Bloomberg Markets: The Conclude 01/19/2024

In search of a record high.Live from Studio two here at Bloomberg headquarters in New York, I'm RomaineBostick and I'm Vonnie Quinn. We're kicking you off to the closingbell right here in the United States. And as you can see, we've already hit anintraday high on the S&P 500. It was a great day for Mike.It heartened the team at Bank of America to come out and talk about how theMagnificent Seven and all of the narratives of last year still count thisyear so far. And look at it at least for today.It's true that intraday high, 48, 30, 42, right now we're at 4832.So we've actually surpassed that.

We have a new intraday high right now.As you can see. We are seeing some of the air coming outof that March record balloon again today with the two year yield in particular upanother five basis points. Crude oil stabilizing.Not too many headlines coming out of the Middle East, but for now, we are stillabove $73 a barrel. And the Golden Dragon index isinteresting. I'm going to be talking about thisthroughout the show. The amount of money that's come out ofChina, in particular China and Hong Kong over the last several weeks is reallyquite stunning.

This index is a proxy for China andmainland. And Hong Kong stocks down 16% so farthis year, another three quarters of a percent today.All right. But of course, we go back to the S&P500. It's been 515 days since we last had arecord high on the benchmark U.S. index, a reclamation up that I 4796spot, 56 to be precise, not only in sight, but we're trading firmly above itat the moment. Last week, the S&P did trade above thatlevel on two separate days. But this is the first time in two years,though, that apparently we are going to.

Close at that level.Today is as good as any another day to take a run at that record high.And when you look at that level where we're at right now at 4832, it is asomewhat lackadaisical and a somewhat lumbering rally that has taken us therewith more than half the S&P stocks still in the red on the day, on the week andon the year. So while the gains this week name thatmay not really beat sort of those animal spirits that Steve Schwarzman over atBlackstone was talking about the other day, I'm sure a lot of investors areperfectly happy taking what they're getting here right now.You can thank a slew of economic data.

This week for putting a floor underequity prices that includes the economic data that showed resiliency in retailsales, resiliency in the labor market. And just this morning, fresh datashowing resiliency and consumers optimism about their financial situationthat you missed sentiment number coming in as its biggest monthlyincrease that we've seen going back to 2005 as the perception of currentfinancial situations rose to a two year high and consumers short termexpectations for inflation, Bonnie slipped to a three year low and we haveit in chart form right here on Main. As you can see, you mentioned that risethat monthly Y is being the most since.

25 or 30, 20 years.You can see that rise right here, a stunning rise in the last month data.And as you can see, we're right back to 2021 levels when it comes to consumerconfidence. One month's data obviously comes withall the caveats that one month's data comes with.But this is an important and both the 2.9% for short term inflationexpectations, does that complicate the Fed's job?What kind of conversations will they be having around that?This mostly thanks to gas prices and also the stock market rise last year?Well, that's going to continue if the.

Data continues.It's a self-reinforcing cycle, right? If we flip up the board and what we'redoing it, I point out that Neel Dutta also making the point today that thiswill weigh on the November elections. Right.Especially when it comes to the incumbent.It depends on how people feel about the economy, how they feel about theincumbent president. So that could be good for the Bidenadministration. Certainly today they're enjoying thedata. This is chart form of the expectationsand current sentiment.

And as you can see, we are higher onboth to a large degree, and this mostly thanks to households being, you know,also employed as well. Don't forget that our employment data isstill very, very strong. Well, all right.Kicking off to the close. Let's get right to it.Rebecca Patterson joining us here in Studio two, former BridgewaterAssociates, chief investment strategist. And Rebecca, I'm sure you've been keepan eye on the economic data, economic data that is painting, if not a rosypicture, certainly one that's not as dour as I think some folks have pricedin a little while a few weeks ago.

No, absolutely.Whether it's jobless claims, retail sales confidence, the things youmentioned earlier, all better than expected this week.We did have some really poor manufacturing sentiment data this week,but it seems like the market doesn't care so much about that.Manufacturing has been contracting for over a year.What we care about is the consumer. That's the bulk of what drives the USeconomy and the consumer remains resilient.Those sentiment numbers were quite alarming, I mean in a good way.And the idea that, you know, what had.

Been really an inflation driven drop insentiment now appears to be a disinflation, I guess, bump up insentiment. Exactly.So as inflation comes down and wage growth continues, even though at aslower pace, real disposable incomes go up.So what you want to see with the consumer is the ability to spend and theconfidence to spend. And this week we got both right, theability to spend because jobless claims are still low.And the confidence in that University of Michigan survey and digging into thatreport this morning, I notice that.

Democrats and Republicans.For more confident this month, I was like, Oh, that's new.And that's interesting because you remember the past reports.There was that divide there and you kind of still a divide, but they were not inthere. Yeah, but yeah, I know there's hope forthis nation after all. Yeah.What does it mean for the Federal Reserve, though?We're already obviously seeing, as I said, they are coming out of the Marchrecord balloon. Does this sort of solidify that?Well, to the degree stocks keep going up.

And if ten year yields and bonds andgeneral yields come down easier, financial conditions will be one factorthat could slow them down. The resilient consumer, I don't thinkthat slows them down unless they think it could restart inflation expectationsor restart higher wage inflation if the consumer consumer's so strong toostrong. Right.So we need that Goldilocks consumer. And right now it feels like that's wherewe are. But there are risks both ways.To your point, at the consumer's too strong, you could see inflation go backup again.

That's going to put the Fed on pause forlonger. And there are still risks to thedownside for the consumer. We got the latest business confidencefor the service sector out recently. The employment piece of that had a hugedrop for the last month. It didn't get a lot of coverage on on inthe media. But it was interesting when we've seendrops like that historically, it has always been into a recession.So I don't think we're out of the woods yet.But these are certainly good data to suggest the soft landing prospects arestill alive and well.

And also, we're not an isolated economy.Right. And there are still things going onelsewhere in the world today. It seems pretty quiet, but there havebeen serious geopolitical headlines over them.Absolutely. I mean, freight rates are going up very,very quickly. That's going to be stagflation area,right? It's going to be harder to get our goodsand we're going to pay more for them. That's going to be something that couldmake the Fed ease more slowly, but also hurt growth, the geopolitical risk.And it's not just the Middle East and.

Ukraine.Now we're seeing North Korea making some noises that I think one has to keep aneye on as well. The Taiwan Strait, of course, continuesto be something we have to watch carefully.Plus, you just have much slower growth in China.And I think we're going to see slower growth in Europe this year.All those things are going to fold into the US economy.And we've seen that play out certainly in Chinese equities over there in HongKong as well as in mainland. But I am curious also about probably oneof the more important or I guess more.

Stellar turnarounds we've seen inmarkets over the last a few months. And that's what we've been seeing inJapan. Of course, the Nikkei still holding atwhat the highest level since 1990s and really just a lot more, I guess,optimism about the longer term investment prospects.So it doesn't necessarily seem like this is short term track tactical trades,that these are people making a longer term bet that I guess what is ailedJapan for so long may finally be behind it.Yeah, I think there are some structural things changing in Japan.They've been pushed, I think, for a few.

Years now to increase return on equityin Japanese companies, but it feels like there are some signs they're doing it.If you look at buybacks from Japan, for example, they've been up now for thelast three years very strongly and there's still so much cash on corporatebalance sheets, there represents about a quarter of market cap.Let's put that in context. The US at seven.Yeah, so we have much less cash. So they have the funds to do morebuybacks. That's going to support the market.And then if we could get Japanese households to increase their exposure tolocal stocks even a little bit, that.

Would be a major push.Just real quickly, we're almost out of time, but this was Ted Peak.We had interview with Ted Picker Stanley out of Davos, and he kind of touched onthis point, how they're really looking to expand in Japan.And he talked about this idea of sort of this potential unleashing of householdsthere and where they put their money. We haven't seen it yet, but theprospects are better today than they've been in decades.Literally, they have rising wages. The economy is truly reflecting.So if it's going to happen, this is when it should happen.And if it doesn't, to me, that suggests.

Maybe there's some more vulnerability tothis rally, maybe not in the very short term.But as we look further out over this year into next.All right, Rebecca, going to have to leave it there.Always smart. Rebecca Patterson, former BridgewaterAssociates, chief investment strategist, helping us kick off to the close.We're going to turn to our conversation here about what's going on in markets,including a closer look at some of the comments out of Sam Altman over at OpenAir. Looking to raise billions for the nextstep in his path to total, total.

Dominance details up next.Now our next guest says residential real estate sales are set to pick up thisyear. We've got a master plan from DavidO'Reilly, CEO of real estate giant Howard Hughes Holdings.And an upgrade for AT&T after major improvements to his network.We're going to talk to the analyst behind that call and why he sees abrighter future for TV. That's coming up next right here on theclose. This is Bloomberg.I'm. Life and liberties Freedom 100 EmergingMarkets Index is completing its annual.

Rebalance, making the top four countriesin the index Taiwan, South Korea, Chile and Poland, all places that have seen aninflux of geopolitical risk. Now, while that may seem scary, our nextguest says there are still opportunities for investment.Joining us to talk a little bit more about this is Perth Toll.She's the founder of the Life and Liberty Index is Perth.Great to have you back on the program. It's been far too long here.Taking a look at that list. I see.South Korea makes sense to me. I guess Chile sort of makes sense to me.I do want to start, though, with Taiwan,.

Because, of course, that has been infocus given the elections and of course, given some of the concerns that stillpersist out there about its relationship with mainland China and whether Chinawould like to change and alter that relationship, why do you find itattractive in this state? Yeah.So as you know, Romain, we've been on together at the beginning of the launchof our fund. This index basically weights countriesbased on their freedom levels, and Taiwan is the highest freedom scoringcountry in the emerging market space. So in that emerging markets universe ofabout 24 countries, Taiwan scores the.

Highest on both personal and economicfreedom and that composite score. So we look for countries that havestrong institutions that provide checks and balances, strong rule of law, andstrong protections for for both personal and economic freedoms, and especially inthe emerging markets where you're coming from a low base, we believe that iswhere we'll find the best growth story stories in the future.Now, with Taiwan, we were very concerned coming into 2024, into this election,because we saw that the aggression from China, all of our clients were verycognizant of this. And so our investors know, though, thatas as we saw with Russia and Ukraine,.

The aggressor, usually the autocracy isthe place where the autocracy risk lies. So in, you know, the war with Russia andUkraine, the worldwide sanctions on Russia and then the fall of their stockmarket is what we're looking at here as a potential risk for China if there's tobe a war of some kind. So I person Yeah, okay.So that's an external risk. And so I get that that may be okay iftheir internal measures are enough to sort of rise to your threshold.One of the other names that was at the top of that list though was Poland.And there were political risks there. But those political risks were sort ofcoming from inside the house, so to.

Speak, here.What changed the game that gave you a little bit more confidence that that gotbumped up in the index? Yeah.So Poland has been under a government that had constitutional majority for thelast eight years, and this government was kind of a more extremist, more farright wing and rolled back or attempted to roll back some freedoms such asjudicial independence. Now we see the EU coming in as abalancing party, a balancing institution to stop that from happening.And they've done so successfully. But more so, we saw voters, Polishvoters, turn out for the most, has the.

Biggest turnout in history in theirOctober elections to vote the other side into power so that now there's a balanceof powers in Poland. But we're going to see some volatilitywhile the two you know, the prime minister is from a different party thanthe president right now. And that's going to be throughout 2024into 2025. So we will see some volatility.But I have never been more bullish on countries like Poland in the emergingmarket space because of this historic kind of turnout in this election.I see the checks and balances working. I see institutions are strong.Yeah, and I see even more of a checks.

And balances coming from the EU.So I've never been actually more bullish on these types of smaller countries inthe emerging market space that are have high freedom levels.Perth markets don't always respond well to freedom and democracy though, right?Particularly emerging markets. I'm thinking if you put, say, Indiaacross from South Korea, you'll see very divergent performances.And you know, according to your indices, there really shouldn't be.How do you account for that? Yeah.So democracy is not the goal here. Freedom is the goal.But democracy, you know, it's a it's a.

Way to get to the freedom.So it's the best government type that we have that leads us to the freedoms thatlay the foundations for economic growth and innovation.So we still want those countries that are democracies.You know, India is is a very old and very large democracy.Notably right now it is not in our index because India is having some issues aswell with media freedom, with repression of Kashmir peoples with, you know,blacking out of Internet in places that are to have protests.You know, there are a lot of issues like that.However, I do have, you know, very.

Bullish views on India as well.Even though it's not currently in the index, it's very borderline.It could make it in at any time, at any rebalance, I should say.But yeah, it's there's no 100% free country.There's no 100% repressive country, you know.So, yeah, it's all kind of relative. And we just want to captured the themost free the best opportunities out there.All right. A conversation we need to continue.I we have to leave it there for now. Perth.We'll catch up again soon, I'm sure.

Perth Toll, the founder of Life andLiberty Index, is the rebalance year of one of those main indexes now pushingTaiwan, South Korea, Chile and Poland to the top of the list.Coming up here after the break, a discussion about open AI and as CEO SamAltman and well, his push into getting into the chip business, it's a big one.That's coming up next. After the close on the close fromBloomberg. Welcome back.A bloomberg scoop openai ceo sam Altman has been working to raise billions for achip venture with the aim to set up a network of factories to make A.I.semiconductors.

Bloomberg Technology co-host Ed Ludlowjoining us right now with a little bit more on this story.What is it exactly, the ambition here? I mean, why not just rely on, I guess,the existing network of foundries and other things that are out therescattered across the globe? Because we learned in the last fewyears, particularly in the aftermath of the pandemic in 2020, that there arevulnerabilities in the chip supply chain.The ultimate goal for Sam outlined in Openai, according to sources, is to havecertainty of supply for AI chips, specifically accelerators that are usedright now in the training of large.

Language models.But the inference part of the equation is really important.And what I'm understanding is that Sam Altman is very concerned about this,that in the future he needs to make a move to guarantee that supply and howthat's looking right now is that he is in talks with many different types ofinvestors to raise tens of billions of dollars and then go to the existing fabsor the existing chip contract manufacturers and work out a way tobuild out that supply base, which is not straightforward.Yeah, And you reporting that firms including Abu Dhabi based G42 and alsoSoftBank might be interested.

Now SoftBank obviously has someexperience here emphasis on bringing the aam IPO to the table in fact but it wasvery costly. Is it likely that they would want toinvest in something like this that these things take a long time.Yes. What I'd say on G42 we previouslyreported that the firm wanted to give Sam between 8 to $10 billion.We reported that at the end of last year.And you know, it's important to note that at least in DC, there have beenconcerned about G42 his association with Chinese entities and calls for greaterscrutiny on them.

My sources are telling me that SoftBankis very much in the fray. And there's one thing is clear is thatSam Altman holds all the cards here. SoftBank is a very willing investor andtrust me, there are many others that would go to stand up and say, Here'smany billions of dollars. But my understanding is he's holding hiscards very close to his chest and working out strategically the best placeto get those funds so that he can move forward with what is a complicatedproject. And we should point out he's probablynot alone here in the ambitions. Add another scoop on the Bloombergterminal.

Also air space, this having to do withsome folks over at Google's DeepMind project and some scientists there, atleast two who are said to be leaving to start their own venture.What do we know about that? Yeah, So two longstanding computerscientists at Google, DeepMind. Look, it's not hugely surprising.People do leave that jobs in the industry and go to other places.If you look at some of the leaders in the field, many of them are open airalumni and have gone elsewhere. Equally, many people are open.I've worked to Google DeepMind. These two scientists are raising €200million, we understand from sources.

Which for a debut round is very big.That was a story in 2020. Did you think about France's Mistral,for example, which raised in excess of $100 million for his first ever round?These are new levels that we're seeing. We've seen in Series A rounds, and itjust shows the kind of investor interest, but also the capital youneeded to get started from a talent perspective, compute perspective ifyou're going to build your own AI company.Ed, thank you so much. That is Bloomberg Technology co-host EdLudlow. Time now for Options Inside.A We want to get you up to speed with.

The day's options Trading AbigailDoolittle is looking at some option plays on commodities, including gold.To understand. Abigail Indeed, we have one of the bestgold bugs out there. Gold traders, i should say.Vonnie joining us today for options insight.I'm very pleased to say that dennis gartman, the former editor of theGartman letter and the current chairman of the University of akron's endowmentfund. Thanks so much for joining us, Dennis.And it's been quite a ride for gold recently and even over the last fewyears.

Talk to us about what you're seeing atthis point. I think Gold wants to break out to theupside. We shall see.Time shall tell. But the trend has been for for severalyears. From the lower left to the upper right,we've had, for lack of a better term, a quadruple top in gold around 230, 2 to3, 20, 32, 20, 35. We got there four years ago.We got there three years ago. We got there a year ago.We're there again right now and I think we're about to break out through 2035and spot gold.

If that's if that happens, the place totake a look at is owning gold, the ETF or owning gold.These options, you going to own the 195 gold options for February at about 70$0.75. You're going to own the markets forabout a dollar $0.50. And I think if we break spot gold above2035 and take gold the ETF above 195 on a weekly basis, weekly closing basis, Ithink we go to 230 or 240 very quickly in gold, which would be a huge run.So I'm very I've been bullish on gold for a while.Gold has obviously geopolitical circumstances predicated upon it.And also it would be beneficial if the.

Fed were to begin easing monetarypolicy. That would be a bump to the gold marketat the same time. So you've got geopolitics and interestrate considerations. I say by gold, if we break above 195 ofgold's causes above 2035 on a weekly basis, and by the options, the 195 callsfor February or March, if they work, you can go out to May and June later on.Well, you beat me to it because I was going to ask you why you thought goldwould be going higher, but you certainly answered that.But you're not just taking a look at gold.I know that you think that Bitcoin is.

The new gold and that it's a speculativetool, but let's skip right ahead to oil and even wheat because you have somethoughts on those commodities as well and how to play them through options.I've been bearish on crude for a while until about the last week and a half ortwo weeks, predicated upon the fact that the term structure, which is where thein four I've always said informed, sophisticated money leads is footprints.And we've taken the term structure from a contango in crude oil to to a smallinversion, which I think is very bullish for the crude oil market.So for the first time in months, I'm actually turning bullish of of crude.I think buying crude by March futures at.

The right at the current spot price, Ithink we're going to start to see 80 to $85 again in the not too distant future.Depends on what happens in the Suez Canal, what happens in the Indian Ocean,but I think could have stopped going down.The term structure has turned quite bullish and term structure has alwaysbeen, again, we're in for money leaves. It's it's footprints and then foreignmoney is leaving its footprints on the bullish phenomenon right now.Well, that is tremendous perspective for sure.And I know that you also think that contrary to what some people think, thatsnow for winter wheat is actually.

Bullish for those crops.Thank you so much, Dennis Gartman, former editor of the Gartman Letter andchair of the University of Athens Endowment Fund for joining us forOptions INSIGHT today from New York, this is Bloomberg. This is the countdown to the close, justabout 230 here in New York. And that rally in equities nowaccelerating into the close with the S&P firmly up more than a percent in recordterritory. The Nasdaq up about one and a halfpercent here on the day. Meanwhile, a mixed bag going on rightnow in the commodities space.

Let's get right to Abigail Doolittle,who's standing by with our commodities. Carlos.Yeah, indeed. And overall, we have the BloombergCommodity index down two in contrast to what's happening for stocks and the bigweight here, crude oil and the energy complex in general.You can see crude oil down almost 9/10 of 1%, cooling off after some of thegains. More recently, heating oil futuresdespite the cold in the US and other elsewhere.Also taking a break from the recent rally to the upside, though, we do havecrude palm oil and we also have sugar.

Higher sugar is up 2.3%.So lots of strength for some of the, let's say, oddball commodities.But again, oil that is overall weighing on that Bloomberg Commodity indexremain. All right.I like that oddball commodities Abigail Doolittle there with the nice wrap up ofwhat's going on in the commodities space as we turn our attention right now.Back to real estate. We got some economic data this morningthat showed sales of previously owned U.S.homes falling in December, capping the worst year for the housing market innearly three decades.

David O'Reilly is the CEO of HowardHughes Holdings, which owns, manages and develops commercial, residential andmixed use real estate throughout the U.S.here. David, great to have you here on theprogram. I think we should point out, I mean, youguys are kind of like the experts at kind of master planning communitieshere. And there are so many moving parts inthat because you're not only just talking about what the demand is goingto be for those homes, but also, of course, for the retail businesses thatwould serve some of those people, as.

Well as the offices and other sort ofcommercial businesses where some of these people may work.Has that planning gotten harder in this environment than, say, a few years ago,prior to the pandemic? No, I don't know that it's gettingharder. I would say that it constantly evolvesand that every six months we have to look at our master plans and make surethat we're developing the products that our consumers are looking for that helpscreate these amazing places to live, work, play, learn and discover.You know, four or five years ago, we would have said need less retail becausemalls were challenged today needing less.

Office.But we still need some and we're still building to meet that demand that we seein our communities. There's been a lot of talk about justhow weak the housing market was last year, particularly when it comes toexisting homes. However, we saw, of course, a big rallyin homebuilders. We saw a big rally.And though and those folks who are associated with the new home builderside of the equation, and I'm wondering if the strength that we're seeing in newhome builds or the demand for new home builds is coming at the expense of whatwe're seeing in the existing home sales.

Market?Well, I don't want to say it's at the expense, but I think you led the segmentby highlighting that it's been the worst year for existing home sales in over 20years. To me, that's a sign of positivity forhomebuilders and for land developers like Howard Hughes, because it meansthat the supply of available inventory is reaching one of the lowest levels inmultiple decades. Demand is still there, albeit atslightly lower levels, given today's higher mortgage rates, but with moredemand and less supply pricing power firmly in the hand of homebuilders andthose homebuilders are paying record.

Prices per acre for Howard Hughes land.We're doing that because of this imbalance that exists.Those that have existing homes with mortgage rates that are on average inthe mid threes aren't willing to sell their home to trade in to a much highermortgage rate, whether it's 6% or 8% today.That's put all the leverage in the hands of new home construction and publichomebuilders. David, I know at least last year youwere struggling at certain points with a financing market that was freezing upjust a little bit because of concerns about commercial real estate.Now, you did get your Woodlands project.

Off on, you know, onto a good footing,but it was difficult to begin with. Has that improved at all that situation?I think it's stabilized. I would tell you that there are stillloans available for some of the best borrowers, for some of the bestprojects. But those projects that are on the edgesor those projects that are in a property type that are out of favor today, likeoffice, are still incredibly challenging to get.We've had incredible success getting loans recently, specifically on a newcondo construction project in Hawaii and where a condo construction project usedto be one of the harder deals to get.

Done.Today, they're the easiest on a construction basis because the lenderknows what your take out is. Those condos are pre-sold at a certainprice and they know they're getting paid back.So from that regard, those loans have become a little bit easier, whereasgetting a construction loan today for an office building is incredibly difficult.David, I know that prices are going up in places like Texas, so Dallas andHouston, where you're quite active. Obviously places like New York.You mentioned Hawaii. Where will the next places be thatprices go up?.

Look, I think that we're going tocontinue to see increased demand outside of Las Vegas in a community likeSummerlin, where we own outside of Phoenix, because they're warmer, lessexpensive and affordable. The income to afford a median pricedhome outside of Las Vegas or outside of Phoenix is one third of that.In San Francisco, less than half of what it would take in New York or L.A..And as a result, we're going to continue to see that flight to quality of life,that flight to affordability that those communities continue to offer.Do you think that that flight will be followed, of course, by the jobs andother support that are needed?.

I mean, there's a reason why cities likeSan Francisco, New York, etc., became the behemoth that there were.A lot of us live here not because we loved the place per se, but because ifyou want to make a living in a certain industry, you kind of have to be here.Absolutely. And we're seeing a lot of thosecorporate relocations every day, every quarter.We've signed a number of deals with cryptocurrency companies, cosmeticcompanies that have moved their headquarters out of New York and SanDiego, respectively, into the Woodlands, just north of Houston.And we're already in discussions with a.

Number of CEOs today that are thinkingabout moving their business to Summerlin outside of Las Vegas.Those companies, CEOs like myself, we have to bring our businesses to wherethe well-educated workforce is. And that well-educated workforce hasleft places like New York and San Francisco and gone to chase quality oflife. And now companies are chasing thatwell-educated workforce. All right, David, great to have you hereand very illuminating. David O'Reilly, he's the CEO of HowardHughes Holdings. And we don't always talk about thiscompany, but I mean, they are really a.

Behemoth in this space.And I'm always fascinated by the whole master planning aspect of this business,because it's way more complicated to do that than just say, we're just going togo out by attract and build, you know, a dozen homes on this track.But to really sort of integrate where the jobs are going to come from, wherethe retail support is going to come from, etc., there's a lot of movingparts they have to do. Exactly.And it's very much sort of a distant prospect when you start planning thesethings. Right.You have to think about how things are.

Going to change in the next 10 to 20years. And those kinds of long time horizonsare so difficult. But the seaport in New York is one ofthe Howard Hughes. Yeah, Yeah, that's really Well, that'sthe other thing too. I mean, we always talk about them inkind of these suburban areas, but they have a big presence, obviously, here inNew York and New York. I don't believe that you that I didn'tsay I didn't love New York. I'm just saying, you know, some of ushave to make choices that aren't about what we love.We were a little about spending a lot of.

It a little bit.All right. I know you're a lover of New York,right? I'm a complete lover of New York.Yeah. All right.Still ahead, AT&T spent time and money upgrading its wireless network.Now, Oppenheimer says those efforts are paying off.We'll talk to the analyst that raised his rating on the stock next.This is the close on Bloomberg. And. All right.Let's get a view from the sell side with.

Our top calls, the big movers on theback of analyst recommendations. And we start off with Chegg.Goldman downgrading the company to sell from neutral.The firm saying the ed tech sector is under threat from that bogeyman ofartificial intelligence says that the rise of AI may alter learner behaviorand ultimately user growth for Chegg. They also see fewer subscribers amidintensifying competition in the space price target being trimmed as well, downto eight from ten bucks. The shares being trimmed down 5% on theday. Next up, IBM, an upgrade to outperformfrom in-line over at Evercore with the.

Analyst calling it a, quote, overlookedbeneficiary of the adoption of artificial intelligence.Yeah, they believe IBM's unique set of consulting and software assets will helpcustomers deploy AI the best set of tools in a much better way.Those shares getting a nice boost today, up about 3%.And finally, let's talk about AT&T. An upgrade to outperform over atOppenheimer. Now, the analyst there citingimprovements to AT&T, network capacity and coverage, all giving a potentialboost to average revenue per user to analysts also excited by the potentialof that merge to merge the satellite.

Provider DirecTV with DISH, AT&T shareshaving a pretty decent day up about 2%. And those are some of our top calls.And we do want to stick with that last call and talk to well, that mythicalanalyst that we just mentioned, he's here live in the flesh.Tim Horan, cloud and communications analyst over at Oppenheimer is the manbehind that call. Tim, talk to us a little bit more aboutthis specifically when it comes to the average revenue per user.Or remain so. AT&T has invested $50 billion in their5G wireless network over the last three years.And frankly, the whole wireless industry.

Has and they want to get a return onthat investment. And one way to do that is to takeadvantage of a massive amount of increase in capacity, increase inquality, increase in speeds. So they're giving customers what we callmore capacity on hotspots. They're also now starting to sell fixedwireless. They're starting to sell some enterprisenew business use cases on these brand new 5G wireless networks.And they're slowly raising prices and kind of encouragingtheir subscribers to move up to these higher priced plans.Well, that's what I'm curious about,.

Too.So does the growth story, meaning the revenue story, become one of basicallyjust getting more money out of the existing subscriber base?Or do you anticipate that you could see new subscribers come into the fold?Great question. We do have new revenues coming fromInternet of Things and things like Apple watches, but we are only growing thepostpaid phone store base around two or 3% per year.That's not going to really accelerate that that much.We're basically, you know, reaching saturation.So we kind of do need find new use cases.

And more usage.So, you know, to your question, the industry is kind of growing revenuesthree or 4%, more than half of that is from encouraging existing users to spendmore money. Tim, It looks like sentiment, though, isfairly split. We have 16 buys and 16 holds.What do you think other analysts are valuing this company at that maybeslightly less attractive than your valuations are?For example, 15% free cash flow and 7% dividend yield?It is not really sure, but I mean, it's they've had a difficult three or fouryears.

They sold off.They got out of the media business. They had to sell a lot of spectrum.They raised a lot of debt. They haven't been able to de-leverageall that much. And a lot of people looking for assetswith more growth. But we're kind of focused on the factthat they have a 15% free cash flow yield.And we think they're at a place right now where they can return that free cashflow to shareholders. That's going to be a balance.They're going to reduce their debt from 130 billion down to 110.And then we think at that point they're.

Going to start to buy back stock.But we think in the short term, people are missing the fact that they do havemassive amounts of wireless capacity that they can monetize.But even on their wireline side, they've been building out a lot of fiber alreadyand they are attracting a lot of new broadband customers on the fiber side.And those customers are charging them a lot more and raising prices there.So I think a lot of people are taking a backward look at AT&T and not lookingforward to where we're going to be three years from now.Yeah, I mean, the other thing you draw attention to is this the potential tomerge DirecTV with DISH?.

Is there any movement in that directionat all or any speak any talk of this? It's been a talk for a long time.The two companies have worked together a little bit where Dish does resell AT&TWireless network. They were talking about maybe doingjoint build for the wireless networks. I think DISH needs to clean up some ofthe spectrum that they own and some of the business model.And I think there's a very, very high likelihood that the two companies willfigure out ways to merge the satellite business, the TV business, and then comeup with a way to come up with a better product for those customers.We think bundling and fixed wireless, in.

Particular with a direct broadcastsatellite product could be a very, very fine business.It's just that it's going to take time to bring this together.But hard then on the timing. But we do think it would create a lot ofvalue, frankly, for both companies that they can figure out how to work togetherand we think they ultimately will. I am curious about kind of how connectedcompanies like AT&T are to the hardware makers in terms of their reliance onupgrade cycles and the like here. There's been a lot of talk, of course,about the new the new iPhone whenever that comes out later this year.But also, of course, the release today.

Or the orders of it's starting to beingtaken for the the new VR headset that Apple has out here.Is that a material thing that they that you have to sort of pay attention to andthat AT&T has to pay attention to? Yes.Primarily because in the United States, they provide a lot of phone subsidiesfor their customers and for AT&T. You know, this can cost them well over$5 billion a year in subsidies for customers.And what's happened with the phones lately, they've gotten a lot better andwe've not seen a lot of new upgrades. So the phones are lasting an awful lotlonger.

They can last like four or five yearsnow. They used to last two or three years.So net net for AT&T, it's important because they reduce their expenses quitea bit. And it's one of the things that's reallyhelping out on the free cash flow growth.Now, you also like to see new devices like like the headset and like, youknow, Apple watches and there's a whole host of new Iot devices coming out.AT&T is very dominant, for example, in the connected car business.Yeah. And their whole alternative businessoutside of just phones is kind of over.

20% of revenue now.And it is growing faster than the overall business.And that probably should should continue.But to your point, we need new hardware. We need better hardware to takeadvantage of these wireless networks. All right.Great stuff. Tim Moran, there is a cloud andcommunications analyst over at Oppenheimer.An upgrade on AT&T to outperform a $21 price target here on the back of whatlooks like maybe some potential revenue gains here, as well as that potentialcombination of DISH and DirecTV.

All right.Still ahead here, why are parents here in the U.S.not saving as much? There's been a lot of discussion hereabout the cost of child care and how it dives into household expenses over allthat conversation after the break. This is boomer and. Let's talk childcare now, because it'sno secret that parents in the United States are facing record high prices forcare, and it turns out it's preventing many from saving for the future.According to a new survey from CARICOM,.

More than a third of parents who pay forchildcare are drawing down their savings to shoulder the costs.Joining us is Bloomberg Equality reporter Kelsey Butler.That's kind of a terrifying statistic that they're drawing down their savings.I mean, I guess put it into context for us.What kinds of costs is child care bestowing upon parents these days?Yeah, I think some people that aren't actually making these payments would besurprised. But on average, in the U.S., for ananny, it's about $40,000 a year. And if you think, you know, that's aluxury service, of course it's going to.

Be expensive.Daycare costs aren't necessarily easy to swallow either.On average, those will run you about $17,000 a year.So still a pretty penny. And parents are tapping into theirsavings. They're spending less in order to makethat math work. I am curious, though, why people aresurprised by that number. I know it sounds like a big thing, butanyone who has kids is kind of like, well, like, you know, No, you know,whatever, Sherlock. I guess what?I'm not allowed to say it on air here.

But why are people surprised by it?And does that sort of feed into the problem that if people aren't aware ofthis costs, that there's really no way to really address it?Yeah, I think obviously for parents, there's no sticker shock.There is a pain point, but we we understand what's happening.But I think what we're really seeing is how much prices have risen in recentyears. Bank of America Institute data showsthat prices are up 32% just from 2019. That's not that long ago.So though childcare costs have always been a pain point, they've really risenexponentially recently, and that's a.

Necessity.I mean, it's not like a discretionary item where you can just cut back on it.Yeah, it's infrastructure for most people.Exactly. Well, not if you look.Yeah, you have to look. I mean, you have to let it take care ofitself otherwise. Right.But how do you parents make that calculation?That remains talking about because at some point is more cost efficient forone of the parents to work at home basically as a child care provider thanto go to work.

And we are seeing parents and familieshaving to make that calculation. The same.Bank of America Institute data showed that we're seeing a decline in thenumber of dual income households. So some parents are slipping out of theworkforce. The Care.com data also showed people aremaking decisions like cutting back on work hours just to make the schedulingwork. And anecdotally, I've heard people doingall kinds of creative things like working from home while also taking careof their kids are working opposite shifts in order to just keep thingsgoing and make it work.

When you look at the study and you lookat that data, is there any sense or any hope?I should say that those prices at a minimum will stop rising, but moreimportantly, any hope that they'll actually come down?I hate to be a pessimist, but we're not seeing that on the horizon right now.We saw an end to pandemic era funding for childcare, the childcare industry inSeptember, and that is going to likely make centers close.And in the meantime, in order to make the math work again, those centers aregoing to have to hike prices in order to retain staff.Well, you never want the choice to have.

Children and not have children to be acost issue. Right.That's the smartest thing in the world. But it is all the time for so manydifferent reasons. But is it more cost efficient to havemore? Does it become cheaper the more you havein terms of at least care? Well, I don't know about that.When you look at the discounts, you're seeing maybe 10% knocked off of a priceat a daycare center. And we're talking about things in thevery high thousands of dollars that's not really making necessarily much of adifference.

All right, Kelsey.Kelsey Butler here hopes to lead our Bloomberg equality coverage.A great look here at some of the data behind the costs to raise a child andmore importantly, I guess, some of the folks who still have their head in thesand about what that cost can be. Well, and it's fascinating because we'reseeing so many countries try to promote having children.Rightfully, countries are faced with this dilemma of demographics and, youknow, their populations getting older, but not being able to replace them withnew people and certain countries actually offering cash, it may not beenough.

And in the United States, obviously,it's not enough. Well, Vincent and see his address.I mean, how many economists have you heard from prominent economists who'vemade it clear the direct link between economic conditions and the cost ofchild care? If you don't address that issue, you'rebasically shutting out a huge portion of our workforce.Well, I think the potential your point is right, though, Romain.I mean, when you have a kid, you have to be thinking of these things, right?It doesn't just start at school age when you have to pay school fees.It starts the minute that they're born.

I mean, I can't say that Léger is right.Yeah. Don't tell me.But we love them. We love more the most.All right. Let's get back to the markets here as wecount you down to the closing bell here on this Friday afternoon, a holidayshortened week that started off with a whimper.Looks like it's going to end with a bang.4008 35 and change right now on the S&P 500.If it holds that level, that would be a record high onup.

The nuclear would remain.And we are also going to keep an eye on yields as well, because that will alsotell the tale to a certain extent. You've got the two year yield there atfour 1398, and oil has been relatively quiet actually today in the commoditiesspace. We did see a really rough week fornatural gas. I'm sure you noticed it down another 6%on the front month contract. If you take a look at Bitcoin, they arenow back around that 42,000 level after, of course, a few interesting days comingafter the approval of that spot Bitcoin ETF last week here, maybe getting a bitof its mojo back here.

Some of the big individual movers outthere on the day take a look at Celsius holding.That's the energy drink maker having an awful day.A lot to cover, a lot to break down. Stick with us, Romaine Bostick andVonnie Quinn. This is the close on bloomberg. Just about 3 p.m.here in New York. This is the countdown to the close.Let's get a view from the top. I'm Romaine Bostick and I'm Vonnie Quinnand Vonnie Quinn. It looks like it's going to be a recordday for the S&P 500, barring a huge.

Reversal.Over the next hour here. But with one hour to go, we're firmly inrecord territory, 4837 and change right now on an S&P that's really just kind ofbeen lumbering its way towards that record high, but a big surge in activityand more importantly, a big surge in volume as we get closer to those bells.Lumbering sway is a lovely way of putting.It remained because it did. It took a while for it to pick up speed.Right. And there's been no sort of hugecatalyst in the meantime. But as you say, we keep going higher.Yeah, maybe the economic data is giving.

People a little bit more confidence.You see, the Philadelphia Semiconductor has really been leading the charge here,at least for a second day, up about 4% here.Yields not as much of a factor here on the day.But I want to flip the board here because, I mean, keep an eye on what'sgoing overseas. We should point out the U.S.isn't the best performing market. The best performing major market forquite some time has really been Japan. And there are some interesting anecdotessaying that some of that has come at the expense of China.The latest Bank of America fund manager.

Survey talked about this idea here ofhow so many traders are looking to pour any money they can into anywhere butChina. So we're basically talking aboutemerging markets or non-U.S. markets, as you say.So it's going into India, it's going into other places, including a nonemerging market, but going into Japan as well.And of course, you know, there's a great sort of consensus that April is the timewhen the BOJ is going to make its move. And so it would be sort of the obviousthing to do, at least until then, perhaps to park your money in Japan.But it's had a great run so far is up.

Something like 20% in the past year orso. Is it time?You know? Yeah, absolutely.Here would there's a lot of individual stories, too.We talk about chip stocks leading the charge.I know you've been taking a look at some other stocks as well.Yeah, I specifically didn't look at the chip stocks because they can take careof themselves. Right.Michael Hartnett, a banking broker, coming out today with his note saying,look, it's the same as last year, but.

Take a look at the top mover right now.It's travelers up more than 6% for that company.And that's going to have a halo effect on some of the other insurer's core EPSbeat. That was the main story.But it's also maintaining its quarterly dividend.And that's sending, as I said, all its insurance peers higher, with theexception of one. And that's a lot in today's session.We'll see you next week. Some more earnings from insurers if thatall bears out. And then moving to you, talking aboutSchlumberger.

Yeah, what's going on?There is a fascinating ruling because obviously Schlumberger was a huge storylast year with oilfield drilling, really sort of doing well.Well today. This is a dividend growth story.It's giving back a little bit all those gains.Yeah. And I mean, well, but that's what a lotof these companies are supposed to do, right?I mean, that's why energy is attractive. We feel like we've gotten away from thatas well. You had Albemarle up there as well, Ithought, and they're down on the day.

That was the down story.We're going to be speaking about electric vehicles a little bit later on.Well, this is directly associated with that kind of story.It's lithium. Lithium miner.And they have not been doing well. They've been cutting they've beencutting expenses. They've been cutting projects.They've been cutting people. But lithium prices are just in thetoilet, down 80% from their peak. And Albemarle is really suffering downthe toilet. Is that a technical term for lithiumhere?.

But I'm fascinated by this because we'regoing to talk a little bit later here about some of the bloom coming off therose of the EV boom. And of course, it's companies likeAlbemarle that supply one of the key chemicals for that are really sufferinghere. We are moving closer to these closingbells. We have our full cross-platform coverageof all today's top stories right now. Come down to the close.Bloomberg's comprehensive cross-platform coverage ahead of the U.S.market Close starts right now. This is the countdown to the closeRomaine Bostick alongside Vonnie Quinn,.

We're joined right now by our colleaguesCarol Massar and tim Sandvik. Welcome to our audiences across all ofour Bloomberg platforms, television, radio originals, and our partnershipwith those folks streaming on YouTube. And for anyone that was betting here ona potential rally in this market, you finally got it up a percent here on theS&P 500 Carol Massar And if that holds, that will be a record high.Yeah, big time, right? All in.Its interesting to see that we're getting ready, right, for the Fedblackout period. We've got a little bit of time to go forthat first Fed meeting.

Having said that, you know, thatconsumer sentiment report this morning showed that consumers are out there.I kind of feel like it really goes together with the retail sales number wegot for the end of the year. Like people out there, they're feeling,are you okay? No, go ahead.You know, maybe it's time for you to take a bit of a detox here.Let me a detox. Stop smoking.I shouldn't drink this vodka, but. Yes.And put your phone down. I don't know if you saw this, Siggi's.Is that with a challenge to people to.

Basically write to Tim, do a digitaldetox. Yeah.For 10,000 that they make the yoga. Yoga maker and they're doing a digitaldetox. Yeah.So it's obviously a promotion for ciggies.I need to put it in different kind of January.Okay, so, you know, dry January when you don't drink alcohol.What about a dry January about giving up your electronic device?So they're doing this contest where you can win $10,000 in three months ofsiggi's yogurt.

If you put your phone in a lockbox foran entire month, you can. Still have access to a phone.They'll send you a flip phone and a SIM card.But that smartphone, it's got to get under lock and key.That seems very common. 10,000 bucks.I mean, I think I could do it. Bonnie, do you think you could do it?I could do it if you paid me 10,000, I I'm going to do it for competition.Yeah, I think Yeah. If they gave me 10,000 upfront, maybe.Do they know that? They will?They will.

You have to enter to be one of thepeople who, you know, gets the $10,000. Or if you make it to the end of themonth, you get the 10,000. Only ten people get it, though, right?That's right. Yeah.Yeah. Cheap marketing.Exactly. But you guys are such naysayers, man.Now, you know, I guess I maybe were naysayers here.I wasn't aware of this bigger point of, like, how much time we're on her phone.Five and a half hours a day for the average.Yeah.

I mean, there's there's a longerconversation we can have about this, but there's also the issue of necessity aswell here. I mean, I don't know.I mean, I know you may spend all your day Carol Massar playing video games onyour phone, but some of us use it for product.I mean, A, to be better at our job, to be, you know, connected to our kids andour family. Do you buy your dad?You know how you look so dapper. What do you buy your clothes?Is it online? Mm.No, I have a guy in Baltimore.

Can you hear me?So. All right.Where do you want to go? I was looking.Another story here, too, though. You know, Vonnie and I were talking hereon Bloomberg Television a while ago about the downdraft that we've seen inAlbemarle, a big stock of lithium making lithium.And a lot of this is tied to the weakness that we're seeing in the EVspace. Remember, there's been so muchcommentary right now here that that rise in demand is now basically flip flop.And of course, we learned a little bit.

Earlier today that Ford kind ofconfirming what we all knew, really scaling back.Now it's EV. It's F-150 lightning vehicle production.Yeah, it's fascinating because they're going to one shift and one shift in anauto production facility is really almost no thing.Right. But they are upping their shifts in theregular combustion engine type trucks. So it is fascinating to see that peopleare just going off EV It's not just the F-150, EVs, UBS out with the forecastfor 11% growth this year. So but this is but not much.I wonder, though, if this is kind of an.

Own goal kind of situation.I mean, aside from the fact that, you know, they price these things at seenprices, but then there's a whole issue of infrastructure and a lot of the otherthings that you need to support this and it just really wasn't there.I feel like maybe they came a little bit too fast and furious, if you will, punintended. Carol Massar I don't know these things.I don't know. I don't know.You know, it depends on everyone's different in terms of the way the waythat they, you know, use their vehicle. But a lot of people in the U.S.live in single family homes and have.

Garages and can charge these things athome. So from an infrastructure perspective,there are a lot of people who don't necessarily need to be charging thesethings when they're on the road. Olivia But the stat on that Tim getsback more than half the country lives in multifamily properties, including onething I will say, I think you guys talked with Keith not and we're going toto and I know we've got to run, but Keith Norton said the growth is there.It's just at a slower rate. So people are still buying it.It's just, you know, So yeah, I mean, no one's saying that the EV boom is over.It's just that, yeah, the fast growth.

Rate is in there.I agree with you. Do do you own a big EV?Not yet. I agree with you.The prices have been crazy. Yeah, no.Got an old fashioned gas car. Oh, okay.Yeah, I got a horse environment. Thanks.Remember we talked about H earlier this week?No. Goodbye.I'm out of here before we all get yelled at.All right, guys, We'll be back in less.

Than an hour's time.I'm going to wrap up the trading week. The trading day.Radio, TV, YouTube, Bloomberg Originals. We will see you at 4 p.m.Wall Street. Time for Beyond the Bell.And we continue our markets coverage right here on the clothes, counting itdown to the close. Those closing bell is just 50 minutesaway. Many tough.Joining us, senior client advisor over at Jen Trusts.Let's talk a little bit more about this market and you join us, I guess, on apretty good day, at least if you're a.

Bullish type.We are sitting at record high levels for the S&P 500, and this has kind of been along time in the making. We've seen this coming.It's been a slow march higher. And I do wonder if you feel that thatmarch higher has been justified. Yeah.I think the initial roots of the march here really stem from the improvementsin the inflation data that we have veritably seen over the last 3 to 6months. And and then in December the Fed reallytook a pivot and started talking about likely that we're at at or near the peakfunds rate which the next step will be.

When do they start easing.Mm hmm. Having said that, we do think that, youknow, the expectations are pretty lofty at this point for earnings growth thisyear. So we're a bit more cautious than thanthe market excitement on these big days. Well, I am curious.I mean, just take and you can correct me if this is wrong, but you guys are stillunderweight equities, overweight, fixed income.What, if anything, would get you to flip flop that?And I mean, in the shorter term, so like you say, over the next year or so.Yeah.

So I was afraid you were going to say inthe next week when you said the shorter term.Listen, we we think that the fixed income just performs better in a broaderrange of scenarios. If we if the economy does falter andbegin to weaken, we'll see those bond yieldsgo down further. And on the flip side, if if growthcontinues to be okay, then you can earn the yield.We do think that, you know, rates will stabilize here.What causes us to change likely if we were to see the earnings growthmaterialize, that is priced in something.

Like 11% this year and 24 is priced in.And also if if growth were to remain high in the face, called to two and ahalf percent in the face of continuing falling inflation, I think that wouldput us in a in a more optimistic outlook.Maybe. Will the Fed have been just a little bitconcerned looking at today's data at all?I mean, everything is coming in so strong.Does it suggest at all that the Fed will have to do something a bit more drasticat some point? You know, maybe maybe hold for longer,but then need a 50 basis point cut or.

Something like that.Yeah. So it's interesting because the Fed, intheir last summary of economic projections, has three cuts penciled inand the market has six cuts penciled in for this year.So I think on the margin, the Fed should be more cautious and wait longer.Right now we've got 50% odds of a cut priced in for March.And our baseline, for instance, is they should they should collect more databefore they start cutting. So we're probably on the lower sideunless things, as you point out, unless things get sloppy, then we could see anacceleration of rate cuts.

When are we going to see some pain inthe labor market? Any pain in the labor markets?Well, you know, the labor market's been steaming along, but it really has.You know, the monthly job growth numbers really have come down quite a bit.And on the labor force on the supply side, we have seen growth in the supplyside. Right.Like working aged women's participation in the labor force is at an all timehigh. So I think it's just we are going tohave to wait and see. Typically the Fed doesn't really easewith inflation above two and a half.

Percent unless the unemployment rate'sbeen above 5% and we're at three and 3.7 right now.Right. So that the labor market has been a rosyelement thus far. All right, Mimi, thank you so much forjoining us. That as Mimi senior client advisor overAgen Trust. Coming up here, an interview withCenterview Partners co-founder Blair Effron.His views on M&A and much, much more. And a lot of talk about that slump inM&A. We're going to actually break down onespecific sector, and that's the gaming.

Industry.We're going to talk to Josh Shachtman over at Convoy Ventures.And just over a week out from the launch of a spot Bitcoin ETF, David Mann, headof ETF Products and Capital Markets, where Franklin Templeton joins to talkflows. All that and more coming up.This is the close on Bloomberg. I'm. Less than 45 minutes until we get to theclosing bell, sitting right now at record highs on the S&P 500.That's largely due to the fact that you have names like momentum platformssitting near record highs, Microsoft at.

Record highs.In fact, a lot of the big cap tech stocks now posting up towards some oftheir highest levels that we've seen, if not of all time, certainly in the lastfew years. A little bit of red on the screen here.Netflix and Tesla, one of the few laggards when it comes to theMagnificent Seven space. But it doesn't matter here.Everyone else is doing their job. Magnificent Seven as a whole, up about1.7%. The Philadelphia Semiconductor index upmore than 3% here on the day, almost 4%. And the S&P 500, which we've beentalking about all day long, 4839 and.

Change 1.2% gain on the day.If that holds, it would be the first record high for the S&P 500 sinceJanuary of 2022. As for the rest of the space here, keepan eye on what's going on in the commodities sector, because what'shappening in equities and what's happening in commodities not necessarilytelling the same story. A big week next week, Bonnie.We've got about 70 companies in the S&P 500 scheduled to report, including someof the big and most consequential ones, and that includes names like Netflix.Exactly. I mean, and also some banks as well.Let's recap bank earnings and the.

Broader financial sector with SaulMartinez, now senior analyst of financials at HSBC.So let's start on your whole undiscovered financials.So you downgraded the stock to hold from buy.Tell us about some of the trends you're seeing in known gold.It's really, really difficult quarter for discover.Yeah I was here and thanks for having me.Yeah it was it was a surprising quarter and you know the we did downgrade themyesterday to a hold from a buy on the back of the results and we reduced ourestimates, our EPS estimate for 2024 by.

8% and 25 by 15%.Now, the primary reason for that is that the loan growth outlook has really,really changed. Low that primarily a credit card issuerand it grew the loan total loan book 15%.They're expecting 0% loan growth this year.So it's a dramatic change and a dramatic deceleration.And at the same time, they really surprised on the outlook for credit costin for net charge of 3.4%, going to 4.9 to 5.2% expectation for next year.So they are expecting credit worsening and they're seeing it as a 30 daydelinquency ratio.

And, you know, they called out sometrends that, you know, are challenging for them.You know, they called out that, you know, their borrowers are seeing theeffects of wage real wage reductions because inflation has exceeded wage wagegrowth. They've depleted savings.So and keep in mind that this is in an environment where the unemployment rateis 3.7%. So it does raise some questions.And we just think the best thing to do here is, you know, take some money offthe table and go to a hold rating. How murky is the outlook, Saul?Because it is quite difficult to see.

I mean, already the year is surprisingis right, even though the narratives are similar to last year so far with thestock market at least. Yeah.I mean, look, I think we're broadly, you know, put aside discover a little bit.The big takeaway thus far is that we still have a challenging in an uncertainrevenue environment. Loan growth is is is still very subduedfor the big banks. They're still seeing deposit costpressure at a slower rate. So that that's positive.But they're still seeing that they're still seeing outflows out of checkingaccounts into higher yielding.

Instruments.And the guidance for net interest income, which is the biggest revenuecomponent for traditional banks. For the banks that I cover, you know, 24down low single digit to high single digits.Now where there is some difference of opinion and this is really important iswhen you see a bottom in net interest income.And that's really important because the story for big banks can't just be aboutthings getting worse at a slower rate and then being cheap.At this point, you start you do need to see improvement, you need to see thingsget better, you need to see revenue.

Start to accelerate.And there's a difference of opinion in terms of when that happens.JPMorgan still sees net interest income pressure throughout the entirety of2024. Right.And but others in we're in this camp see that inflecting in the middle part of2024. And in the back end, you start to seesequential growth. But we're still a little bit away fromthat. So so when we talk about that growthstory, do we also need to talk about the potential for an increase in the capitalrequirements of the regulations?.

I mean, that's been sort of the sword ofDamocles that's been hanging over them. Now, I know there are some analysts whothink that the banks will deal with it fine, But when you hear some of theproposals coming out of Washington, I don't know if some of these look prettyextreme. I agree the proposal would increase forthe biggest US bank capital requirement by 20%.That's a big number that clearly would have an impact on reshaping riskappetite and buybacks. Now, we're actually a little bit morepositive here. We do think the industry's advocacyefforts are working.

Hmm.And you're very excellent. Bloomberg intelligence analyst namedNathan Dean puts a 60% probability that the final rule, you know, which shouldcome out sometime this year, exact time, is hard to determine will it will softin that. We agree with that.We think the final rule will be softened versus what we have today.And I actually think that's positive because I think we priced in a lot ofthat last year.And if that's the case, it does open the door for for some banks to start to buyback stock in somebody like a said, you.

Can buy back the stock at 50% of bookback. That's a big positive.Wow. All right.So this is all great stuff here. We got to get you back on a nicenamedrop of Nathan. He's one of our favorites, too, as well.Saul Martinez over at HSBC. A closer look here at some of the bankand financial earnings that we've gotten almost through that part of the earningsseason, Vonnie Quinn. But let's kind of take a moment here tokind of talk about the potential end of an era here.A big friend of the show and a quite.

Legend on Wall Street, Dick Beauvais,we're learning, is going to retire. He's 83 years old.So, you know, maybe it's time for that. But he's had a remarkable career thatspanned more than five decades. Odeon capital analyst departure iseffective today. He said this in a call from Florida.Beauvais is leaving the industry to spend more time with his wife and saidhe would consider taking on consulting projects at a future time.He was so fun over the years, you know, through really, really difficult times.We spoke to Dick Beauvais during the financial crisis constantly, and thingswere coming out constantly.

And he always was able to, you know,analyze in real time and give his time, but also analyze in real time whatexactly was going on with the banks. Some of them didn't even make itthrough. And that was, what, nearly 20 years ago?Yeah, and I always appreciated his candor and just humor.And you just talk about a guy who just knows every corner of Wall Street fromhis days as Dean Witter or Rockdale and all the sort of the companies you workfor that got bought by other banks. And of course, he ended up over at OdeonCapital. So great career and a well-deservedretirement seven years on the banks.

It's all it's all ahead of you.All right. A lot more coming up.I have that kind of. All right.A lot more coming up here on the close. We'll be back in a moment.This is number threeand. All right.Welcome back. The most read story on the Bloombergterminal today is not about the Fed. It's not about stocks, bonds or anythingelse. It's about chicken fingers.More importantly, the billionaire owner.

Of the chicken finger chains RaisingCane's Todd Graves. Apparently, he's purchased a penthouseat a luxury condo building under construction in Dallas.And this is significant, I'm told by our producer, because the wealth that hasreally gravitated not to Texas overall, but specifically Dallas and the way thatit's really boosted that real estate market as well as like the restaurantsand other things out there has been remarkable here.A. I don't know how much.How much did he pay for this thing? Something like 25, 25 million.Oh, but it has to be at least at least.

25 million because another penthouse inthat building went for 25 million. Yeah, but you know how these deals getdone as well. Mean way to.No one wants to have an empty penthouse apartment and so on.So, you know, I'd like to see that. Oh, yeah, Yeah, I can totally relate.But that said, you know, it does speak to the fact that Houston, Dallas, allthese Texas cities have become massive, massive growth centers.And it gets to the conversation we're having a little bit earlier with DavidO'Reilly and Howard Hughes, the idea that there are some serious demographicchanges going on right now where people.

Are finding that they can live and workin other cities other than the traditional major hubs like in New Yorkor Los Angeles, Chicago. And of course, we know Texas has been abig beneficiary of that, whether it's Austin, Houston or Dallas.Exactly. In the tax situation, beneficial as wellin Texas. Have you ever had any raise?Cane's because businesses. I know I don't but I just was looking itup in the break. Apparently they've got a couple righthere in Manhattan. So I think we've got 3 minutes in thenext break, so maybe we can rush out and.

Get some chicken fingers here.All that more coming up next right here on the close.This is Bloomberg. This is the countdown to the close.Less than 30 minutes to go here, Bonnie, with stocks right now at record highs.And it was is a phenomenal day in the stock market.Let's have a look at the map because the S&P 500, as we know, has been hittingintraday highs. Will it close at a record?We shall see. At least right now, it's making a verybig effort to do just that with all of the sectors in the S&P 500, almost thewhole pie green except for consumer.

Staples.So interesting because that's where you just stay lower and can view.And in no particular news there, it's just the consumer staples are probablythe least favorite right now. Michael Hartnett, the Bank of Americawith a note saying, listen, last year's themes continue to be this year'sthemes. He also thinks that the negative themesthat people selling banks and so on, that that will continue to.All right. 74% of those individual stocks arehigher here on the day. And that's a big flip flop.And what we saw this morning, in fact,.

The S&P 500 was in the green, but youhad the majority of the stocks were in the red.That's changed as we're getting closer to the closing bell.And we're now not only sitting at record highs for the S&P 500, but for a lot ofindividual stocks. That includes Microsoft, which is poisedto close at a record high. And take a look at Supermicro, a 35%gain on the day. That's the most on record.And at 422 and change, that would be a record high as well.They came out with preliminary earnings report, full earnings on the 29th.But those preliminary results cause a.

Lot of optimism out there.And remember, this is on the back of those results we got out of Taiwan semiearlier in the week here. So at least when it comes to the chipand more importantly, the hardware sector in the computer space here,there's a lot of optimism there. And that's what really drove the rallytoday and yesterday. Meanwhile, to the downside, twointeresting stories, and that's actually the most volatile stock in the S&P 500over the last 30 days. And that's actually one of the biggestdecliners on a percent basis since the start of the year.And iRobot, a 25% drop, as we learned.

Apparently, that European regulators areprepared to block that acquisition by Amazon of iRobot Barney.Well, remain for more market analysis. Let's bring in Dana, the Oriental co-CEOand president of Investment Solutions and Investment, which currently has $375billion in assets under management. So, Dana, where we go wrong is, is theMagnificent Seven not fully valued? Is there more to go?Well, it seems like there's always more to go.Thank you for having me. But, I mean, I.I would say to you that after spending years of telling everyone who boughtthat portfolio, you can't just be.

Concentrated in The Magnificent Seven,you know, And here we are. We had in December, obviously somewidening, very much breadth coming in. You know, Smallcaps doing well after notnot performing very well throughout the course of the year.Sectors that were just getting hammered all of a sudden catching a bit back.A lot of the performance last year that we got out of the small cap market wasin December. So, you know, it looked like we weregetting a lot of good market breadth. But here we are in a rally and it's kindof the same winners that we were seeing last year.So I would say it's it's one of these.

Cases where you're in the market,you're, you know, retail clients, which is what we serve, be our advisor base.It's really about just making sure that the portfolio is broad enough and thatyou're not overly concentrated and not have the sort of barbell that we weresort of seeing where, you know, S&P 500 and big cash positions to take advantageof, you know, cash rates. We we recommend and like to see morediversification across the stream rate, small caps, international, etc..Well, so if you've been in cash and you're trying to get in on some of theaction, you know, it's very confusing time, particularly with the Fed.We don't know whether March is out of.

The picture.Now, 50% of the market says that it's not out of the picture yet.And obviously, also with these run ups that we've seen, what do you do withyour cash? Yeah.Well, so first I would say if you were in CAF last year, it seemed like a niceplace to be. Right.And we saw money markets increasing dramatically.But then you look at what happened in, you know, returns in the market and theS&P 500 and you kind of missed a fantastic year, Right?So whereas it might have felt great to.

Lock in those cash rates through theportion of the portfolio that belongs in cash, stay in cash.But to your point, if you're if you're looking for places to be in the market,chances are you've got already a seven in your portfolio.You've got an attack and growth in your portfolio, whether you're indexed oryour closet indexed. So I would say and recommend broaden outthat base. If you're tilting, maybe tilt a littlebit more to a diversified small cap portfolio, maybe consider alternatives.There are so many options now in the market and much more access, I think, inthe past than you've ever seen before.

Yeah.Where you really kind of diversify when you're looking at valuations and you'resort of trying to find spots in the market specifically, are there areasthat you find attractive on that basis of valuation alone?Yeah, well, something, for example, like health care utilities that just gotreally hammered. Again, you know, these areas of themarket that could not catch a bid. Health care we know to tends duringelection year to struggle you know and either way.Right. Whoever you think might make it intooffice.

There's reasons to to consider astruggle. But to your point, when valuations arelow enough, you've priced in all the potential bad news.It actually is a nice place to be, even if you're looking at the growth storyand you're saying I have some concerns about election year drama, you know, thevaluations are beaten down so far that it is worth getting into.And I think looking at areas of the market like that, if you've been out ofthose areas getting back in, but I'll say again in stress it small caps are agood bit, I think, in general. All right.We know that over the long haul, unless.

You're in those growth, these small capcompanies, you do tend to outperform good style factor exposure in smallcaps, you know, value evaluate quality. Those are nice place to be in small cap.So I definitely recommend looking there as well.Does that also become, though, the economic story?Do you need to basically see more of the data points that we've gotten over thepast week showing resiliency and the consumer resiliency in the labor market,etc.? I think there's a short term and a longterm picture to this short term, I think the reason that you've seen betterimprovement in performance lately is.

Because of Fed pivot smallcaps tend tobe more interest rate sensitive. So it wasn't as much of a problem andyou saw them doing a little bit better. Now there's, you know, well, is themarket actually over promising on you know what the what the Fed's actuallygoing to do to your point earlier you know this expectation of a rate cut inMarch, maybe that doesn't materialize. Maybe we don't get 140 basis points ofcuts. Maybe it's something more like 75.Does that in turn in the short run for small caps in the same way it helpedthem, you know, when when all those rate decreases got priced in?I think maybe in the short run to a.

Certain extent.But again, back to the valuations. Valuations and small caps are stillfavorable relative to large caps. We go into the year at 19 times for thelarge cap rate where a small cap on the average.So I still think for a mid or longer term play, which most investors shouldbe, it's a good bet. Dana, you have some of your picks, theARK Innovation ETF, Innovation ETF, the Sector Spider Biotech ETF, and also theRegional Banking ETF. You'd want to be pretty courageous toput any kind of significant portion of your portfolio on any of these.All right.

Yeah.No, I mean, I would say to you that, you know, what you're talking about there isis situations where if it's a risk on environment, you start to catch a bit infor some of that stuff. But again, that, you know, if you'regoing into specific sectors like that or even some sectors, areas of the market,industries in the market, that is more in my mind of a speculative play andyou're really doing it based on again, the idea that valuations are low.You're not doing that in a big piece of the portfolio.Dana, thank you so much for joining that is Dana Duryea, co-CEO and president ofInvestor Solutions at Investment.

Coming up the top three, where we focusin on the top three movers and shakers at the center of the day's biggeststories. That's next.This is the close on Bloomberg. Some breaking news right now on ShariRedstone and her family company, National Amusements.We're now learning that Apollo Global Management is considering making anoffer to buy national amusements from the Redstone Family Company thatcontrols the film and TV giant Paramount Global.Of course, we know Shari Redstone has been shopping around at least some ofthat company, if not all of it.

We are learning that several bids haveactually come in and now we're learning that Apollo Global Management, accordingto people familiar with the discussions, is considering making an offer itselffor national amusements. All right.We're going to try to get you some more details on that story and we will returnto it once we get those details. But now we want to turn to our topthree. We do this every day where we dive intothree of the big people at the center of three of the big stories out there.And we're going to start off here, Bonnie, with actor Alec Baldwin.He was just indicted again on charges of.

Involuntary manslaughter in the on setdeath, a cinematographer on the set of that movie Rust.This was out in Santa Fe. Of course, the incident happened back in2021. Of course, this made all the media was abig deal here. A previous grand jury decided not tomove forward with the case. But now, apparently, according to theAssociated Press, there's been a new analysis of the gun that was used.And now special prosecutors in the case brought that back to a grand jury, andthey have decided to move forward with an indictment.And, of course, as you know, grand.

Juries are always in secret.But of course, you always also sort of know, because you can see the witnessescoming out of the rooms or what have you.And so, you know, somebody did see two witnesses at the courthouse, includingcrew members, one of whom was present at the time that the shot was fired.And we know that Baldwin said he pulled back the hammer but not the trigger.And it appears, as defense attorneys for Baldwin have already indicated, thatthey will fight the charges. All right.Who we're going to next? I'm going to James Rourke.This guy no relation to Carson BLOCK,.

But he could be because he's an amateursleuth, as we're putting it, on the Bloomberg today, behind the best call oflast year. Now, he's a physician at one ofAmerica's top hospitals, but that's not enough for him.During his spare time, he moonlights as an amateur financial investigator andwriter, and he stumbled upon signature blank.Well, right at the beginning of 2023, it took two months for signature buying tocome down, but he had already had it in his sights two months earlier.His personal mission in general is to expose the cryptocurrency market.Forget this being what he describes as.

Semi decentralized pyramid scheme.I think it's interesting. I mean, this guy has been on the radarof a lot of folks for a while. He's been very vocal and it kind ofharks back to remember, you know, Warren, Kitty and GameStop, where youbasically have folks who aren't necessarily financial professionals thatare actually doing a lot of real fundamental analysis, trying to decidewhether to buy or sell something. And he's obviously found, at least inhis view, some deficiencies in the crypto space.And oftentimes with these people you find that they don't make or profit asmuch as they could from their findings.

So he said he had bet pennies orsomething on this on this idea. It was more that he wanted to propagatethe idea. I mean, Hindenburg research also, youknow, at the time at least made very little from the Adani enterprise.Yeah, he says it's just a hobby, but maybe now he's getting some attention.Maybe. I mean, you know, I don't know.Between his shifts at the hospital, I don't know, you know, being a physicianor being, you know, an investor, I don't know.It's a yeah, you got to wait till they're both of them.Let's get right to to our third person.

Here.Maybe you're familiar with him, Paul Conway.Of course, a lot of people know him. Musical founder of the big investmentcompany Pacific Media Group. But he's also the owner of a Belgiansoccer club, football, as you guys call it.And apparently, you don't mess with Belgian soccer fans because upset herewith some of the changes that are being made and the buyout here.Apparently, they cornered this guy in a bathroom at the stadium.I don't know what they wanted from him. Well, these people are.Yeah.

I mean, you know, smile and so on.These ultras as they're colder than serious.And I wouldn't want to be cornered in a bathroom full of steel and aluminum andall these horrid products by 15 ultras. And the funniest thing is that they callit the VIP section at Cave Alston's game last weekend.But I've been part of the problem is that he's a multi club owner and this ishe's a multi club owner. But can I just say the funniest thingabout this story? This isn't the first time that soccerfans in Europe have trapped the owner in the bathroom.Apparently they did this to the owner of.

Manchester United.This is when the Glazers took it over and this goes back in oh seven and theysaid hundreds of people. It was like for 5 hours like, what arewe doing over there? Imagine if they did that here.Well, if you wait there long enough, I'm surprised on your stakeouts.They haven't known this. If you waited a little personal, have togo. All right.We're going to get back to markets in just a second as the countdown to theclosing bell is 15 minutes away. Stick with us.This is Bloomberg.

And. This is the countdown to the close.Romaine Bostick here alongside Vonnie Quinn.A record day here for the S&P 500, barring some dramatic turnaround overthe next 10 minutes. It's really quite stunning right fromthe beginning of the week. It started off quite slowly down days,of course, holiday shortened trading week.Well, it's finishing on a note of ebullience, as you can see.Up 1.2%, continuing to climb. This reminds me of the last sessionbefore the end of the year, actually,.

Because that's exactly what happenedthat session as well. Something going on, say, in the market,as you said, it's something that ground higher.It was grinding all day. And I think a bigger narrative that'sgoing to unfold here over the next few weeks, too, is the disparity that we'reseeing between what's going on in the U.S.markets and what's going on in the second largest economy.You see Chinese stocks, at least represented by the Golden Dragon Index.They're only down 6/10 of a percent. But on a weekly basis here, we'reactually seeing one of the worst sell.

Offs that we've seen a Chinese stocks ina while. It's been incredible the amount of moneythat's come out of China just in the last few days, just since the beginningof the year. And some of that on disappointment thatshe hasn't done more, that it's this drip, drip, drip of small things that'sgoing to help the markets. But you did see some representatives atthe World Economic Forum in Davos trying to put across the message that China isopen for business when it seems that the market's got the opposite message.Meanwhile, back here in the U.S., 4836 right now on the S&P 500, the NASDAQ isactually a percentage gainer on the day,.

Up about 1.6%.Ellen Lee joining us, Causeway Capital Management's portfolio manager, as wecount down to the close with just about 9 minutes ago and now and a lot of talkright now about this kind of a bit of a stealth rally, if you will.I mean, I know today is a strong day, but kind of the days that led up to thisreally didn't seem to belie the fact that we were going to end up at a recordhigh. You buying into it?Not really to be direct. You know, in the current equity markets,if you look at the stock market, it's already pricing in a lower interest rateenvironment.

However, if you look at the bond market,it's indicating that, you know, when rates have to fall, it's usually drivenby some economic distress. So I think market's been veryschizophrenic, to be honest. At the record level of valuation that'sreflected in some of the equities, especially the S&P.Yeah, it's really, really astounding. Well, let me just play devil's advocatefor a second, because there are some people that have said that we're lookingat valuation all wrong. But yeah, if you just look at it fromthe historical perspective, yes, indeed, things are overstretched here, but thereare people they look at structural.

Changes, demographic changes, ie, thingslike that. And they say at least for certainsectors, when you factor that in, some of these stocks might actually be cheap.I you know, I don't have a crystal ball, so I, you know, admit that, you know,things could be different. But if you look at path goals ortechnology breakthroughs, you know, changes actually take longer to adoptand impact tends to be bigger. But even I you know, we've just startedscratching the surface. I think when I talk to companies, theyuse the word a lot. But in terms of application, I thinkthere's a varied spectrum of how it will.

Actually be utilized.So I think we're still in the beginning. And if you look at at least the historyof economic cycles and development, there hasn't been a change that makes mebelieve that historical patterns are going to be completely irrelevant.Ellen I know we were interested in certain international markets becausetheir valuations are more attractive, but which ones?Because there may be a good reason for some of them trading at a discount.I mean, Europe may be going into recession.You know, there's all sorts of problems in certain countries in Asia.So I like the company.

Kerry Caring isa luxury goods company that owns brands like Gucci, Bottega, Veneta and SamLaurent. It's gone through a creative director,Change management Change at Gucci. They are a missed operatingrestructuring at look at history of Gucci.They've turned around the company twice in the last couple decades.So I know that the company is or the brand is capable of reinventing itself.And secondly, the valuations reflect the weakness, especially in China.So a lot of that is priced in under 15 times.So I believe that when the economic.

Cycle turns, you know, Gucci will be abeneficiary as well as a huge beneficiary of operating restructuring.Yeah, that's talk down 33% over the last year.I know Rolls-Royce is another pick, but these are really luxury stocks, Ellen,And it seems like it might take a while for the Chinese consumer to come backand luxury hasn't been doing so well. Yeah, luxury has been weak.Rolls-Royce is actually an aircraft engine manufacturer, so they areactually in the miss the beginning of upcycle where, you know, the theWidebody aircraft are going back in the air and flying hours are increasing.And Rolls-Royce just had the new CEO.

Come in the beginning of 2023 and theirfruits of restructuring is coming to fruition.Since he's come into the office, they've revised up their free cash flow guidancetwice. And so with effects of operatingrestructuring combined with cyclical recovery, we believe the company is wellpositioned. It's up 240% in 2023, but we think we'restill in the beginning phase. But this gets a broader question here.I just about the general confidence that people have in the markets, in theeconomy, everything else all put together here.Does 2024, though, become a story where.

You really do have to be that kind oflooking at single stocks or even single sectors?Or do you think there will be a broader macro story that could sort of lift allboats or maybe single, depending on where there were?A lot of what we do at Causeway is look at companies on a bottom up basis.And, you know, in the current environment, I think stock selectionwill really matter. And as I said, you know, because ofCOVID, a lot of sectors have a more asynchronous cycle.As I mentioned, aircraft engineering is aircraft engine manufacturing that'sgoing through an upcycle.

Now, luxury goods has already gonethrough a downturn. So it's going to be really important tolook at companies and sector specifically to make investments goingforward. All right, Alan.Well, I remember that's how it used to be done before we had that crazy bullrun. A few years ago.Alan Lee, always great Causeway Capital Management up this countdown to theClosing Bells, just about 3 minutes away from that year with the S&P 500 rightnow still sitting on those record highs. Bonnie.Yeah, it's incredible.

And we haven't told all that much aboutyields yet today. But I mean, obviously we will.And you're seeing sort of the two year yield a little bit more sensitive to howthe Fed will perform the move a little more than the ten year yield at themoment. But they're higher.They're very much higher. And the two year at 439, the ten year atfour, 1398 right now. All right.We are, of course, moving closer to those closing bells.And we talk about this idea here, Vonnie, when we talk about sort ofwhether this does become sort of a macro.

Driven market or as I think Elena'salluded to, and she's not the only one who's come on this program talking aboutthis idea of being bottom up, focused single stock focus, and that ends upbeing the driver here. But at the same time, you need that kindof an economy to cooperate with that because those individual corporatefundamentals are still linked to the broader fundamentals of.Exactly. And maybe more than one economy.Right. Because the question in the UnitedStates is when the Fed eventually does card, presuming it will cut as its firstmove.

Right.Is it because of slowing growth or is it because of inflation being well belowits target, around target for some time? And if it's because growth then.It's anyone's guess. Absolutely.Here. 48, 38 right now on the S&P 500, itlooks like we are going to hit a record high for the S&P.Of course, the Dow also at a record high.So, too, is the NASDAQ 100. Our full market coverage starts as wetake it 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 2 minutes awayfrom the end of the trading day Romaine Bostick alongside Vonnie Quinn, we'rejoined right now by our colleagues Carol Massar and tim fan of a global simulcastas we count you down to the bell and beyond.A hearty welcome to our audiences across all of our bloomberg platforms,television, radio, originals, and YouTube.Record highs pretty much across the board here today.Carol Massar at least for the Dow, at.

Least for the S&P and of course, for theNasdaq 100 as well. Yeah, it's a big day, certainly one forthe bulls here. I was curious, you know, after thatstrong sentiment, U.S. sentiment, consumer sentiment numberthis morning, I was curious about consumer discretionary names and we'reseeing some outperformance. And among the top gainers, the groupoverall just up about 1.3% today. Okay.The question I have is if companies can live up to the lofty expectations thatinvestors have for them moving forward and certainly we'll find out next week.We're in the midst of earnings season.

We've got a handful of big companiesreporting next week and then, of course, the week after as well.Those include Tesla, a few airlines and Vonnie and some of the ever importantrailroads as well. Yeah, exactly.And if you look at the, you know, the breakdown of what's higher, as Raminsaid earlier, is semiconductors really helping to a certain extent, up 4.4% asa group in the S&P 500. And, you know, things like managedhealthcare that after the Humana results down two and a half percent.So some of this will hinge on how things perform next week.You know, the thing is, I mean, you have.

To kind of go back when you talk aboutthe broader market here and you go back to sort of what we saw in late October,sort of when stocks kind of bottomed out here and the run up that we've had inthe major indices since then, it has been nothing short of phenomenal.And of course, as we sit here at 4 p.m. on a Friday afternoon on this veryJanuary 19th of 2024, we finally get the culmination of, I think, what a lot ofpeople have said might have should have happened a long time ago, 48, 39, andchange on the S&P 500. It takes a while for these numbers tosettle, but no matter where they settle, that will be a record high, a 60 pointgain or so on the day, 1.2% on the S&P.

500.The other indices not to be left out. The Dow Jones Industrial Average up apercent to a record high. The Nasdaq composite up about 1.7%,which point out the Nasdaq 100, up about a similar amount at a record high.And the Russell 2000. Let's take a quick look at that.Of course, that still has got a little bit of a ways to go before it gets backto a record high, but still posting a gain on the day of about 1%.Yeah, it's interesting after kind of a tortured start, certainly on the equityside of things here in 2024. It does feel like as of late andcertainly this week that, you know,.

Investors are willing to take on riskhere when it comes to the trade. Having said that, vonnie, s&p 500, alittle bit of a deeper dive. We are definitely seeing that risk ontrade. 371 names on the index higher today, 131to the downside. Yeah, exactly, carol.And as I mentioned, semiconductors and semiconductor equipment representingmany of those higher names, but also regional banks.It'll be a little bit of relief for some of those regionals as they start toreport earnings and so on to get some upside.Many of them are down 20% or more year.

Over year.And then to the downside, as I was saying, managed health care not doing sowell. And we also have a lot of the healthcare stocks actually lower on higher medical costs.Just to reiterate, if you're just joining us, the S&P 500 index closing ata record high for the first time in two years.So a significant move certainly taken out here on this Friday.All right. Having said that, let's get to some ofthe individual gainers that were helping to push the overall market higher.This one, I don't know if this has been.

On your radar.If it hasn't, it probably should be super micro computer.I kind of pulled him over. I'm like, have you seen this stock?It has been year after year after year, high performance up 36%.In today's session. It's up about 45%, I think, year todate, largely because of the move today, last five years, since January one of2019, it's up nearly 20 900%. It's a computer hardware maker.It put out some preliminary financial results.It beat expectations. The company saying it expects to exceedits previous guidance.

Analysts weighing in, includingBarclays, their analyst, over their estimates that Supermicro likely shipped9000 air servers in the December quarter alone, thanks to improving graphicsprocessing unit supply and strong air demand.They expect another full year 2024 guidance increase when SUPERMICROreports results later in this later this month.Is this a name that's on your radar? Oh yeah, it's been on our radar for awhile. I mean, they're a big deal.I mean, at least if you're building the data center or something like that.But I mean, yeah, 35% seems a little.

Extreme.But I guess when you look at some of the valuations out there and the promise ofI, I guess maybe it makes sense. Yeah, exactly.But it's year after year after year. Just real quickly, PayPal a top gainerin the S&P 500, NASDAQ 100, up about 6%. No real news.A lot of volatile volatility around this stock.A lot of A-list weighing in. But it was an outperformer today inEndeavor. I just wanted to mention Group Holdingsup about 6.6% today. You know, remain your agents.Yeah.

Sowe're not supposed to talk about that on air.You know, I. My Don't worry, my feature film willdebut in 2025. But just real quickly, we should pointout, too, I mean, in all seriousness, I mean, you talk about the moves that yousaw in those tech names, you know, with Metta basically going back to a recordhigh, Microsoft going back to a record high.And in fact, most of those big cap tech stocks and some of the mid-tier oneslike super micro, if not at a record high now within a whisper of that aswell.

So this really has been, at least forthis week, a relatively broad based uplift.It has. But if we think about, you know, mediaplatforms, for example, or some of the other big tech names, it's certainlybeen a bumpy road getting here. I mean, that company is up, what, about70% since those lows about 18 months ago.And they laid off a lot of people and restructured a lot of restructuring toget here. So it has certainly been a rough road.Hey, speaking of a rough road, there were some actually decliner actualdecliners in the S&P 500 today and.

Outside of the S&P 500 as well.I do want to start with one of the worst performers in the S&P 500, Albemarle.It is one of the largest lithium producers in the world.Shares falling for eight days in a row. It's down on the softness that we'reseeing when it comes to the EV market. We saw the Ford News earlier today.We know what is happening when it comes to the way at least U.S.consumers are thinking about EVs. The company's customers include carcompanies such as Ford, Tesla, Volkswagen, Mercedes and more.And Lithium, of course, a key component when it comes to those EV batteries.Let's talk about PG shares falling.

In PPG Industries today, it's the paintand coating maker reported yesterday its first quarter adjusted earnings pershare came in below analyst estimates. Wall Street analysts also said theguidance implied a slow, slow start to the year shares finishing.They're down by about 2.5%. And then did you guys see what happenedto iRobot today? This is all a regulatory issue.Concerns that the Roomba maker iRobot, that Amazon acquisition remain expectedto be blocked by Europeans European Union antitrust regulators over concernsthat the deal will harm other robot vacuum makers shares down.Really how many of those are they?.

That's why I'm laughing.Okay. I mean, I know there's like someknockoff ones. Yeah, we have a knockoff Roomba at home.Oh, does it actually do that? Does it only like clean half the houseor something? Yeah, well, the Roomba is are tooexpensive, so we got the cheaper one. I love this quote.EU interim competition Chief Didier Renard said Amazon had to pledge fairtreatment to all robot vacuums offered on its platforms.The antitrust regulators will not rest until the robot vacuums are all treatedequally.

But in all seriousness, closing down27%. And speaking of competition to it, didyou see Celsius? That's the course.The big energy drink maker down significantly on the day.Worst day they've had in a year and a half.And that was on the back of a downgrade because of competition in the energyspace. Oh, let's talk about yields, becausethat was a big part of the story this week.It was a big part of the story last week.And in fact, what you're looking at.

Right now is kind of a completereversal. Last week, you had a drop of about 23,24 basis points on the two year yield. This week we had an increase of about 24basis points on the two year yield. So call it a wash.You're looking at the daily numbers. They are here up about three basispoints on the two year. The rest of the curve it shiftedslightly lower, but on a weekly basis, everything is higher than where it was.And that gets us to this idea here of whether that is going to actually factorinto, well, how people look at today's rally when they come back Carol, onMonday.

Hey, and speaking of good news, there'ssome good news for Mr. Gorman over at Morgan Stanley.We know he's moved out of the CEO role, but James Gorman, Morgan Stanley up intheir pay his pay specifically seven and a half percent to $37 million in hislast year as CEO as that company. So certainly was at that company for along time, made a lot of changes. But nonetheless, 2023 was pretty goodyear for him. Okay.Well, let's start thinking about what happens next week and then the weekafter. Of course, when we hear from the Fed, wedid hear from a lot of Fed speakers over.

The last two weeks.The blackout period begins next week. So we're not going to hear from Fedspeakers next week. So we're going to read different tealeaves. But I think it's important that we'regoing to be hearing from a lot of different companies about any softnessthat they're seeing with the consumer. Again, I think that, you know, sincewe're seeing equity markets at all time highs for the first time in two years,it's going to be really important to hear if investors expectations are goingto be met when they when we hear from some of these consumer companies.I think it's I mean, when you look at at.

Least the numbers that Bloombergcompiles in terms of expectations for earnings in aggregate here, they arerelatively ambitious, if you will. The most people seem to think that weare going to have a very good year overall.And if we start to see that in those fourth quarter numbers and moreimportantly, the guidance that they give going forward, does that add more fuelto the rally or is that already priced in?Yeah, I mean, every time we hear from a Fed speaker, as you pointed out, we havefresh data to sort of listen to them with.And there was a raft of data this week,.

Much of it good and much of it relatedto the consumer. How does that change each person, eachvoting member and each non-voting member's opinion on when they shouldcome out first? Carol Yeah, I think we're datadependent. We know that we're going to go from datapoint to data point. Having said that, what happened withFord today, we know that they're going through these changes.They're still committed to the EV market, but they've also got to staytrue to the way, you know, cars have been for such a long time.Take a look at that stock.

What a range.It was down one and a half percent, but finished up almost 2%.I like what? Thank you.But I think the point is that companies react quickly to what is going on in themarket. As much as it means really sorry forworkers that lose their jobs, but I think they are kind of beaten up veryquickly by the market if they don't do what they need to do.And somehow things cyclically kind of seem to move through pretty quickly.Just before you go, Carol Massar and I know you've got a really busy day thatwe need to stop our mikes and go now.

I think we have that 37 million onMorgan Stanley for Gorman. Interesting, too.They're also saying that Ted pick his starting salary is base salary that isis going to be at 1.5. Obviously, that was pretty much in linewith what Gorman made as a base salary. So the big question is, are is is hisstock compensation going to rise to the same level that Gorman said?That's maybe some weekend homework to think about that?No, I mean, I just gave it to you. Now we got to go.Are you right? I don't know what I'm doing.She's watching the game on Sunday and.

Watching the game.Go Kansas City. Can I do that?All right, that's a wrap, guys. Have a good and safe city fan that youwere from Jersey. I am heard to Taylor Swift.Are the Giants there? No.All right, everybody, have a good and safe weekend.Stay warm. All right.We'll see you guys, everybody on Monday. All right.Coming up, a closer look at AIG right here on Bloomberg Television.This on the back of a couple of.

Bloomberg scoops involving Sam Altman.And his effort to raise money for a chip venture is something that we kind ofknew about. And some departures over at Google'sDeepMind project. That conversation coming up next on theclose on Bloomberg. Record high levels for US stocks here onthis Friday afternoon. And now a closer look here, acompensation for some of the big bank CEOs.James Gorman, the outgoing CEO over at Morgan Stanley, already stepped down.His pay last year, got bumped up by almost 18% to $37 million in terms oftotal compensation.

Sonali Basak standing by with a littlebit more on this here. This is relatively in line with what weheard. I think we had John, yesterday, if Iremember it. We're talking about Jamie Dimon.He got 36 million and total comp. So James Gorman is right there in themix, right there in the mix. Call it the Morgan and the MorganPremium. Into the jump you saw Jp morgan was onlyabout 4.3%. The jump you're seeing from MorganStanley is a lot larger. Of course, it was James Gorman's finalyear as CEO.

What we also know is very kind ofboilerplate here. The base salary also for the new CEO,Ted Pick, according to this disclosure. But as we know, the base is nothingcompared to the base is peanuts for them.Right? Exactly.It's $1.5 million, a cool 1.5. But, you know, you have this MorganStanley $37 million. You have to remember that Morgan Stanleyand Jp morgan commanded two of the richest valuations among every majorWall Street bank. And so this kind of 36, $37 Millionfigure, it will be interesting to see.

How it sets the standards for others whodo not trade as richly as Morgan Stanley and Jp morgan.All right. Well, we'll find out.And Ali, thank you so much. That is Sonali Basak there, our crackfinance reporter and host of Real Yield on Bloomberg TV.Smart Bitcoin ETFs began trading last Thursday, and since then, Bitcoin hasslumped to its lowest since mid-December.Joining us now is David Man, Franklin Templeton's head of ETF products andcapital Markets. Franklin Templeton launched their ownBitcoin ETF last week with the ticker.

Easy B.So, David, I have to ask you, are you disappointed?I know we've actually been really excited from a new launch perspective,really strong volumes. I know somewhat unprecedented in the ETFindustry to have so many, you know, so many funds starting withthe same exposure. So certainly we're paying attention ofour flows compared to the other issues that brought a Bitcoin ETF.But our volumes have been strong and we know that there's a lot of platforms andgatekeepers that want to watch how these things work, make sure the trading isgood, the creation of redemptions works,.

That is tracking to spot a Bitcoin.So we know it's going to be a bit of a marathon and we're we're excited aboutthe journey. What's your pitch when you're trying toget grab some market share here? Is it purely fees?Is it the fact that you use a different exchange?How do you convince an institution to buy your Bitcoin ETF, frankly?Yeah, sure. So I say there's two main, two mainpitches. First, from a fee perspective, we arecurrently the lowest Bitcoin ETF in the marketplace at 19 basis points with afee waiver down to zero for six months.

But more importantly, just FranklinTempleton. Add, you know, we're now over 75 yearsas an asset manager. We've been in the digital space forquite some time, and so the trusted partner and the digital expertise of ourfirm and actually having an on chain money market fundactually investing in some of these companies actually being part of nodesand and, you know, at the forefront, you know, we're actually kind of a oldschool asset manager but are also crypto native.So combining that expertise and into my side, the ETF form we think makesFranklin a good spot for your Bitcoin.

Investments.I am curious as to the whether you think that the folks who will gravitate to,say someone like your company, FranklinTempleton, versus some of the more I guess pure sort of newer crypto players,whether it's Coinbase or wherever else is going to be doing custody out there.Do you think that there will be sort of a preference by some of the folks to gofor certain of their, I guess, newer finance companies at the expense of themore traditional finance companies like Franklin Templeton?Yeah, it's it's you know, we're we're wondering that sometimes ourselves.I mean, in terms of Franklin Templeton,.

There is a.Okay. The crypto native and the old schoolasset manager. And so, you know, to your point,this is a Bitcoin exposure with an ETF form.So sort of the obvious first answer is, well, we're going to be talking to folkswho like to use ETFs, might maybe they trust traditional asset allocators,first of all platforms. And now there's this whole new cryptonatives and folks that have had digital wallets that are now maybe they'rethinking they'd rather have it in a in a brokerage account.So we're we're talking to all of them.

But but it's an interesting journey tosee. Yeah.You know, we're pleased to be coming from and especially looking at thefirst, you know, first trading over the last week, week and a half.Yeah. How much is moving from an existingexposure, whether it was other fund vehicles or even just bitcoins intothese ETFs is something we're tracking.Absolutely. And it's going to take a little moretime, I guess, for all this to shake out, of course, as this stuff has tokind of work its way through the system,.

Particularly when you're talking aboutnew adopters. I am curious about on the custodianside, particularly what types of conversation you guys had about thedifference in custody of digital assets versus custody or just, you know,normal, you know, say, stocks and bonds here.Is there a material difference there or is there enough, I guess, overlap andsynergy there that it doesn't really matter?No, it's it's it's we get a lot of those questions, you know, where the bitcoinsare held. Ours is we use Coinbase as our Bitcoincustodian, you know, depending on how.

Far down the ETF ecosystem rabbit holeyou want to go, we can talk about hot and cold wallets, we can talk aboutcorrections and redemptions. Oftentimes we'll use gold as an analogyin terms of, okay, well, how does the fund hold gold and who's your goldcustodian considering that Bitcoin is often often referred to as digital gold?Lots of new plumbing was built, but at the end of the day, a lot of thefeatures that investors have come to like about ETFs, the trading inliquidity, you know, trading in line with the value of Bitcoin kind of worksthe same as other ETFs. Correct me if I'm wrong, it looks to methat your market cap right now, and.

Obviously we're in the very early daysis $48 million. Is there a baseline market cap that youwould need in order for this ETF to continue living?No. I mean, you know, to my earlier point,you know, we we certainly model out how we think flows will go one in three,five years. But, you know, given that a lot of themajor partners and platforms that we typically talk with will tell us, hey,this is this is a bit new, we're still thinking through what is the rightpercentage of asset allocation that should go to Bitcoin.We're going to watch how these behave.

For 1 to 3 months and then and then, youknow, we'll be admitted to those platforms, so to speak.So we are you know, we've priced this with a long term horizon and so we'vegot plenty of runway to to get there. All right, David, great to catch up withyou. David Mann over at Franklin Templeton.A closer look here at the nascent spot Bitcoin ETF market here.And of course, the big players now trying to make their mark.Coming up here, a closer look at venture capital and a closer look at the videogaming industry there. They're, of course, connected.And there's been an interesting.

Development here when it comes to someof the M&A activity in that space. Just chatting in a convoy venture isgoing to be joining us in just a bit. Stick with us.This is Bloomberg. All right, let's talk video gaming orjust gaming, because funding in the sector is on a bit of a down day.Valuations dipping by about 33% between the third and the fourth quarter, thoughI'm told actual volumes are pretty much in line with where they were theprevious quarter. Josh Chapman knows a lot about thisindustry. He's a managing partner over at ConvoyVentures and he joins us now to talk a.

Little bit more about this.And before we get down into the nitty gritty and some of the broader trends, Iam curious about the discrepancy between the drop in deal values that we saw lastyear. But when I was looking at the number ofdeals, there were about the same. Yes, absolutely.And thank you so much for having me on the show.But the that drop is directly correlated to the fact that valuations have comedown. And so the amount of funding that'sgoing into gaming has actually dropped, but the valuations kind of allow you tohave the similar ownership.

And so the volume stays consistentbecause seed and early stage are doing well.But that's that's why you're seeing that discrepancy in the market.So where do we look to, I guess, in 2024?Because whenever we talk about this sector, I think everyone kind of focuseson that handful of publicly traded big companies out there.But there's a whole universe of other names out there.And I'm wondering how much appetite is there out there for and for investors tochase after some of those names? That's three or four years.There's been about 30 to $40 billion.

That's been put into the beat of thegaming industry and a bunch of names that have yet to go IPO or names thatare actually being publicly traded. And so that's kind of the main thingthat everyone's waiting for is where's the liquidity coming in the market forthat 30 to $40 billion. A few names like that are waiting to gopublic or things like Epic Games that owns Fortnite or Discord,a lot of other different companies that are still private.And so that kind of goes into the IPO backlog.That's a much broader macro trend. But over the coming years, we're goingto watch these names potentially go.

Public.We're going to watch public Corp's potentially use their 32 billion on thebalance sheet in cash to buy private companies for half a billion.A billion? 2 billion.And we're even seeing Non-endemic X like savvy gaming group out of Saudi Arabia,put over $30 billion in the gaming of which they did a $5 billion acquisitionjust last year. So I think you're going to see a lot ofnew entrants, public courts, buying private companies, and then the IPObacklog finally go public. Some of them, though, Josh, missed theiropportunity because it does feel like,.

If I can phrase it this way, there's abit of a gaming recession on. Gamers are dropping off and particularlytwitch water is. Yes, actually, I would disagree with youthat gamers are dropping off. Last year we just added 100 milliongamers to the gaming ecosystem. So now 3.3 billion gamers in the worldare playing. That's adding about 100 million a year.And that's been steady for almost two decades.That's really interesting where the gamers are still increasing, but theindustry has seen sort of this dip in funding that's very correlated to thefact that this is a very risk on sort of.

Venture capital gaming trade when ratesare rising and you can get risk off capital gains elsewhere.And so that I think this macro environment is affecting early stagebets. While the gaming industry continues tosee adoption, you see Netflix gaming continuing to rise.You see that groups like Nintendo continue to come out with their nextversion and console. And so I think gaming is thrivingunderneath. But the industry from a funding and arevenue basis is sort of fluctuating along the way.What about the content?.

Are people getting as excited for gamescoming out now or are the next iterations of all these games just a bitlike the television, you know, movie series that are a franchise?Just getting a little bit, you know, long in the tooth.Yeah, I think people are still excited about certain games that they have a lotof brand loyalty to. So if you're a huge Halo fan, you'rereally excited about that, but you don't really care about Grand Theft Auto onthe other side. Take-Two Interactive that owns GrandTheft Auto, they're upcoming. You know, GTA six is one of the mostanticipated games for decades.

Then you have things like Call of Dutythat people buy habitually every couple of years.And so it really depends by the game that people are playing where theirloyalty is and therefore their wallets will follow.But I think it's a broader statement. This is sort of a personal view that wehave at the firm. There are too many games in the gamingindustry and there probably needs to be a lot more consolidation of talentbuilding better games, but a few fewer than before.And I think that's a trend we're going to see right now as you're going throughsort of a lot of that pain and a lot of.

Consolidation business models that are alittle upside down. I think you're going to see people bandtogether to build greater experiences, but just fewer of them.Okay. So fewer of them.So that means don't necessarily expect big IPOs, but expect maybe moreconsolidation. Yeah, I think this year you're going tosee no huge gaming vertical in M&A. So last year, the big story wasobviously Microsoft buying Activision, one of the largest acquisitions of alltime in tech, and that was huge for the gaming industry and one we were verysupportive of and we're so glad that got.

Through.Yeah, that said, the regulatory environment I think is going to holdback some more of those big IPOs this year.You just saw Adobe Sigma fall apart. So yeah, I think that's happening on theM&A side. I don't expect a lot of gaming IPOs tohappen this year. Anything above 500 million I don't thinkhappens this year because a host of reasons of which you all are experts inmonitoring on a daily basis. So yeah, that's sort of my my predictionon that. Thank you so much.We will let you get back to playing.

Fortnite.I know that there may be some of us just have a managing partner at ConvoyVentures. They're joining us.Coming up, we'll speak to the brains behind New York City's first cannabisconfab. Sorry, this is Bloombergand. Yeah. Welcome back.This is that part of the show where we tell you how the markets did on the dayand on the week. And guess what they did Well.You're looking at a record high on the.

S&P 500.515 days have passed from the last record high back in early January of2022. A lot of folks said that it was overdue,long overdue, but still a lot of big questions here about whether thecorporate fundamentals are going to support that big rally that we've seenoff of those October lows back to 4800 and change 1.2% here on the day and nowfirmly above a lot of those key moving averages.We should point out the Dow also closed at a record high today.So did the Nasdaq 100, The Russell 2000, as well as the Nasdaq composite havesome catching up to do?.

But there are a lot of investors rightnow that think when you look at the interest rate environment, when you lookat the Fed and more importantly, when you look at the economic data, there isa case to be made. The valuations in this market are notonly cheap, but for some of them, a screaming buy fund.All right. We want to pivot from this and go to ournext up segment. That's the more we highlight theentrepreneurs and trendsetters, moving the needle in the markets and intechnology and in venture capital space. Our next guest has been merging herexperience in the VC state with retail.

And cannabis opening Gotham as New YorkCity's first cannabis concept store. And it promises buyers the state's bestcannabis alongside other premium items. Please to say Joanna Wilson is joiningus here right now, the founder and CEO of Gotham.A Joanne, why cannabis? You had a lot of businesses prior tothis. Why cannabis?Why not? I think it's a multiple things as afterin the during the COVID world, seeing all these different stores collapse aswell as the advent of cannabis coming into a very, very early stage, nascentmarket, I think is really what inspired.

Me to get involved.But you know, it's a really, really difficult space, particularly if you'regoing into it legally, right? So if you want a licensing that takesforever and obviously you have ones that you went through all that process.So this has to have been a multi-year process for you.How much did it cost to get up on your feet?It cost millions of dollars to get up on your feet.And the taxes, there's a tax code to it, which is extremelyegregious in regards to what you need to pay the federal government.So we're all waiting on bated breath for.

That to change.And the DEA will hopefully change the tax situation.But it is an insanely complicated business, particular talking about anindustry that has never been legal but has been operating fine anddandy for 60 years. There you go.The city licensed about 16 dispensaries last year, but we all know there'sprobably 16 on most blocks in New York City.Right. So it doesn't actually affect yourbusiness that all these unlicensed premises are open.It absolutely affects our business.

I mean, when people say what is the mostwhat is the thing that you expected that you didn't expect?Well, I did not expect it would be 8000 illegal stores in New York City and theywould be my biggest competitors. I mean, the reality is, is these illegalstores were on the market in New York City.And I know that the state is working really hard and figuring out how to shutthem down. But it's a tremendous problem.And I don't think a lot of the consumers even know that these stores are illegal.And that to me is the biggest problem. And there's a million ways to makecustomers aware.

PSA would be the first, but there's verylittle tax money that the state has created because they haven't opened upin our stores. So it's sort of this catch 22.There's clearly a failure here on the part of government to address this.And again, anyone who's not in New York, I really encourage them to just walk thestreets and you'll see exactly what we mean by the proliferation of thesestores. Oh, it's crazy.In the meantime, you've still got to run a business.You gotta run. What what's the value proposition wherepeople come to your store and buy.

Legally instead of going to either theseillegal stores or to their old illegal dealers?On the streets. Yeah.I mean, listen, we created a very unique store.I think that the when I sought out to do this, I wanted to change the narrativearound cannabis. And this narrative around cannabis hasbeen false since the person that oversaw the alcohol Commission back in the 1930skeeping their job. And they really use it to keep black andbrown people in jail. And so the reality is, is that there'snothing wrong with can but you can point.

To Israel has continued to do all theresearch on it and allow that to happen. Whereas in our country we've stopped allthat research every day there's new things that are coming out.And so, you know, it is a lifestyle. It's just like, why can't you?You can go into a wine store and have cheese and crackers and bring in yourkid. Why wouldn't you want to go to acannabis store and experience something very similar?I mean, ask around. Yeah, everyone's using cannabis.Yeah. Yeah.I mean, I'll plead the fifth on that,.

But you may or may not be correct.I am. I am curious, though, as to how youbuilt this business beyond just having one store, if that is indeed yourambition. How do you do that?Well, I mean, I come to the startup world.I was in technology startups as an angel investor for way over a decade.I invest in over 150 stores. I build stores, companies before andwe're looking at this is, have you ever built something where you were?You were immediately faced with that level of competition.Can't say I've ever built something that.

I had to deal with the government beforeat this level. But, you know, it's the same thing.You know, you're building a brand, you're building a direct to consumerbusiness. With our merchandising, we're looking tobuild our delivery business. You can go to Gotham, Dot NYSE and getanything delivered around the city. And then we also had these experiencesin our store, which we do events all the time that creates community and peoplecome back constantly for that. So I think that's a really important,particularly in this post-COVID world. Yeah, there you go.I was going to ask you about that.

Because it's in some extent a little bitof a commodity, right? I mean, it it's like a coffee shop, butthere are some coffee shops that are more popular than others.So there's obviously things that work and things that don't.What have you found that works? And, you know, as a side question, whatdo people want the most? It depends on the customer.We have everything for everyone. I do think that what sets us apart,we're a very high tech, high touch business.High has very luxury hospitality. I think that's what most customers arelooking for.

They feel comfortable in a store.They like what they're seeing. The people behind the the case line, thebud tenders know deep knowledge about what works for you or what doesn't workfor you. And so once you become a customer, Imean, the numbers in the data prove that you continue to come back to Gotham.There will be stores all over the city that will eventually be like your localdry cleaner or your local shoes person or your local bodega.Yeah, but we aren't that okay. But that's where the differentiate comesin, because as I'm sure you know, a lot of the products, but primarily becausethe regulations are the same.

If I go to one store, a lot of times thethe other legal store will have kind of the same brand.So that's true inventory for the most part.So you have to separate yourself out. We talk about it from the customer'sperspective. I am curious about when we talk aboutscaling up and maybe the need for investors, are investors overallcomfortable coming into the space given some of those loose ends aroundregulation and legalization? There's no investors in the space.There's no investors in the space and think that all of these people that havebeen previously incarcerated that got.

This golden ticket to go out and open astore, that they're going to make millions of dollars.They are going to be sorely sad to find out that it's not going to work.Investors are not going to give to individuals.What investors will give to is brands that are being built, that are beingprofitable, that can figure out how to open across state lines in differentstates, working with different farmers. That's an interesting investment.Or the large companies that are on the public markets that's investing or backend technology. But they're these one offs.They're never getting money in the bag,.

Certainly are giving it to them.All right, John. Well, this is illuminating.We have to have you back on to talk about this.Joanne Wilson, prolific investor and entrepreneur and now the founder and CEOof Gotham Funny. Openai CEO Sam Altman has been workingto raise billions for a chip venture with the aim to set up a network offactories to manufacture A.I. semiconductors.Bloomberg Technology co-host Ed Ludlow joins now with the story.So, Ed, give us the context here. Tell us a little more.Yeah.

So Sam Outmanned basically wants toguarantee for open AI the future supply of chips used in in AI.And right now we're talking about A.I. accelerators that are used principallyin the training of large language models.But in the future, when all of these large language models are deployed inthe real world, either as generative AI tools or other A.I.technology, it's about kind of the constant running of them, the inferenceside of this equation. So all sorts of investors around theworld are very keen to write checks to. Sam Altman.We're talking about tens of billions of.

Dollars, but what he wants to do is inpartnership with the existing CHIP contract manufacturers, make sure thatwe are building the additional capacity, literally new chip fabs or chip fat.Trees that can help him work towards that long term goal.Just clear up something for me, Ed. I mean, are we talking when we talkabout his chip venture? Are we talking about more about designor the actual bill? Because it seems like the expertise hewould need to do this, he's still going to have to partner with, I don't know, aTSMC or an Intel or somebody else. Right.Or I mean, correct me if I'm wrong.

No, this is exactly why we went andreported this today, because it gives clarification that the initiative andit's an initiative. Right.Sam Altman has a lot of ideas. There are lots of people that want toinvest in him, but he's basically trying to bring many parties together, saying,I'm really worried that we won't have supply in the future that meets thedemand. And so what can I do as a kind ofspearhead of this project to do that? As it stands, the focus is not ondesigning a specific AI accelerator that would compete with Nvidia's H1 or AMD'sMay 300 XT, though I suspect that that.

Is something this Altman is thoughtabout based on what I'm hearing from sources.All right. So there's another story that we had alittle bit earlier involving a couple of the folks over at Google, DeepMind, whoare also leaving that company, that project, to start their own.What do we know about that, Ed? Yes.Two of their leading scientists are raising €200 million, according tosources, for a new AI startup. Then, you know, it's not uncommon fortalent to move between AI companies. If you look at like names like anthropicor you look at and Maestro, you look at.

Open A.I., many of the people on staffat all these companies have spent time at somewhere else.But for me, the story here is that there is still a lot of throw and enthusiasmthat investors would be willing to hand over that sum of money, be it a seedround or a series. A The first time that a startups raisingmoney, if they bring in €200 million, it's a big chunk of change and themarket seems to still be that for it. This appetite to get into new startupsbased on people with long standing careers either on the academic side orthe R&D side. There you go.I mean, Google DeepMind.

Pretty good thing to put on your resume.But Ed, the people who are familiar with the matter said that the venture may befocused on building a new AI model. What does that mean?Just using different large language models?Yeah, look, there are lots of companies that are working on large languagemodels. You can differentiate a large languagemodel by the volume of parameters on which is trained, in other words, thevolume of data and how many different datasets you use to train it.You can train a very narrow, large language model with fewer parametersthat has a much more specific focus.

And this is not what we know about inthis case, but you could train a large language model solely on DNA data, forexample, because you want to use that use case of automating or acceleratingyour ability to read the human genome as an example.There are lots of people doing it different ways.What they all have in common is that it's expensive to do because you need alot of compute, but you also need the computer science talent to write theunderlying code for it. Hence why $200 million isn't a euros.Sorry is not a huge surprise for for a two person operation at this stage.So amazing stories from our San.

Francisco team today.Thanks to Bloomberg's Ed Ludlow for joining us.Coming up, we'll hear from Blair from some of your partners, co-founder andpartner, about his 2024 election expectations for Wall Street.This is Bloomberg and. Welcome back to the close.It's time now for our Wall Street Week Daily segment.David WESSEL notes The Wall Street Week joins us as he does every day.And David, we had a big day, at least Trump had a big day in the Iowacaucuses.

We have the New Hampshire primaries nextweek, and maybe we'll get a bit a little bit more clarity as to who's reallygoing to be facing off, though, kind of seems inevitable.Who are the two candidates who We don't know yet.But as you suggest, Roland, right now, if you were going to guess, it lookslike it is going to be the current president and the former president youbrought up. And we're trying to do something on WallStreet. We called Wall Street votes where webasically ask, what does it mean for Wall Street between these two candidatesif we end up there?.

What are their policies mean?So we talked to Blair Effron. As you know, he's an investment bankerinstead of your partners, co-founder and partner.He also has been really active in Democratic politics.So you'll see that he has some point of view.But we asked him from Wall Street's point of view, from the CEOs he talksto, what is the difference between these two sets of economic policies?For the first time in history, we have two candidates that have been president.So you have a track record of what of what to expect in the case ofPresident Biden.

You had so far three years ofsteadiness, good growth markets at an all time high.I think it's underappreciated what has gone on with the economy.Unemployment at 3.7% versus the Trump years at 4% job creation.If you take out COVID as the impact, you still have 9 million jobs created underPresident Biden versus 6 million under President Trump and even GDP growth 2.2basis points higher under President Biden.So in addition to that, you've had are-engagement globally.And when you think about our biggest and.

Best companies,60% of their business is outside the country, outside the U.S.Therefore, we're having a an important steady relationship withour allies and adversaries where you protect U.S.interests, but also looking out for the interests of corporate America, I thinkdoes matter. And I think if you look at the policiesahead, what do you expect in a second term?I think with a Joe Biden, you still have out of the 3 trillion of investmentspend or is 5 trillion of total spend, but only 3 trillion towards InvestmentInfrastructure Chips Act, IRA era, 75%.

Of that is still available to be spent.So you will get that spent. You'll have 900 billion sort of beenspent by the private sector capital in terms ofsupport behind IRA, for example, carbon sequestration facility by Exxondown in the Gulf Coast, everything at a higher around ships.You'll see more of that. I also think you will see policies aimedtowards lowering costs for all Americans on afirst term drug pricing insulin. The second term, expect more aroundchild care, long term care benefits, more arounddrug pricing and continued engagement.

Globally.So then the question is, with the Trump presidency, what do we know so far?Well, what about that? Because if you look back, I think a lotof Wall Street says it was not a bad time under President Trump.In fact, we actually had good growth. We had good job creation.Less regulation, less taxation. A lot of companies did pretty well,didn't they? The companies did well, and theycontinue to do well. And I think that people need toappreciate that our private sector is as innovative and vibrant as ever.But even in this record regulatory.

Question, everybody talks about my worldM&A. The fact is, for the first three yearsof President Biden's first three years of President Trump, M&A is up 6%.In terms of policy, what we've heard so far and the thing that I'm particularfocus on is the notion of tariffs, 10%tariff across the board. And that, to me, is a tax on Americans.That's $300 billion of increased cost to Americans.That's inflationary. It's estimates you've seen byindependent analysts have 500,000 jobs at risk and probably a point or so lessGDP growth.

So that that's concerning.And in addition to that, the question of budgets, I think, is important to eithercandidate that we rein in our deficit. And if we letthe tax cuts put through under the Trump ministrationcontinue, that's another three and a half trillion dollars to the deficit.And I think it's very important in this environment.Do that. One more thing I'd point out,we've had a high interest rate environment and the fact that we arestill able to have a tailwind for the economy is a testament tothe innovation and talent.

Of our companies, both small business,which is half of our economy and the most important biggest companies ontheir side of spectrum. Sounder Trump, we had basically free money and I think it'sadded a certain discipline. So we talk about growth.It's actually even more impressive that you can grow in a current in the currentenvironment. You mentioned the debt and deficits.How concerned is the C-suite sort of generalizing here, but how concerned isthe C-suite about debt and deficit? Because when you talk about the tariffissues are clearly issues about how we.

Would conduct ourselves in the world atthe same time. Even the Committee for a ResponsibleFederal Budget says that in fact it would reduce the deficit because itwould be money coming to the coffers of the U.S.government. So first of all, the deficitis as important issue as everybody thinks it is.You never know when it hits you. It's either a cancer, it's a heartattack. And at some point we will be reacting toit. I would tell you thatno matter who is president, that must be.

Dealt with in the case of PresidentBiden, obviously the IRA. There's a reason Inflation Reduction Acthas a deficit component in there. Bring down deficit $20 billion.And I do think that the strength of this country depends onthe strength of the dollar and depends on capital inflows.Depends on the sanctity of our budgetary process.And that all says we need to be focused on the debt before it starts focusing onus. That was Blair Effron of CenterviewPartners. I must say that last issue about thedebt and the deficit.

Yeah, one of things Glenn Hubbard toldus last week for a Wall Street folks, is he's worried there isn't enough of adifference between Joe Biden and Donald Trump because not clear that either oneof them is really going to take that on. Yeah.And also, where's the support? I mean, even if even if one of thepresidents did decide to side to spearhead that, are you really going tobe able to corral what is still a very divided Congress in order to get itdone? Yeah, And I'm not sure the Americanpeople really are clamoring for more taxes or less spending.And I thought his analogy kind of.

Comparing it to, well, address it whenit gets so kind of heart attack level. And that's what a lot of economists havesaid. Right.It just that's just kind of how we operate, unfortunately, as a country isthat we wait till the last possible minute when things are really dire tofinally say, let's address this as a nation.Yeah. Okay.Well, thank you so much. And tonight on Wall Street week, we'regoing to be joined by Lawrence H. Summers.He's the former U.S.

Treasury secretary as well as of SundayBeschloss. Rock Creek CEO and Peter Bhatia,computer trading company. That's at 6 p.m.Eastern Time. Remain.All right. Wall Street week coming up in just a bithere. Stick with us here on the clothes.We're going to set you up for some of the big market moving events over thenext week. This is Bloomberg. And.

Some breaking news.JetBlue and Spirit have filed an appeal on that ruling that blocked the mergerdeal. Remember, earlier this week, a judgebasically said that deal cannot go through.We have now learned that JetBlue and Spirit are now filing the appeal tohopefully shepherd that merger forward. All right.That could be a potential big market moving event deeper into the future.As for next week, there is a lot going on, including earnings.Exactly. And from Qualcomm, Spectrum will meanquite literally.

We have Verizon and AT&T, but also fromother industries, American Express, Tesla and Netflix as well.Also some economic data as well, including some PMI data as well asjobless claims. Exactly.Old demise. And then investors have to wait onFriday before they got the crucial piece of data.We also get some central bank decision, not the Fed, but some big ones, the ECB,BOJ, B or C, none of them are expected to move.It's all their first meeting of the year, but they will say interestingthings.

And then, of course, back here in U.S.politics, we're going to get a sort of another look at who the potentialnominee for the Republican Party could be.Of course, Trump won the Iowa caucus by a huge margin in the New Hampshireprimary next Tuesday, and that will be on TV and radio right here.Yeah, we'll have full coverage here. Our balance of power team.We'll be all over that. I'll be back next week.Please tune in then. This is Denver and.

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