Bloomberg Surveillance 12/29/2023
>> WE ARE IN MUCH MORE UNCHARTED TERRITORY THAN MARKETS BELIEVED TODAY. >> WE HAVE SEEN SOME VOLATILE MOVEMENTS IN THE MARKET. IT IS LIKELY WE WILL CONTINUE TO SEE THEM IN 2024. >> WHAT I DO SEE IS A BROADENING OUT OF PERFORMANCE. >> WE WOULD SAY VOLATILITY PROVIDES AN OPPORTUNITY FOR INVESTORS TO GET INVOLVED.
>> WE MIGHT HAVE A MORE BORING MARKET THAN YOU THINK IN 2024. >> THIS IS BLOOMBERG SURVEILLANCE WITH TOM KEENE, JONATHAN FERRO, AND LISA ABRAMOWICZ. CAROL: GLOBAL SHARES ON TRACK FOR THEIR BEST SINCE 2019. THE DOLLAR POISED FOR ITS WORST YEAR SINCE THE ONSET OF THE PANDEMIC, OIL NOT DOING SO WELL. A LOT TO TALK ABOUT. FOR OUR AUDIENCE WORLDWIDE, THIS IS BLOOMBERG SURVEILLANCE LIVE ON BLOOMBERG RADIO AND TV ALONGSIDE MANUS CRANNY AND KATIE GREIFELD. PULLING UP THE SUPERLATIVES,
THERE ARE A LOT OF THEM. MANUS: THEY ARE MARCHING OUT AT ME. WILL WE GET THE RECORD HIGH? WILL WE GET THE LAST MOMENT OF EXUBERANCE IN THE EQUITY MARKET? YOU HAVE THE DOLLAR MAKING MULTIPLE RECORD HIGHS. THE S&P 500 IS JUST SHY. 47 -- CAROL: 479656. ARE WE ASKING SO MUCH? KATIE: IT WOULD BE POETIC IF WE GET IT ON THE FINAL TRADING DAY OF 2023. YOU THINK ABOUT ALL THE SENTIMENT SHIFTS. A BANG IN JANUARY. SUMMER SENTIMENT WAS BAD. MANUS: DON'T FORGET CONSENSUS CALLS WAS RECESSION, CHINA WAS GOING TO FLY TO THE MOON. CAROL:
ARE YOU REMINDING THOSE STRATEGISTS OF WHAT THEY GOT WRONG? MANUS: I GOT A LOT WRONG TO BE FAIR. YOU HAVE TO TRY TO MAKE YOUR PREDICTION. THE QUESTION IS NOT IS THIS EXUBERANCE OR IRRATIONAL EXUBERANCE. CAROL: IN A YEAR WHERE WE HAD SO MUCH VOLATILITY, TO SEE THE VIX AT 12, THINGS HAVE CALMEDED DOWN SO MUCH. KATIE: VOLATILITY DRAINING OUT OF THE EQUITY MARKET. IT SEEMS LIKE IT IS NOT BEEN A
VOLATILE YEAR. THE BOND MARKET HAS BEEN A BASKET CASE. FOR ALL THE STRATEGISTS WITH FORECASTS WE'VE BEEN MAKING FUN OF, THE FED STORY WAS RIGHT. THE FED WAS MORE AGGRESSIVE THAN EXPECTED.
THE THING THAT DID NOT FEEL RIGHT IS THE ECONOMY HELD UP AND CORPORATE EARNINGS HELD UP. IT DID NOT MAKE SENSE. MANUS: IF YOU LOOK AT WHAT BLOOMBERG ECONOMICS PUT OUT, WHAT COULD NEXT YEAR LOOK LIKE, THE CORE PCE INFLATION ACCELERATING ABOVE 3%. THIS IS YOUR RISK INTO 2024. NOT SO MUCH FROM THE OIL MARKETS BUT OTHER COMMODITIES. THE FED WILL HAVE TO HOLD RATES HIGHER FOR LONGER AND THAT IS WHAT THIS EQUITY MARKET IS NOT DISCOUNTING. CAROL:
THEN YOU HAVE AI DRIVING THE NASDAQ AND THE TECH TRADE THIS YEAR. THE BEST RUN SINCE 1999. WHAT IS THE MOMENTUM PULL COMING IN 2024 QUESTION MARK WE DON'T KNOW. KATIE: WILL WE START TO LOOK AT FUNDAMENTALS? CAROL: YOU DON'T THINK THERE WILL BE A FED NARRATIVE? KATIE: I IMAGINE THERE WOULD BE. WE HAVE SPOKEN TO A LOT OF PEOPLE HOPING IT INTO EXISTENCE. MANUS: YOU JUST WENT TO THE FIRST WEEK OF THIS YEAR.
THEY WILL LOOK AT THE LISTING OF FINANCIAL CONDITIONS. TO WHAT EXTENT WILL THEY LOOK AT THE INTO BRINSON EQUITY MARKETS? THIS IS THE MIX THEY DO NOT WANT INTO THE FIRST QUARTER. CAROL: THE FED IS VERY GOOD AT KEEPING INVESTORS AND CHECK. EVEN THOUGH THEY ARE NOT WATCHING FINANCIAL MARKETS.
LET'S GET TO THE MARKETS ON THIS FINAL TRADING DAY OF 2023. S&P 500 FUTURES LITTLE CHANGED. WE HAVE BEEN SAYING THIS EVERY MORNING. UP ABOUT 2.5, CALL IT FLAT. EURO-DOLLAR, IT WILL COST YOU $1.10 FOR THE EURO. JUST A LITTLE BIT OF MOVEMENT. MANUS: FOURTH STRONGEST CURRENCY AGAINST THE DOLLAR.
THE EURO PAYMENT NUMBER FOUR AGAINST THE DOLLAR THIS YEAR. CAROL: EXPECTATIONS OF EVENTUAL RATE CUTS PUTTING PRESSURE ON THE U.S. CURRENCY. U.S. 10 YEAR, 3.88. KATIE: A QUIET RISE IN YIELDS. IT FEELS LIKE THE GRAVITATIONAL PULL OF 4% IS STRONG. MANUS: MAY THE FORCE BE WITH YOU. THERE IS A LOVELY LINE. KATIE: ARE YOU YODA? AM I YODA? MANUS: DARTH VADER GOT STUFFED YESTERDAY AFTERNOON ON THE SEVEN YEAR OPTION. THE DEALERS GOT LEFT WITH A LOT
OF PAPER. A LITTLE BIT OF INDIGESTION. KATIE: WE ARE ALL TIRED. CAROL: I KNOW I GOT ABOUT 14 HOURS OF SLEEP. CAN YOU TELL? LET'S SEE A MUCH SLEEP SAME GOT. JOINING US ON THIS FRIDAY.
THERE IS SO MUCH TO TALK ABOUT AS WE GET READY TO WRAP UP A WILD YEAR. AS YOU SIT HERE ON THIS DECEMBER AS WE GET READY FOR THE LAST TRADING DAY IN THE UNITED STATES, HOW ARE YOU THINKING ABOUT THE YEAR THAT WAS IN THE YEAR THAT MIGHT BE? SAM: RAIN. -- GOOD MORNING. I AM LOOKING TO 2020 BEING A GOOD YEAR. HISTORY TELLS US THAT GREAT YEARS ARE FOLLOWED BY GOOD YEARS.
THAT GAINS IN EXCESS OF 20% IN ONE CALENDAR YEAR LEAD TO DOUBLE-DIGIT GAINS IN THE SECOND YEAR, BASICALLY A 300 BASIS POINT IMPROVEMENT OVER THE LONG-TERM AVERAGE WITH A 10% INCREASE IN THE FREQUENCY OF ADVANCED. BASICALLY YOU ARE LETTING YOUR WINNERS RIDE FROM ONE YEAR TO THE NEXT. MANUS: EVERY DAY WE HAVE TO COME UP WITH A NEW WAY TO ASK YOU IF YOU WANT TO BE LONG RELATIVE TO THE BREATH. THEREFORE HUNDRED 93 OTHER
STOCKS. IF YOU THINK YOU WILL GET A DOUBLE-DIGIT RETURN, THE QUESTION IS THEY ARE EXPECTING TO SEE EARNINGS GROWTH RISE 22% NEXT YEAR. THAT IS TWICE THE S&P 500. THERE IS AN IRREVOCABILITY ABOUT HAVING TO HAVE A PORTION OF YOUR EQUITY EXPOSURES. IS IT STILL OVEREXPOSED TO MAX SEVEN OR DO YOU GO FOR BREATH? SAM: YOU GO FOR BREATH BUT YOU BROUGHT AN OUT WITHIN THOSE SECTORS THAT HAVE DONE SO WELL. GOING BACK TO 1990, IF YOU WERE TO BE HOLDING ONTO THE THREE BEST PERFORMING SECTORS INTO THE NEW YEAR, YOU ENDED UP BEATING THE MARKET 70% OF THE TIME.
THE FOCUS BEING NET OUT YOU DRIFT DOWN INTO THE SECOND OR THIRD TIER LEVEL. SEMICONDUCTORS HAVING 105% IMPROVEMENT ON A SUB INDUSTRY LEVEL WITHIN THE S&P 1500. YOU WOULD STICK WITH THAT GROUP, BUT INSTEAD OF LOOKING AT NVIDIA YOU MIGHT LOOK AT BROADCOM, YOU MIGHT LOOK AT MARVELL TECHNOLOGY. YOU STICK WITH THE WINNING SECTORS BUT YOU MIGHT BROUGHT AN OUT TO THE SECOND AND THIRD TIER COMPANIES. CAROL:
WHY NOT STAY WITH NVIDIA. I FEEL LIKE IF WE TALK ABOUT AI CHIPS, THAT IS STILL THE COMPANY EVERYONE SAYS HAS TO BE THERE. IAN KING WAS SAYING WE ARE WAITING FOR THEIR ACCELERATOR CHIPS.
WHY NOT GO WITH THE LEADER? SAM: WE STILL RECOMMEND NVIDIA. OUR TECH SPECIALIST IS SAYING THIS IS A COMPANY THAT IS LIKELY TO BE A LEADER FOR QUITE SOME TIME. WHAT I WAS SAYING IS WE ARE ALSO GOING TO SEE OTHERS. MAYBE WE TURNING INTO THE MAGNIFICENT 14.
WE BASICALLY BROUGHT AN OUT OF THOSE GROUPS THAT ARE LIKELY TO BENEFIT. MANUS: IT IS INTERESTING YOU SAY TIER THREE. I GET YOUR POINT. HOW MUCH EXCEPTIONAL BREADTH WOULD YOU TAKE. WE CAUGHT UP WITH ALLIANCEBERNSTEIN YESTERDAY AND THEY TALKED ABOUT THE SWEET SPOT.
HOW MUCH RISK DO YOU WANT TO PUT INTO PORTFOLIOS NEXT YEAR? HOW MUCH BREADTH? WHAT IS THE EQUIVALENT FOR YOU IN THE EQUITY WORLD? SAM: WHEN YOU DEAL WITH RISK, IT DEPENDS ON THE INDIVIDUAL. I LIKE TO SAY I AM SO CONSERVATIVE I WEAR A BELT AND SUSPENDERS. WHEN YOU LOOK TO HISTORICAL PRECEDENT AND YOU SEE WE ARE IN AN ELECTION YEAR FOR A FIRST-TERM ADMINISTRATION, THE MARKET HAS GAINED 100% OF THE TIME SINCE WORLD WAR II WITH AN AVERAGE TOTAL RETURN OF 15.5%. WE ARE IN THE SECOND YEAR OF ABLE MARKET, UP 12.5%, RISING 85% OF THE TIME. WHENEVER WE ARE IN A YEAR FOLLOWING A 20 PLUS PERCENT ADVANCE. THE MARKET HAS DONE EXCEPTIONALLY WELL IN THAT
SECOND YEAR. I WOULD TEND TO SAY IF YOU HAVE ADDED TO THE RISK IN THIS FOURTH QUARTER, STICK WITH THAT HIGHER RISK. IF YOU DO BELIEVE THERE IS MORE RISK POTENTIAL FOR 2024, I THINK WE ARE A BIT OVERBOUGHT RIGHT NOW. ONCE WE GET INTO THE NEW
CALENDAR YEAR WHEN PEOPLE CAN TAKE THEIR PROFITS AND DEFERRED TAXES FOR ANOTHER YEAR, I WOULD SAY LOOK TO BUY ON THOSE STEPS. MANUS: LET'S TALK -- KATIE:LET'S TALK ABOUT THIS FROM A SECTOR PERSPECTIVE. YOU WRITE FOLLOWING UP YEARS IT IS BEST TO LET YOUR WINNERS RIDE. DO YOU LET YOUR LOSERS CONTINUE TO LOSE? YOU LOOK AT UTILITIES, ENERGY, STAPLES LEADING LOSSES. DO YOU STAY AWAY FROM THEM IN
2024? SAM: WE HAVE RECOMMENDATIONS IN ALL THREE OF THOSE SECTORS, BUT FROM A WAITING PERSPECTIVE WE WOULD RECOMMEND UNDER WEIGHTING THESE GROUPS, MAINLY BECAUSE THERE IS A LOT OF OVERHEAD RESISTANCE AND IF THERE IS EMPHASIS TOWARDS GROWTH, TOWARDS RISK, INVESTORS WILL CONTINUE TO FOCUS ON THOSE GROWTH LEADERS. I WOULD TEND TO SAY THAT WHILE YOU COULD SEE DRIFTING HIGHER SOME OF THESE GROUPS FROM A RELATIVE STRENGTH PERSPECTIVE, THEY ARE LIKELY TO BE UNDERPERFORMERS. KATIE: I WANT TO GET SPECIFIC AND RUN THROUGH SOME NAMES. I WANT TO LOOK AT THE STOCKS YOU HAVE SPECIFIED. CHARLES SCHWAB IS AN INTERESTING NAME.
IT WAS ONE OF THE BABIES THROWN OUT WITH THE BATHWATER AND IT HAS NOT RECOVERED. YOU TAKE A LOOK AT SHARES DOWN 16% FOR 2023. WHAT IS THE THREE KING -- WHAT IS THE THINKING AROUND CHARLES SCHWAB? SAM: FUNDAMENTALS TELL YOU WHAT BUT TECHNICALS TELL YOU WHEN AND HOW FAR. I WOULD LIKE TO COMBINE CFA ANALYST RECOMMENDATIONS ALONG WITH OUR RESEARCH TECHNICAL ASSISTANCE AREAS. SEEING WHERE THE MOMENTUM RELATIVE STRENGTH HAPPENS TO BE. CHARLES SCHWAB IS AN EXTREME
UNDERVALUATION SITUATION, ALMOST TRADING AT HALF OF WHAT NORMALLY TRADES. ALSO WE ARE LOOKING AT AN ENVIRONMENT IN WHICH THE CONCERN IS TOTALLY OVERBLOWN. WITH THE PROSPECT OF ANOTHER GOOD YEAR IN THE MARKETPLACE BENEFITING THE INVESTMENT BANKS AND BROKERS, ONE THAT IS OVERSOLD AND HAS NOT REACHED ITS POTENTIAL, IT IS CHARLES SCHWAB. CAROL: OUR MOST READ STORY ON THE BLOOMBERG PUT TOGETHER BY A BUNCH OF OUR REPORTERS SAYS WALL STREET'S BEST AND BRIGHTEST FLOPPED IN 2023, SAYING THAT AT THE END OF 2022 EVERYONE WAS GAME PLANNING FOR THE RECESSION THEY THOUGHT WAS COMING.
A LOT OF THINGS CAME OUT OF NOWHERE. REGIONAL BANKING. RUSSIA-UKRAINE. THE MIDDLE EAST CONFLICT. AS YOU LOOK AHEAD, WHAT ARE THE THINGS WE MUST KEEP ON OUR RADAR THAT COULD COME OUT OF NOWHERE? SAM: AS MAN S WAS SAYING, WHEN WILL THE FED START TO CUT AND BY HOW MUCH? OUR BELIEVE IS THEY WILL CUT THREE TIMES BECAUSE THE FED DOES NOT WANT TO MAKE THE MISTAKES THEY DID IN THE LATE 1970'S. THEY WANT TO ENSURE THAT INFLATION IS FULLY DOUSED BEFORE THEY START TO CUT INTEREST RATES. OUR BELIEF IS ONLY IF WE END UP
WITH A HARD LANDING RATHER THAN A SOFT LANDING WILL THE FED BE MORE AGGRESSIVE FROM A RATE CUTTING PERSPECTIVE. ALSO ADDING GEOPOLITICAL ISSUES SHOULD WE FIND THERE IS A BROADENING OF THE MIDDLE EAST TENSIONS AND CONFLICT, AND THE TOTAL SHUTDOWN OF THE RED SEA. WE ARE STILL HAVING SOME SHIPPING FIRMS WILLING TO VENTURE IN THERE, BUT A TOTAL SHUTDOWN, A JUMP IN OIL PRICES. THOSE COULD HAVE BEEN THE YEAR
AHEAD FORECAST. CAROL: A FULL PLATE FOR THE NEW YEAR. HAPPY NEW YEAR. APPRECIATE ALL OF THE TIME YOU GIVE. FULL PLATE IT FEELS LIKE AS WE
GET READY FOR THE NEW YEAR. MANUS: INTERESTING HE SAYS HE ONLY SEES THREE RATE CUTS. YOU WILL SEE PUSHBACK FROM THE INVESTMENT COMMUNITY. SIX WAS MAYBE IRRATIONAL EXUBERANCE. THE FED HAVE GONE TO THREE. THE LAST VOICE CALLING THREE RATE CUTS IN 6:00 A.M. UNLESS SOMETHING BAD HAPPENS.
KATIE: INTERESTING TO SEE HOW PRICING CHANGES BETWEEN NOW AND FEBRUARY. CAROL: INFLATION IS DOUSED LIKE A CAMPFIRE. COMING UP, BROKE MAY OF EVANS MAY WELL.
>> THIS IS MORE COMPLICATED BECAUSE THE HOUTHIS ARE DISTANT, THEY ARE BACKED BY IRAN. THEY ARE THE ONLY ENTITY THAT HAS LAUNCHED A SHORT RANGE BALLISTIC MISSILE TOWARDS ISRAEL. DETERRENCE MAY INVOLVE AMERICAN STRIKES ON TARGETS IN YEMEN, BUT NOBODY WANTS THAT. CAROL: AARON DAVID MILLER TALKING TO US YESTERDAY ON BLOOMBERG SURVEILLANCE. MIDDLE EAST TENSIONS FRONT AND CENTER. A QUICK CHECK ON THE MARKETS. S&P 500 FUTURES UP TO .25%.
WILL WE HIT A RECORD ON THE S&P? WE ARE WATCHING THAT LEVEL? 47.96. WE WILL SEE A FRIDAY IS THE DAY. TAKING A LOOK AT THE 10 YEAR. WE GET READY TO WIND UP THIS YEAR. YOU ARE CRUDE, WATCHING THAT VERY -- NEW YORK CRUDE, WATCHING THAT VERY CLOSELY.
CONCERNS OVER ESCALATION IN THE MIDDLE EAST. UP $.35. OIL, WE KEEP A WATCH ON IT. MANUS: THIS OIL MARKET, WE WILL HAVE AMRITA SEN ON LATER. OPEC-PLUS HAS THEIR WORK CUT OUT FOR THEM. THIS MARKET IS STILL LIMPING ALONG. YOU LOOK AT THE SUPPLY. THE NATIONAL NUMBERS SHOW A DRAW FOR THE FIRST TIME.
IT IS NOT BEEN THAT COLD IN THIS COUNTRY. YOU BOTH WILL TELL ME I'M IN FOR THAT EXPERIENCE. CAROL: IT HAS NOT. OIL HEADED FOR THE BIGGEST
ANNUAL DROP SINCE 2020. KATIE: WHEN YOU THINK ABOUT THE LAST YEARS, TO MANUS SUPPORT ABOUT SUPPLY, THAT IS BEEN THE DOMINANT STORY, EVEN WITH GEOPOLITICAL TENSIONS. CAROL: S&P DOWN 4.6%. MANUS: ONE THING TO KEEP IN OUR MINDS IS JEFF CURRIE THIS TIME LAST YEAR WAS EVANGELIZING A SUPER CYCLE IN OIL AND COMMODITIES, SOMETHING WE CAN BRING UP WITH THE GUESTS THROUGH THE MORNING BUT OIL SO NO SENSE OF WAVERING.
CAROL: LET'S TALK ABOUT THE POTENTIAL OF ESCALATION OVERSEAS. SENIOR ADVISOR FOR THE TRANSNATIONAL THREATS PROJECT JOINING US ON THIS FRIDAY. I CANNOT KEEP TRACK OF THE DAYS. THEY ARE BLURRING. NORMAN, NOTHING BLURRY WHEN YOU WATCH WHAT IS GOING ON OVERSEAS AND WHAT FEELS LIKE AN ESCALATION.
WHAT STRUCK ME WITH SOME OF OUR GUESTS YESTERDAY WAS NOT JUST A HANDFUL OF ATTACKS, BUT MORE THAN 100 ATTACKS IN THE REGION HAPPENING AT THIS POINT. LITTLE THINGS ARE HAPPENING AND YOU WONDER DOES IT ADD UP TO SOMETHING MUCH BIGGER? HOW DO YOU STRATEGIZE THAT? NORMAN: GOOD MORNING. I RAN AND ITS MAJOR PROXIES OUTSIDE HAMAS HAVE NO STRATEGIC DRIVERS TO INVOLVE THEMSELVES IN A CONFLICT IN A WAY THAT WOULD RISK A SIGNIFICANT ESCALATION THAT WOULD UNDERMINE THEIR OWN EQUITIES AND STABILITIES. AT THE SAME TIME THEY HAVE MULTIPLE INCENTIVES TO CONTINUE TO CURVE THE PACE OF ATTACKS THROUGHOUT THE AREA OF OPERATION TO KEEP ISRAEL UNDER SEES, TO SHOW DEFIANCE AND WEAKNESS OF THE WEST, PARTICULARLY THE UNITED STATES.
WE SHOULD EXPECT THESE ATTACKS TO CONTINUE, PERHAPS WITH THE QUANTITY AND INTENSITY INCREASING AS THESE ACTORS BELIEVE THEY HAVE NORMALIZED THEIR BEHAVIOR OR THEY HAVE PASSED WHAT WERE PREVIOUSLY PERCEIVED TO BE REDLINES. MANUS: GOOD TO HAPPY WITH US THIS MORNING. THE PENTAGON IS DAILY ENGAGED WITH SHIPPERS IN THE RED SEA. THEY HAVE SAID THEY ARE ENGAGED WITH THE INDUSTRY ON A DAILY BASIS TO PROVIDE REASSURANCE TO THE NATIONAL COMMUNITY THERE IS HELP WITH SAFE PASSAGE. IS THIS THE NEAR-TERM FLASHPOINT OF WHERE WE REALLY NEED TO BE FOCUSED? THERE SEEMS TO BE A RELUCTANCE TO COVER THE MARITIME NEEDS. WHAT YOU MAKE OF THE PENTAGON REASSURANCE IN THE RED SEA? NORMAN: THE NUMBER AND QUALITY AND CAPACITY OF THE NAVAL ASSETS THE UNITED STATES AND EUROPE HAS PUT INTO THE RED SEA, THE IRANIAN SEE IS EXTRAORDINARY.
THERE ARE HUNDREDS OF OFFENSIVE MISSILES AND AIR DEFENSE MISSILES. WE HAVE MORE THAN ENOUGH CAPACITY TO LAUNCH A SIGNIFICANT AND POWERFUL STRIKE. MANUS: IS THAT WHAT I RAN WANTS TO PROMPT? THAT IS THE FLASHPOINT RISK FOR US. NORMAN: IT IS. AT THE SAME TIME IT WOULD NOT BE UNREASONABLE TO THINK IRAN IS NOT -- UNDERSTANDS THE WEST IS NOT INTERESTED IN A CERTAIN LEVEL OF CONFLICT AND THEY CONTINUE WITHOUT BREACHING A REDLINE.
WHAT YOU LOOK FOR IS A STRIKE THAT WOULD UNFORTUNATELY HAD THE BRIDGE OF A SHIP OR KILLER U.S. SEAMEN THAT WOULD PROVOKE A STRIKE BY THE UNITED STATES. UNLESS THAT HAPPENS, HISTORY HAS SHOWN WE WILL PLAY DEFENSE. THAT IS SOMETHING THAT ALLOWS THE HOUTHIS CONTINUE THEIR BEHAVIOR. MANUS: LET'S MOVE TO THE HAMAS-ISRAEL CONFLICT. YOU WOULD SAY MILITARILY THE IDF HAS SUCCEEDED OR FINISHED ITS FOCUS IN THE NORTH OF ISRAEL. HOW FAR ARE WE FROM ANY
CESSATION BECAUSE THE BATTLE RUNS HARD AND LONG IN THE SOUTH. YOUR ASSESSMENT OF THE IDF'S DESIRE TO RAMP OFF? NORMAN: THE IDF WOULD LIKE THIS CONFLICT TO END AS SOON AS POSSIBLE BUT THAT IS A LONG TIME FROM HAPPENING. THEY ARE IN HOLDING OPERATIONS. VERY DIFFICULT URBAN ENVIRONMENTS. A CHALLENGING SERIES OF OPERATIONS.
THE TUNNEL STRUCTURES ARE MASSIVE. THE LEADERSHIP OF HAMAS REMAINS, THOUGH ON THE RUN. THIS IS A DIFFICULT GROUND OPERATION FOR ISRAEL'S MILITARY. KATIE:
LET'S TALK ABOUT WHAT IS GOING ON IN NORTH GAZA. YOU MENTIONED THE SHIFT FROM ATTACK TO A HOLDING PATTERN AFTER THE IDF ACHIEVING MOST OF ITS MILITARY GOALS. WHAT DOES HOLDING LOOK LIKE? WHAT DOES THAT MEAN FOR CIVILIAN CASUALTIES? NORMAN: SUFFERING IS GOING TO BE A CONSTANT FOR THE PALESTINIAN POPULATIONS. IT IS A STAIN ON OUR GENERATION. FOR NORTH GAZA, HAMAS'S CAPACITY HAS BEEN ERODED.
THERE ARE ELEMENTS OF HAMAS THAT ARE STILL ACTIVE BUT THEY HAVE VERY LITTLE COMMAND AND CONTROL. THIS IS AN INCH URGENCY -- THIS IS AN INSURGENCY IN A SEA OF RUBBLE DESIGN FOR GUERRILLA WARFARE. THE NUMBERS ARE COMPARATIVELY SMALL AND THIS ALLOWS THE ISRAELI DEFENSE FORCES TO SHIFT THEIR POWER TO THE CENTER OF GAZA AND TO CONCENTRATE ON LEBANON OR SYRIA. CAROL: WE TALK SO MUCH ABOUT ISRAEL AND HAMAS. WHEN I THINK ABOUT THE ECONOMIC IMPACT, WE HAVE TALKED ABOUT THE SHIPPING IMPACT. THERE IS MORE NERVOUSNESS WITH
THE RED SEA. YOU AND THE NOTES YOU SHARE WITH US TALK ABOUT THE HOUTHIS CONTINUING TO EXERT AN OUTSIDE PRESSURE ON THE GLOBAL ECONOMY AND TO IMPOSE HUNDREDS OF BILLIONS OF DOLLARS OF COST ON THE U.S. IN DOZENS OF COUNTRIES. IT SOUNDS LIKE OUR FOCUS NEEDS TO BE ON THE HOUTHIS BECAUSE THEY SEEM TO NOT BE WILLING TO STAND DOWN. THEY UNDERSTAND THE PRESSURE THEY CAN IMPOSE. NORMAN:
THAT IS CORRECT. IRAN HAS ALWAYS INTENDED TO HAVE AN INFLUENCE AGAINST THE WEST IN GENERAL. THEY HAVE A CAPACITY TO TOUCH GLOBAL SUPPLY CHAINS, GLOBAL ENERGY, IMPOSE A COST ON WESTERN ECONOMIES AS A WAY OF ASYMMETRIC SANCTIONS ON THEIR ADVERSARIES. CAROL: 30 SECONDS. WHAT AM I GOING TO BE TALKING ABOUT -- WHAT ARE WE GOING TO BE TALKING ABOUT A YEAR FROM NOW? DO YOU BELIEVE THIS CONFLICT WILL BE TOP OF MIND 12 MONTHS FROM NOW? NORMAN: THE IMPACT, CERTAINLY. WE NEED TO LOOK AT WHAT IS HAPPENING IN LEBANON. MORE THAN 60,000 ISRAELIS HAVE BEEN MOVED FROM THE LEBANESE BORDER, THEY MUST RETURN HOME. MORE THAN 75,000 LEBANESE HAVE
BEEN MOVED. AT SOME POINT THE ISRAELI GOVERNMENT AND THE INTERNATIONAL COMMUNITY WILL GRAPPLE, HOW DO YOU CONVINCE HEZBOLLAH TO STOP FIRING TO ALLOW THESE PEOPLE RETURN TO THEIR HOMES? IF THAT DOES NOT HAPPEN THIS CONFLICT COULD SPREAD. CAROL: THANK YOU SO MUCH. HAPPY NEW YEAR. LET'S HOPE IT IS A HAPPY NEW YEAR. I LOOK AT WTI CRUDE UP .5%. MANUS:
I THINK WHAT NORMAN HAD TO SAY ABOUT THE QUALITY -- WE HAVE QUESTIONED THIS PROSPERITY GUARDIAN IN THE RED SEA. AS HE MADE CLEAR, HE SAID THE QUALITY OF WHAT THEY'VE GOT IS VERY HIGH BUT THEY WILL PLAY DEFENSE RATHER THAN OFFENSE. THAT IS WHAT THE HOUTHIS WANT TO PUSH. CAROL: IT GETS MORE COMPLICATED AS WE WATCH ALL OF THESE GROUPS DOING DIFFERENT ATTACKS IN DIFFERENT REGIONS. YOU WONDER WHAT WILL IT ALL MEAN GOING FORWARD AND OUT OF THE U.S. AND THE REST OF THE WORLD REACT? CAROL: THIS IS BLOOMBERG SURVEILLANCE LIVE ON BLOOMBERG RADIO AND TELEVISION. I AM CAROL MASSAR.
TO THE MARKETS WE GO. PRETTY QUIET. S&P 500 FUTURES FLAT. UP 2.5 POINTS. NASDAQ FUTURES UP .1%. A LITTLE BIT OF MOMENTUM. KATIE: I AM SPEECHLESS LOOKING AT THESE FUTURES. CAROL:
WELCOME TO THE WORLD OF SARCASM. RUSSELL 2000 FLAT AS WELL. THAT HAS BEEN IN OUTPERFORMER. LET'S FLIP IT AND TAKE A LOOK AT WHAT WE ARE SEEING LONG THE CURVE IN THE UNITED STATES. A 10 YEAR COME A LITTLE BIT OF MOVEMENT TO THE UPSIDE. KATIE: A QUIET RISE IN YIELDS. WE'LL SEE IF THAT HAS ANY STEAM.
CAROL: ALL QUIET AT THIS END OF THE YEAR. LOOKING OUT OF THE 30 YEAR, 4.03. LET'S LOOK AT WHAT IS GOING ON IN THE CURRENCY TRADE. IN A YEAR WHERE WE ARE SEEING THE DOLLAR SET FOR THE WORST YEAR SINCE 2020, THE SWISS FRANC RISING TO ITS HIGHEST LEVEL.
WHAT DOES IT MEAN WHEN WE LOOK AT THE EURO-DOLLAR CROSS? WE HAVE TALKED ABOUT PARITY. RIGHT NOW $1.10 TO THE EURO. THAT IS YOUR MARKET SET UP ON THIS FRIDAY. LET'S LOOK AT OTHER HEADLINES. A SECOND STATE RULING DONALD TRUMP CANNOT RUN IN ITS REPUBLICAN PRIMARY, WITH MAIN THE LATEST TO BAR THE FORMER PRESIDENT.
COLORADO ALSO BARRED TRUMP, BOTH SIDING TRUMPS EVIDENCE -- EFFORTS TO OVERTURN THE 2020 ELECTION RESULTS. TRUMP IS BACK ON THE BALLOT IN THE APPEAL OF THAT DECISION. THERE IS UNCERTAINTY OF HOW THIS ENDS BUT THERE WILL BE A LOT OF COURT RULINGS. MANUS:
THIS WILL BUBBLE TIME AND AGAIN THROUGHOUT THE START OF 2024 UNTIL WE SEE HOW THE SUPREME COURT RULES ON SOME OF THESE THINGS. THE TRUMP CAMPAIGN MADE THIS STATEMENT. WE ARE WITNESSING IN REAL TIME -- THE LANGUAGE REMINISCENT OF THE LANGUAGE AROUND THE ELECTION -- WE ARE WITNESSING THE THEFT OF AN ELECTION AND THE DISENFRANCHISEMENT OF THE AMERICAN VOTER. KATIE: A LOT OF COURT DRAMA COMING UP, A LOT OF LAWYERING, ALSO A LOT OF CAMPAIGNING. TRUMP TRYING TO CAPITALIZE ON THIS. THE BIDEN ADMINISTRATION, THE BIDEN CAMPAIGN SAYING HAVING TRUMP RETURNED TO OFFICE WOULD THREATEN THE COUNTRY'S DEMOCRATIC INSTITUTIONS. CAROL: THAT SOUNDS A LITTLE POLITICAL.
KATIE: MATCHING THE TRUMP CAMPAIGNS LEVEL OF DRAMA. CAROL: THERE IS A GREAT STORY IN BLOOMBERG. HE SAYS HE EXPECTS THE SUPREME COURT NOT TO DECIDE WHETHER TRUMP ENGAGED IN INSURRECTION BUT WHO HAS THE AUTHORITY TO DECIDE WHETHER SUCH AN ACT BARS HIM FROM HOLDING OFFICE. WHEN HE WOULD ARGUE KEEPING HIM OFF THE BALLOT WILL GET HIS BASE MORE EXCITED. IS THAT PROBLEMATIC IN KEEPING HIM OFF? MANUS: THERE'S BEEN SOME PUSHBACK FROM DEMOCRATIC JUDGES IN TERMS OF HOW THE LAW IS BEING INTERPRETED AND WHAT IS HAPPENING. THIS IS NOT A SLAMDUNK POLITICIZED SITUATION.
THE SUPREME COURT WILL HAVE ITS HANDS FULL IN 2024. CAROL: YOU TALK ABOUT SLAMDUNK'S. CHINESE STOCKS SAID TO RECORD THEIR LOWEST EVER FOREIGN INFLOWS IN 2023 AS THE COUNTRY'S ECONOMIC STRUGGLES WAY ON INVESTORS. FOREIGN FUNDS BROUGHT JUST OVER $6 BILLION WORTH OF ONSHORE STOCKS THIS YEAR. IN BETTER ECONOMIC TIMES INVESTORS WOULD BUY THAT AMOUNT IN A MONTH. YOU KEEP REMINDING US, YOU LOOK AT EMERGING MARKETS. BACK OUT OF CHINA, THEY HAVE
DONE WELL. KATIE: E.M. EX-CHINA SEEMS TO BE THE PHRASE OF THE YEAR. IT IS INTERESTING TO PUT THOSE NUMBERS. JUST $6 BILLION A YEAR FOR THE CHINESE STOCKS. I AM THINKING ABOUT MY U.S. FRIENDS WATCHING. WE TALK ABOUT INVESTOR CONFIDENCE.
THIS UNCERTAINTY OVER BEIJING POLICY, WHAT THEY WILL DO. WE JUST SAW THAT WITH THE GAMING SITUATION, THE RULES THERE, AND THEN THE U-TURN. MANUS: EVERYBODY WAS FULL BULL ON THIS. CAROL: ABSOLUTELY. MANUS: THE ONLY ANALYST WE WILL QUOTE IS GOLDMAN BUT THEY WERE SO BULLISH. CAP -- THEY WERE NOT IN ISOLATION CAP. -- THEY WERE NOT IN ISOLATION. KATIE:
I BELIEVE THEY CALL THIS THE DECADE OF E.M.. MAYBE E.M. EX-CHINA, BUT CHINA IS A PRETTY BIG PORTION OF IT. CAROL: THE GRANDDAUGHTER OF THE FOUNDER OF FRENCH COSMETICS COMPANY L'OREAL IS THE WORLD'S FIRST WOMAN TO AMASS A $100 BILLION FORTUNE ACCORDING TO THE BLOOMBERG BILLIONAIRES -- THE BLOOMBERG BILLIONAIRES INDEX. HER WEALTH PAST THE CENTURY MARK THIS WEEK ON THE BACK OF A STRONG YEAR FOR THE COMPANY. SHARES OF L'OREAL RISING MORE
THAN 35% THIS YEAR. WE WILL HAVE MORE IN THE NEXT YEAR. CAROL: GO WOMEN. EVERY TIME WE DO A LIST TOOR A POLL, IT IS LIKE FINALLY ONE WOMAN GETS THERE. MANUS: EVEN IF YOU GOING TO RESCISSION NEXT YEAR, THE LIPSTICK INDEX WAS FOUNDED BY LEONARD LOWDER. NOT THAT YOU TWO HAVE EVER HAD A HARD TIME, BUT APPARENTLY THE LIPSTICK INDEX IS YOU BY YOURSELF SMALLER THINGS, SMALL LUXURY. KATIE:
THAT WAS A THEME FOR THE CONSUMER. MAYBE IT WAS NOT LIPSTICK, MAYBE IT IS BUYING STARBUCKS CALL GROUP. CAROL: KATIE SOUNDS LIKE SHE IS TALKING HER BOOK. KATIE: I DON'T KNOW IF I AM TALKING FROM PERSONAL EXPERIENCE. CAROL: ANYTIME WE DO A COFFEE ORDER IT
IS LIKE AND I HAVE A COLD BREW? MANUS: WE TALK MORE WITH OUR INVESTMENT MANAGERS AS THE MORNING CONTINUES. BILL GATES WAS AT COP 28 AND SAID THE WORLD WILL PROBABLY NOT MEET ITS PARIS AGREEMENT GOAL OF GIVING THE TEMPERATURE RISE BELOW TWO DEGREES. FRANCINE LACQUA SPOKE TO BILL GATES AND BEGIN BY ASKING HIM THE ROLE OF FOSSIL FUELS GOING FORWARD. BILL: WE HAVE TO OUTCOMPETE FOSSIL FUELS. TO DO THAT PROPERLY, THEY SHOULD NOT GET SUBSIDIES AND A CARBON TAX OVER TIME SHOULD BE PUT ON SO THE NEW ELECTRIC CAR OR THE PLANE THAT USES HYDROGEN, THE FACT THAT IT DOES NOT EMIT CARBON, YOU ARE HELPING IT GET ADOPTION.
THOSE COMPANIES HAVE SKILLS. IF YOU WANT TO SEQUESTER CARBON OR NUCLEAR WASTE, THERE IS A LOT OF SKILLS IF YOU WANT TO MAKE BIOFUELS. SOME OF THOSE COMPANIES WILL TAKE THE SKILLS THEY HAVE. I WILL NOT SAY OK I WISH THEY WERE NOT THERE. PEOPLE STILL, THERE IS NO COUNTRY THAT CAN SAY WE HAVE ZERO EMISSIONS.
PEOPLE WANT TO DRIVE TO WORK. THE EXCESS SUPPLY WHEN RUSSIA CUT OFF ITS SUPPLY, THE WORLD WAS GLAD THAT WAS AVAILABLE. OIL AND GAS NEEDS TO BE OUTCOMPETED AND THOSE COMPANIES NEED TO JOIN THE EFFORT. FRANCINE: I KNOW YOU LOOK AT A LOT OF TECHNOLOGY AND INNOVATION, BUT IS THERE ONE THING YOU'VE BEEN MOST EXCITED ABOUT IN THE PAST FIVE YEARS OR YOU ARE MOST EXCITED ABOUT FOR THE FUTURE? WE TALK A LOT ABOUT THE REALLY BIG EXCITING STUFF.
WHAT ARE YOU EXCITED ABOUT? BILL: I LOVE ALL OF MY CHILDREN AND I HAVE THESE 100 COMPANIES. I NEVER KNEW WE WOULD GET A NEW WAY TO MAKE STEEL OR CEMENT OR BEEF. IT IS FAIR TO SAY IF WE CAN GET NUCLEAR FISSION OR FUSION TO BE SAFE AND BROADLY ACCEPTED AND VERY ECONOMIC, BECAUSE IT IS NOT WEATHER DEPENDENT, IT WOULD BE COMPLEMENTARY TO THE AMOUNT OF SOLAR AND WIND WE ARE PUTTING INTO OUR ELECTRIC SYSTEM. I AM BIASED, I AM A HUGE INVESTOR IN FISSION AND FUSION AND HOPING IT COMES IN TIME. WE CANNOT COUNT ON IT. FISSION HAS BEEN TOO EXPENSIVE
AND FUSION DOES NOT EXIST YET. FRANCINE: FUSION 15 YEARS FROM NOW? I KNOW IT IS A GAS. BILL: OF THE FOUR COMPANIES I'M INVESTED IN, ONE OF THEM, COMMONWEALTH FUSION, HAS A CREDIBLE PATH. IN THE LATE 20 30'S THEY COULD BE MAKING ELECTRICITY AND START TO SCALE IT UP. THAT IS AN ASPIRATION BUT IT IS A GREAT COMPANY AND WE HAVE THREE OTHERS THAT ARE NOT QUITE THAT EARLY BUT ARE WITHIN FIVE TO 10 YEARS OF THAT. FRANCINE: WE ARE IN A STRANGE PLACE IN THE PLANT.
THERE ARE A LOT OF UNKNOWNS. IT IS AI, TECHNOLOGY, CLIMATE CHANGE. DEFINED LEADERS DISTRACTED OR ARE THEY STILL PUT IN CLIMATE CHANGE AS THEIR TOP PRIORITIES? BILL: WE CANNOT HAVE IT AS OUR ONLY PRIORITY. WE STILL NEED TO BUY VACCINES
AND WHEN THERE IS A WAR THAT PROPERLY DEMANDS ATTENTION. EVEN THE EIGHT BUDGET FOR THOSE REFUGEES. I WISH THERE HAD NOT BEEN A PANDEMIC OR A UKRAINE WAR OR MIDDLE EAST UNREST. THOSE ARE GOING TO TAKE AWAY FROM THE
AMOUNT OF TENSION WE HAVE ON CONTINUING TO MAKE HEALTH PROGRESS AND CLIMATE CHANGE. THOSE ARE BAD DEVELOPMENTS. IF YOU WOULD ONLY SEEN 10,000 PEOPLE VERSUS 35,000 YOU MIGHT HAVE SAID WE ARE GETTING DISTRACTED. INSTEAD TWICE AS MANY CAME, INCLUDING A LOT OF THE BIG BUSINESSES. THE SIGNS I AM SEEING IS THAT WHILE WE HAVE TO DEAL WITH THOSE THINGS, AND WE HAVE LIMITED RESOURCES, CLIMATE PROGRESS IS MOVING AHEAD EVEN THOUGH IT WILL NOT MEET OUR HIGHEST ASPIRATION.
FRANCINE: HOW DOES AI FIT INTO HER VISION? BILL: AI IS SUCH A POWERFUL TECHNOLOGY IN THIS RECENT ADVANCE WHERE AI CAN READ AND LIGHT. THAT WILL AFFECT EVERY HUMAN ACTIVITY. WE ARE USING AI TO FIND NEW DRUGS, WE ARE USING AI TO LOOK AT CLIMATE CHANGE. ALL OF OUR COMPANIES ARE GOING
TO MOVE FASTER BECAUSE AI HELPS THEM EXPLORE DIFFERENT SOLUTIONS AND MOVE ON BETTER. CERTAINLY FOR CHALLENGES LIKE THIS, AI IS VERY MUCH OUR FRIEND. MANUS: AI IS VERY MUCH YOUR FRIEND. BILL GATES SPEAKING WITH FRANCINE LACQUA. IT WAS A HISTORIC COP FOR A
HOST OF REASONS, NOT LEAST BECAUSE IT WAS THE FIRST TIME THERE WAS AN AGREEMENT TO MOVE AWAY FROM FOSSIL FUELS. GAS WILL BE THE TRANSITION. THE CONSENSUS SEEMS TO BE GAS WILL BE THE TRANSITION. CAROL: THEY HAD TO FIGHT TO GET THAT. MANUS: IS UP LOSSES OF A MAN AND HE MOVED AWAY FROM THE FORMAL PROCESSES AND TOOK IT INTO HIS OWN UAE HOUSE AND COALESCED THEM AROUND.
AN AGREEMENT HE SAID IS ONLY AS GOOD AS ITS IMPLEMENTATION. CAROL: THINKING ABOUT WHERE IT WAS HELD. THE EVENT WAS HELD IN THE MIDDLE EAST. YOU KNOW WHAT IS SO IMPORTANT TO THEIR ECONOMY. WHAT I THOUGHT WAS INTERESTING THAT BILL GATES HAD TO SAY, TALKING ABOUT FUSION AND FISSION AND NUCLEAR POWER. I FEEL IN SOME OF THE ENERGY CONVERSATIONS I'VE HAD THIS YEAR, THAT HAS BEEN A FOCAL POINT. WE HAVE SEEN IT REDUCED FROM THE MID-1990'S TO TODAY ABOUT 10% OF WORLD ELECTRICITY IS PRODUCED BY NUCLEAR POWER BUT CLIMATE CHANGE IS MAKING EVERYONE TAKE ANOTHER LOOK. KATIE:
I FEEL LIKE THE TIMELINE ISSUE IS STILL REAL. WE WERE TALKING ABOUT THESE DEALS THAT HAD BEEN AGREED TO AND THE PROMISE OF THE TECHNOLOGIES YOU TALKED ABOUT. THE HERE AND NOW, TRYING TO HEAT A COUNTRY, HOW DO YOU KEEP THE URGENCY UP ON SUCH A LONG TIME FRAME IS A QUESTION FOR A LOT OF THESE LEADERS. MANUS: YOU ARE RIGHT TO SAY THE IRONY OF WHERE IT IS HELD, LEARN THE FOX INTO THE CHICKEN COOP. THAT IS WHERE THE ACCUSATION WAS.
THE UAE HAS AGREED TO RESTRAIN THEMSELVES. THEY HAVE THE CAPACITY TO GET TO 4 MILLION. YOU ARE NOT LOOKING AT OIL AND GAS GOING AWAY. IT IS JUST A QUESTION OF THE TIMELINE TO TRANSITIONING AWAY FROM FOSSIL FUELS AND THE REALITY OF THAT POINTED OUT. CAROL: THE U.S. APPROVING A NEW KIND OF NUCLEAR
REACTOR FOR THE FIRST TIME IN 50 YEARS. YOU ARE SEEING SO MUCH MOMENTUM. WE'LL CONTINUE TALKING ENERGY AND FOSSIL FUELS. AMRITA SEN ON THE OIL MARKET.
CURIOUS WHAT SHE HAS TO SAY ABOUT THE TIMING OF BACKING OFF FOSSIL FUELS. IT FEELS LIKE WE ARE STILL ALL IN. >> I WOULD NOT BE SURPRISED IF IT IS MORE THAN $700 A BARREL. I THINK THE FACT THAT U.S. SUPPLY AND YOU KNOW OPEC IS HOLDING SO MUCH OIL OFF THE MARKET IS NEGATING THE GEOPOLITICAL RISK AT THE MOMENT. CAROL: ABOVE $80?
MANUS: SHE IS PUSHING. >> I WILL NOT SAY NO. MANUS: ELLEN WALD JOINED US YESTERDAY FROM THE ATLANTIC COUNCIL. OIL TRADE THIS MORNING , 72.02. UP ONE THIRD OF 1%. THAT IS NOT WHAT YOU WOULD CALL A PREMIUM. CAROL:
WE ALSO TALKED ABOUT STOCKPILES. WHEN YOU'RE LOOKING AT THE ENERGY AND WHAT IS GOING ON IN TERMS OF THE AMOUNT OF OIL. KATIE: WE TALKED ABOUT SUPPLY ALL WEEK. WHERE IS THE DEMAND? THAT IS ONE OF THE BIG CONSENSUS CALLS THAT WENT WRONG. CAROL: I AM FILLING UP MY TANK.
MANUS: THE U.S. PUMPING OVER 30 MILLION BARRELS AND EXPORTING EIGHT. AMRITA SEN IS OUR GUEST ON THE OIL MARKET, CLOSING THE AGENDA. YOU PROBABLY STARTED THE AGENDA
AND YOU WILL CLOSE THE AGENDA FOR BLOOMBERG ON OIL. WAR PREMIUM IS BEING SUBSUMED BY INVENTORY BUILT. WILL THAT CONTINUE AND ARE WE MISPRICING OIL? IS THERE IS THERE A SUFFICIENT LACK OF WAR PREMIUM IN YOUR VIEW IN THIS MARKET? GOOD AFTERNOON, GOOD MORNING.
AMRITA: GOOD AFTERNOON, GOOD MORNING WHEREVER YOU ARE. IT IS DIFFERENT PARTS OF THE WORLD. IN TERMS OF WAR PREMIUM, THERE IS NO GEOPOLITICAL RISK PREMIUM IN THE PRICE RIGHT NOW. THAT HAS AS MUCH TO DO OF THE NOTION THAT DEMAND IS WEAK. IF ANYTHING DEMAND HAS BEEN GROWING AT OVER 2 MILLION BARRELS A DAY. IT SHOULD BE SLOWING.
WE ARE EXPECTING IT TO SLOW GIVEN THE HIGHER INTEREST RATES AND THE LAGGED EFFECT OF THAT ON THE ECONOMY. IT WILL BE GROWING 1.2 MILLION BARRELS PER DAY. THE BIGGER CHALLENGE HAS BEEN A LOT OF TRADERS AND SPECULATORS HAVE BEEN HIT THIS YEAR BECAUSE TRADING HAS NOT BEEN EASY, IT HAS BEEN CHOPPY. WE DO NOT HAVE THE CONFIDENCE TO COME IN STRONG. WE NEED SUSTAINED STOCK DRAWS. WE HAD BAKED STOCK DRAWS IN THE NUMBERS YESTERDAY.
IF WE SEE A CONTINUATION I THINK CONFIDENCE WILL COME BACK AND THAT IS WHEN YOU SEE GEOPOLITICAL RISK PREMIUM COME BACK. MANUS: YOU STILL HAVE AN INVENTORY BUILT. THERE IS A TRIGGER EVENT AT THE BEGINNING OF THE YEAR.
WE HAVE THESE VOLUNTARY CUTS OF 900,000 BARRELS WE SPENT AGONIZING DAYS DEBATING WHETHER THEY ARE ROBUST OR NOT. TAKE US TO THE CUTS OPEC-PLUS WILL IMPLEMENT. CONTINUING WITH A UNILATERAL CUT OF ONE MILLION BARRELS.
TAKE ME THROUGH THE DEFICIT FOR Q1. WHEN WILL IT MATERIALIZE AND WHAT SIZE WILL IT BE? AMRITA: Q1 IN EARLY Q2, I WOULD SAY THE CUTS GO TOWARDS OFFSETTING WHAT WOULD HAVE OTHERWISE BEEN SEASONALLY BILLS BECAUSE THIS IS WHEN REFINERIES GO DOWN FOR MAINTENANCE. OIL PRODUCTS WILL BE STRONG. GASOLINE AND DIESEL.
OPEC HAS BEEN CLEAR -- WE COULD SEE A SMALL DROP DOWN. I THINK FROM THE LATER HALF OF THE SECOND QUARTER ONCE REFINERIES ARE BACK FROM MAINTENANCE YOU WILL SEE CRUDE DROP VERY SHARPLY. IN THE MEANTIME THE PRODUCT MARKETS WILL TIGHTEN. OVERALL HYDROCARBONS WILL LOOK TIGHTER. THE PRODUCT MARKETS WILL BE A
LOT STRONGER AND CRUDE AS ITS WEAKEST PERIOD ANYWAYS. OPEC, IF THEY MANAGE TO KEEP INVENTORIES AND CHECK, THAT WILL BE AN IMPRESSIVE FEAT. USUALLY WE BUILT THE FIRST HALF AND WE TRAWL THE SECOND HALF. CAROL: YOU'VE TALKED ABOUT EUROPE MOVING AWAY FROM RUSSIAN OIL. WE GET THAT.
YOU GUYS WORK WITH CONSULT, OR PEOPLE RELY ON YOUR RESEARCH, UTILITIES, GOVERNMENTS. WHAT ABOUT MOVING AWAY FROM FOSSIL FUELS? THE ENERGY TRANSITION? WHAT IS THE CONVERSATION AROUND THAT YOU ARE TELLING THEM? AMRITA: GREAT QUESTION. I WOULD HOPE FOR OUR CONVERSATION THERE IS LITTLE MORE PRAGMATISM SEEPING THROUGH, PARTICULAR AFTER THE WAR. AT THE END OF THE DAY ENERGY TRANSITION CAN EXIST AS LONG AS WE ALL EXCEPT THAT IT WILL NOT HAPPEN ACROSS THE WORLD AT THE SAME TIME BECAUSE WE STILL HAVE BILLIONS OF THE POPULATION IN AFRICA, ASIA, AND LATIN AMERICA BELOW THE POVERTY LINE AND ENERGY IS AT THE EPICENTER OF ANY ECONOMIC GROWTH. I KEEP SAYING IT IS A NICE WESTERN CONCEPT WHERE WE CAN TELL PEOPLE THAT BY THE WAY YOU'RE GOING TO GROW. IT DOES NOT WORK LIKE THAT. THAT DOES NOT HAPPEN AT THE SAME TIME AT THE SAME PACE.
THE SECOND IS THE TRUE COST. WE CANNOT MOVE AWAY FROM FOSSIL FUELS. RENEWABLES ARE NOT RELIABLE ENOUGH. CERTAINLY YOU NEED GAS. THERE IS AN ENORMOUS MAN OF
INVESTMENT REQUIRED. ONE OF THE CHALLENGES I FIND IN ENERGY TRANSITION AS EVERYONE TALKS ABOUT BEING FOR ENERGY TRANSITION BUT NOBODY WANTS TO PAY FOR IT. THE KEY THINGS I SAY WHEN WE TALK ABOUT ENERGY TRANSITION IS ABOUT CODING IN ON DECARBONIZING HYDROCARBONS TO SAY WE ARE NOT GOING TO REQUIRE FOSSIL FUELS IS TO THE DETRIMENT OF THE INDUSTRY BECAUSE WE HAVE SEEN OIL DEMAND AND GAS DEMAND CONTINUES TO GROW AND WE HAVE NOT BEEN INVESTING ENOUGH. THAT IS WHERE WE SHOULD BE VERY
CAREFUL ABOUT TALKING ABOUT TRANSITION AWAY. IT NEEDS TO BE A TRANSITION WITH OR INCLUDING FOSSIL FUELS BUT A LOW CARBON FOSSIL FUEL. CAROL: IF WE HAVE THE TIME. KATIE: I WANT TO STICK WITH THE TRANSITION CONVERSATION AND BRING THIS TO A LONGER TIMEFRAME. WE WERE TALKING ABOUT COP 28, THE FACT THAT FOR THE FIRST TIME YOU SAW FOSSIL FUELS MADE IT A GLOBAL CLIMATE DEAL, AGREEING THESE COUNTRIES TO CURB THEIR CONSUMPTION AND PRODUCTION OF FOSSIL FUELS. YOU TALK ABOUT THAT THIS WILL BE A DRAWN OUT PROCESS. OVER WHAT TIME FRAME DOES THAT
TRANSITION BECOME BEARISH FOR OIL? AMRITA: ON OUR NUMBERS WE DO NOT HAVE OIL DEMAND PEAKING INTO THE 20 30'S. GASOLINE PEAKS TOWARDS THE END OF THIS DECADE, DIESEL PEAKS IN THE EARLY 20 30'S. ONE OF THE REASONS I DO NOT LIKE USING THE WORD PEAK OIL DEMAND'S PEAK IMPLIES IT IS A MOUNTAIN, IT GOES UP AND GOES DOWN. EVEN BY 2050, OIL DEMAND IS BARELY BELOW 100 MILLION BARRELS. IT PEAKS IN THE EARLY 20 30'S BUT THAT IT IS A PLATEAU AND GRADUALLY PLATEAUS OUT TO SLIGHTLY DECLINES. I GO BACK TO APRIL 2020 AND THE PEAK OF COVID, WE WERE ALL AT HOME, NOT FLYING AND NOT DRIVING.
WE STILL CONSUMED 18 MILLION BARRELS A DAY. THAT IS A STAGGERING NUMBER AND WE SHOULD REMEMBER THAT IS HOW INELASTIC OIL IS. EVEN WHEN NONE OF US TRAVEL. I DO NOT KNOW WHAT WE WERE DOING. MANUS: A LOT OF COOKING AND A LOT OF HEAT.
WE ARE IN THE CLOSING MINUTES. I WANT A PRICE OF OIL AND Q1 ON THE SQUEEZE AND THE DRAW, AND IN THE SECOND ANGOLA HAS GONE FROM OPEC, DO THE IRAQIS RAISE THEIR SWORDS, WILL THERE BE MORE ANGST AT OPEC? AMRITA: I WOULD SAY SECOND QUESTION FIRST, I KNOW NOT AT ALL. UNITY IS FINE. DOES NOT AFFECT ANYTHING. THEY WOULD NOT RAISE PRODUCTION. THE SECOND QUESTION IN TERMS OF PRICES, CONFIDENT NEEDS TO COME BACK. WE HOVER AROUND $80 FOR BRENT IN THE FIRST QUARTER. SECOND QUARTER ONWARDS I THINK
PRICES WILL BE IN THE 80'S AND PROBABLY $85 OR ABOVE. CAROL: THAT IS BIG FROM HERE. MANUS: IT IS GOOD TO SEE YOU GOT THE MESSAGE THAT THERE IS NO ANGST.
WE HAVE THE CAPACITY TO PRODUCE FOUR BUT WE ARE FIND STICKING AROUND THE THREES. AMRITA SEN, I WILL SEE YOU SOMEWHERE IN AN ALLEYWAY IN VIENNA DOING IN REPORT ON VIENNA THIS YEAR. AMRITA SEN, PROBABLY ONE OF THE MOST SPORTING ANALYSTS. SHE GETS UP EARLY IN VIENNA, SHE LOVES IT, SHE DOES TOETAPPING DANCES.
$80 AND ABOVE. QUITE A PUNCHY CALL. CAROL: WE HAVE A VIEWER WRITING IN INSANE CLIMATE CHANGE WILL BE EXPONENTIAL. I LISTEN TO THE USE OF FOSSIL FUEL AND IT WILL CONTINUE AS TEMPERATURES CONTINUE TO RISE. WE SAW IT IN NEW YORK OVER THE SUMMER AND TERMS OF FIRES OUT OF CANADA. CAN WE AFFORD TO CONTINUE TO DRILL, DRILL, DRILL? KATIE: I LIKE HER PHRASING ABOUT HOW TO TALK ABOUT THAT. PEAK OIL DEMAND, IT IS NOT A PEAK AND THEN A MOUNTAIN. IT IS A PLATEAU.
I THOUGHT THE TIEBACK BACK TO THE PANDEMIC WAS TELLING. MANUS: WHAT WERE WE DOING DURING THE PANDEMIC? COOKING? CAROL: AND BUYING FROM AMAZON WHO HAD TRUCKS TO GET TO US. KATIE: WE WERE ALL BAKING BREAD. MANUS: I WAS IN DUBAI. KATIE:
I WAS IN NEW JERSEY. CAROL: OUR NEXT GUEST SAYS TO BREAK -- WILL NEED BETTER PERFORMANCE OUT OF THE OTHER NAMES. >> WE ARE IN MORE UNCHARTED TERRITORY THAN THE MARKETS BELIEVED TODAY. >> WE HAVE SEEN SOME INCREDIBLY VOLATILE MOVEMENTS IN THE MARKET. WE WILL CONTINUE TO SEE THAT IN 2024.
>> WHAT I DO SEE>> IN 2024 IS A BROADENING OUT OF PERFORMANCE. >> VOLATILITY PROVIDES AN OPPORTUNITY. >> WE MIGHT HAVE A MORE BORING MARKET THAN YOU THINK IN 2024. >> THIS IS BLOOMBERG SURVEILLANCE WITH TOM KEENE, JONATHAN FERRO AND LISA ABRAMOWICZ. MANUS: FROM NEW YORK CITY FOR OUR AUDIENCE WORLDWIDE, THIS IS BLOOMBERG SURVEILLANCE. ALONGSIDE ME, CAROL MASSAR,
KATIE GREIFELD. WARM WELCOME. YOU WILL WORK WITH THE PRINT TEAM ON THIS THE REST OF THE DAY. WE GET A HEADLINE. FINGERS CROSSED. IT'S PROBABLY THE DOLLAR. WE TALK ABOUT VOLATILITY IN BONDS AND EQUITIES. THE START OF THIS YEAR STARTED WITH A BANG, PUMPED UP 6% IN EQUITIES, CHINA WAS GOING TO OPEN, LUXURY WOULD BE THE HOLY GRAIL, AND EQUITIES CONTINUED TO OUTPERFORM. IT WAS THE YEAR OF A SILENT
RECESSION RATHER THAN A SLOW DIE OF THAT DYING OF THE EQUITY MARKET. KATIE: THE BIG RECESSION DID NOT HAPPEN FOR A 70 YEAR IN A ROW -- FOR A SECOND YEAR IN A ROW. YOU LOOK AT THE BLOOMBERG DOLLAR INDEX OVER THIS YEAR.
IF YOU HAVE NOT BEEN PAYING ATTENTION SINCE OCTOBER, YOU WOULD BE CONFUSED, BECAUSE THINK ABOUT HOW DOMINANT AND STRONG THE DOLLAR WAS. IT FEELS LIKE THE WHOLE GAME CHANGED SINCE THE END OF OCTOBER. CAROL: A YEAR AGO, WHAT WERE WE FEELING IT EXPECTING FOR 2023? WHAT ARE WE THINKING ABOUT? SORRY, EVERYBODY, BUT IT'S A REMINDER THAT KEEPS US HUMBLE, THAT RECESSION WE KEEP CALLING FOR. IS THIS THE YEAR WE SEE CHINA
START TO COME BACK AND WE SEE INVESTORS MOVE INTO THAT AREA. WE HAVE HAD MIXED VIEWS. KATIE: I'M THINKING ABOUT BREAKFAST. MANUS: THESE TWO HAVE ALREADY ORDERED THE BREAKFAST. KATIE: YESTERDAY WE ORDERED IT.
LONG EGGS, BACON, JUICE, CAPPUCCINO. MANUS: WE ARE LIVING THE DREAM ON BLOOMBERG SURVEILLANCE ON THE LAST TRADING DAY OF 2023. LET'S GIVE YOU A SNAPSHOT OF MARKETS. IF YOU WERE NOT IN NVIDIA AND TESLA, YOU WERE NOT IN THE WINNING TRADES.
THERE IS THE S&P 500, 4834 .75. EURO-DOLLAR CAME IN NUMBER FOUR AGAINST THE DOLLAR THIS YEAR, DOWN 3% ON THE INDEX. YIELDS DID NOT BREAK THROUGH TO THE LOW OF THIS YEAR. 3.74% WAS THE LOW, BUT YOU SAY THERE'S A GRAVITATIONAL FORCE IN THE BOND MARKETS. KATIE: AT LEAST WHEN IT COMES TO THE 10-YEAR, THE 4% LEVEL IS WHERE IT WANTS TO BE.
YOU SEE THAT EVEN AMID THIN VOLUME. THIS QUIET RISE WE HAVE SEEN. MANUS: THE QUIET RISE. THEY GOT LEFT HOLDING THE BABY YESTERDAY IN THE SEVEN YEAR AUCTION. MAYBE THAT BACKED THINGS UP A
LITTLE BIT. CAROL: WE ARE DONE. KATIE: HAVE TO WAIT UNTIL NEXT YEAR. CAROL: I TOLD YOU I DID NOT KNOW WHAT DAY IT WAS. MANUS:
KEEP MAKING EGGS. LET'S TAKE IT TO OUR NEXT GUEST, BROOKE MADE, MANAGING PARTNER AT EVANS MAY WEALTH. TO BREAK THE FIVE THOUSAND LEVEL, WE WILL NEED BETTER PERFORMANCE. HERE'S A SHOCKING STATEMENT OF 2023. OF THE OTHER 493 NAMES EXCLUDING THE MAGNIFICENT SEVEN, SO THIS IS A QUESTION OF BREADTH, BUT OUR LAST GUEST SAID YOUR WINNERS.
HOW DO YOU DEFINE BREADTH? BROOKE: GOOD MORNING. I WOULD DEFINE IT AS THE OTHER 493 NAMES, BUT IN ADDITION, DIPPING INTO SMALL CAP AND FIXED INCOME THAT'S RALLIED. WE ARE SEEING BROADER PARTICIPATION ACROSS THE BOARD, NAMES THAT DID NOT NECESSARILY SORE EARLY, LIKE THE BIG TECH NAMES. WE ARE SEEING SOME CYCLICALS
RALLY IN ADDITION TO SOME NAMES THAT HAVE BEEN BEATEN UP STARTING TO RECOVER. CAROL: A LOWER RATE ENVIRONMENT IS OFTEN SO GREAT FOR THOSE HOT TECH NAMES, SO HAVING SAID THAT, IF WE GOT THAT LOWER RATE ENVIRONMENT, AGGRESSIVE IN TERMS OF THE FED, OF COURSE, YOU HAVE TO COUNTER THAT WITH DOES THE ECONOMY START TO FALL APART, BUT COULD WE THEN SEE THOSE MAGNIFICENT SEVEN CONTINUE TO RALLY? BROOKE: I THINK SO. WE HAVE NOT CUT OUR ALLOCATION. WE HAVE TAKEN SOME PROFITS BUT WE STILL LIKE THE BIG TECH NAMES. THEY HAVE PROFITABLE GROWTH. THESE COMPANIES ARE GROWING. THEY HAVE EARNINGS AND WE EXPECT THEM TO DO WELL -- TO CONTINUE TO DO WELL BUT SEE BROADER PARTICIPATION AMONG THE OTHER ASSETS, SMALL-CAP, FIXED INCOME, ETC. KATIE: READING THROUGH YOUR NOTES, YOU
HAVE $6 TRILLION IN MONEY MARKET FUNDS. YOU RIGHT THERE WILL BE A ROTATION OUT INTO EQUITIES, BUT YOU ALSO WRITE THAT IF INVESTORS DID NOT TRANSITION FROM MONEY MARKETS TO BONDS, AS IS UNLIKELY, THEY WILL MAKE THE MOVE NOW. BASICALLY, THE CASH THAT IS IN THERE IS PRETTY STICKY. BROOKE:
5%, 5.25%, IT'S COMFORTABLE TO SIT THERE AND HAVE PEACE OF MIND THAT YOU WILL HAVE THAT PRICE STABILITY AND EARN A LITTLE BIT, THE YIELDS WILL COME DOWN. WE WILL SEE MONEY MARKET RETURNS COME DOWN AND THEY ARE NOT AS ATTRACTIVE. IF INVESTORS DID NOT GO OUT AND LOCK IN CORPORATE BONDS AT 5.5% OR -- OR MUNICIPALS AT 3.5%, IT WILL BE HARD TO STOMACH WHEN RATES HAVE DECLINED.
AS PEOPLE ARE JUST SATISFIED WITH THE LOWER RETURNS OUT OF THE MONEY MARKET, THEY WILL LOOK FOR BETTER OPPORTUNITIES, AND I THINK THAT'S GOING INTO THE EQUITY MARKET. MANUS: WE HAD SOMEONE SO YOU COULD NOT GIVE AWAY BONDS AT 5.25%. WE WERE WRACKED WITH FEAR. WE WILL EXTEND THAT THOUGHT MAY
INTO SOME OF THE BONDS THAT SIT SIDE-BY-SIDE THE EQUITY NAMES. YOU HAVE A CALL IN CHARLES SCHWAB -- ON CHARLES SCHWAB THAT IS BULLISH. THIS ONE IS DOWN 16% YEAR TO DATE. WHY SUCH AN OPPORTUNITY AND THAT? IT DID GET SWEPT AWAY AND THROWN OUT WITH THE BATHWATER DURING THE FIRST REPUBLIC DEBACLE.
WHAT IS THE HEALTH OF CHARLES SCHWAB RELATIVE TO THE OTHER NAMES IN THAT SECTOR? BROOKE: SCHWAB HAS ITS EARNINGS COME FROM TWO SOURCES, REVENUES AND FEES THEY GENERATE ON THE ADVISORY RETAIL SIDE, AND THE OTHER FROM NET INTEREST. AND IT'S HARD TO MAKE MONEY IN NET INTEREST WHEN YOU HAVE THE INVERTED YIELD CURVE. AS WE RETURN TO A TRADITIONAL SLOPING YIELD CURVE, THERE'S GOING TO BE AN EARNINGS PICKUP FOR CHARLES SCHWAB. IN ADDITION, THEY JUST
COMPLETED THE MERGER WITH TD AMERITRADE. THERE WILL BE ADDITIONAL REVENUE GROWTH, COST SYNERGIES, AND SOME OPPORTUNITIES TO CAPITALIZE ON THAT BROADER BASE, SO THERE'S A LOT GOING WELL FOR SCHWAB AND IT'S CHEAP AT THIS POINT AND WE FEEL LIKE, OVER THE NEXT FEW YEARS, THERE WILL BE GREAT RETURN. MANUS: A LOT OF THAT IS LOCKED IN. REALLY PUSHING THAT THROUGH. WHEN YOU LOOK AT HOUSE BUILDERS
AND THAT ECOSYSTEM FOR NEXT YEAR, IF WE GOING TO RATE CUTTING MODE, DO YOU SEE HIGHER HOUSE PRICES AND MORE MOMENTUM IN THE HOUSEBUILDING PERIPHERALS AROUND THAT? BROOKE: I DO. THERE'S PENT-UP DEMAND. WE LOOK AT HOUSEHOLD DEMOGRAPHICS. WE ARE CREATING MORE AND MORE HOUSEHOLDS THAT NEED HOMES AND APARTMENTS -- HOUSEHOLDS AND HOMES AND APARTMENTS. IT'S BEEN A CHALLENGE.
SO A LOT OF PEOPLE ARE WAITING ON THE SIDELINES HOPING RATES WILL COME DOWN AND WE ARE STILL IN A SITUATION WHERE WE HAVE LOW INVENTORY, SO IF THEY COME DOWN, AND IT LOOSENS THINGS WITHIN THE MARKET, PEOPLE WILL JUMP BACK IN, AND DEMAND WILL PROBABLY CONTINUE TO LEAD SUPPLY. THEREFORE, PRICES WILL GO HIGHER. KATIE: I HAVE TO WONDER HOW MUCH PENT UP DEMAND IS THERE ON THE OTHER SIDE OF MORTGAGE RATES BEING AS HIGH AS THEY ARE? ONCE THEY DROP, I HAVE TO IMAGINE, MAYBE SPEAKING FROM PERSONAL EXPERIENCE, THERE'S A LOT OF PEOPLE THAT WOULD LIKE TO BUY. HOW ARE YOU THINKING ABOUT SOME
OF THOSE FACTORS IN THE HOUSING MARKET IN THAT CALL? BROOKE: YEAH. YOU CAN ONLY STAY IN YOUR CURRENT THAT'S IN YOUR PARENTS BASEMENT FOR SO LONG -- IN YOUR PARENTS BASEMENT FOR SO LONG. THERE ARE REASONS PEOPLE WILL BUY A HOME. STUDIES ESSAY AT ONE POINT THIS YEAR WE HAD 6 MILLION TOO FEW HOMES IN THE COUNTRY, A COMBINATION OF SINGLE AND MULTIFAMILY, BUT THERE IS DEMAND THERE, AND WHEN DEMAND EXCEEDS SUPPLY, YOU GET PRICE APPRECIATION, AND LOWER MORTGAGE RATES WILL HELP. CAROL: ONE MORE NAME I WANT TO SQUEEZE IN BEFORE WE WRAP UP. NETFLIX. YOU LIKE THIS ONE.
SITTING NEAR A 52 WEEK HIGH HERE. WHAT IS THIS STORY? SO MANY PEOPLE GO HOME AND THEY ARE LIKE NOTHING TO WATCH AND YET THERE IS. WHAT IS IT YOU LIKE ABOUT NETFLIX SPECIFICALLY? BROOKE: WE LIKE DOMINANT PLAYERS IN THEIR SPACE AND NETFLIX FITS THE BILL THERE.
WHEN WE LOOK AT THEIR Q3 EARNINGS REPORT, IT WAS AMAZING. REALLY, THEIR SUBSCRIBER GROWTH IS WHAT HAS US EXCITED. THE STREET WAS EXPECTING THEM SAT ABOUT 6 MILLION NEW SUBSCRIBERS IN THE THIRD QUARTER AND THEY ADDED 8.8 MILLION, DRIVEN BY A FEW THINGS. THEY HAVE CUT DOWN ON PASS WERE
CHANNELING AT HAVE SCALED THEIR AD SUPPORTED TO YOUR AND THEIR CONTENT. IT IS SUPERIOR IN OUR BELIEF TO SOME OTHER COMPETITORS OUT THERE. THEY WENT FROM A COMPANY THAT HAD A 4% PROFIT MARGIN IN 2016 TO WE THINK 22% NEXT YEAR. THEY ARE GROWING PROFITABLY, NOT JUST AT ANY COST, AND THINK THEY WILL CONTINUE TO DO WELL. CAROL: IT IS ALL ABOUT BRIDGERTON.
MANUS: YOU JUST FINISHED THE CROWN. YOU JUST FINISHED BACK HIM. CAROL: THERE YOU GO. MANUS: BROOKE MAY, THANK YOU. SOME PUNCHY CALLS, NETFLIX AND CHARLES SCHWAB BOTH IN YOUR PORTFOLIO FOR 2024. THE OPPORTUNITIES ARE THERE. IF YOU ARE JUST JOINING, THIS
IS WHAT WE HAVE FOR YOU I MARKETS. THE S&P 500 ATTEMPTING TO HAVE US LAST HURRAH, 4832.75. WILL THE HURRAH CONTINUE INTO 2024? A PRETTY BULLISH SET OF CALLS. CAROL: I THINK SO, ESPECIALLY WHEN IT CAME EVEN TO THE MAGNIFICENT SEVEN. SHE SAID WE NEED TO SEE THE MARKET BROADENING AND SHOULD EXPECT IT IN THE NEW YEAR BUT SAID THAT DOES NOT MEAN YOU WILL SEE BIG TECH GETTING INVESTOR ATTENTION. KATIE: WHO KNOWS IF ONE WEEK OF CONVERSATIONS MAKES A TREND BUT IT FEELS LIKE WE HAVE SPOKEN TO PEOPLE WITH VARYING DEGREES OF BULLISHNESS BUT NOT AN OUTRIGHT BEAR.
THE OPPOSITE OF BULL SAYING THE BEST DAYS ARE BEHIND US FOR THE S&P 500. MANUS: THE MOST WE HAVE HAD IS MAY BE A DRAWDOWN AT THE START OF THE WEEK. WE HAVE THIS WEAPONIZED FOMO. THAT IS THE PHRASE WE STARTED
WITH. WHAT DOES THAT MEAN FOR THE CONSUMER? THERE'S NOBODY CALLING ANYTHING MORE AGGRESSIVE THAN MAYBE A 5% DRAWDOWN. KATIE: THERE IS A TEMPORARY -- CAROL: THERE'S A TEMPERING FEELING OF EXPECTATIONS IN TERMS OF HOW ADDRESSES -- HOW AGGRESSIVE THE FED WILL ULTIMATELY BE. I KNOW IT IS DATA DEPENDENT. WE WILL RUN FROM DATA POINT TODAY TO POINT TO GET A FEEL OF DO WE ULTIMATELY SEE SOME SOFT LANDING OR RECESSION OR EVEN A MINOR RECESSION? THAT WILL DETERMINE HOW THINGS PLAY OUT. KATIE: YOU THINK ABOUT WHERE WE WERE
THIS TIME LAST YEAR -- I WANT TO TALK TO ALL OF YOU BUT THINK ABOUT THE EXPECTATION FOR 2024. FOR THE FIRST TIME IN 20 YEARS, THE CONSENSUS WAS THAT YOU WERE GOING TO SEE THE S&P 500 DECLINE IF YOU PUT TOGETHER ALL THE TARGETS. AT THIS POINT, PEOPLE ARE JUST SHY ABOUT SAYING I'M BEARISH. MANUS: THE BRAVE MAKE BRAVE CALLS. SOMEONE SAID I HAVE NEVER SEEN CONSENSUS AS WRONG AS IT WAS IN 2023. CAROL: IF YOU ARE A CLIENT OF ONE OF THOSE MANAGERS, YOU SAY, HOW DID YOU MISS THIS? MANUS: THAT'S WHERE I WOULD BE.
I LOVE A DISCOUNT. I LOVE A BARGAIN. WE WILL TALK WITH TERRY HAYNES FROM PANGEA POLICY. WHAT IS IT WE ARE >> THE WEST IS NOT INTERESTED IN SUCH A CONFLICT. THEY CAN CONTINUE A CERTAIN LEVEL OF ACTIVITY WITHOUT REACHING A REDLINE. IS THERE A STRIKE THROUGH THAT UNFORTUNATELY WOULD HIT A BRIDGE OF HIS SHIP? THIS WOULD PROVOKE A STRIKE BY THE U.S. AGAINST THE WHO THESE --
AGAINST THE WHO -- AGAINST THEM. THAT ALLOWS HIM TO CONTINUE. MANUS: A FORMER SENIOR U.S. INTELLIGENCE OFFICIAL AND ADVISOR FOR THE TRANSITIONAL THREATS PROJECT AT CSIS AND MADE CLEAR THAT THE COALITION OF FORCES HELPING TO REINSTATE SOME OF THE FLOW OF MARITIME TRAFFIC IN THE RED SEA IS A FORCE TO BE RECKONED WITH AND A FROM EDIBLE FORCE AT THAT -- AND A FORMIDABLE FORCE AT THAT. CAROL: IT AFFECTS COMPANIES. YOU THINK ABOUT HOW THAT WILL TRICKLE DOWN THROUGHOUT THE GLOBAL ECONOMY. YOU THINK ABOUT WHAT THIS MEANS
IN TERMS OF GROWING ESCALATION AND WHERE THIS GOES FROM HERE SO WE HAVE TO PAY ATTENTION TO THIS. KATIE: YOU ALSO THINK ABOUT CONFIDENCE. IT'S A FORMIDABLE FORCE BUT HALF THE RED SEA CONTAINER FLEET IS AVOIDING THAT ROUTE. OBVIOUSLY THERE'S A BIG RELUCTANCE TO GO ON THE OFFENSIVE HERE, ACTUALLY STRIKE THE HOUTHI BASES, AND CAUTION ON THE PART OF THE SHIPPERS. MANUS:
THERE'S A QUESTION OF WHETHER THE PENTAGON CAN CONVINCE THEM TO RETURN TO THAT LANE. LET'S BRING THESE DISCUSSIONS TO THE NEXT GUEST. TERRY HAYNES IS THE FOUNDER OF PANGEA POLICY. GOOD MORNING TO YOU. YOU LAID IT OUT VERY PUNCTUALLY -- VERY PUNCHILY. THEY HAVE NOT FUNDED UKRAINE
AND THEY ARE RELUCTANT TO FUND ISRAEL. THEY HAVE TWO HOT WARS BUT YOU SAY THIS. "WASHINGTON'S LAZY BARE MINIMUM APPROACH ON EVERYTHING, BORDER SECURITY, FOREIGN AID OR THE BUILDING FISCAL CRISIS, WON'T CUT IT IN 2024, NOT FOR THE MARKETS, NOT FOR THE U.S. NATIONAL AND INTERNATIONAL INTERESTS."
MARKETS HAVE ESSENTIALLY IGNORED THESE FAUX PASS THES -- FAUX PAS. IS IT FOLLY AND WHAT IS THE BIGGEST RISK? TERRY: THIS IS A SITUATION YOU HAVE NOT SEEN IN 50 YEARS WHERE YOU HAVE A COMBINATION OF PROBABLY THE HIGHEST GEOPOLITICAL RISK AND PROBABLY THE HIGHEST DOMESTIC RISK AS WELL. THOSE THINGS COMBINED, I THINK WHAT MARKETS IGNORE IS THAT, GOING INTO TICKET BEFORE WITH THAT -- INTO 2024 WITH THAT COMBINATION IS THEY TEND TO SEE POLITICAL ISSUES BY AND LARGE AS ONE WAY OR THE OTHER, THINGS THAT ARE NOT FUNDAMENTAL TO THE MARKETS BUT PROVIDE SOME MINOR UP OR DOWN ACTION, WHEN WHAT THEY SHOULD CONSIDER IS THAT LOWER GEOPOLITICAL RISKS AND LOWER DOMESTIC POLITICAL RISKS IN THE UNITED STATES ARE BOTH FOUNDATIONAL TO THE MARKETS AND, YOU KNOW, WE HAVE NOT REALLY HAD A CONFLICT IN THE UNITED STATES THAT SHOOK MARKETS SINCE THE SECOND WORLD WAR, BUT WHEN IT DID, YOU KNOW, THE MARKETS WENT DOWN BY 20% IN THE FIRST SIX MONTHS AFTER PEARL HARBOR AND I'M TALKING ABOUT A CONFLICT THAT HAPPENED ALMOST 80 YEARS AGO, IN WHICH -- MORE THAN HALF OF THE U.S.
CITIZENS ARE INVESTED IN THE MARKETS, SO THE FOUNDATIONAL RISKS I THINK GENERALLY, AND THE VOLATILITY -- CAROL: LET'S GET MORE SPECIFIC. IF MARKETS ARE IGNORING GEOPOLITICAL RISK, WHAT MIGHT LIKELY HAPPEN IN 2024 WHEN IT COMES TO THOSE RISKS? WE HAVE KIND OF LAID THEM OUT THROUGHOUT THE WEEK. OBVIOUSLY WE CONTINUE TO WATCH WHAT'S GOING ON IN THE MIDDLE EAST, CONCERNS ABOUT ESCALATION. YOU STILL HAVE RUSSIA AND UKRAINE.
WE ARE LOOKING AT CHINA AND TAIWAN. YOU HAVE AN ELECTION COMING UP. THERE ARE CONCERNS THERE. PLAY OUT SPECIFICALLY WHAT YOU THINK COULD HAPPEN THAT INVESTORS HAVE TO BE WARY OF? TERRY: THERE WILL BE A TEMPTATION TO THINK THAT THE THREE MAJOR CONFLICT AREAS GEOPOLITICALLY THAT YOU JUST POINTED OUT, UKRAINE, ISRAEL, TAIWAN, ARE GOING TO BE SOMEHOW HANDLED, WHEN IN FACT THEY ARE GOING TO CONTINUE ON FOR MONTHS. I MEAN, THERE'S NO EASY END TO THE UKRAINE MORE.
THE ISRAELIS SAY THE HAMAS WAR WILL GO ON FOR MONTHS AND I DON'T SEE ANYTHING THERE TO STOP IT. AND THERE'S A LOT OF VOLATILITY AROUND TAIWAN, WHICH IS UNDERAPPRECIATED BY MARKETS, WHO THINK THAT BIDEN AND XI JINPING HAVE SOME SORT OF AGREEMENT AFTER THEIR RECENT SUMMIT WHEN IN FACT WHAT CHINA IS DOING IS PUSHING ON KIND OF UNDETERRED AND PROBABLY HAS MORE RATHER THAN LESS INCENTIVE TO ACT THANKS TO THEIR MORE PARLOUS ECONOMIC SITUATION, SO THERE'S ALL THAT, AND HE WILL HAVE A LOT OF POINTS AND DOMESTIC POLITICS WITH THE PRIMARIES COMING UP OVER THE NEXT SEVERAL MONTHS, WHO WILL BE THE NOMINEE, WILL OR CONTINUE TO BE RISING THIRD-PARTY CHALLENGES, AS I HAVE THOUGHT AND THINK WILL CONTINUE TO BE. WHAT IS THE DIRECTION OF THE U.S. BOTH DOMESTICALLY AND IN TERMS OF ITS OWN FOREIGN POLICY? THOSE WILL PLAY OUT IN SPECIFIC POINTS AT LEAST ONCE OR TWICE A MONTH THROUGH THE YEAR AND I THINK HAVE THE OPPORTUNITY TO PUT ADDITIONAL VOLATILITY INTO THE MARKETS. I'M UNSURE ABOUT THE FUTURE DIRECTION OF THE UNITED STATES. CAROL: I DO NOT WANT TO BE INFLAMMATORY. I JUST WANT TO BE SMART FOR OUR
AUDIENCE. WHEN WE TALK ABOUT A THIRD WORLD WAR, WHEN I LOOK AT THE BLOOMBERG INTELLIGENCE TEAM RESEARCH WHEN IT COMES TO WHAT WE NEED TO WATCH ON THE GLOBAL ECONOMY, AND, ON TOP OF THE LINE, THE HEADLINE, IS ABOUT WAR, SO HOW DO WE NEED TO THINK ABOUT THE POSSIBILITY OF A THIRD WORLD WAR? TERRY: YOU KNOW, IN SOME WAYS, AND I'M NOT TRYING TO BE INFLAMMATORY EITHER. I WILL GIVE YOU A DIFFERENT WAY OF THINKING ABOUT IT, THOUGH. IN A LOT OF. WAYS, WE ALREADY ARE THERE ARE AT LEAST THREE REGIONAL CONFLICTS, A CYBERWAR. THERE'S CONCERNS ABOUT HOW THE CONTENDING PARTIES MOVE INTO SPACE. THERE ARE CONCERNS ABOUT HOW THEY MOVE AROUND EVEN IN THE ARCTIC, FOR EXAMPLE, SO, YOU KNOW, YOU HAVE KIND OF A SLOW MOVING CONFLICT RIGHT NOW AND I'M NOT TRYING TO BE INFLAMMATORY OR PUSH IT TOO FAR EITHER BUT WHAT I WILL SAY IS THAT ANYBODY THAT'S LOOKING AT THE CURRENT THREE HOTSPOTS AS SOLELY REGIONAL CONFLICTS AND NOT REPRESENTATIVE OF A LARGER CONFLICT IS NOT THINKING ABOUT THIS ENOUGH AND THE ECONOMIC CONSEQUENCES ALONE, AS YOU ALL JUST NOTED, ON SUPPLY CHAINS AND IN THE RED SEA AND MANY OTHER THINGS, COULD BE VERY SUBSTANTIAL, SO WE ARE IN A VERY VOLATILE SITUATION ALREADY EVEN THOUGH MARKETS DON'T FULLY UNDERSTAND, REALIZE IT OR APPRECIATE IT. KATIE: A LOT TO WORRY ABOUT ON THE
GLOBAL FRONT. LET'S GO BACK TO DOMESTIC BECAUSE YOU TALK ABOUT WASHINGTON'S OUT-OF-CONTROL FISCAL SPENDING, INCREASING DEBT SERVICE COSTS. MAYBE WE SAW SOME OF THOSE CONCERNS PLAY OUT IN THE TREASURY MARKET, BUT LOOKING AT THE STATE OF PLAY, AND SEEMS LIKE THAT'S A BLIP WE LOOK AT THE FISCAL SIDE OF THE EQUATION. TERRY: WASHINGTON ALWAYS THINKS THEY UNDERSTAND THE MARKETS IN THE MARKETS ARE RESPONSIVE TO WASHINGTON. I NEVER THOUGHT THAT WAS TRUE AND WE PROBABLY HAVE THE BIGGEST GAP BETWEEN WASHINGTON AND THE MARKETS IN SOME TIME. INCREASINGLY, THE MARKETS ARE
ASKING WHEN AND WHETHER THE U.S. GOVERNMENT IS GOING TO BE ABLE TO GET ITS FISCAL SPENDING UNDER CONTROL, AND THERE'S NO MOVEMENT AT ALL TO DO THAT. YOU HAVE A SITUATION IN WASHINGTON NOW WHERE, YOU KNOW, THE MOST -- THE PEOPLE ARE BANGING THEIR FISTS ON THE TABLE THE MOST ARE IRONICALLY TO SOME EXTENT CONSERVATIVE REPUBLICANS, BUT REALLY WHAT THEY ARE TALKING ABOUT IS TAKING AS MUCH AS 1% OUT OF 30% OF THE DISCRETIONARY PART OF THE OVERALL FEDERAL BUDGET, AND THAT'S A BLIP AND BY NO MEANS WHEN ANYONE EXPECTS, SO THE DISCREPANCY BETWEEN WHAT MARKETS WENT IN TERMS OF A MORE SUSTAINABLE FISCAL POLICY AND WHAT WASHINGTON CAN DELIVER, THERE'S A HUGE GAP AND THERE'S NO INDICATION THAT WASHINGTON EVEN UNDERSTANDS WHAT MARKETS WANT OR EXPECT THERE. MANUS:
WE WILL HAVE TO SEE HOW THESE NEGOTIATIONS GO DOWN TO THE WIRE THIS MONTH IN REGARDS TO THE POTENTIAL RISKS. THERE WAS A GREAT DISCONNECT BETWEEN MARKETS IN WASHINGTON. TERRY HAYNES OF PANGAEA POLICY JOINING US THERE. COMING UP, ANGELA STENT OF THE BROOKINGS INSTITUTION ON BLOOMBERG.
MANUS: FOR OUR AUDIENCE WORLDWIDE, GOOD MORNING. THIS IS BLOOMBERG SURVEILLANCE. ALONGSIDE ME, CAROL MASSAR AND KATIE GREIFELD. IF YOU ARE NOT AN, DO NOT WORRY. YOU ARE NOT THE ONLY ONE WHO GOT IT WRONG IN TERMS OF EQUITIES.
WALL STREET GOT IT WRONG AND THEY ARE PAYING MONEY. THE S&P PREVARICATING, 4831, A BIT OF AN UNFAIR POP. NASDAQ WAS UP 55% THIS YEAR AND IF YOU WERE NOT IN NVIDIA YOU SIMPLY WERE NOT IN IT. TESLA 105% RELATIVE TO THE REST OF THE AUTOMAKERS. A LOOK AT THE BOND MARKETS. DO YOU GO FOR BREADTH ON THE RUSSELL 2000? CAROL: THAT'S WHAT EVERYONE IS SAYING. KATIE: SMALL-CAP VALUE. MANUS:
YOU HAVE BEEN CONVERTED. CAROL: WELL, THEY HAVE BEEN LEFT BEHIND. EVERYONE HAS BEEN TALKING ABOUT THEM FOR SOME LONG TIME. KATIE: BUT HOW MUCH OF THAT WAS PULLED FORWARD? CAROL: ALL OF IT, RIGHT? NOT JUST SMALL CAPS. KATIE: EXACTLY. MANUS:
HOW DO WE FINISH? YOU ARE POSSIBLY TEMPTED TO THE AUCTION. YOU LEFT IT OFF THE PAPER. ONE FINAL AUCTION. THE SEVEN YOUR PAPER DID NOT GO ACCORDING TO PLAN. WE HAVE NOT RETOUCHED THE LOWS OF THE MIDYEAR POINT. WE MOVED AND PIVOTED. CAROL: NO 6%. MANUS:
CORPORATE COMMUNICATIONS NEED TO REIN IN THE EXUBERANCE OF JAMIE DIMON. CAROL: JAMIE, YOU CAN SAY WHATEVER YOU WANT. MANUS: YOU BELIEVED MR. CURRY ON THE
OIL MARKET AND $100 OIL DID NOT HAPPEN. AND RITA SENT AS WELL. SO WE KNOW YOU ARE LISTENING. KATIE: I DID NOT KNOW HE WAS TRACKING THOSE THAT CLOSELY. WE ARE LEARNING A LOT ABOUT YOU. MANUS:
WE COULD USE YOU TO JOIN OUR BOOKING AND RESEARCH TEAM. KATIE: HE HAS SOME TALKING POINTS TO SHARE. MANUS: THAT IS THE FIRST MOMENT WE HAVE MADE KATIE BLUSH THIS WEEK. THERE YOU GO.
KEEP THE NOTES COMING IN. WE WILL TAKE CALLS AT ANY TIME. LET'S GET TO UNDER SURVEILLANCE. NVIDIA IS SELLING A LESS POWERFUL VERSION OF ITS BEST GRAPHICS CHIP TO CHINA TO COMPLY WITH THE U.S. RESTRICTION. THE VERSION SOLD IN CHINA HAS 10% LESS PROCESSING CORES.
THE U.S. IS CRACKING DOWN ON THE EXPORT OF POWERFUL CHIPS TO CHINA. THE FAA IS MONITORING INSPECTIONS OF 737 MAX AIRPLANES AFTER THE AIRLINE FOUND A BOLT DEFECT IN THE RUDDER CONTROL SYSTEM DURING MAINTENANCE. BOEING IS ASKING ALL THE OPERATORS TO CHECK NEWER, SINGLE AISLE AIRPLANES FOR THE ISSUE. AIRLINES ACROSS THE WORLD ARE ALSO RAMPING UP INSPECTIONS OF SPARE PARTS TIED TO AOG TECHNICS AFTER FALSIFIED RECORDS.
NO IMMEDIATE SAFETY ISSUES HAVE BEEN REPORTED IN EITHER CASE. PACIFIC HAS CANCELED SOME YEAR END PLATES, COMING 11% OF DEPARTURES FROM HONG KONG. FLIGHTS HAVE ALSO BEEN CUT AS PILOTS HAD THEIR -- PILOTS HIT THEIR ANNUAL FLYING LIMITS. SERVICES AFFECTED SPAN PACIFIC, INCLUDING SYDNEY, TAIPEI, SHANGHAI AND SINGAPORE. CAROL: EVERYONE IS GETTING SICK. MANUS: THERE IS NO SICKNESS ON THIS SHOW. CAROL: MULTIPLE PEOPLE HAVE HAD COVID. MANUS: YOU ARE LOOKING HEALTHY.
CAROL: MAKEUP AND HAIR. KATIE: SOME PROFESSIONAL HELP COMING THROUGH FOR ALL OF US. BUT NORMALLY WE WOULD CHAT A LITTLE BIT BUT ALL THESE BUT WE HAVE SOME NEWS TO GET TO AND THAT'S 2023. IT WAS THE YEAR OF TAYLOR SWIFT AND HER VERSION OF DOING THINGS HAS BEEN DIFFERENT. SHE HAS INNOVATED TAKES ON ANYTHING FROM RECORD DEALS TO TOURING BUT JUST HOW RICH IS TAYLOR SWIFT? BLOOMBERG DID THE MATH. >> IT'S OFFICIAL. TAYLOR SWIFT IS A BILLIONAIRE.
>> WELCOME TO THE ARIS TOUR. >> HER HEIRESS TOUR ALONE IS A PARTY GENERATING HUNDREDS OF MILLIONS OF DOLLARS. IT'S A MULTINATIONAL CONGLOMERATE WITH THE WORLD'S MOST DEVOTED CUSTOMER BASE AND AN ULTRA CHARISMATIC CEO. &g
2024-01-01 02:55
