulcast partners. We're joined right now by by Carol Massar. Vic has the day off bringing together our Bloomberg Television Radio and YouTube audiences. And Carol let's get right to it. We're looking at the Nasdaq 100 and Nasdaq composite down about two and a half percent. I want to point out the S & P is down about one and a half percent. These are the lows of the day. But this is not necessarily a broad based sell out. About half the stocks in the S & P are still in the green. But a lot of those tech names are really dragging us down. That's a really good points of good perspective. And I will also point out one of the groups that's really winning in today's section is the airlines sector. It's up about two and a half percent. The SBC for Composite Airlines Index is up guys thanks to Delta earnings. So we are seeing some of those are winners in today's session. Meanwhile the losers as we see the Nasdaq really underperforming in terms of volumes actually the action is really happening in the S & P 500 and I mean up 16 percent versus your usual daily average. So people are putting them you know putting money to work when it comes to those two hundred ninety three stocks that are on the downside. I think it was really interesting that we were speaking to Kevin Nicholson of course earlier saying that the role of bonds in the portfolio is some of that shock that we feel on days like today is now traditionally in the past six months or so he says that that hasn't been working but today remain you do see that it is down five basis points on yields at least here on the belly of the curve. Yeah. And I just want to point out too I mean the dollar which we've been talking about all day dollar weakness it was down about two tenths of a percent. It's actually been flirting going back into the green right now. So it's interesting to see people buying the dollar buying bonds selling off some of those stocks here. That's the setup at least on a daily basis. What it means long term. Who knows. Dow Jones Industrial Average though it looks like it's going to finish the day down by about five tenths of a percent or about 170 points or so as we get the closing bell and wait for these numbers to settle just a little bit. The S & P 500 is going to end the day down by about one point four percent or 67 points. The Russell 2000 down about a tenth of a percent. But really all the focus right now are on the NASDAQ indices the composite and the Nasdaq 100 each down about two and a half percent right now. We should point out too Carol when you go back to last Friday we were talking about this drawdown that we saw on the Nasdaq basically about 70 percent from that all time high. We clawed back some of those losses but as of today we're now down about 8 percent from those highs. So one of the most meaningful draw downs we've seen on the Nasdaq indices are going back several months. Yeah absolutely. We talk about dip buyers but you didn't necessarily see that in today's session. You do wonder whether or not we'll see that over the coming days. I do also want to mention the VIX today up about two points two and a half points. So hitting that 20 handle today. So volatility we continue to see that in the trade. Carol let's take a look at where we are in terms of a sector level. You mentioned airlines. Earlier I was talking about the cruise lines. That's one of the bright spots. As you can see here the transportation index is up four tenths of one percent the third best performer. Other than that everything feels very defensive. Utilities food and beverage food and staples capital goods. That is that bond story that defensive story. Otherwise there was a lot of red even in the winners section as well. We take you down to the bottom of the screen there with some of the losers. And that is where all of the technology really comes back into play. It's media technology and hardware semiconductor equipment software services auto components. Now those sectors are off anywhere from 2 to 5 percent. All right. Until you set me up really well I'm going to bring up a board a couple of gainers a couple of decliners in. Session Taylor talking about big technology Microsoft among them down about four and a quarter percent it's now down about 8 percent on the year the software space remain. Talking about that a little bit earlier. Now service now top decline in the S & P 500 down 9 percent for the Thursday trade. Barclays lowering their price target to 680 from 791. That stock you can see closing at 521 a change so well below that keeping the overweight rating. So what did gain. We had actually one company going public TCG big private equity firm. We talked about this early up more than 15 percent. What I mean. I'm sorry. You know I always hate to interrupt you but I do it anyway. Caroline Hyde. But to go back to the point on the software I mean I mean in all seriousness here we talk about the weakness in those software stocks and the idea that it is really those high multiple tech names that have been moving lower. There was an interesting note out a little bit earlier and I'm kind of forgetting the bank that put it out. But they talked about the idea that there were a lot of quote unquote value tech names and there was kind of some of those old school tech kind of your Hewlett Packard other the world your Dells even IBM. Those names mostly finish higher here. But when you get those software names to build a bill Sprout sent no confluence service. Now these killer trade debts all these stocks down 7 8 9 percent here on the day. You tell me remain you're not comfortable with the P A current P of 441 and service now. I'll pass on. I figured as much. That's DAX down almost 20 percent so far this year. I mentioned CPG in its first day of trading up 15 percent. And I do want to mention Taiwan Semiconductor. We talk about technology. It's important to do so. We watch those semi names that names up five and a quarter percent. This is it talked about a big spend a CapEx spend in 2022. We're talking at least 40 billion dollars maybe as much as 44. And that was more than what the street was expecting guys. Yeah. You move across from what's happening in terms of your stocks to what's happening in terms you across asset perspective. And I wanted to go to commodities because really we had and more so Citigroup hon just talking about how we could move into a surplus in the oil market come 2023. And oil actually on the downside today is that as they too I want the Federal Reserve might do what does that mean for global growth. What does it mean for U.S. growth. What does that mean for demand for oil. We see WTI crude actually giving up gains. Women they're still above 80 dollars in fact to eighty one dollars. Twenty five went down by a percentage one point forty four percent. We see Brent crude giving up about a percentage point as well. Natural gas. Absolutely. Volatility here of course as we saw yesterday natural gas prices spike about 13 percent on the back of the cold weather that we're experiencing here and particularly the northeast in the United States is now plummeting back down 12 percent. So make of that what you will in terms of our on again off again moves into natural gas. I'm looking what's happening in terms of foreign exchange in sympathy with oil falling the wind and crone goes down by six cents percent. I don't see it here but the greenback dollar index basically flap in fact down for three straight days now the worst three day sell off in the greenback dollar index that we've seen since back to May. Therefore on the flip side of that you see a little bit of buying in the yen up about four tenths percent. So strong also getting a bit up some three tenths of a cent. But Taylor once again buying across the sovereign bond market at the moment from Italy to Portugal the 30 year debt getting a bid so long term and also short term debt. The Spanish two year yield down some 4 basis points. Yeah you really seem to be beard for the safe haven. Come back into play as bond yields are showing that that is their role within these markets. You're down 3 to 5 basis points pretty much across the curve. But what is I think interesting Carol as we think about all of this week a Federal Reserve that's continue to talk about three to four rate hikes a cute teen a big shift from QE and long term perspective the range bound nature that we've been in still so far that long term trend line has been higher. All the analysts that we've spoken with Jim Paulson Kevin Nicholson for example on TV have said that yes that path is going to be orderly but it will be higher from here. Well another thing I would throw on it. You know it's been such an interesting week. I'm a little exhausted a lot of Fed speakers. But you know this kind of they've really come together. We know we're anticipating that they're going to raise rates guys. But I do wonder if any way that what we hear from CEOs could that change kind of the psyche within the financial markets in terms of the outlook. I think the short answer that is certainly it could. I guess the question is what do we actually hear out of them. We've actually seen some revisions already from some companies basically kind of front running this saying hey tamp down your expectations just a little bit. But of course we also saw you know there was a lot of pessimism going into a couple of the quarters last year. And a lot of companies are really knocked it out of the park or at least were able to reassure investors that everything was OK. And we have from rich advice every American century investments a little bit earlier on TV talking about all Micron. I mean we sort of put it to to one side on days such as this where we really focus in on what the Federal Reserve is doing and talk about inflation. When you get a PPR reading it still so elevated. But what does that mean for future supply chains. What does that mean from some of the executive conversations we get over the next few weeks overrunning season. I'll take the flip side of that trade and say that this is a Federal Reserve that has said we can't solve those supply chain issues. We can solve a demand problem. Demand isn't the problem. And I think most of the analysts who spoke to deuces barring a huge massive. Turn of events. This Fed knows exactly what they're doing the next two months but they've got to get prices down. I mean that's ultimately this is about comes back around to inflation here. Whether they actually have the tools to really tamp it down here. I mean we saw of course the CPI report yesterday. We've seen retail prices for things like lettuce skyrocketing and any other food item out there Carol. It's crazy. We just did. That's great. What was it like 60 percent something over here that we're missing. So you've got to be specific about which type of lettuce. You're absolute right. So maybe we need to move to CAC. But you know it's a you know that's one of the oldest varieties out there. You know I was like that back in the Byzantine era. So now in fact you should know it's like ancient lyricists Goldilocks. Yes it's roomy. But you know I do wonder about BPI write that print. Maybe there's signs that things are easing. And I do feel like we're starting to get little tidbits of information about maybe when it comes to pricing maybe when it comes to supply chains guys. And Caroline that you know things are starting to ease. How about the labor market though and indeed getting people back into the office amid on the corner. I mean that Supreme Court news coming out about an hour or two hours ago really putting paid to some of that effort coming from the federal level to ensure that workers are forced to be vaccinated and get back into the workplace. But still companies are going to go at it and in an individual way. And it seems as though President Biden is asking them to do so. We're seeing pretty aggressive. Anyone back in the office though. I mean I was walking around midtown yesterday after work. I mean it goes down and there's no joke. Do we go for anything. All right. But we know things can bounce back quickly. So fingers crossed that we peak and we start to see people coming back and they come and buy their expensive salads. Exactly. If if they. If they're there. Right. All right. We got it right guys. That's going to do it for Beyond the Bell across time from coverage on radio TV and on YouTube. We'll see again. Same time same place. Talking bank earnings no doubt about it tomorrow. Meanwhile of course we continue to keep an eye on breaking news this coming as alphabet matter of course owner of Facebook Twitter Reddit all subpoenaed by the January 6th riot panel. Remember this is as we see further evidence wanting to come from individual lawmakers. And now indeed from companies in the response to what happened on Capitol Hill on January the 6th 2021 the storming of the Capitol. That does it. Of course more cross platform focus. We'll be back with that. Breaking news this happening back. Now of course the breaking news continues as to the investigation by the January 6th committee about well the riots on Capitol Hill that occurred that day in 2021 we understand now Alphabet Metta Twitter Reddit all being subpoenaed by the January 6th right panel. Let's bring in Bloomberg Technology host Emily Chang who she's been bracing yourself for some of this. And indeed Silicon Valley has been bracing themselves for it. Absolutely. Caroline you now have the select committee calling out these companies directly Google and of course its platform YouTube media its platforms Facebook and Instagram Reddit as well as Twitter. The chair of the committee saying that these companies just haven't provided enough information and believes that they have critical information that could aid in this investigation. They singled out YouTube specifically saying there were significant communications by users there who were actually live streaming the attack. They talk about Facebook where messages were shared misinformation was spread the coordination of the stop the steal movement happen. They also single out the sub Reddit The Donald on Twitter which quote unquote ultimately hosted significant discussion and planning related to the attack. Again this according to the select committee and Twitter for communications users had there as well. The committee saying that they've tried to get more information from these social media companies. They haven't ponied up this information and it's time to get that information now hence these direct subpoenas. So Emily can you kind of give us a little clarity though here as far as what they're seeking. ISE most of the stuff that they're seeking stuff that was actually posted publicly or are they looking for something that was maybe going on underneath the surface that only those companies would be privy to. It sounds like both. They talk about public communications for example many of the recent revelations about Facebook by the whistleblower Frances Halligan. The committee has deduced based on what they call public conversation and public revelations that they believe Facebook knows more than it's been letting up. So it sounds like they want more more information about what what happened on these platforms to be honest in broad daylight but also information about how the platforms handled this information. What did they know. What did they do to stop it if anything. And Emily how do you think the technology companies respond to those questions as well as questions about future investments into making these platforms more secure when you're talking about fair elections for example. So look these companies have always drawn a line between what's public and what's private. You know they've always emphasized that they don't want to compromise the data of their users but they're going to comply with the law to the extent that they have to. And they don't necessarily have a choice about that. All of these companies have announced you know different measures and precautions that they're taking to protect communications to safeguard the election. The you know we've heard about the resources that these companies have committed to authentic dissemination of information. But it's easy to do all of that after the fact. And here you have the collect select committee saying not enough was done before this event and leading up to this event. And we want to know more. Really fascinating deep dive there Emily Chang. I'm pretty sure you're going to be covering this throughout your show. But what 40 minutes time. Bloomberg Technology host Emily Chang that with all you need to know when those subpoenas for January 6th and how it goes technology. Taylor thank you there. Caroline Of course it is not Friday but it was such a move that we've talked with specifically Jim Paulson about this rotation that we wanted to do the factors on Thursday and said a factor Friday. Let's bring in Chris Cain our equity strategist here for Bloomberg Intelligence. Joining us to break down the action. And Chris what are you seeing so far not only this week but maybe so far in 2022 as we've all been talking about this movement back into value out of growth. I mean you hit the nail on the head Taylor. I mean it's been a huge movement under the surface here with the factors just a huge rotation in the markets. I mean value you has just rocketed higher so far in 2022 as a long sought factor has really been at the expense of growth. So you know factors like average five year CPS growth has really been hurt very bad over the last two weeks call it. So that's been the main story out of growth in the value. Like you said the only other factor that I do want to mention is low ball. So you know long low volatility stocks short high volatility stocks that factors working so far in 2022. It's really continuing its momentum of November and December of last year. So that that factors up a lot over the last three months. That really shows the relatively defensive nature of some of the investors in the market right now. Chris talk a little bit about the interplay between long short. How much is value up and what has been the primary driver. Yeah. So it's interesting Romain like when you look at the long short values doctors they're up huge since. Over the last two weeks like a 10 to 15 percent even more over some of these some of these factors. But when you look at the individual legs like the long leg versus short leg it's really the short leg that driving it. So the long leg of a value factor will be cheap stocks. That's up like two to three or four percent over the last two weeks. But the short leg is expensive. Stocks that's down like 10 to 15 percent over the last two weeks. So it's really the popping along for value factor is really being driven by the decline of your shorts on The Factor. What then of sort of long only value. Can you remain committed to that factor rotation. Because it feels that it is such an on again off again. You know they have their time to shine in the sun for the first half of 2021 and then it fizzles out. Can you should you be long. Only Xi Jinping protecting yourself. Yeah. Caroline I mean you know we've had so many fits and starts and the value factor. They think we're all conditioned to be very skeptical. And we did write a note that said they'd long only value could disappoint. So you know we hear a lot about how the value factor is cheap like from the great club Vastness and others. And one can say that they mean that the valuation cheap stocks versus valuation expensive stocks is wide compared to history. That remains true. That being said when you look at the valuation of just cheap stocks in isolation they're not very cheap. I mean everything is getting more expensive in cheap stocks you know or aren't. You know they're getting more expensive as well. So you know we think that potentially the short end of the long for value factor could be the main driver of the factor going forward. And some of these long only value investors could potentially be disappointed. We want to thank you always for dissecting these on again off again rotations. Chris Kane of Greenberg Intelligence they were always great to have him. Coming up Chris Kay is joining us head of consumer banking and M.A. Bank. A programming note of course. I'm also going to be having an exclusive interview with Fed Governor Christopher Wallace 6:00 p.m. New York time. Isn't that. All right. We're focusing right now on banks M.A. a bank while one of the biggest regional banks out there in the U.S. based on total assets announcing today that it's focusing on diversity by designating an additional 100 bank branches as multicultural centers. Now this is another step in the company's mission to be a culturally fluent bank for all communities. Joining us right now Chris CAC. He's the executive vice president and head of consumer banking business banking and marketing over there at M.A.. Chris thanks for being here. Let's start off with sort of what this initiative is really about. What is it intended to accomplish. Romain thanks for having me. It was great to celebrate today with customers and colleagues this sort of milestone as we go along this journey. You know as we pick out the community bank and community model it's really really important that we really deeply in banks generally really deeply understand the needs of different race racial cultural and ethnic groups. And when we look at the at the opportunity here it's really about going deeper into our community and making sure that we can uncover the barriers of access to banking. And so it's sort of our motto this community bank being in deep in the community. But for us it's a real double down and intention to make sure that we're welcoming and supporting hiring and taking down those barriers. That's what this this represents. It's interesting Chris that this comes at a moment where even the Federal Reserve to a large extent was being dependent on to focus on inequality. When you look at a unemployment rate running above six almost six and a half percent for people of color whereas for whites half of that. What do you make of the Federal Reserve's balancing act at the moment when you're looking at trying to be inclusive in a jobs market inclusive of all economy when also having to tack tackle the inflation rate that we're currently seeing. How is that move by the Federal Reserve at the moment sort of affecting your bank. Yeah you know that the inflation certainly has a disparate impact on different communities. But as we think about them the job that we collectively have to do. I think it's really incumbent on the financial industry to step in and make sure that we are really really thinking about how we reduce the barriers to access. You know we work very closely in the communities with minority and small minority owned female owned better known businesses. And we were really closely with churches and other groups to really really understand how can we contribute in convene and be part of closing that wealth gap in the cities of America. How are you thinking. Big picture about a Federal Reserve that's looking at raising interest rates maybe three or four times this year. The steepening of the yield curve that so often helps the financials. But any impact on loan growth as a again we saw I think today was mortgage rates now going back to the highest since March of 20 20. Yeah you know organists were if we all contemplate look loan the yield curve and rates going up you know we're going to see certainly a softening potentially in the housing market. But you know if you look back at our and what's happened over the last 18 to 24 months we've observed that that our customers actually have more savings and we're continuing to see spending consistent rates now. Monday when when or tomorrow when the retail sales report come out we'll see what the overall impact on Micron has been. But we think our customers are going to continue on the consumption side. And actually I'm on the small business side. We're considering continuing to see relatively stable loan demand. But you know the impact of Omicron the impact of the uncertainty certainly is testing the resiliency of small businesses around America. But we see it. We see an update. We're hopeful about continued investment there. There's there are some regional differences here in the U.S. Chris and M.A. obviously has a big presence on the East Coast particularly in some of the mid Atlantic states here. Do you see. Are you picking up or are you detecting some of those regional and state by state differences. Yeah it's a great question remain. I don't think the impact of the last couple of years has been evenly distributed. You know in regions like western New York where we may have a deeper penetration of service economies we see we see that that the recoveries are slower. But you know at the end of the day I think our job is to actually be close enough to the community so we can tune into where that stress is and partner with our customers and the community more broadly to make sure that we're bringing everything we can to the table to support their resilience and rebound to a large extent serving customers by expanding. And you have been doing that through M and A. But the merger with Peoples United for example seeing some delays. How much of this is is affecting you at the moment. How much do you see some more clarity and regulatory approvals for Firebag coming. You know we're really excited and and continue to be be optimistic about about our coming together with People's United any are one of the things that we really really are committed to is it really gives us the platform to be able to continue to expand things like this multicultural initiative into the northeast into the communities and continue to build on the great work that it's done over the last number of years. All right. Well it can't be understated here. The importance of banks particularly a lot of these regional banks for a lot of our small and medium sized businesses as well as consumers. Chris Gay of M.A. really appreciate you taking the time to be with us today. All right. That wraps up our coverage for Bloomberg Markets Clothes. But don't go anywhere. Meet Caroline Taylor. We're sticking around what you miss. Coming up next in the big triple take today we're going to focus in on what's going on in the airline space. Delta quarterly results providing some insight into the health of the airline industry. Believe it or not. Elaine Becker big friend of the program going to be joining us. She's a managing director over at CAC. Yeah. Well we're gonna have a woman president of the airline consulting firm on W Manning Co. And such a myriad of forces facing airlines in whatever way they stand. I mean in one one degree it's about the consumer at some degree. I mean 5G gets weaved in there sometimes hating my G. I'm quite excited about this a lot. How on earth we we've that our goal was ltl 5g was going to crash all the airplanes or something. Does this seem to be doing that in China. OK that's fine. G work I've got on my phone. I don't know. I pay extra for VIX. I don't know if it works. How did you get suckered into that deal on the set. It's all about connecting. Connected devices remain. Have you got enough of them. No more. Three sixty five pounds. This is back.

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The Close Full Show (1/13/2022)

Caroline Hyde, Romaine Bostick & Taylor Riggs bring you the latest news and analysis leading up to the final minutes and seconds before the closing bell on Wall Street and tackles Brainard's hearing, the return to the office and M&T Bank's diversity mission Guests Today: Kevin Nicholson of Riverfront Investment Group, Ed Morse of Citigroup, Stephan Scholl of Alight, Richard Weiss of American Century Investments, Jim Paulsen of The Leuthold Group, Chris Kay of M&T Bank (Source: Bloomberg)

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