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tv   Bloomberg Markets  Bloomberg  December 31, 2021 10:00am-5:00pm EST

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matt: welcome to "bloomberg markets," the final edition after five in a row of this simulcast on both bloomberg radio and bloomberg television. i'm matt miller with paul sweeney. paul: our last day of this cool radio/tv simulcast, the last trading day of the year, as we look ahead to 2022. the markets off just a smidge. the s&p off about four points, but not too much. let's go to abigail doolittle. she is going to give us the latest on the beginning trading session, the last one of 2021. abigail: the last one is showing very small volume, 52% below the 20 day moving average, so clearly lots of traders and investors are out already for the new year holiday. the s&p 500 fluctuating between
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small gains and losses. the big question is whether or not we can end the day with at least a small gain. that would be the 71st record close of the year. if not, 70 record closes in 2021. that is pretty remarkable. the nasdaq 100 down ever so slightly. bonds not doing all that much. we are seeing a bit of a to klein and crude oil, perhaps having to do with some worries around omicron, and of course, all eyes on 2022. most seem to think there will be again in 2022 for the s&p 500. the average at 5300, perhaps pointing to another double-digit gain. if that is the case, the s&p 500 now close to a 27% gain for this year. that would is -- that is three double-digit gains in a row for the s&p 500. matt: thanks very much, abigail doolittle with a quick look at what is going on in the markets on this low-volume and low
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volatility new year's eve day trading session. let's get to cate faddis, ares capital president and cio, to give us her take -- grace capital president and cio, to give us her take. thank you for joining us. so many people have come on this program over the last week and said we had fantastic gains in 2021, it is not going to match this. cate: i have to agree. i think there's a lot going on. 2021 was a strong year, as was 2019 and 2022 could still be -- as was 2022 could still be strong, but with different winners. covid winners in technology and health care, even the financials did well not related to covid, so i think in 2022, you could still have some of the companies that have underperformed significantly picking up, and
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there are a number of those in a number of sectors. paul: give us where you think the opportunities might be, maybe even some names. cate: a primary opportunity is health care. hard to believe, if you look at the number of health names that it extremely well, cvs, labcorp, it is hard to believe that the sector as a whole underperformed the market, only up 12% or 13% on the year. going forward, i think there are a number of names that were ignored or missed. exact sciences, merck, biotech, biogen, teladoc. teladoc had a horrible year. i will be focusing on those. not all of them. you have to do your fundamental research. but i think some of those could be very attractive. matt: why did some of those underperformed? what is your best guess as to
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why investors did not value them as highly as they did tech stocks? cate: there are a couple of things going on. in the case of something like exact sciences, the sales people could not get in front of the doctors because of covid. there are other cases where procedures could not get done because of covid. in the case of something like teladoc, teladoc had done so well because of telemedicine that there was this perception that things were reopening. teladoc just fell completely out of favor. united states physical therapy, this was one where procedures have not gone down. they provide -- excuse me, they provide physical therapy services, and the numbers were not down. they were up 18% over 2019, yet
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the stock did not perform well. so i think those are some of the names you have to keep an ion. along those lines, there are some covid plays that have done extremely well. i would keep an eye on those. , even cvs area cvs stated their numbers were going to be down because they are not going to be doing as many covid jabs as the year before. those are the names i would keep an eye on. do not up over 100%. i would keep an eye on that. paul: over the last couple of years, i cautiously embraced some of the cyclical trades out there. energy, for example. but i have to admit, i am much more comparable with tech names that have strong topline growth, tons of free cash flow. how do you think about the technology sector over the next couple of years? it has been such a good sector for a couple of years. do we still have room to grow their? cate: we still have room to grow
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for technology. technology generates a lot of free cash flow. unlike in the past, you don't have a lot of employees. you've got a couple of guys, a couple of silicon valley bros coming up with the software, using a few computers, and they come up with these models, software-based, and they can make a tremendous amount of money. so technology is a sector we favor. when you look at some of the mecca cap tech stocks like microsoft, like apple, they have done so well that you can see them still continuing to deliver on the numbers, but the stock price is not doing anything. so i look at names that are also very strong like intel. visa has had a couple of tough years. i think visa could be very strong. square has had a rough year. i look at some of those names and i say those are the places you should focus on.
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fundamentally, everything has become technology, from the factory floor to the eye doctor. technology is everywhere. so i am a long-term technology bull. matt: first of all, i want to say i am tired of the term bro being used in such a derogatory sense. [laughter] i'm joking. you were about to say what you would avoid. financials i know is one. energy is one. energy has been the huge winner of 2021, if you look at a breakdown of the s&p 500 energy groups. energy up almost 50%. financials have done pretty well, too, 33%. why would you avoid these, i am wondering, if your bullishness on tech leads to bearishness on the sectors? cate: because they are not really related. we can start with financials because financials have been a tough group area just to give
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you a very quick history lesson, financials 1.0 was the m&a area. financials 2.0, once you have done all the m&a, you make it up on volume. we are going to lever up and lend. that led to the 2008 crisis. now with financials, you have to have very strong common equity tier one ratios. so you don't have a lot of loan growth. you've got a lot of deposits coming in. people are not using the banks like they used to. you've got fintech's nibbling away at them. so the financials are saying come you've got to say to yourself fundamentally, where are they going to get the loan growth? it is going to be a service business. that is my problem with the financials. people could say i am going to buy the financials because i think they are going to have a steepening yield curve. i say i cannot buy the financials on a macro call. one thing you do get with the
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financials, you get some candy every month. they pay strong dividends. that is important. paul: thank you so much. we really appreciate getting your thoughts on these markets. a lot of names to think about for 2022, and that is what we always like to get when we chat with some of these fund managers. the folks up in boston are really good on the equity business, all the big mutual funds up there. a lot of analysts and investors, and that is where you get a lot of good ideas. cate faddis, grace capital president and cio. coming up, the latest on what president biden and president putin talked about yesterday. that is coming up. ♪
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>> this book came from a series of lectures you gave named after somebody who was an ideological opponent of some of your views, and that was justice scalia. were you a friend of his, even though you had ideological differences? >> yes, i think so. we would debate those differences, and i thought we had a terrific debate in texas. there were several thousand students who had come. they had never seen a super court justice. we would talk about our differences. don't you think that george washington knew about the internet or free speech? and scalia would say, i knew that. good point. then he would say, i am not saying my theory is perfect.
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two hunters are hunting bears, one is putting on his tennis shoes. where are you going? and he says, bear is coming. you can't out run a bear. yeah, but i can out run you. that was his view of my way of deciding cases. and of course, i never, and i still, 28 years now, i have never heard a voice raised in anger in that conference moment. i have never heard one justice say anything mean or -- >> nobody is snide at the table or anything like that? >> what good would that do? i try to play net to the students. you get all excited, and all that happens is people who disagree with you think he's all excited, he must be wrong. and that is so true. so we get on well personally. we are friends personally, and we disagree on some things. not as many as you think, but
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some. >> it has not always been the case. there was a supreme court justice who refused to talk to or be in the presence of justice brandeis because he was jewish. so it hasn't always been that friendly. but you are saying since you have been on the court, 28 years, people don't yell and scream at each other. >> they don't insult each other and they are not rude to each other, and it is a professional job. you go in and do your best professionally. and if you want people to listen to you, the best you can do is to think through this problem, listen to her the other person is coming from, and see what you can contribute. >> sometimes, if the dissent is a little up on the person who are the majority opinion, they don't take that personally? >> i get that question a lot. somebody would ask that question and i would try to answer it
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because i didn't want him to. and i would say, look, i know you're not aiming that question at me. i get it. but what you don't understand is that some people suffer from a disease. it is called good writers disease. and if a good writer finds a felicitous phrase, you won't give it up. it is like a good comedian. you can't give up that joke. that is nino. he is a very good writer. he has a felicitous phrase, and we all know that, and you don't take it personally. >> do you have a lot of unanimous decisions these days? the 5-4 decisions get all of the attention. is that where the court really has its argument with each other, the 5-4 decisions? >> not necessarily. what you read about are the ones depressed thinks the public be
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interested in, either a political or a social content. they will say that is the most important. i don't know. one of the most important decisions i wrote this last year was called google versus oracle, and it took a year for me to write that. it was about copyright and something called interface programs, and i was told that was very important. for me, it was like learning latvian.
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♪ paul: welcome back to "bloomberg markets," the last trading day of the year. we are simulcasting, bloomberg radio and television. looking at the markets, i guess it is what you would expect on the last day of trading on new year's eve. why are we working on new year's
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eve? i don't know, but it is kind of mixed up there. matt: i can tell you. first of all, on two different levels, i can tell you why we are working. first of all, because the boss wants us to. paul: good point. he's here. matt: that is our job. also, i've got viewers writing in. i have listeners writing in. there are a surprisingly large amount of people watching, and we are here to give them the information that they need. on another level, i can tell you the reason technically why we are trading today, the new york stock exchange rulebook. normally if a holiday falls on a saturday or a sunday, a holiday that you deserve as an american, you get that on either the preceding friday or following monday. however, according to the new york stock exchange rulebook, that is not allowed if the friday or the monday is the last day of the quarter or the year.
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so this is why we are trading today. paul: i did not know there was a rulebook, but i guess we follow the rules, and here we are today, following the rules. yesterday, the kremlin said russian president vladimir putin is satisfied with the outcome of talks with joe biden in a phone conversation that sets the stage for three sets of negotiations on european security next month. here with more details on that conversation is marty schenker, bloomberg news chief content officer. what do we know about what these two presidents spoke about yesterday? marty: i wish i could give you more details, but i don't think we have any. the kremlin basically cast this is a very positive call. they were satisfied with it. on the american side, they were very clear that joe biden told putin in no uncertain terms that if he engages in any aggression in ukraine, he will pay
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consequences for it. but there is no indication whether joe biden was satisfied with the call, so you basically have to make you own mind up what you think happened. matt: how difficult is this going to be for president biden? on one hand, we clearly want to avoid that russia, that putin marches into ukraine and annexes sovereign country. on the other hand, we really want to avoid military conflict, so is that going to be possible? marty: i think it is going to be possible. i think what people are not paying enough attention to is the domestic issues that vladimir putin is facing. yesterday morning we publish a story about how covid deaths in russia exceeded 85,000 in the month of november. their worst since the pendant began. so he has to worry about his
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domestic issues, and i think an armed conflict miles away from his home country is not something he would probably want to get involved in. paul: the negotiations set for next month regarding european security, is this all about ukraine were all these broader discussions about nato, about russia? frame out what might be on the agenda. marty: i think it is clear that vladimir putin keeps talking about security guarantees, i don't think you can get any guarantee out of the west. you can probably get some understanding. what the russians want to make sure is that there is no expansion of nato, which they consider an existential threat with troops right on their border in places like poland. so i do think it is going to be more about making sure they
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understand each other's positions, and then of course the whole issue with european energy, which russia is central to. matt: and we are sitting here in berlin, very sensitive to that. it does not seem like nord stream 2 is really reversible. is it? they finished building it. i know they have to certify it, but is this going to happen? marty: all signs point to it happening, and certainly vladimir putin wanted to happen and the germans want it to happen. when you look at record natural gas prices in germany and throughout europe, they need that gas, and the russians need the revenue from that gas. so i think all things point to it happening, but i do think putin's behavior is going to determine a lot of whether it gets turned on this summer. paul: just about 13 and a half
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hours to go -- matt: just about 13 and a half hours to go until another election year at home. what do the democrats need to do in order to keep the paperthin advantage they have in congress? marty: they need to change the narrative. they need to basically connect the good things that are happening in the economy to joe biden. right now he is getting zero credit for record stock prices, for unemployment at record lows, and he is getting all the blame for inflation. the republicans are making sure of that. they need to turn around that narrative, and so far they have not been able to do it. matt: marty, thanks so much for joining us. i hope you have a fantastic new year's eve, even amidst this pandemic, and we wish you the best, as well as your family. marty schenker serving us well
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for many years. paul: he has a little home studio going there. matt: he does. i actually have the studio sub at home, but i've never used it. he is a very dedicated bloomberg employee. we are looking at a market right now that is very light. right now, the s&p 500 is all most unchanged. dr. james crowe, divan about vaccine director -- the vanderbilt vaccine director, next.
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>> if you have ever smashed the
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screen on your iphone, you will know that it can be massively expensive. apple is introducing a program called self-service repair that will let you repair your device at home with parts and a manual provided by apple. it is a response in many ways to the right to repair movement. whereas it used to be quite straight forward to repair electronic devices 25 or 30 years ago, as they have grown more complex and proprietary, it has got harder and harder. now we are seeing a wave of legislation in the works come in the european union toward the end of next year, due not only standardize the spare parts for each device, but also ensure that their pricing is reasonable. that is where apple comes in. they seem to be getting ahead of some of this legislation with their own proposals. the devil will be in the details of what apples solution looks like. how it spins of are the parts going to be? how easy will it actually be to do this yourself? >> there are plenty of videos
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online to explain how it is done, but most customers, we estimate only 5% of customers in the market will actually repair their own device, whereas 95% will go to a professional. if you are going to get it wrong, it is quite costly. while in many ways devices have become easier to repair and more intuitive, there's also many risks involved in terms of one little bit of damage to the logic board or one tear of a flex cable could render his can part of the device damaged entirely. >> right now, to get an iphone screen fixed by apple, it will cost you in the region of $280. for a battery to be replaced, it will cost you about $70. the price to do it at home will be a really important data point, and that is where the detail lies. for the longest time, apple said
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it deposed repairs being done by people who were not licensed or just doing at home. they said it was dangerous. this is a huge turn, but it does quite a lot to furnish apple's green credentials. -- ♪ matt: welcome back to "bloomberg markets." this is special coverage. we have been doing it all week. we've been loving it, you've been loving it. it is a simulcast on bloomberg radio and on bloomberg television. it has been a lot of fun. i have to say, even though it has been fairly light trading between christmas and new year's , obviously there are a lot of people taking off, not as many people in the markets as they normally are, it has still been more than half of the volumes you see during any other day,
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but today feels even lighter. paul: the train coming in today, i was the only one in my car on the train, so that gives you a little sense of what is going on. i'm sure this afternoon the train is going to be packed with people coming in for new year's eve. matt: well then, i don't want to be on one of those trains. paul: i will be going the other way. matt: a little bit of a reverse commute. we are looking at markets that are not doing a heck of a lot, except for the commodities. i have noticed a lot of commodity movement today. by the way, i do this because my screen is kind of under here a little bit, and my keyboard and mike mcglone did in the way. i am backing up and looking under. i'm a little bit too tall for this desk, so i have to scoop to see what is going on. it does not matter if you are looking at any market except commodities. if you look at commodities right
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now, we are looking at nymex crude down 1.3%. that is not the weakest it has been, closer to 75 even. brent crude 1% as well. we have seen movement going the other direction. nat gas in the u.s. on the rise. iron ore overnight in asia on the rise. that is the place where there has been so much activity today. not so much fx, not so much in rates and stocks. paul: it is a little bit quiet out there, but let's get little bit smarter on this pandemic. let's bring in dr. james crowe, director of the vanderbilt vaccine center. unfortunately, he got his md from the university of north carolina chapel hill, so i will just have to deal with that. we appreciate dr. crowe joining us. let's start off with a little but of a definition here. what are monoclonal antibodies,
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and how to they help with this pandemic? dr. crowe: that is a great question. the antibodies are a body's natural defense molecules after you have been vaccinated or infected. your body spreads lots of antibodies all over the body to protect itself against being reinfected. so with modern technologies, we can go in and sample the blood and pull out infection fighting white blood cells to make a single antibody that can do the job for a particular virus, and that is called a monoclonal antibody. they have been used in canter and autoimmunity's. over 100 of these are licensed for use in humans. but they have not been used for infectious disease very much, and covid is the first time where we see them really being deployed as an important tool for medical use. matt: what a world we live in. antibodies can be licensed. i love that. that is crazy.
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let's talk about what the possibilities are in terms of helping humanity even beyond this pandemic. what else can we do with this kind of technology? dr. crowe: one of the most exciting things going on right now is a new use of antibodies, a new technology has been rolled out that are called long-acting antibodies. typically, antibodies have a half-life of only about three weeks, so they keep decreasing very rapidly, but now there are engineered antibodies that will last for a very long time called long-acting antibodies, and one of these has now been approved by the fda for use in preventing covid in high-risk individuals who cannot be vaccinated. so this technology is not only good for preventing covid, but now we know it is safe and it
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works, we can use it for other diseases. so we have launched a new initiative to prepare and stockpile this type of technology, the 100 most likely causes of future epidemics. paul: how are we employing it for this coronavirus, this pandemic? what are the applications? dr. crowe: most of the antibodies that have been approved by the fda so far have been for treatment or protecting someone after exposure, but there is a new one out now that was developed with finn about university, in cooperation with astrazeneca. this is a prevention antibody, so we give it by just a shot, not an infusion, that prevents covid. there are about 5 million people
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who have risk factors or immunocompromised who cannot be vaccinated properly right now, so this drug is now available all over the united states for patients. so we are using it for covid, but the same time, we are seeing that the technology is now available for other infectious diseases, and that is what our program is all about. matt: tell us what you are doing with that initiative because you are not just the director of the vanderbilt vaccine center. you are also the chief scientist for i had 100. dr. crowe: this is a nonprofit entity, a private-public consortium of companies, state, local, even federal government, the bill and melinda gates foundation, the coalition for epidemic preparedness, a lot of people who are thought leaders and technical leaders in the field have come together in this
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nonprofit, and the idea is to make monoclonal antibodies not just for covid, but for other diseases that might cause pandemics, like all of the things you hear about occasionally causing threats. dengue virus, all of these types of virus that are out in nature that have the potential to cross over. we want to be ready ahead of time, not be reactive, to have this stockpiled, and this nonprofit consortium is putting together the discovery, the manufacturing and stockpiling so we will be ready. paul: dr. james crowe, thank you so much for joining us, the director of vanderbilt vaccine center and chief scientists of ahead 100. this is bloomberg. good morning. ♪
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>> most people who have been successful in hollywood as writers or producers have been wightman. -- have been white men. norman layer, air and spelling are classic examples. -- norman lear, arron spelling. >> i found that to be a difficult question to answer, and i say that because i don't know what it feels like to be a white man, so i don't know how people were treating the white men at the time. i only know how i have always been treated. i was raised very clearly by my parents to be a person who did not look at things as optical's -- as obstacles. when anyone treated me anyway that was not 100% respectful, i was taught that that was their problem and that i should move forward. so i am sure that i experienced a lot of things that were not probably what other people
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experienced. i just chose not to be defeated by them. some of them i probably didn't even bother to notice. >> today, given how prominent you are in the entertainment world, do you feel discrimination at any point now? >> i mean, there's an insularity that comes with being in a certain position in hollywood, but that doesn't change the fact that if somebody doesn't know who you are, they still see you as just another person of color. the racism in this country is the racism in this country, unfortunately. >> the events that led to the murder of george floyd obviously affected our country dramatically, and certainly the effort in american community particularly. how did you respond to that? you are a prominent african american figure in the country. did you feel you had some obligation to speak out or do more? how did it change your life, would you say? >> i think that the entire
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george floyd situation did a couple of things. one, obviously, like anybody else, i felt rage and frustration. but i also felt real dismay that a lot of people used that event to finally discover that racism existed. that was disturbing to me that it took something that horrific for people to go, wait, there is inequality. that was a little upsetting for me. i don't necessarily know that i had a particular obligation to do anything more than any other person did. a lot of people were marching, a lot of people were protesting. i think the beauty of what happened was how many average citizens stood up and did something. i think that is the power of that moment, and that hopefully will continue to be the power of
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that moment. but i also feel like whenever i am asked this question, i never quite know how to walk the line between saying here's what i did and hear where that -- and here is what isaac is important, because i feel like it might let people off the hook a little bit because it also suggests that racism is the problem of people of color, and really, i feel like i always want to say it is not what i did to work on the george floyd problem. it is not what i did to work on racism. racism is a white people problem. so what i white people doing about it? to me that is the question.
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matt: welcome back to "bloomberg markets." we are simulcast on bloomberg radio and bloomberg television. matt miller here in berlin. paul sweeney in new york. we are seeing markets open. the equity markets are going to be up in the bond market just
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has a half day today. dow jones industrial average is down 65 points to 36,332. the s&p is giving up some of the santa claus gains we saw off of christmas, and the nasdaq tech stocks down about 0.2 percent to 15,709. paul: yeah i look at the 10 year treasury, 1.5%. it seems like it has been at 1.5% give or take forever. it is just extra ordinary. i know we have seen the two-year yield move up to 72 basis points from 20 several months ago, but the longer end of the curve is pretty steady. the concern is, are we going to see movement in that end of the curve in 2022? matt: it does feel like it has been a long time. i am just pulling up the chart on my bloomberg terminal to see how long we have seen it hovering around 1.5%. it really has been since september that it has been at
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that level. i heard someone point out today is kind of the unofficial two-year anniversary of covid. today two years ago was the first time we learned of the first case out of wuhan on the internet. i swear it has been 15 or 16 years. doesn't if you longer than two years? paul: it absolutely does. we are just waiting to get to the other side of this. hopefully this omicron variant will burn out quickly and we can move forward as the weather warms up and we had to the spring. but i will tell you, retail traders had a really good holiday shopping season. we heard that number of 8.5% growth in holiday sales. let's dig under the layer's of that with mary lou gardner, associate partner at infosys consulting. the headline number looked really good, a point 5% growth in holiday sales. what did you take away from it? mary lou: consumers started
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shopping early. they were worried about some of the supply chain issues. when you saw some of the early sales, they came in much stronger coming out of october and early november, so that set us up for going into black friday, which was actually a little disappointing in total, but i think what happened coming out of there, there were some extra promotions that were dropped. consumers felt comfortable finding significant shifts to online and e-commerce, looking for those frictionless experiences where they could buy online, pick up in-store or get it dropped off right in their car, so there were multiple opportunities for people to feel comfortable about shopping, even with the rise of omicron. i think people were just so fatigued last year and so disappointed about not being able to travel and be with family that people found a way to buy the gifts, yet spending
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per person is projected to be down, with some people really trying to protect their savings at the moment, but overall, people were in stores and shopping online. matt: could these numbers have been higher had companies been? ? better stocked -- companies been better stocked? i wanted aramco trx and a new -- a ram trx and a new gmc and a ford lightning. paul: i wanted a new paris socks. -- a new pair of socks. matt: is that the case for a lot of goods that if they had had more inventory, they could have sold a lot more? mary lou: the biggest challenge you are seeing in the automotive industry and several other industries that have been impacted like household appliances is the computer
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chips. anything that needs a computer chip in it right now, that is what is causing the major backlog there. companies like target, walmart, gap, other retailers were really worried about the supply chain issues, so they found some other creative ways to get product into stores. so if you look at the retail segment and the players within the retail segment that figured out how to get product the stores, and some cases you did not see the -- of stocks. in other cases, it could take three to six months to get the car you want. that really came down to the computer chip issue. matt: i'm looking at the data you have put together. apparel sales were up, clothing sales, 47%. jewelry sales were up 32%. le truong's sales rose about only 16%, and of course, in
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electronics, you need to get those chips. in a t-shirt or sweater, you don't. is that the reason why we saw clothing and jewelry sales do so much better? mary lou: it is also that clothing and jewelry are very giftabkem in the -- very giftable, and a lot of people are starting to go back out again so maybe they need to buy themselves something. so clothing was not a surprise because all of last year, it was all athleisure, and now we are looking at stores like macy's actually did quite well this year in the clothing space compared to the results last year. so i think it is a little bit of give double items combined with -- of giftable items combined with treating yourself. electronics, when you're coming off of a bigger base, they sold
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more electronics last year, particularly around covid being shut in, and just a lack of availability and some spaces like phones, they suffered a little bit with the computer chip impact. paul: what is the outlook for retail sales? there's going to be a lot less stimulus in the economy in 2022. does that sit just a market slowdown in sales? mary lou: it is definitely a concern, so let discretionary cash available. the other concern really is the continued inflation. some of the sales you might see here once we really start digging into it were driven by some of the inflation. we can look at the cost of gas or the cost of groceries compared to where they were a year ago. that could be driving your sales , so once you strip out that inflationary impact, it will be kind of interesting to dig under
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a little bit to get a better understanding. but i think as that continues and there is less money in the market for people to be skin -- to be spending on discretionary items, it is definitely a concern, but there will be some pullback. the other concern is the ongoing supply chain issues. customers, for the most part, what we are hearing is that people were able to get what they wanted. it might have taken them a little bit longer, but there were not as many out of stock experiences as people predicted, and the ups's of the world were able to -- matt: none of those elmo problems. mary lou, thank you for joining us. this is bloomberg. ♪
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matt: this is "bloomberg markets ." i'm matt miller in berlin. paul sweeney with me in new york. we are simulcast on bloomberg radio and bloomberg television, and we are thrilled you are joining us. it is 11:00 a.m. in new york, midnight in hong kong, and they are celebrating, shooting off fireworks. for those of you on television, you can see that on the screen. for those of you listening on radio, i will just tell you it looks pretty cool. it looks like a big party. surely very conservative in terms of the lockdowns and covid policy, but it doesn't seem to have affected the brilliance of their fireworks. they are going off all over hong kong. it looks like a fun place to be,
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at least visually. paul: it looks great. the question is later on this evening in new york, what is it going to look like in new york city? i will not be in times square. i know you thought i was going to go there, but i'm going to pass on that this year. matt: i thought you were going to a deli in hoboken. paul: i might be going to a deli in hoboken tomorrow to get a worse beef sandwich or something along those lines. matt: i have to guess a lot of people have really scaled-back new year's eve party plans. not that they are not doing anything, but i am going to a small party. dani burger told me earlier she is going to a small party. everyone doing lateral flow tests before the party. so we are all testing to see if we maybe have covid or maybe don't. those of us who test positive hopefully will stay home, and those who don't will go out
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there. paul: scaled down a little bit. matt: i wanted to bring in the founder and president at vital knowledge to talk to us -- before we get to adam, do you want to check in with abigail? i want to get a sense of how things went in 2021. we had a haddock of a year -- a heck of a year in these are what he markets. what do you have for us? abigail: it is interesting because you're talking about scaled-back new year's eve plans. that is the case for the markets now. we have very small moves. at this point come of the s&p 500 down fractionally. it will be interesting to see whether it can push higher by the end of the day for a 71st record close potentially of the day. the nasdaq also lower, and that has to do with the fact that the bigger laggards on the day are some of met mecca cap tech names such as facebook, amazon, and google. bonds not doing all that much. the 10 year yield back below 1.5%, and crude oil breaking a
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very long winning streak, down more than 1.2% on the year, up more than 60%, so perhaps some profit-taking into the end of the year or maybe a little bit of concern around omicron and what does it mean for global growth in 2022. matt: it is interesting, i thought kind of the opposite. i know it is down today, but it is still $76 a barrel for nymex, $79 a barrel for the global benchmark brent crude. that tells you something about global demand. it is not dropping, certainly not at the same inverse rate as the rise in omicron cases, right? abigail: certainly not, given that cases are globally at 2 million, and oil does appear poised to keep rising in 2022. that is based off of the technicals. it does seem as though oil could continue to go higher. should that occur which is interest in about oil being higher this year is the fact of the dollar is also higher, up
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about 7%. you often don't see commodities surge higher. the bloomberg commodity index overall up over 30% with the dollar. that speaks to a strong economy and reflation as opposed to inflation. will that be the case in 2022? we will have to find out. lots of interesting takeaways from this very risk on year right now into the new year of 2022. paul: thank you so much. we appreciate that update on the markets. let's bring in adam, the founder and president of vital knowledge media. as abigail was just reporting, a heck of a year for risk on assets. that begs the question a lot of investors think about as they come back to work on monday. now what do we do in 2022? how are using thing about the new year and where the opportunities might be? adam: i think perversely, the last two years of the pandemic were obviously very negative for humanity, but a very favorable
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time for equityzen capital markets, asset valuations, largely because you did not see a sustained decline in earnings. more importantly, you saw an enormous tidal wave of liquidity , fiscal and monetary that washed over markets and helped sustain economic activity. so i think now that we are looking to the end stages of the pandemic, and i am very optimist about the pandemic dwindling over the coming weeks and months , i think headwinds are going to emerge for markets as that occurs where you have this stimulus withdrawal process take place area so you have fiscal cliffs and monetary cliffs throughout 2022. i think that will create headwinds for equity multiples. that to me is going to be one of the major macro themes for 2022. matt: we have already seen multiples come down over the past year, right? i was looking at s&p multiples graft on the bloomberg, and we
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were at 21, now i-26 and change. how far down do you think they come? adam: i think if you look on the forward year earnings, you are looking at about 21 to 22 times for the 2022 year end consensus forecast, so even if that were to come down in turn, that would still trade on downside pressure for the s&p. there's not a lot of consistency on multiples, so the more extended multiples and p/e ratios, i think there's are going to be more vulnerable. those other groups that have seen the most benefit over the last couple of years. so i think going forward in 2022, that is going to be your biggest headwind for u.s. equities, especially where you have some of the highest multiples on the planet and aggregate for major indices. paul: given that backdrop, the headwinds, the monetary policy, the stimulus coming out of the
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marketplace, rates rising, where do i go in the equity markets? what sectors do you think can perform in that type of backdrop? adam: in the u.s., your traditional cyclical groups should hold up well. financials, energy, i think i could's of health care are appealing as well. groups that have multiples well below the market, that should benefit from some of the dynamics that you will see in rates, and i think internationally, chinese equities are really set up well right now, given they are coming off of a horrible year of performance. sentiment is atrocious. china will be one of the only major economies on the planet that is going to be extending stimulus in 2022, and there are some possible green shoots on the pmi's, which came in lower than expectations. so china i think is going to stand out as one of the more favorable countries, at least for the initial months of 2022. matt: what is the biggest risk
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to your outlook? adam: i think the biggest risk is we see a rishaad incline in -- a really sharp decline in inflation, which would see clearly, if you were to see a quick and sudden pullback in inflation, they could easily hike once or twice, and which case you are going to see what we saw for the last couple of years extend further going forward. i think a lot of it is going to come down to the rate of stimulus withdrawal and the effect that has on multiples. paul: is there a washington risk out there? we are heading into an election year. adam: for the coming year, not really. i do think we will reach some kind of build back better consensus. there are not big differences about money. the big differences are more on policy. usually you see legislation get killed because of monetary difference. manchin seems amenable to
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something about $1.5 trillion. isaac there won't be major disruptions in washington. 2023 will be a different story. i think you will see republic and stick the house or the senate, and in 2023 will seasonably vicious fiscal battles involving the debt ceiling, involving budgets, possible shutdowns, but when he 22 should be relatively quiet in washington as both sides gear up for the midterms. matt: adam, thank you so much for joining us. adam crisifulli joining us from vital knowledge media. this is bloomberg. ♪
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>> immigrants make up one in every five entrepreneurs in the country. latinos start one in every four new businesses in the u.s., making them a critical source of new jobs in the economy. the owner of a spa and salon in new jersey as one of them. >> our salon is different
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because we really focus on the people that walk in through our doors. i have been here 20 years, so for me, this was my home. i am grateful for you every day. i am american-born, first generation. my mom and my father are both from the dominican republic, born and raised there. my mom owned many hair salons in the states she came to the united states, and i basically grew up in a hair salon. there was no playground or none of that. my mom had to work. she had to do what she had to do, and she did it, and then i just kind of fell in love with that, and here we are. you have a side part natural, but it is usually worn back. >> she got a small business loan to purchase this salon almost four years ago. a recent study found only 51% of latino business owners receive funding may apply from
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national banks, compared with 71% of white business owners. >> you can't help but wonder, are we not good enough? what are these people that are in control of the money thinking? how can we change the narrative on that? we push harder because it is that much harder for us. >> the study also found latino owned businesses contributed to about $700 billion in sales to the economy annually. >> i think a lot of the immigrants that come to the states have an entrepreneurial spirit. when you come here, you come here with a hope, a dream of a better life, not only for yourself, but for your children, for your loved ones, your parents, whoever it is you are taking care of. we were thriving, hustle and bustle. some thursdays and fridays, we were seeing over 100 people a day. then we got the news that there was going to be a shut down.
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i was angry. i was nervous. i was scared. every five seconds, it was a different emotion. then we reopened. we had to come out strong because the revenue lost, it was about 30% of revenue lost. that is a huge hit. we got the ppp loan. it wasn't the full amount, but it was very necessary and it was important. >> 3% of latino earned businesses received partial ppp loans, whereas 7% of white counterparts got one. >> we are here, only 7% down, and the way that i project holidays and everything, we will be right on track. my advice is si si puede. you can do it. we should be rooting for each other.
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it wasn't for my family, me sitting down and having a heart-to-heart with the bank, there's always a way. ♪
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♪ paul: we are back. "bloomberg markets," we are simulcasting. bloomberg radio, bloomberg tv. matt, for new year's eve in berlin, do the kids go to brandenburg gate and ring in the
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new year? what is the deal? matt: normally it sounds like an absolute war zone in berlin. on it typical new year's eve, it would already be so loud behind me, it is almost 5:30 p.m. here, that you would be able to hear it for sure on bloomberg radio and bloomberg television. however, it must be due to the omicron outbreak, we haven't heard any fireworks yet. usually it is an extreme, surprisingly shocking amount of fireworks that everyday people set off, not professional fireworks displays. this year we have some kind of giant concert going on at the brandenburg gate. for those of you watching on bloomberg television, you can see it behind me. if you're listening on bloomberg radio, you probably know that i broadcast from directly in front of the brandenburg gate. all of it lit up in blue. the four horse statue on top is
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shining and gold. it looks like they are setting up for some kind of concert. i don't know who it is, if it is ariana grande or beyonce. i probably wouldn't know anyway. but it looks like it is going to be a big deal. paul: well good. they are doing something in times square. they're going to try to limit the number of people, but they are getting out, so we will see how that all goes. let's talk markets for a little bit here and bring in ensign cignarella, -- bring in vincent cignarella, bloomberg macro strategist. i'm sure you will be with the kids at times square, but we would love to get your thoughts on when you talk to traders, how do they think 2022 is going to shape up? vincent: by and large, the mood of the previous guests is optimism. i call it more of a hope as opposed to what many are believing is a reality, that the virus will burn itself out
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sometime around mid january, likely after new year's celebration gatherings, and we get through that couple of week period, so they buy and large are hoping that that is the case , and that we don't see a wage price spiral in inflation, and as long as inflation keeps pace with growth, we will continue to see corporate earnings hold up, and see stock prices go up. i personally think there are so many things that can happen to upset the apple cart. i am not as optimistic as i would say the majority of people are. matt: so do you expect losses? after three years of stellar double-digit gains in equities, are we going to see a losing year in 2022? vincent: i would not say a losing year necessarily, but i think there is going to be a bit
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of a downturn. taking into account all of the potential super-spreader events and whether or not the variant burns itself out remains to be seen. besides new year's, you have the super bowl. you have the chinese olympics. you have mardi gras. there are so many things in the next few months where people are going to be getting together and mass, and realistically, everybody is tired of this thing , so guard is dropping and people are not wearing masks may be as much as they should be. there are still a variety of unvaccinated people out there. i just get the feeling that this is going to go a little bit further into the spring, and we are going to get some kind of a pullback and get opportunities to get involved and buy stocks at better levels, and then going forward, i think we will see the optimism i think in the second half of the year. matt: vincent, i am so pumped for the super bowl and for super bowl parties. i am moving back.
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not just in the states, i am moving back in one week, and i am going to be living in scarsdale. i could probably hit your house with a golf ball from my place. vincent: we are literally in the next town over. matt: so if you have a super bowl party, i am in. i am most interested to know what you thing about earnings and what you said about multiples because these are key factors in what happens in the markets. our last guest sees earnings around 240. michael purves sees earnings at 240 and change. our last guest also said he thinks for multiples around 21, 22. how do you see those important factors? vincent: i think we could see them end up there, and i don't think we will start out that way. we are starting to see the labor force have a leg up, if you
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will, on corporate america. we are seeing some wage gains that we haven't seen in a long time. we have seen strikes from unions , caterpillar and kellogg, for instance, and those unions winning out to get better wages. so those wages are going to factor into corporate profits. the key is whether or not those profits can be passed along, and they will only be able to be passed along if the rest of the country, the rest of the workforce manages to get wage gains to go with it. we are not talking about wage gains like i don't think we will see this wage spiral that people talk about. we are nowhere near that. the fed is not going to have to worry about inflation running away necessarily unless other factors intervene. commodity prices, for instance. but i think in the near-term, multiples will suffer and earnings will suffer until the cycle catches up him until people are closer to except in
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those higher prices. paul: vincent, thank you so much for joining us. always appreciate getting your perspective. you talked to a lot of traders on the street. you've got your finger on the pulse. that is vincent cignarella giving us a little more of a cautious outlook. i can understand that, given his experience. he has seen the market cycles. there are some headwinds. there are some bricks in that wall of worry, if you will come that markets are going to have to deal with in 2022. we will have more coming up. this is bloomberg. ♪
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>> at its peak, his firm and edged $38 billion, making one of the largest hedge in the world. >> it opened up a lot of doors and became very interesting in terms of the people i met. >> paulson has yet to repeat the success that made his fortune. he richly joined the list of industry legends to quit the hedge fund business, converting his fund into a family office. >> personally i never liked the business side of the business. i did like the invest in's -- the investing side. >> he pledged $400 million to harvard university and donated $100 million to the central park conservancy. >> i wanted to give back to the institutions generally that were important to me. important to me.
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>> ago through an ai algorithm. it is a sidewalk, bike thing, it is parked correctly, and it can
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deduce that in real-time and provide audible feedback. >> there is valuable behavior that will help others get on board. the rent hundreds of them, trying to prove the durability. it is a dynamic industry. the main players have raised more than 4.5 billion dollars since 2017, according to bloomberg. this was built by automaker ford and 2018, and it is the third largest. according to data, track bite uber second measure, it is launching in sacramento. it's biggest advantage is in washington dc. it will convince hesitancy officials. it last longer, you don't replace it as much. it is safe to drive. you're going to get your tech
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market. >> they are also working on a hot -- scooter. it is a three wheeler powered by software that can be moved out of the way remotely, and into an area where it is more likely to get a customer. this is bloomberg news, san francisco. matt: this is bloomberg markets. i am matt miller, and we are simulcast on bloomberg radio and bloomberg television. it's new year's eve. we wish you all a very happy holiday, today. we are looking at markets that are not doing much in terms of the equity indexes. the x -- the s&p is fairly unchanged. the dow jones average is down 37 points. 36,360. the real action is in
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commodities. if you have a bloomberg terminal in front of you, you type gl co, you get a great overview of the commodity prices. you can see that everything in the oil patch is basically down. that is up in the unites states, but it is up huge in europe today. most of the metals are gaining. you saw iron up overnight for the second day in a row in nature, and you have gains today and copper, gains today and nickel. etc.. it seems to be down for the most part. stocks are off -- coffee is down. that is because it is new year's eve, and people are bidding on champagne. paul: when it comes to commodities, i turned to mike mcglone, from lubricant teller's. i asked for the pork belly quote. were bigelow bit smarter here about the pandemic,.
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rosen concentrate or shoes. you're right. let's get smarter about this pandemic as we try to do on a daily basis. maria is here. a baylor college of medicine dean, studying and tropical medicine and microbiology. maria, you are joining us from honduras. much warmer than midtown manhattan, but thank you for taking the time. i'd love to get your thoughts on how we should be thinking about these vaccines and these boosters, going forward. is this something that is going to have to get jabbed every six or 12 months to keep up those antibodies? maria: thank you at a happy new year. the reality is that you may continue with having so many places and populations not vaccinated. we will continue with this pandemic. maybe we will need to jab ourselves more often. this is really what we need to do. it is getting more people vaccinated.
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anymore vaccines. indeed, those of us who can get the reinforcements with other vaccines also, because omicron is very much going for the rest of the year. matt: as privileged in the developed world start giving more boosters, there are lots of or more countries who are able -- unable to get there two initial shots, maybe not even the first set. is that a recipe for disaster. >> i think were already seeing a recipe for disaster. i think we know very well that when you have a lot of populations that are under vaccinated or not vaccinated, it is very -- variance arise. that's why we have great news because the children center for vaccine development is together with biological ease, a very
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conventional ways of making vaccines and approaching vaccines. they can now be made in a large scale, and hopefully bring it to those locations where there is a hard time getting vaccines are getting people vaccinated. matt: what about the hope that this virus eventually mutates itself into something not nearly as harmful to your health as a human being. how high is the likelihood of that? maria: that's a very good question. of course, we've seen how we do have other coronavirus is or what we call common cold coronavirus is. it takes a while. it's not a given that this virus, and one day, could be communicative or nonpathogenic. we still do not know how it is long-term. the eventual consequences of
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having been effected with all sorts of variance from covid-19 or the sars-cov-2. if we continue, it made be that indeed we will be able to be established, but with what money. we are basically, we don't know the impact of morbidity. we don't know the impact of health, and eventually, you are very interested in the empanada -- economic impact of being sick or pretty much with illness from this. matt: i'm wondering, as we get vaccinated, it's difficult to reach emerging markets in particular. are we going to get to point where we don't have cold storage for these vaccines that could be as simple as a pill. we could deliver millions of these pills globally or efficiently? are we trying to get to that? maria: that's a very good
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question. i think all of us have always tried to develop intervention that reduces a burden. the distribution, the accessibility. the quantity. the way it is distributed. we do not have that, but again, using, for example, conventional platforms like protein-based vaccines, we know that they already have a type of system and how they're being distributed. there is duration, and we recall, initially, the rna vaccine was having some difficulty because of the very strict freezing temperatures that they need to keep it maintained. i think it is going to get better. they are learning more about how to manage those technologies also. it can be made in large quantities and reach everybody. low cost, and efficacy.
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at the same time, we can maybe even have universal vaccines for the coronavirus. we don't have to worry about getting vaccinated with many different vaccines or changing the vaccination, depending on the strength that arises. a lot of us are working on that vaccine, or adjusting a variant, but also the future coronavirus. how can we get a universal vaccine? paul: thank you source for joining us. maria, she designed a vaccine. that is another level. this is uber.
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>> during covid, you had many jobs. >> a company called mckinsey. you need to be a public traded
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company. your partnership, this is easy to do when you are publicly traded company. but you are a publicly traded company with a market cap of over $200 billion. what do you think about the few that sultans should be privately owned and set a public traded. >> is an interesting question. for us, the market is an important element of discipline. were getting our results every quarter. of course, we think it is attracting talent. our employee -- employee value opposition is a very strong one because of our stocks. they are part of our performance in a culture that is tied to created value for all stockholders. it has served us well in terms of attracting great talent. >> be or not competing with private equity. not trying to steal people from private equity to go consulting. private equity seems to be trying to compete with professional services. they are hiring and acquiring a lot of professional services, these days. >> businesses been a growth
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business. you see a lot of acquisitions. you are doing this from washington dc. washington is a great place. it is the capital of our country. but it does not necessarily known as a place you run global businesses from. why are you headquartered in washington dc? >> we have not had a headquarters since -- for 30 years. at least. pre-covid, we were the largest organization running itself remotely. our leaders are around the world, and so, the defective headquarters is wherever the ceo is. when it was in paris, it was paris. before that, boston, before that dallas. d.c. is a great place to be based, and it is the first time in 30 years that the ceo and cfo are out of the same office, so very fortunate to have that here in d.c.. >> during the covid. of time, you going to the office, you work remotely. >> i worked remotely.
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one of the things we're famous for his being close to our clients. our offices are at the center of our work. that is why we have distributive leadership. i literally, even pope recovered -- pre-covid, would have team i want to make sure our people felt comfortable working from home. didn't feel pressure to go into the office. i'd think -- i think one of the great learning opportunities is the idea of omni connection.
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>> good friday morning tea. a new year eve special. bloomberg market addition, and why special? we are simulcasting bloomberg radio and tv. we've been doing it all week. global news markets as we close out 2021. we are taking a look at some opportunities in 2022, across
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all of the asset classes. a little bit of a red on the screen. as we finish up the last day of trading, it has been a very impressive 2021 in terms of equity performance. we are still up 27%. your day, if i told you at the beginning of 2020 that were going to have a global pandemic that is going to's grand travelers all around the world, and is going to mess up the supply chain, nothing will normalize for years, would you have guessed that the markets would rally? in that time, 50%, it is just extraordinary how central banks across the globe flood the market with liquidity. stimulus is what has been propelling this market, and of course, you take a look at 2022. a lot of that will come out of the market place, that has rates and concerns some people.
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i need to low bit more risk to think about generating some good returns in 2022, that may even include emerging markets. >> we are joined by continuous capital. he is a partner in the client portfolio manager. thank you for joining us. what is your call for emerging markets for next year? >> luis: thank you. 2022 will be an interesting year. you can just look at the backdrop of what we've been through over the past 12 months. it becomes little frustrated at times, but again, our firm is solely focused on fundamentals. we are very bottoms up. we focus on high-quality businesses trading at attractive prices that looks at income this abuse in, and we want characteristics to persist. when we look at the macro point of view, yes, it looks a bit gloomy, but we have to remember that emerging markets, all agility, is inherent. we are 26 different countries, and when you think about lester's best performer, south
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korea was number one, he put up almost 40%. today it is all most on 9%. the same goes for china and a few other countries. but we think about unraveling, the valuation is externally depressed, and it has an absolute basis but also relative across various indicators. which one is that reassuring price that has leveled the playing field between the united states and emerging markets because that a cyclicality and inflation. right now, the discount is at an all-time high. is that the only thing, we don't think so. it is a complicated one. i think one component that seems to get overlooked is the portion of narrative economics that we've been seeing over the past 12 months. we latch onto a story, for good or bad purposes, and it perpetuates itself. if you look at the underlying metals of a lot of these businesses, especially the ones we invest in, we continue to persist, and continue to be on earnings with high-quality type earnings. it is very healthy, so as a
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whole, diversification is key. it is hard to actually know when that value will begin to unlock, but i think, once momentum continues to carry itself, there is eligible performance, and we will continue. matt: if i look at might top screen on the bloomberg terminal and i put in big developed markets like the s&p, versus ishares, ms cia earning markets, or the ms ci urging markets, emerging markets did keep up over -- over the last two years, into december january february. they start to underperform. what happened? what changed? luis: i was a proponent of that, and china drives a majority of returns for the index. when you think about it it's about a third. but when you go back to when the index was created in 2001, it
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was 5%. i wouldn't called a rounding error, but it was minimal. today, what drives returns in china will create some keys of the index. that, i think coupled with a few sources, i know that they are related. it was discussed with vaccination. there was a lack of vaccination in global markets, including india. that started to pick up. i can tell you that it started to pick up recently. for a while it was pretty flat line. were moving that, and were removing the noise and looking at fundamentals. it is head scratching sometimes because there is just so much divergence between not only the u.s. but also emerging markets and broad development. paul: when you and your team are looking for opportunities, do you start the country level? i want to be in brazil, i don't want to be in china. south korea, but do you look at individual companies first. luis: it is based on academic
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research, and we look at history and what is rewarded us in emerging market specifically. it is not taking case pacific sectors. we focus more on the individual company level. about it this way. we isolate the risk to the country level, so china is 33% right now. we will be closer after a few percentage points, but it is more a function of finding high-quality businesses that we can get within the bucket. for us, it is not a specific country or sector. again, we are going back to the comment. there is so much volatility, your year. there will be a specific winner in 26 countries. that is just based on broad statistics, and it is very difficult. we are diversifying from the point of view, and buying high-quality businesses at attractive prices that pay dividends. it has a higher probability in rv. matt: that is a key part of the strategy. i love the top screen, but it shows the price change, and it shows you total returns, and the
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difference. someone on twitter was saying yes. including total returns. a lot of people leave dividends out. this is a big part of your strategy, isn't it? luis: that is a -- correct. ironically, maybe 85% of public companies in those countries pay some sort of cash distribution. united states have less than half. if you have a sandbox that lends itself to this type of strategy, individual companies, not only does that help increase total returns for strategy, but it lowers rates to let the probability of misrepresentation disappear. matt: do you give us an example in 30 seconds of our recent company added to your portfolio? >> i can't speak to the specific companies, but in sectors and countries, in poland, there was a software service, mid-cap company that did quite well. it piggybacked on what we're seeing in the united states in terms of amazon. locker deliveries and drop
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locations. as a compass desk commendation hardware software. there is a return on equity, a return on capital. it is growing leaps and bounds. they have a high market share within their company -- country, no ethics of poland. it's an emerging market company, but there is value. we believe in pacific companies -- specific countries like that. matt: thank you for your time. we really appreciate. luis is from continuing capital, and a platinum portfolio manager. great to get your insight. happy new year to you. you and your family. we hope you have a healthy and happy new year. that's it for me. paul, have a good one. have a good one. this is bloomberg.
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question five afternoon, good
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news he. we have an expanded special edition of bloomberg markets are you. you're simulcasting today as we have been all week. bloomberg radio and bloomberg tv. bring it to you. romaine bostick, and paul sweeney. we are based here in new york. i know you will be ready for new year's eve at times square, but before then, let's close out this last year training. romaine: you talk about a phenomenal year. frankly, your we talk about that and a lot of people saw coming. you talk about the targets we saw one year ago, today. we were bullish, but not this bullish. we are slightly lower on a daily basis. the s&p, nasdaq pretty much rounding the record highs as we close out there. paul: we have been hearing about more single-digit return opportunities in 2022, so will see other plays out. let's check in with the market correspondence and cannot check in on the market action. >> it's interesting. it has been a banning year.
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-- barrier. we have relatively small moves, but very light volume. not surprising. less than the 20 day average, and it seems many traders may be away from the desks. the s&p 500, interestingly, it is at session lows, but that's a tiny, tiny loss. .2%. the nasdaq is down a low bit more. .4%. microsoft, google, facebook are lagging. the dow is down slightly. fonts are getting a tiny booze. overall, a very small movement. fitting for holiday training. romaine: this will shape up to be one of the lightest days of the year. if not the lightest day. can you give us some perspective on what brought us here today, abigail? a lot of the other industry's other, specifically like philadelphia, they are outperforming. >> yes. stocks and the semiconductor index, leading index. especially given the supply chain issues. it is very impressive. the energy index is up 47%.
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the dow transporters up 30% grade one interesting lag or is the golden dragger. it is down more than 40% it's worth years since -- worst year since 2008. the higher commodity complex is inspiring the commodity index up 20%. that is the best year since 1979. that has everything to do up -- with oil up 36%. the best year since 2009. another big winner, that you were talking to yesterday. coffee is up 75%. it's best year since 2010. anyway you slice and dice it, they're all doing well in 2021. romaine: we will check back in with abigail later today. we will keep the simulcast moving. we'll bring in david. he is the president and ceo of guide some capital. giving us some perspective and 2021, and what we can expect next year.
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david, i am serious. you could have picked any sector, and made money, whether it was intentional or not. whether it was energy, financial, technology, and everything in between here. when you look in 2022, do you think will see a little bit more divergence between the sectors. >> absolutely. this is a function of continued monetary policy, plus, energy -- earnings growth is something no one expected. you spoke about how strategists didn't expect the kind of year we had. earnings were up 45%. no one call that. you had the easy but -- plus a robust market across the board. it was one of those years were you threw money at the market and you did well. next year, it will change. a lot of those tales wins -- tailwinds and 22 a1 will become head in 2022. monetary policy. lower earnings growth. gdp, and will have less physical stimulus when it comes into
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play. we will have higher taxes. inflation is now a significant concern. all of these things are going to create a much less robust year action. likely, a lot more volatility. paul: given the backdrop, what should an investor do. those are some significant headwinds. >> i figure have to be opportunistic. in the last three years, the best asset classes been u.s. large-cap stocks. the returns have been better than 25% on average for the last four years. if you stick it in s&p index funds, you did great. but you have to be more opportunistic, and looking globally, it makes a lot of sense. emerging market debt is attractive today. develop market equity is attractive. both of those investments, even small-cap security in the night states, these are all asset classes that haven't participated in the same degree as large-cap u.s. equity has, and there is opportunity there for evaluation and perspective. that diversification is going to
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be critical, as well as volatility picks up. romaine: as we look at some of the retirement interim returns out there, issues on the horizon, i have to ask you about the covid crisis. the latest variant. omicron. we're not doctors, and i don't get too deep into the medical science behind it, but i am curious about the sentiment right now. we're seeing it in the market. were seeing in the broader economy. whether you think what happened right now with a spike in covid cases is enough to come i really damped down any kind of equity or economic activity by heading into the needed. >> i'm an optimist, so i believe that what we are seeing with omicron is one of the final legs of this disease. it is not going away, but this seems to be much less dangerous, fewer hospitalizations, fewer deaths, and a significant fight -- spike in south africa. we have very low levels of hospitalization.
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we will see that here. i think the data will bear that out. we have vaccines and boosters. we are significant he prepared. right now, compared to a year ago with an additional variant, we are hopeful that as a country, we can manage it appropriately, and from an economic perspective, it can remain open and we can continue to see economic growth. it will benefit all americans. paul: we are hearing in your state that they are extending mask mandates until february 1. that is according to the governor of new york. again, everyone is still trying to deal with that as we go forward. we have that backdrop, we have some of the headwinds. what is the wrist, your mind, that this federal reserve throws the market a curveball, and maybe, raises rates, more aggressively than the markets. is that something of material risk. >> in our mind, that is the
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absolute biggest risk in the markets next year. there is a concern, appropriately so, that the fed's be on the curve. we have a competition running at 7% with the fed funds rate still at zero, the fed is now indicating that they are likely to raise rates again next year. they have to end the tapering, which starts in march. at that point, inflation is still running at 7%. that will be behind the curve, and will have to play catch up. if that occurs, the market is not going to respond well. historically, it is between two and 4%. on the s&p 500 has been around 17. we have been doing it 21 times today. combine that with the fact that we have a midterm election year, and historically, you see an average of 19% drawback for a midterm election years. there is a lot of stuff going on, and it cannot be managed. ultimately, inflation, and has an effect to thread the needle and have a number of strategic
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rate hikes the do enough to mitigate inflationary pressures so the market can see through that, even if that happens. there will be additional volatility, but that be the best case scenario. romaine: threading the needle will be something they have to pull off in 2022. let's talk about some alternative assets. the idea of how you structure a portfolio in this environment. particularly if you're trying to diversify, to some degree. equities or away from some of the risks out there. >> the impact of monetary policy is that it has forced investors to have a risk or. the treasury's at one half percent, with investment grade bonds, a little more than that. even high-yield bonds. they are a lot higher. investors going to equities and risk asset classes. it is a force there. as i said earlier, we have seen that. it pays dividends over the past three years. the s&p 500 is up more than 45%
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on average. going forward, we have to look at other asset classes. emerging market equities have had a negative. if you are long-term, you have to like the opportunities. there is real estate investment. real estate valuation. it is low interest, and it is a demand for real estate. with inflation being an issue, a lot of the investors are going to look at real estate as a way to offset the impact of inflation on the portfolio. real estate investment, even though they've done it really well, it is attractive, going back to a set earlier, forecast stocks, it is a d.c. year, but we are not seeing large caps. it is able to appropriately manage inflation, and the economy will continue to expand. small caps earned a great position to rally. >> thank you so much for joining us. we appreciate getting your thoughts and perspectives on these markets as we head into 2022. the president and ceo i/o of guy
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stone -- cio of capital management. in the great state of texas. we will have looks at the market, more previews for 2022, and get a sense of where opportunities are. a lot of folks think it is going to be tougher next year. police compared to this one. we'll get into it. this is bloomberg.
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romaine: this is bloomberg markets special coverage on simulcast radio and tv. i am romaine bostick alongside paul. we are keeping on the high -- and i on telephone calls. a 50 minute telephone call between joe biden and vladimir putin yesterday. edward already from the russian side that they are satisfied
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with what transpired on that call. we also had a little bit of perspective here. let's get some perspective from our editor-at-large for bloomberg news. marty, what did you hear out of the white house with regard to how they interpreted the call. >> they stress the idea of unity with the european allies. abe lincoln, -- secretary blinken reiterated a desire to not do anything to alienate our nato partners. they made it clear that negotiation is something they want. but they will take steps if the russians act aggressively against the grain. paul: how united is the united states with its nato allies? after the last administration, things got a little dicey. where are we in terms of putting up a united front vis-a-vis russia? marty: joe biden made it clear
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that one of the goals was to repair the damage the trump administration did to nato and alliances. he did not get off to a good start without handling the submarine issue with france. he had to do some damage control of his own. but i do think things have been much better in recent months. they have taken real steps to try and reassure our partners in europe, and again, they've taken a united stance against russian immigration and the ukraine. they are expressing that they don't want negotiations to be successful. romaine: i am curious about the loose ends with the nord stream 2 pipeline, which for a lot of nations, it is pretty vital in assuming it gets approved and allowing caps to start flowing. is that owing to be part of the bilateral talks we will see in a week or a week and a half in geneva? marty: you know, the security
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talks are designed to address issues of common interest. clearly, nord stream 2 and the gas that flows through it is a big competing importance, and natural gas prices have hit record. they are going to be depending on that gas. in turn, it will cause concern in the united states, where we don't like to see our european allies so reliant on an adversary, and russia is an adversary. it may not come up specifically, but it is essentially the gorilla in the room. paul: thank you so much for joining us. we really up or she getting your thoughts and perspectives. geopolitics are taking -- coming closer to the front burner for the next several weeks. thank you so much. let's switch gears and get to the back to work story. a lot of investment banks, a lot of financial institutions have been more on the aggressive
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front in bringing people back to the office. the omicron variant is causing a lot of folks reconsider. we have a lot of folks and they are going to extend the mask and then date -- max -- mask and vaccine mandates. let's bring in madison. i know, be of a had a huge employer in new york, as well as across the country saying, maybe not so fast, what is leis? >> we have a lot of banks and employers taking an approach, and they are recognizing that tonight, after the past holiday we can, we are going to see a huge spike in cases. i just want to remind you that we are already in the midst of a surge with the globe pitting over 2 million cases for the first time ever yesterday. the u.s. is reaching a caseload of twice in a row. the highest ever case count. here in new york city, one of four people currently have covid, so these numbers are really alarming, and employers
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are responding by accepting that there is going to be gatherings of people and they have this evening, saying, we get it. you're all probably going to be running this night, so don't come in at three. employees themselves are kind of taking a proactive approach here. we are seeing, across the united states, more people are avoiding the office. we had reporting on this at bloomberg, showing that there is been a 40% drop off in in person work. over the past week, just here in new york. we are seeing that often. miami, as omicron contains the spread, and employees are worried that eight hours in the workplace is not the best way to spend time right now. there is a surge of a new variant. we should be clear. with the leg which we are hearing out of the banks, including j.p. morgan america, the long-term plan is to get everyone back in the office, face-to-face. that is still there. there is a temporary reprieve. madison: that is true.
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people are hoping we will see that in the united states. but we've seen south africa, we are seeing a huge surge, and then a really big drop off. we are seeing drops at a rate of 30%, which is very exciting. unfortunately, i hate to be the bearer of bad news, but it is summer in south africa, and that is obviously going to be important in getting cases down. where in the middle of winter here in new york. people will be gathering together more frequent, especially as we see events canceled. i'm ever talking to dr. fauci about this. it is great to decrease the number of big events that are going to draw large crowds. the downside of that is that it will draw people indoors. you will see a lot of people going to each other's houses, and that is where you really see these big spikes coming. it is still something that we need to monitor. something to see if we can have the same situation that happened in south africa. there, we saw a surge over four
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weeks, and then a two week drop off. that was here in the united states, we are week out for that. the next week, following years, it will be the one to watch. to see if we have the same situation that they did in south africa with the drop off. coming cases. romaine: everyone needs to be safe out there. madison mills joined us on the big simulcast today on new year's eve. we will catch up with her later in the day. we will keep an eye on what is going on. with covid, the conversation with our doctor from johns hopkins university, we will hear what yes to say, shortly. this is bloomberg.
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>> we are back. new year's eve, bloomberg
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markets, specialty addition -- edition. we are in new york. a little bit of a pullback, but you have to put that into context. what a heck of a year for the s&p 500. romaine: a massive ear. -- year. even if you got in in the middle, you did pretty well. >> what we have heard from folks, more muted expectations for the coming year, but folks are still constructive. one of the big wildcards is washington, d.c., what will come out of congress and this administration. we want to get a look at d.c. with terry haines. give us the sense of the to do list. congress comes back next week. maybe they get to work the following week. what are you looking for out of washington, d.c. next year?
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terry: not very much, really. an awful lot of the congressional energy gets put into the midterms, as you would expect, because the margins are so tiny. you have a four seat majority in the house, a zero seat majority in the senate. what i am looking for are five things that affect the markets. the first is what i would call the politicalization of the regulators. this comes up with the fed first and foremost. i'm not sure you know what fed policy will be when the majority of the governors have been either renominated or not yet nominated. then you have all kinds of other things. the market implications ranging from the federal trade commission's war on tax to what the sec will do with esg.
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and all kinds of other situations. so, i think that that is number one. i think that you have got -- romaine: let me jump in. before you go to number two, with regulators, people are concerned about what could happen. we see in washington, the legislative process, but we know that they have a lot more sway to be able to change the rules in a way that does not necessarily have to go through the sausage grinder that is congress. do you think that over at the cf tc, that the proposals they are doing will really make it to see the light of day? terry: i think they will. thank you for bringing that up. they will push hard to make something happen, and that alone will cause market heartburn and angst. we are some way from understanding whether or not they will get the majority.
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so they are about to learn that at the sec she runs a five commissioner agency and the other four commissioners will have their own views. once i was a person at a regulatory agency, and sometimes it was about them taking their 90% and going home. that, frankly, will roil markets more. but you are right to bring that up. i think that is a big problem in 2022. paul: what about the build back better bill? it was derailed a couple weeks ago. what is the shot of this coming back in some form with the new congress? terry: i think it is about 60% likely to happen. but it comes back in this tiny sort of form. if you follow the bouncing ball, it's basically three times less
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from where the democratic progressives really wanted, what they started out with. but i think they will get something in the end. joe manchin said no, but tried to continue to negotiate. the democrats want something to show that they have achieved something. they are at the point now where they almost do not care what that is. but the economic impact of it, you know, it is different, and i am very different than other economists and i think it will be really tiny. the most recent jobs report, frankly, showed that, that things are going a lot better without it. without the additional government intervention. so the need for the things they wanted in the beginning are not there anymore. romaine: i want to pick your brain on foreign policy issues. there were a lot of loose ends coming into this new administration, maybe with the
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exception of the pullout from afghanistan, that really did not get tied. we have a bilateral summit between russia and the u.s. coming up, and other formal talks between the u.s. and china. do you think we will see a resolution to those conflicts next year? terry: i do not think we will get resolution, but what i think is we will go through a year that will have also seen market impact, where that is proving of the current administration and exactly what they intend. if you look from a non-us perspective, what you may see is a growing sense of crisis of confidence and competence. the three things i would bring up most recently, frankly, are the way that covid is being handled. we are behind the curve on testing and on understanding variants, by the vice president's own discussion. firstly. and secondly you have this whole
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business with supply chain, which the government says it wants to sort out, but really can't. but they want to claim credit for it. and then you have the overlay of how we got out of afghanistan, regardless of whether we should have been there in 2021 or not. how we got out was something that looked like weakness to a lot of other countries. and i think we will get poked on whether or not it is the current russia-ukraine business, china and taiwan, the iran nuclear deal, and then we have north korea always on the outside, too. a lot of balls in the air for the current administration, and i think that that will roil markets in foreign policy for the u.s., too. paul: 2022 is an election year, and we are likely to see changes in congress.
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how should investors think about that? terry: simply this, there's -- the most misused word politically in washington and outside of washington is majority and control. majorities do not equal control in congress, but the republicans probably have the better of it going into the midterms. even if they gain majorities, they will not be huge, they will not be overwhelming, and they certainly will not amount to controlling the agenda or the ability to get that started. or the ability to hold back regulators that are appointed by the biden administration. it will not amount to any of that. so it is not that consequential. where it might become consequential is if the president decides he's made a mistake in his first two years, siding a lot more with his progressives. which made up the majority of
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the majority in congress, but the only represent a tiny part of the country. pew research did a bit where they showed 10% of democrats identify as progressives. so, if the midterms come in big republican, yielding republican majorities, biden will have the opportunity to shift to the center. that could be consequential for markets in a positive way. otherwise, the majorities alone won't. romaine: does that mean we end up with -- in the process? terry: there is not the will or votes for huge consequential matters. but there are things that can be
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done on the side, like prescription price regulation. the democrats want to do it. as far as broad, sweeping covid bills or huge build back better bills, these transformational things will not be in the cards for some time. romaine: always great to catch up with you. we'll catch up with you next year, i'm sure. that is terry haines. we have got to talk a little bit more about what has been going on with the bars, restaurants and hospitality industry, particularly here in new york city. they started to get back on their feet, then the omicron variant putting those plans in jeopardy. that is after the break. this is a simulcast on bloomberg tv and radio. back in a moment. ♪
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>> good new year's eve afternoon. paul: we are simulcasting radio and television, have been doing at all week, giving you the break on this last week of trading. and trying to give you a good preview on what to expect for 2022. headlines crossing the bloomberg now, bridgewater gained 7.8% in december. one big month for ray dalio. a heck of a december. many took advantage of it. romaine: you saw the way that some of these funds were able to bounce back. still, the performance we saw earlier in the year called into question the strategy that ray
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dalio pioneered, and of course has been profitable for him and the fund first so many years. paul: we did see some reporting of december, a strong end to the year. which is also strong is the omicron variant, dealing a blow to new year's eve plans and just plans to get together. i think about jp morgan canceling their health conference in california a few weeks ago, a sign that omicron is here in discouraging big gatherings. in new york city, there are big places that were looking forward to new year's eve with a lot of people, and now that will not happen, or at least be on a smaller scale. allison, what is the story for these venues? allison: this year was supposed to be a year of recovery for many of the hotels, restaurants, bars and tourist attractions. obviously, we saw restaurants
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and bars shut down in 2020 because of the pandemic, so with people getting vaccinated 2021 was supposed to be better days ahead, with people gathering, traveling. but now, what we are starting to see with the new variant is parties are getting canceled, broadway shows have been canceled, flights have been canceled. that is having an impact on those venues that were relying on a turnaround from the pandemic. romaine: many were struggling before the latest pandemic -- or variant came out. you highlighted a big hotel in lower manhattan near the whitney . a beautiful hotel, perfect location, great bar and restaurant, overlooking the hudson river, but if you have no tourists, you will not have much of a business. now that hotel is in foreclosure.
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allison: exactly. some of the properties, their lenders were saying, we will give you more time to pay us back. now they are running out of patience, and running out of cash themselves to keep giving these properties more time to recover. and now we can see foreclosures happening, for example, at the standard highline hotel, where the lenders are looking to get out. paul: i think about some of the big event spaces, like cipriani's, fantastic space for the midtown and downtown. i have been to the midtown space, where you can get hundreds together, jammed in there. tables are next to each other, 10 deep at the bar, all there for various functions. how are they reacting? how are they faring? it has to be difficult. allison: cipriani's is the
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perfect example of this effect on commercial real estate from the pandemic, and the intersection with wall street, because it is a very popular area for events and galas. it's pc financial trouble. it is in default on its mortgage. and it will have to try to figure out how to work the debt out, whether it can reach an agreement with lenders, or whether somebody else will provide additional financing. those major events are the lifeblood of a venue like that. when people are not coming for christmas parties, that has an impact on the bottom line. romaine: what about the private clubs, the semi private clubs? the princeton club, they are trying to figure out how to go forward and i am told that eric schmidt might lead to the rescue. allison: that could be a perfect example of a rescue story. the princeton club has been shut
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down for months now. it lost a third of its paying members during the pandemic. now eric schmidt is considering bidding for the property, or has bid on the loan, and might be able to be the white knight to rescue that club. but the big question we will be looking or thinking about in 2022, is whether or not we will see more white knights like that step in for iconic new york institutions or whether they might go the way of the other ones we have seen, where they have closed. 21 club has closed, but remains to be seen what will happen with that property. will they sell it, try to open it in a different form or find additional financing? paul: any optimism out there when you talk to the hotels or event spaces? perhaps in south africa's news
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could give them optimism, that this will be a short duration of a variant. allison: that is right. the optimism is the current variant, compared to previous ones we have seen, is or looks like it is having milder symptoms for people, which means people are not forced to quarantine for as long. it looks like the impact of the variant overall in terms of the period in which it spikes is shorter, so overall it seems to be less severe. and that has people hopeful that as we move into the new year, we will see these properties pick up speed. we will see some resumption to a return to normal, if we can even say that anymore. that we will hopefully see something resembling that in 2022. another big piece i should mention is the business struggles. we have seen some return of tourism and family vacations,
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but we have not seen folks on airplanes to go to business meetings in the same way we used to, because we are all on zoom now. romaine: have a wonderful new year's. allison within ion the ground i -- eye on the ground in terms of the restaurants and event spaces struggling to remain open. next, travel. people are trying to travel this weekend. and it is off to a bumpy start. we will talk about the thousands of flights being canceled. and, of course, for tomorrow as well. bloomberg tv and radio, back in a moment. ♪
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paul: this is "bloomberg markets, the close." romaine: a special simulcast on bloomberg tv and radio. we are watching the markets. and an eye on everything that moves the markets. and we are walking does watching holiday travel as people try to get to and for this holiday weekend. not off to a good start. tony robinson is joining us to talk about what's going on and why. is this all because of labor shortages? tony: to a large degree, yeah. there's always weather affecting travel here and there, but yes,
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there's bad rain in atlanta, snow in the west. that will slow things down. but omicron is the bigger factor. it has cut down staffing at several of the airlines, not all. but that is making it difficult for them to keep up. they are getting ahead of issues as much as they can. many of the cancellations today and yesterday came early in the morning. we hit 1000 by 9:00 a.m. this morning, and it slowed down the pace of cancellations because they wanted to give people time to prepare and make alternate plans. it's not widespread. paul: what is the solution, if there is one? if you do not have the people to fly the airplanes or clean them, there is not much you can do,
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can you? tony: what they will do is consolidate. they will move to bigger aircraft, push flights that might have been separated by several hours. and then those people who were on two different flights will now get on one flight, that will help. not much you can do if people are out, because of isolation. if you tested positive, i mean. so they will try to give passengers advanced notice. you do not want to get told -- it's easier to be told four hours in advance that your flight has been canceled, and than bigger planes will hit the schedule, than to be told one hour or less in advance. so they do that to minimize the pain for travelers. as much as they can. romaine: demand was high. the actual capacity even going into this was lower than what it was pre-pandemic. we are focusing on u.s. flights,
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but what about overseas? i have seen stories where there are countries you cannot even fly into. tony: yeah. it's harsher in parts of europe and asia, where lockdowns are more prevalent than in the u.s. paul: think you, tony. -- thank you, tony. not sure there is a solution, this might be an industry that has derided out and everybody -- that has to ride it out. and everybody has to be patient. romaine: you can rent a car. paul: and pay through the nose. much more coming up. this is bloomberg. ♪
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romaine: this is bloomberg markets, a special simulcast across tv and radio. paul, you talk about the markets on a daily basis. right now, unchanged. volume is minimal. but still a strong month, a strong quarter and it will be a strong year with the s&p up. paul: it has been extraordinary. who would've thought it? what i find interesting is what a really strong year end we had in december, one of the best decembers we have had in a long time. so setting us up for what we will see in 2022. extraordinary gains, as tom keene would say, for those who had the risk or fortitude to be in the market. romaine: a guest talked about you could've picked anything sector wise and made money. abigail doolittle has a closer
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look as to what we are seeing. abigail: to your point, small moves on the day, meniscal. but on the year, huge gains. a risk on year, as we have been talking about. the s&p 500 up 27% on the year. the nasdaq is up. the dow up a little bit less, but still up 19%. average is up three years in a row. one index we are not looking at, the russell 2000, up 14%. a double-digit gain, but underperforming in the large caps. this is the year of large caps, more so, and at this point a 13% differential between the s&p 500 and russell 2000, interesting after last year, when the russell 2000 was climbing so much. paul: i look at the numbers and the s&p 500 etf's, just buy them
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and a loopback later. but -- look back later. so much outperformance. abaca: there are certain -- abigail: yes, the best sector in the year. real estate was there. technically a growth sector. and tech, about 33%, its best year since last year. i am thinking about the financials, best year since 1997. in terms of the individual movers, the heavyweights, the nasdaq, apple, microsoft, nvidia. microsoft added $1 trillion in market cap this year, more precisely $870 billion, an incredible move in one year. especially considering it has been up three years in a row. so an incredible run. the big question is whether it can last into 2022. paul: we appreciate it.
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abigail doolittle giving us a market overview with a strong performance in 2021. let's take a look at 2022, particularly this week. we are doing that with the managing partner at bonner corn global, marc chandler. as we were just outlining, most asset classes had a pretty good 2021. how are you thinking about next year? marc: it is amazing. you talk about risk on. the foreign exchange market, the dollar ruled the roost. depreciated against most major currencies. the canadian dollar to close a bit higher on the year, but the dollar was a strengthening against many currencies. what i am concerned about for next year, it seems like so much good news -- the stock market up the third year in a row, a
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strong dollar, and the rally -- you said, who would've thought it? the dollar bottomed this year, at the same time you had the riots on the capital. -- capitol. and positioning has been extreme. good news for the dollar, three rate hikes next year. so it is hard to see better news coming forward. romaine: when we talk about the dollar, and we look at the market through the lens of the dollar strength, isn't part of that how people view non-us countries, the developed nations, and the relative outperformance that the u.s. has had, not only as a market but an economy? marc: you say what is true. the u.s. economy is strong, but the reason it was strong, it wasn't just that we are all hard-working, but what is really driving this is a fiscal
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commitment that we have not seen in other countries. the outperformance and stronger growth is partly higher inflation, and secondly a higher budget deficit. i think these will combine and come together as an achilles' heel for the dollar. it will be between deficits. earlier this week, we had a record trade deficit. we have a large current account deficit. so the u.s. will have to have higher interest rates. of course, the market is pricing in three hikes by the fed. at the end of the year, 7% inflation and 1.5% yield on the 10 year bond. what is happening overseas is there is trout -- is $12 trillion of negative yielding bonds. paul: it is interesting, you talk about the dollar strength story.
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i cannot see a bear story out there for the dollar, but where else in the currency markets do you see opportunities as we go into 2022? marc: some of those currencies or some countries are ahead of the interest rate cycle. i still like canada. canada has a combination of fiscal policy and probably tighter monetary policy. the last couple weeks, the market has shifted, expecting a rate hike in march rather than q2. i like canada. and i think that the u.k. is interesting in the sense that they have a lot of problems. the bank of england, they raised rates this month, but they will allow their balance sheet to shrink. i think the markets will like that. and then japan. finishing at the end of the year, we are at 1.15.
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the best single driver of the dollar-yen relationship is the u.s. 10 year yield. but japan is the only country that will have a larger budget deficit in '22 than they had in '21. everybody else will be cutting back on fiscal spending. romaine: it is interesting, the attempted turnaround in japan, particularly when so many were trying to draw parallels in what was happening in the u.s. and heading down the stagflation path of japan. do you see anything there that could guide investors? marc: they did have a financial crisis years ago. i'm not convinced japan is our future. one interesting thing here that goes unnoticed is while the u.s. is a struggling with 6.8% cpi,
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japan, which has a gdp ratio of over 200%, the central bank balance sheet is the largest in the world, yet they still have deflation. it fell by about 1.5% in both q2 and q3. exclude food and energy, they still have deflation. i'm not sure we will be able to learn from japan because we are so far away from that. in the u.s., we are our own worst enemy. paul: what are the opportunities for an investor willing to take on a credible risk in the emerging markets? marc: good question, because i think the emerging markets are very exciting. the trade-off for the greater return is higher volatility. you thing about the turkish lira, up about 58% this year. brazil has been one of the most aggressive at raising interest
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rates. not only has the currency fallen, but they have been contracting. i think that in brazil you have a picture of what stagflation could look like. a really small detracting of the economy, high inflation, high interest rates, falling currency. i think china has upside. i think that there is fair value for the chinese currency. finishing the year we are firm against china, i mean their currency is firm. and i think that people, especially in the west, they are in a hurry to write china off. just because some of their moves interfere with the market's integrity or punish rich people, i do not think that's something that is a solid point. i think that the chinese currency will have another good year. romaine: last question here,
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probably the most important i will throw at you. i want you to make a hard prediction here. the chicago cubs, they will finish about five hundred for a change? marc: i hope so. what a heartbreak. romaine: it is great to catch up with you. i've been wonderful new year. we'll see you on the other side. marc chandler giving great perspective here on what we can look forward to, particularly with the currencies. you talk about the dollar strength, that took people by surprise. paul: it did. i cannot see a bear case for the dollar. when you look at the relative pace of the economy, where the fed is going, it seems you have to be long the dollar. if you want to take incremental risk, the emerging market currencies, as he talked about, perhaps there. it is tough to make a bull case for the sterling or euro, vis-a-vis the dollar. romaine: this is where the monetary policy is going to come
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into play. a lot more to talk about on the simulcast across bloomberg tv and radio. we will talk about the covid virus, and the return to office. many people were supposed to come back on monday morning, but not so soon. we might get a reprieve. the expectation that may be people should stay home longer. romaine bostick and paul sweeney, bloomberg tv and radio. we will be back in a moment. ♪
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>> as industrial montreal began to become be easier -- busier, people looks for new places to build. inside, a central corridor runs front to back, with rooms on each side of the hallway. like many homes, the kitchens were in the back. and a spiral staircase connected to a small outdoor area.
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but, beyond the standard --, th ey are a little bit eclectic, reflecting different cultures and periods. some have enclosed staircases, others have elaborate cornices, stained glass windows and wrought iron staircases. the architecture of the plex is a little french-canadian, a little scottish and a little british. the external staircase seems to have been distantly a feature that french canadians started adding to their classic houses decades earlier. working class plexes were sometimes known as the poor man's complexes further overcrowding and lack of light. the humble status of the plexes means they were not always carefully preserved. many lost their original features, the solid oak doors and stained glass landing in the trash.
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today, plexes have regained popularity. once known for affordability, montreal has now joined canada's real estate frenzy. they are undergoing a modern renovation craze, as people knocked down original walls for more space and sunlight. even today, the colorful iconic buildings are still inspiring construction, blending into a small town feel of many montreal neighborhoods.
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paul: new year's eve, welcome back to bloomberg markets. we are simulcasting radio and television this week, having fun with that as we look back at 2021. and more important, looking ahead to 2022. 2022 was supposed to be a time
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when corporate america gets back to the office. in fact, big investment banks were talking for a long time about getting folks back to work, but now taking a cautious stance as it relates to the omicron issue. it is impacting plans. mattie mills from bloomberg quicktake joins us. goldman sachs, j.p. morgan, they were successful at bringing people back, but now they are saying, let's be more cautious. mattie: bank of america has announced that once employees to work from home in these first couple weeks of the new year, especially following gatherings that tonight will lead to an even bigger surge in the u.s. now we have seen the highest counts in the past two days that we have seen in the entire pandemic. banks are taking note of that. but they say, we do expect you to come back in throughout the new year. this is only a temporary
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precaution for the first couple weeks, as we see surges. i want to update you on the booster shot recommendations from the banks, that is another area where we will see measures changing. we have goldman sachs amping up testing to twice weekly for those employees coming in after these next couple weeks. they will have a booster shot requirement. jeffrey's financial group has a booster shot requirement by the end of january, as well. something potentially all companies will have to develop guidelines for. romaine: they are trying to develop guidelines for vaccinations. we are also hearing you might have to wear a mask at work. madison: we heard from goldman sachs, also encouraging people, something we probably love, to have less meetings. and if you need a meeting, keep the masks on and keep the gatherings as a small as possible. this is interesting, because
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when you look globally, the u.k. pushed for people to get their employees at home, do not bring them into the office. here, the cdc saying the opposite, lets lower the guidelines -- let's lower the guidelines to keep our economy running. across the board, everybody wants to keep everybody safe, but in the states we want people working as well. paul: is the expectation that jamie dimon will put out a memo saying, ok, you have to come back to the office now? madison: i think so. basically, we have a push of the first two weeks of the new year being kind of an example of just stay at home for 14 days, get the isolation over with so we do not bring everybody back into the office full throttle and have a potentially huge outbreak in these offices. but all of the banks have said, we are not changing plans. do not get excited about working
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from home full-time. do not purchase a house across the country. you have to come back. romaine: madison mills with the update on the potential return to office. but holding off a little bit longer, at least for the big banks. another big story has been the moves in the cryptocurrency space, particularly with either and bitcoin and other coins. kayla gardner is joining us, who covers a lot of the crypto fear for us here. this was a good year. despite the downturn we had over the last few weeks, bitcoin is still above where it was at the start of the year. kayla: it finished with a 625% gain, bitcoin, over all, but december is in the red right now. it is 15% down this december, the worst december since 2013. but we expect crypto to continue to rally in 2022, as retail
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investors and analysts are looking for the price to reach new highs. paul: one interesting thing about crypto is we have not really seen a full throated endorsement of crypto in general, bitcoin in particular, or etherium, from financial institutions. we still have skepticism. is the expectation that 2022 could be the year when we see a fuller embrace? akayla: 2021 was a big year for bitcoin and cryptocurrencies in general. it pushed its way into the mainstream, becoming more popular, but it was still as volatile as ever, even with embrace from companies and banks. i think you are right, there is still hesitancy. there is exposure at major wall street institutions to crypto related products to clients, but there has not been a full embrace. romaine: the other thing that we glossed over was talk about
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regulation, because it never quite came. there is still concern here whether there will be a crackdown on this, or whether they open up the door to alternative vehicles with that. any progress we are expecting for next year? akayla: i think we will be watching for concrete regulation from regulators, to see if that could stable out the market. this year, we saw the approval of the first u.s.-based futures etf, but investors are still holding out for a spot etf on bitcoin and other cryptocurrencies. we do expect more in terms of regulation this year, but we have yet to see anything concrete. paul: we appreciate that. akayla following all things crypto. it was another big year for crypto. a lot of interest with the etf.
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but when will we see more adoption and support from some of the big financial institutions? we will be watching that in 2022. coming up, health and wellness. it is the beginning of the year. we are making resolutions. get things more healthy. and a lot of folks did embrace the at-home workout during the pandemic. let's see how it will evolve going forward. more coming up. this is bloomberg. ♪
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david: after we talked about the trade, i think you made trade with gold or gold futures. you are a big believer in gold. are you believing that gold is now a good investment at this price? john: yes we do, and thank you for bringing that up. believe that gold does very well in times of inflation. if you are on long-term treasury bonds yielding 2% and interest rates move up to 5%, the bonds fall. it is as inflation picks up, people try to get out of fixed income and try to get out of cash and the logical place to go was gold, especially if it starts to rise in inflationary times because the amount of money trying to move out of cash
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and fixed income dwarfs the amount of investable goal that the supply and demand causes it to rise and it feeds on itself and has the potential to go what i call parabolic. david: so you think gold is a good investment now? john: we fought with the fed doing quantitative easing, essentially printing money, that that would lead to inflation. what happened was the fed printed money at the same time raised the capital and reserve requirements at banks so the money sort of recycled, created money and want up in the banks and was redeposited at the fed. the amount of access almost grows by the same amount they were printed and the money never entered the money supply so it was not inflationary. this time around, the money has
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entered the money supply. it was of something like 25% from last year. the best indicator is money supply, so i do think we have inflation coming well in excess of the expectations. romaine: this is a special edition of bloomberg markets simulcast. i know you have a big new year's resolution, to try to get in shape. paul: i actually have been on the peloton thing, work from home, and i actually got into it. but coming back to work has made it harder. i'm just going for what works. romaine; everyone looking to try to say motivated.
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the next guest has a company that tries to keep people together with people who can help them. our guest is rishi mandal. we have seen a whole proliferation of various fitness apps and programs, whether it was peloton or beach body or other things. even future, what future does is a little bit different, you are taking actual trainers and pairing them up with the users of your app and then what happens? are these customized programs? rishi: we pair you with a world-class coach in a matter if you are in the office today, traveling the next day what they do is get a sense of what your surroundings will entail and do a custom program for that. we send the customer and apple watch so your coach can see you doing it and there is real
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accountability. it is so unique. history of fitness is we set the news resolution and the majority of us will pick something up and nothing sticks. the missing ingredient is when you pick up one single modality, it is richard -- rigid. all these things change in your life and it is hard to stick with one thing. what we designed this way to bring an expert to your life every day for you are never on your own. that person does the thinking and planning and we have seen incredible results. people talk to their doctor once a year about their health and talk to their future over 1500 times a year. that is that interactivity and it is due. i think we will see a lot of that in health in 2022. paul: the launch this product in the summer of 2019 or you are a
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business that has been born and developed within the context of a pandemic. how has the pandemic impacted your business and how do you think consumers are going to deal with their health and wellness coming out on the other side of this pandemic? rishi: a few things have happened. there is more conversation about our health than ever before. we are talking about communicable diseases and comorbidities. people have focused on preventative health and feeling great every day. years of acceleration and technology have happened. my co-founder was one of the creators of facetime and i message. we have the technology to connect people intimately from afar. over the last few years we have had billions of zoom cause and acceleration of talking to people from afar. with the increased social isolation, the amount of it changes happening in the adoption of this technology, we have seen more people
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comfortable connecting with an expert who they can get help from digitally. we think that will accelerate something amazing, which is bringing experts into your life when you need them. when you are feeling anxious or depressed, instead of making an appointment with a local therapist for next tuesday, you could talk to someone within an hour. we see that in fitness. we give you a coach who is there for you. romaine: there are a lot of competitors doing what you do or doing something similar, maybe not exactly what you do. there are a lot of options for people. for folks who are sort of trying to weed through what will work for them, what is the value proposition you offer over some of those competitors? rishi: a lot of what is out there for people is content. there is no and to the amount of exercise, fitness content we can
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access and there is no history of that sustained over a long period of time. it is really hard to imagine doing that one thing for the rest of your like -- life. we want a well-balanced fit this routine. you have to try to stitched together a lot of different things. over the course of your life as you get promoted or move or pandemics happen, what we do is radically different than anything we have seen we employed world-class coaches. we have more coaches on staff at future than the nfl, nba, nhl, mlb combined. we have many amazing coaches on staff and we pair them one-on-one with the customer. every sunday they design a new training plan for the week.
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that might be, paul, i'm going to hold you accountable to getting on your peloton twice a week but we should also do some other things or it is nice outside. keeping you accountable, adapting one's circumstances change. it is a new idea and people are really responding to having somebody in your life every single day, a human who checks in everyday and says what can i do for you? we are going to see an explosion. paul: heidi of source the coaches? presumably that is one of the real value added propositions of your service. rishi: 80% of our coaches, to us from a professional sports team or college team and have trained lengthy peer these are high-level coaches. there are half a million talented personal trainers and coaches in america. historically they have been restricted to who is around me
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locally and everyone wants to work out in the morning or after work and not a lot of activity during the middle of the day. by digitizing that, they can reach 10 times as many people. but seeing them every day. having a bit of a conversation. it is so much more dynamic and personal. like i said, and how you are eating, sleeping, moving, dealing with stress, we are about to see this access to experts something that is normalized. that is the trend that is coming. romaine: you look like you are in good shape and what do you do? rishi: i have a startup and two little kids and yet i am able to get small little workouts in. i do three or four strength glyphs a week. i ran outside once -- strength
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lifts it week. i ran outside once or twice. it pressures me into getting it done. i feel great when i get the text afterwards saying i see what you did. it is bite sized chunks i can get in. rishi: thank you for joining us. a really interesting, cool app. rishi mandal, future ceo and co-founder. . they just need someone to coach them along. that is cool. romaine: sometimes you need somebody standing over your shoulder yelling at you. rishi: the best -- paul: the best i can do is hop on pallets and -- hop on the palatine -- pelotan. romaine: everyone has to find
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their weight forward whether it is going to the gym physically. we all have to find a way to do it. we have a lot more to talk about. big simulcast. we will cut you down to the closing bells and to the end of the year. ♪
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>> so we trade the futures and started to trays -- trade the physical. but the question is over time, how liquid do they stay and how
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long do they state liquid for. one of the things you see is people tend to think that liquidity is a monotonic backswing and they see something and if it gets more liquid they assume it will keep getting liquid or never get good again. what we have seen in many contracts around the world and different things is they can go through a period where they are super liquid and then they go out of fashion and you don't see them again. a couple years ago, we make a lot of money trading egg futures in china, because they were trading $5 billion a day, eggs, the thing you boil for breakfast. there were a lot of people speculated in that market and it was a good market. but it didn't last that long before people stopped looking at it and it went back to being a hedging contract and not an
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interesting market. i think one has to temper the excitement about cryptocurrencies and how much you can do in those markets until you can see where there is real liquidity.
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rishi: good in the -- paul: good new year's eve. we have a simulcast going between bloomberg radio and television, going to the market action this week and getting a good look ahead to the next year
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in 2022 and the expectations. we have been seeing this video across the screen for the past couple of days, extraordinary fire in boulder, colorado. my son lives there. he just graduated and fortunately he is not there. good news for us is that we have a bloomberg news personnel in boulder. what can you share with us from the ground? vinny: most of the damage is outside of the city of boulder in the community of louisville and superior, roughly 30,000 people combined. both towns were evacuated, everybody. very dry up there. we are just learning in the past hour or two that up to 1000 dwellings may have been destroyed.
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miraculously, there been no reports of fatalities or missing people. the sheriff because that -- calls that a miracle. they are still putting out fires . right now, a miraculous evacuation. it happened in the blink of an eye. romaine: some of those pictures that we are seeing for the television audience are quite dramatic and sobering. i am curious about what we know about the actual cause of the fire. vinny: this is on the front range, east side of the rocky mountains, including denver all the way up to boulder and beyond. the wind comes down from the mountains in the winter and they came down hard and fast, hurricane force winds. probably power lines down. you don't need hundred dollars
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-- a hundred miles per hour to knock down a power line. this is actually a high prairie east of the mountains. you have prairie grass, new construction, wood frame housing. rishi: -- paul: are the fires contained? i remember seeing the scene of raging fires. many: the sheriff of -- vinny: the sheriff of older said they are contained. the problem is you hotspots and you have to go through and fight those or tamp them down. say it is smoldering worse in areas. snow is moving in from the mountains and that should help matters. when you get beyond this urban squall and into the old part of superior, you have embers, wind.
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think back in the 1870's in chicago, it was the same effect. it was the wind, embers, and dryness. romaine: we have seen weeks of unseasonable dryness out there in some of those cities in colorado. i am curious what the weather looks like going forward. are there any expectations we will get relief? vinny: snow is in the forecast. in denver, things are overcast. some maybe hayes -- haze from the smoke. one forecast has up to 10 inches of snow in the area. that will help. then you have the question of when the snow melts and the runoff from the fire damage. there could be problems. the good news, positive news is no lives were lost, no reports of missing persons.
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and no reports of serious injuries among the evacuees are the firefighters, police offers -- officers, paramedics. romaine: that is good here. we are still concerned about everyone out there and whatever loss of property they may have. be safe, and we wish everyone in colorado to be safe. we are going to make a pivot from the scene in colorado to walt disney. we talk about the changing of the guard last year. bob iger did stick around as chairman. today i think will officially be his last day as chairman, officially ending the bob iger era. here is lucas shaw joining us right now. when you look at the legacy of bob iger and what he was able to do with disney, sort of take it
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to that next level, what is the one thing that encapsulates what he contributed to that company? lucas: he was the most successful big media ceo of the century so far. you put him and then maybe reed hastings at netflix. bob iger took a business that was struggling a little bit on the movie front and animation front, two areas of great history for the company any executed a series of transactions that positioned disney as the dominant movie studio in the world with pixar, marvel, and lucasfilms. those of the same transactions leading to its greatest strength and streaming, they have properties and characters that people love and can't seem to get enough of. they probably own five or six of the 10 most popular characters
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in the world. rishi: look -- paul: looking back in his extraordinary career, he made some very big bets on buying the studios over the years. in hindsight we could say it was a no-brainer, these are big-ticket items. it was a strategy that not many at the time were willing to do. lucas: i was talking with someone high up at a rival company discussing some of the m&a that happened in the past few years. and they say whenever you buy a studio, people always think you overpay. when bob iger bite marvel, they think he paid too much -- bought marvel, they thought he paid too much. there is no question that he invested and built his company around these franchises at a
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level that no one else was willing to. now the other companies wish they have one just one of those -- they had done at just one of those deals. paul: bob iger stepping on a storied career. we were glad to get a couple of minutes from you. it is one of those careers that was just extraordinary for the time and the duration and the success. we had a lot of fun here this week. i did doing these simulcasts. bloomberg radio, number television. we will see you again in 2022. this is paul sweeney, and this is bloomberg. ♪
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romaine: this is bloomberg markets. a global simulcast across bloomberg tv, radio, and our youtube platforms. romaine bostick alongside tim stenovec and kriti gupta. happy new year. they are already celebrating somewhere. congratulations to all our friends in karachi. tim: if we go back to january, the s&p 500, analysts were saying the most bullish case in january, stocks 4400 points. look where we are now, just shy of 4800. romaine: 4800 on the s&p 500. three straight years of gains on the s&p 500. double-digit percentage gains. the nasdaq something like six straight years.
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this has been a remarkable bull run or leg up, despite some weakness on the final day of the year. kriti: remarkable is the keyword. you just heard him talk about the $4400 price target for the s&p 500 in 2021. that is also the low end of the forecast for 2022. the message is the stock market can go anywhere. just because we had monster gains does not mean they will sustain. you have tech on your side. why not have the bullish case as well? romaine: a big concern that the catalysts this year might not be around in 2022. let's get some perspective from our first guest, the infrastructure capital portfolio manager and chief investment officer. let's start off with 2022 and what could be an impediment for the market. >> thanks.
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happy new year to everyone. as usual, the critical judgment to make is what federal reserve policy will be. we are quite bullish about fed policy. the fed has had 19 tightening's of policy since world war ii. 11 resulted in recession. we do think the fed got religion. they have abandoned their civil target of 2% which is of substantiated. they just made that up. they will have more biden appointees. we think they will focus on the dual mandate and not start quantitative tightening, which is a disaster for the market. that is what happened in 2018. the fed was shrinking the balance sheet.
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they are not looking to shrink, just stop excess liquidity. tim: we have talked to analysts about 2022. what do you think the biggest risk is? jay: i think obviously that is the biggest risk. what goes along with that is inflation accelerating beyond everybody's expectations. the couple of months ago, our calculations were that inflation run rate was double digits. keep in mind, the dls does not properly mark rents to market. if inflation prints hot, the fed may have to prioritize inflation reduction over employment. that is the key risk, accelerating inflation. i do think you cannot increase the money supply by 82% and have
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no inflation. that is what the transitory theory of inflation was. he risk is double-digit inflation i think. kriti: what happens when the opposite of what you said takes place? inflation is where the fed is throwing all their firepower. what if inflation has already peaked? what if we are already dealing with supply chain issues, the omicron variant, and commodity prices that have peaked and are coming back down? what is the trade if the labor market turns out to be a bigger problem than inflation? jay: that could work out fairly well. that would imply a soft landing. if the economy is softer than we expect, that would not be a disaster for stocks. interest wednesday relatively stable -- interest rates would
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stay relatively stable. we are predicting 3% to 4% growth for a number of reasons. one of the biggest is a 90% cost advantage over the rest of the world on electricity and natural gas. i don't think that would be a disaster to not raise rates. romaine: so much focus on the fed this year and the effect it will have on equities and the bond market. what about other risk assets? we talk about the push out onto the risk spectrum because of the implicit support, whether it is cryptocurrencies or real estate deals. how do some of those trades get affected by potential tightening by the fed? jay: i think there is a great implicit point there which is people talk about interest rates being a key dynamic that drives the market, but interest rates
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are so low that the key dynamic is the equity risk premium. that is the premium plus treasuries. that is what the required rate of return is. with the fed reducing liquidity, that rises. that disadvantages riskier stocks like tesla and advantages more conservative stocks like utilities. we think the dow will outperform next year the s&p significantly, so the reverse of this year. value stocks will outperform when the equity risk premium is right. tim: we were talking about year to date what the major indices have done. the dow up close to 20%. the s&p outperforming 27%. what is your estimate for how the s&p will end 2022? jay: we are optimistic the dow will be up 10%. i say the dow could be close to
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flat. i think a large percentage of the s&p, and tesla just 2%, are trading at huge multiples, 125 times in their case. those stocks are likely to underperform or go down as the equity risk premium rises and hits the high value stocks. we are also bearish about cryptocurrency for the same reason. they are about 25% correlated with inflation expectations. to the extent expectations drop, that could hurt cryptocurrencies as well. tim: jay hatfield of infrastructure capital, thank you for joining us on the simulcast. we appreciate it. bearish on crypto. we were speaking earlier to some folks on "quick take stock." and asked the same question about crypto. romaine: we have heard from a
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lot of folks that the correlations between the cryptosphere and the real world, that is starting to catch up with a lot of crypto investors. i'm not sure i buy that. when you look at why people are invested in this and the pieces behind it, it seems there is some degree of support on the downside, $46,000. kriti: he said value is what he bets on going into 2022. that is a contrarian take. that was the 20 trade. not necessarily the wall street consensus for 2022. romaine: we talked about the diversions between value and growth stocks. russell was the massive outperformer in the first three months of the year. there is still a 15 percentage point difference between the russell and s&p, but it is
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flipped on its head. tim: a lot more to discuss including the omicron variant. it shifted the way many banks have decided to begin 2022. we are hearing from the governor earlier that she is extending the mask and vaccine mandate in new york state. much more coming up. this is bloomberg. ♪
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>> for 12 and a half years, you help the most powerful job on wall street. what is it like now being the former ceo? >> a bit of a relief. i spent a lot of time arguing against that. i always thought, if i am so powerful, how, i'm taking so much abuse? >> how are you keeping busy? >> here we are chatting. i'm not scheduled. i don't set my clock most mornings. i get to the end of the day and i have been busy the whole day. i spent a lot of time reading. i tried to learn stuff. i would not preclude going back and doing something else more intense than the life i am leading now. i originally was advised to take a gap year. when i finished my gap year,
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country decided to go on its own one-plus gap year. the longer you set the clock in the morning the less you want to set the clock in the morning. after 40 years of running around the world and living in the macro market and knowing the price of everything all the time and knowing that anything that could go wrong anywhere in the world would affect us and have a huge consequence for us, it is hard to drop it. it something i never thought i would miss but i do miss. even as i say i feel a little bit of relief not being intense, i miss that. i miss the background noise even of having things to fret about all the time. >> is there such a thing as a substitute for that? >> well, i am sure there's a lot
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of people who work in great organizations and give their all and are not at goldman sachs, so there are a lot of other things one could do. if you're asking if i have found a passion -- i am a commercial person and am involved in some philanthropy stuff and elevated my involvement in some things and i enjoy that. you can be quite commercial in those places. you can be a commercial person and government in the sense of getting things done and pushing things along. you can be that way in philanthropy. but i am a p&l guy. i kind of like that stuff. i like the immediacy and intensity of it. >> your predecessors at the firm all went on to serve in government. >> don't forget about john whitehead. >> why not you?
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>> well, i would say among the many reasons, i have not been announced. that would be one of the prominent reasons. it is a little bit of a charged environment. i would not say when you look at the administration that you're finding a lot of people from finance and business backgrounds , even traditional roles that were occupied by natural people or commercial and business people. i would say it is not something that i mourn but i would have considered public service because, what else is left? i work at a high level at goldman sachs for 37 years. you want to do something different and make a contribution. i might have but i am not morning it. i understand why it is not happening now. >> what about lloyd blankfein
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for treasury secretary? would you throw your hat into the ring if you thought they were interested? >> who offered that job and declined it? you would have to be preparing for the end of jumping off a cliff. to make that kind of contribution and be at the fulcrum of at large lever, of course she would want to do that -- you would want to do that. i don't think that is going to happen. ♪
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tim: welcome back to our simulcast of bloomberg television, radio, and youtube. tim stenovec with romaine bostick and kriti gupta. let's get to the call between president biden and russian president vladimir putin. the kremlin did say he was satisfied with the outcome of the discussion. u.s. allies have been raising
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the alarm over a potential russian invasion of ukraine. marty schenker joins us. we learned biden is set to speak with the ukraine president sunday. based on what we know about the call between biden and putin, what do we need to look out for in the wake of the sunday call? >> what joe biden is doing is following through on what he said he would do witches consult all of the parties involved on the western side european allies and president zelensky to give first-hand feedback on what he told mr. putin and what mr. putin told him about the potential for aggression in that area. kriti: in 2014, if i had taken a dollar in exchange for rubles, i would have gotten 36 rubles. now, i would get 75 rubles. the currency has not recovered since economic sanctions were
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first placed in 2014. how much more damage can they do if the biden administration puts more? >> they can do considerable damage. it is a point that has not been emphasized enough about the domestic issues that vladimir putin faces. there's also a very serious covid problem he has. we had a story yesterday that said 85,000 russians died in november alone of covid. that is the most since the outbreak began. he has domestic issues. they are economic, health, that speak to whether or not he wants to have a foreign war on his hands dealing with that. romaine: we talk about the idea of how these nations if at all normalize relations. is there a sense that the u.s. has too much to lose even engaging at this level with putin? >> i think joe biden has to make
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the calculation of how he can extract a foreign policy win out of these discussions because frankly his foreign-policy has had a number of missteps. the french submarine fiasco earlier this year and a lack of coherent policy in china has drawn criticism from allies and foes alike. he probably would like to de-escalate this situation while maintaining his firm stand against soviet aggression in the area. romaine: marty schenker for bloomberg news giving us perspective. we will keep an eye on the latest bilateral summit between the u.s. and russia in about a week. we will pivot back to the covid conversation and the return to office, the return to work conversation. madison mills joining us to talk
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about this. all we have been talking about all day is the idea that on monday morning, everyone was supposed to be back in their offices, back on the trading floors. a lot of the banks in the u.s. are saying we will give people more time to come back. why? >> they are saying exactly two weeks and you are going to get asked to come back into the office. that is because of the surge we are seeing. globally, a huge record yesterday. 2 million recorded covid cases, the highest number ever in the course of the pandemic. in the united states, we had two record daily totals at 500,000 positive tests. in new york city, one in four people who get a covid test do test positive. the banks cannot ignore these numbers. it is not good for them to have a huge outbreak if they bring people back too quickly, especially after this evening where people will be gathering of events.
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people not stay at home alone. they will probably gather in each other's homes which leads to even bigger surges. we are already in the middle of a despite, following -- a spike following the christmas holiday. that may be why we saw bank of america saying stay home the first two weeks of 2022. citigroup and j.p. morgan are also doing this. they are not saying this will be the case of all of 2022. just for the first couple of weeks. tim: i'm wondering about boosters. we learned goldman sachs is requiring employees to get boosters. i'm wondering if we will seat the definition of "fully vaccinated" change in the new year to include getting boosters. >> the doctors have said we are urging regulators in the u.s. to change the definition of fully vaccinated to triple jabbed.
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when we rolled out the vaccine, we did it quickly at a never before seen rate in the history of the world. we found given the variants we need to have three shots. the definition of fully vaccinated has changed. the cdc and fda do not want to move too quickly changing the definition because they want to get people trusting in the public health measures we have had so far. if they change the definition, if they keep waffling on public health measures and guidelines, there is a fear it will lead to more vaccine hesitancy. we know the biggest way to keep the virus under control is to get the highest number of people vaccinated, even if it is just two doses. they are moving slowly and with caution on changing the definition to include the boosters to make sure they do not scare anyone off from going out and getting the vaccines. tim: madison mills with the
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latest non-covid. thank you for joining us. happy new year. we talked yesterday about the best performing stocks in the s&p 500. a handful include stocks in the energy sector. when we look at the 11 sectors, the best performer is energy, up more than 47% this year. oil gushing to new highs in 2021. what is in store for 2022? we will talk about that in a few minutes. this is bloomberg. ♪ >> he wanted to go slow. he wanted to keep the team small.
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he wanted to go step-by-step. bringing tourists to the edge of space would be the first step. then they would go into orbit and get to the moon. elon musk comes along and finances it with venture capital and government contracts and gets all the glory. they do quite well. i think jeff bezos has a fair amount of curiosity that elon is getting paid by the government to launch and he is still funding blue origin every year. we have seen them accelerate blue origin's timeline and seed dysfunction the last few years. so far, there has not been a lot to show for it. ♪
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>> with their roots finding to the soil, they can withstand the advance of the desert. it can stop the movement of the sand. the nearby village would have been in sand in a few years. they saved the village. experts warn temperatures and pressure are warming at twice the global average. despite the efforts from her team, the sands have doubled in size over the past two years. for nearby towns, this threatens the mainstays of their lives, facing both droughts and the desert encroachment, last year, the region was projected to lose 80% of livestock after package from the regional government, the number hovered around 25%. he says it was horrible to look at the cattle.
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they would look for grass but there was not any at all. you would see the corpses of horses, cows, camels everywhere. it was scary and you felt pity for the animals. policymakers have these areas in mind when it comes to talking about climate change. the deputy agriculture minister said efforts are now directed at solving the consequences of climate related disasters. experts worry the game plan will never address the root of the problem. he says the problem of desert application is big because the past couple years have been dry. overgrazing and the pastors are not rejuvenating. while the russian government has drafted a more aggressive plan, the time may come late for those who make up the villages in the region. he says the main enemies are
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sand, the wind, and heat. there has always been heat. there is no escaping it. it is getting hot in the summers in the winters are warmer. ♪ romaine: this is bloomberg markets, special simulcast. let's get you caught up on the commodity space. settlement of nymex crude futures, final settlement of the year around $75. down slightly on the day by about 2%. gas futures also lower. in europe, down 20%. i want to look back at what we saw year to date. it has been a phenomenal year. wti crude up 50%, 55% from the
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start of the year. the lowest point of the year for wti crude was the first day of the year. it has basically been an upward trajectory ever since. a few bumps along the way but we are ending the are higher by 55%. the best year for oil going back to 2009. natural gas futures higher by 300 percent in europe. in the u.k., up 200%, well off the highs of the year. we were up 700% on gas futures overseas. in the u.s., under control but still higher by 40%. coffee futures higher by 76% on a year-to-date basis. lumber futures, we saw the huge spike in january. it has come back down to earth but still higher by 59% for 2021. i want to pivot back to oil and bring in simon casey who leads coverage of the energy sector.
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when you look at the run-up in wti crude this year, a lot of people would say this is all about economic recovery. the reason we went to where we are today, that is all it was about. is there more to the story than just economic coverage? -- recovery? >> there is. i would give you three main things that will go into 2022. one is the economic recovery since the pandemic. the other big story, perhaps more important in some respects, is how opec-plus has a tight grip on the market. they have managed the supply extremely well. in 2020 in the first few months of the pandemic, oil prices collapsed and went negative. opec responded to cut production to a substantial degree and got
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supply under control. ever since then, it has been managing it carefully and slowly putting production back into the market. that has meant inventories around the world have slowly declined. the third thing i would mention is the lack of supply response in the united states. in previous cycles, we have seen shale production respond to any uptick in price. that created previously gluts. in 2014, prices tumbled. that was largely due to the creation of u.s. shale. too much of it relative to demand. now we are seeing the complete opposite. we are seeing sustained, deliberate supply and production from the biggest shale producers in the u.s. they are holding firm even in
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the face of high prices. they want to see level production. they are not interested in chasing production for its own sake. that is having a global impact. global inventories are slowly going down. if demand keeps recovering next year as most think it will, we could possibly see much higher oil prices. kriti: it is not 2015 anymore, but how long can the capital discipline sustained when calls for oil are hitting $120 on wall street? >> great question. the oil team at bloomberg asks ourselves this every day. it is a constant conversation in the industry. there is a huge amount of speculation. i think it probably breaks down a bit with some of the privately owned companies, owned by
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private equity. but the public utility companies still account for most of the oil production in the u.s. it has been successful for them. look at equities prices this year. last time i looked, oil as a subset of the s&p was second-best performing. tim: the best performing stock on the s&p 500 this year was an energy company. simon casey, thanks so much for taking the time. let's talk about super billionaires. for the wealthiest people on the planet, 2021 was a pretty good year. the world's 500 richest people boosted their fortunes by more than $1 trillion at the pandemic continued. joining us is sophie alexander. i would imagine being a billionaire at anytime is a good thing, but why was 2021 so good
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for super billionaires? >> i think it has been good and bad. when you are looking at the numbers, they added boggling amounts to their individual fortunes. at the same time, they have come under more scrutiny as the gap widens between super billionaires and the rest of the planet, the rest of the population. people are starting to pay more attention to taxes. i started reporting on this a few years ago, people did not know how much money jeff bezos had. people are more aware of it now because elon musk has $273 billion or so, just a crazy amount of money. romaine: with that crazy amount of money in theory comes a crazy amount of tax. >> right. musk has been vocal about this on twitter the past few months with the billionaire's tax being
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proposed. he was critical of it on twitter. now he is selling off tesla shares saying he would be the biggest taxpayer in history. there is a lot of grumbling about the tax bill. romaine: you invent something, you make money off something, and you see your wealth go up. you can track it all on the bloomberg terminal. sophie alexander doing the heavy lifting as we look at the richest people in the world. kriti, i did not see your name on the list. kriti: i am still counting my pennies. maybe i will get there. romaine: you are young. you can get a car, spaceship, mars rover. this is bloomberg. ♪
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>> almost 120 lorries come here every day and drop off coffee, chocolate, if it is made by nestlé, it will come through here and be sorted by machines and loaded onto a monorail that runs up and down the facility. also, cranes like the one behind me now. all of the chocolate storage is in the big warehouse. it can hold up to 100,000 crates. after it has been sorted and stored, sometimes for months, it will end up over here where they will take it out to supermarkets up and down the country. the entire process is done without people. goods can come and leave sometimes without ever touching human hands. it is one of the largest automated centers in the u.k. and was opened during covid.
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so far, it looks like things are going well. ♪
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>> china>> is the world's most important car market. far more are sold here than any other market in the world. big global brands like volkswagen, bmw, and gm have had great success here. at the same time, it has become increasingly clear that they are starting to fall behind some of the local competition. one factor that stands out is the connected car. you have a cohort of up-and-coming chinese companies increasingly allowing chinese consumers to live their digital lives at home and on the road. that means in the car, they can have social media, gaming, and things like karaoke. >> ♪ stand by me ♪
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>> it is not your usual road trip. it is big business for companies who are at the forefront of the trend, vesting rivals with karaoke microphones. just showing you some of the functionality of the car. scan the qr code and it goes directly to your own social media account. we are in the p7. the entertainment functions, karaoke, gaming, movies, are not able to work when you're driving. by default, they are turned off when you're driving. after the cars purchased, drivers can change the settings so passengers can enjoy the functions. for many chinese, the car is a place where they can enjoy time with friends for a bit of
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karaoke or even a picnic. electric carmakers in china are competing on what happens inside the cabin from social media integration to voice recognition software. a car's digital technology is particularly key to lure chinese consumers. as you are shopping for a car, how important are these functions? >> [speaking another language] >> electric vehicle sales have surged in china doubling from
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2020. >> ♪ some things are meant to be ♪ ♪
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tim: welcome back to our simulcast of the close on bloomberg television radio, and youtube. we are just over an hour away from the equity markets close on the final trading day of the year. let's bring in abigail doolittle with an update. abigail: we are looking at
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stocks fluctuating between small gains and losses. the s&p 500, flight gain -- slight gain. small moves on the day. on the year, a different story of massive gains for the s&p 500. the nasdaq up 27%. the dow up 18%. the russell 2000 underperforming a little bit, up just 14%, still a double-digit gain. confirming the risk on tone, bonds down with the 10-year yield backing up nearly 60 basis points. kriti: a quiet day in the stock market and the bond market. it seems there is some action in the commodities market. i'm looking at will down 2% -- oil down 2%. why such a diversions? abigail: probably because oil had been up seven days in a row, a big winning streak, the longest since february. just cooling off a little bit. oil on the year a huge rally, up
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nearly 60%. wti crude on the are up 56%, best year since 2009. it could reflect concerns around omicron in 2022. one of many questions to answer in the new year. romaine: we count down to the close of trading on this day and of 2021. the big story in 2021 where the cyberattacks, ransomware attacks and other types of cyber security threats. a lot of companies trying to beef up i.t. systems, and governments, to protect themselves. tony anscombe is the eset chief cyber threat officer joining us now. the big question everyone wants to know is, how can you stop this? it seems it has become its own animal, whether it is organized gangs, governments, or lone wolf
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types who want to mess around and screwed something up. how do you stop this? how do you guard against it? >> unfortunately, this is a business. it comes from different places. cyber criminals are making huge amounts of money unfortunately from holding companies for ransom. companies are handing over cash. realistically, you are seeing legislation come through with response ability to disclose. i expect that in 2022 to maybe become not just disclose after the incident during the incident. you have to start regulating or locking down cryptocurrency in some manner and cut the money off. tim: how would you do that? we know you can track cryptocurrency. we saw the government do that in the case of the colonial pipeline ransom that was paid. how do you do that?
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what do authorities have the power to do to prevent this? >> it is an investment tool. if i walk into any bank in the u.s. and try and open an account, i have to identify. identification has to be verified. if we were verifying globally, and this is a global issue, if cryptocurrency had to validate identity, he would cut the money supply off. kriti: how much of the latest push to ramp up cyber security comes from geopolitical tensions with china, russia, or even iran? >> the push to have better cyber security has become political. when you mentioned colonial pipeline earlier, any cybercrime that creates a line outside a gas station is going to have
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political effects because no politician can have their citizens affected by this type of issue. interpol in november made a series of arrests that covered 17 countries. there were seven arrests. $200 million in ransom payments. this is not a particular country. it is a global issue. until the world comes together and has a summit on stopping cybercrime and puts the right people in the room, you are unlikely to see a lot of decrease. romaine: you talk about coming together. to a certain extent, it feels we are fracturing apart. certain countries do not trust other countries. we have had concerns in the united states about buying certain types of equipment and software from china and other countries. where do we find a middle ground? >> that is a tough one. just before the holiday, we saw an additional issue with a small
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piece of code that had a vulnerability. it is open-source, free code. a lot of vendors use that in hardware and software and services. we see issues in supply hitting. unfortunately, they are huge. when they hit, companies have to find out where the used the code. it is a global issue that requires a global response. countries come together in groups is great. but until you bring every country that has a significant part in this unto -- into one room, you are not grasping the whole issue. tim: oftentimes, we read cyber criminals were able to penetrate a system based on an employee downloading a militias file -- malicious file. i like to ask how we should protect ourselves. give us some best practices.
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>> don't trust anything that lands in your inbox. if it is from a retailer or asking for verification of credentials, it is likely not to be real. do not trust anything that lands in your inbox. go to the website and log in manually. they go in and giveaway credentials and the cyber criminal has access. we have seen other issues throughout 2021 where vulnerabilities in software have allowed cyber criminals to get access in other ways. you are right. human behavior, we like to click on things. we need to be the first line of defense. tim: be careful when you click. tony anscombe, eset chief cyber threat officer, thank you for joining us on bloomberg. kriti: we have breaking news. i'm sorry to report betty white has passed away at the age of 99 at her home in los angeles.
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she was one of the key faces when it comes to "golden girls," when it comes to television. we are very sorry to lose her. i am still in shock and imagine you are as well. just shy of her 100th birthday which would have been on january 17. romaine: a pioneer. everyone knows her from "golden girls," what she did back in the 1960's with her talk show and sitcoms, being one of the first women to have full creative control over her own show at a time when that was unheard of. tim: what is also remarkable about her career is how long it went well into her 90's. she was doing commercials and on twitter. romaine: one of the few people beloved by everyone. we live in a divisive world. at least there is someone we all love. we say goodbye to betty white. ♪
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>> this is "bloomberg markets," a special edition simulcast. 2:00 p.m. in new york. 8:00 p.m. in london. midnight in dubai. happy new year to everyone out there. tim, you are kind of a grinch. tim: my sister is actually flying into we are doing something but i have been a real covid grinch to be honest. romaine: i think a lot of people are trying to hunker down today. a few people will go outside and out to their bars or times square. no one is really trading right now. the bond market already closed down. the equity markets are open for reasons i have not had explained it to me. tim tells me there is a whole story why we are here today but there is one hour left in trading. apple not going to hit $3 trillion in 2021 unless there is
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a major turnaround in the final hour of trading. carnival cruise line down. ford one of the abuse -- one of the bright spots out there. abigail: with the small moves on the day with the major indexes fluctuating between gains and losses, let's go to where the real bright spot is. that is a whole year of 2021. a real risk asset rally. both up more than 27%. the chip index. -- the chip index up. haven bonds are down on the year. the 10 year yield backing up six to basis points. interestingly, the two year yield back up a little bit more. the yield curve has flattened a little bit. as for the risk rally, oil up 64% this year, the best since
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2009. it is incredible, the risk picture for this year. kriti: let's talk about that. the recovery trade in 2021 was supposed to be the trade that took off. you were supposed to see it in trouble stocks and commodities. can we expect to see that in 202 or2 -- 2022 is that in the rearview mirror? abigail: we will have to see with omicron and the influence on the economy. many do not believe it will be the biggest deal. relative to this year sector wise, it was a nice blend. you have energy, which is a nice cyclical and growth area. up 47%. interestingly, another growth sector, real estate, up strongly. tech, financials. on the bottom, the defensive sectors such as utilities and staples. often when that happens, you can see those reverse next year. i believe in 2020, energy was the worst sector. this year, the best.
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so if utilities and staples end up on top next year, it could be a defensive year. way too early though. romaine: ed cofrancesco joining us right now to talk a little more about what is going on in the market today and more importantly where he sees the market going in 2022. abigail was just showing us some data that every s&p in the 500 is up 10% on the year or more. do you see those types of gains replicating themselves in 2022? ed: first, good afternoon and happy new year to you and your colleagues. romaine: thank you. ed: i wish we could say that, but we believed 2021 is now in our rearview -- believe 2021 is now in our rearview mirror. we were talking with people a year or a year and a half ago about the nasdaq and s&p. turns out we were right.
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we also anticipated inflation. we started calling for inflation in february. we got so many mixed signals from the market. we believe when you look at the job recovery and how much job creation we have in the united states is the best way to describe it. but there are near record lows in unemployment. we still have these huge supply chain problems. we don't see that being salt anytime in the near future. an all-time highs in all the markets. what we see for 2022 is in the early short-term, we see the markets staying strong. but we expect ultimately the negatives will outweigh the positives and this will be a very defensive year. tim: defensive year. risk off year would you say? ed: i think there is a real potential that six or nine months from now, we look at a major correction. 5% to 15% not likely but a 15
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percentage when he percent correction -- but a 15% to 20% correction. kriti: i am curious how you play tech into all of this. at the end of the day, tech leads the s&p 500 to record highs but also leads the corrections. is this a call on tech? ed: good question. we think it stays strong for a few moments, but the chickens will come home to roost, and when that happens, it will go back to the chart we had a little while ago where you showed tech and real estate and so forth and you talked about it hurting next year. the last two guests you had talked about all the things we are concerned about. security is something we are concerned about at iaa. i think we will see a real inversion of the chart by the
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end of next year. romaine: a part of that, what will determine that overall, the pace of the economy in the u.s. and abroad and the policy response we get, whether it is my three policy with the fed or fiscal policy, whatever levers could be pulled in congress or the white house. do you see potential for policymakers to guide us to that proverbial soft landing? ed: there is always the potential. quite honestly, whether the democrats or republicans, we do not put a lot of faith in stock and politicians. we think the least they do, the better off we are. we subscribe to a theory that you should all beat about it if you don't know about it. one of the things we are interested in, i have been in this industry now for 40 plus years and there was this old
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adage about how the market is just a reflection on the emotional attitude of investors and the people on the street. i think there has been a decoupling of that. we have never seen so much pessimism amongst the average people. i am with them. the average citizen in this country and around the world, we are scared and frightened of the future. are we going to have a worse version of covid? what is happening with the economy, with inflation? i just saw a poll one hour ago showing well over 50% of the country is pessimistic with what is going on in the economy and health and so forth. tim: i want to go back to that, what you set about a 20% to 35% correction. kriti is spot on and pointing out that that is a contrarian view. what is that single event that brings on that correction? there is something always that brings on a correction, right? ed: there are so many events
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that can happen. i cannot begin to tell you. inflation can be much worse then what anyone anticipated. we could have a political event. we could have a fourth wave of covid. we talk about whether there are people looking at a transaction. we start to get fatigued. people are really fatigued from covid now. people want to get back to a normal way of life. we have a fourth wave of covid? i don't know what that event will be. i see some potentials. we doing our analysis here, a general sense that we think something's got to give and i cannot exactly what that is going to be. tim: a big thank you to ed cofrancesco joining us. happy new year. 20% to 35% correction come i
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cannot get beyond that. considering how different it is from everyone we heard from this week. kriti: but not uncommon considering we had a banner year with no corrections. not even a technical correction of 10%. it may not be that wild of a call. romaine: there is a lot of concern. when you talk about monetary policy, how do you rein in inflation without tipping down economic growth? some people said that effectively you have to almost create a recession, so if people believe in that, i can certainly see why a 20% drawdown could be a little more realistic. tim: we will talk bond market in just a few minutes on the other side of this. you are watching bloomberg tv, listening to bloomberg radio, watching us on youtube. this is bloomberg. ♪
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>> you buy software companies and only software companies. why? >> that is easy because software is the front row to the world. you have gross margins that are 90%. you have the potential for big. it is a fragmented industry where you can consolidate markets. software is becoming the business of everything. >> software was definitely hot before the pandemic. but now it is on fire. money is pouring in. tell me about the competitive landscape. >> we have always had great competitors. we continue to do so. our competitive advantage in the market is that we have been doing this for 22 years. in the process of buying 300 software companies, we have
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developed an operating know how that really adds value to the businesses we are partnering with. most of the industry to this day while we have seen great innovation and software is leading the world, most of the industry today is unprofitable. so to buy a whole company and do a private equity deal based on fundamental investing, which is what we do, you have to re-create that and turn these great innovative companies into also cash producing businesses. you have to combine the best of both. if you have been doing it for a while and have an operating model around it, you are able to achieve that. that is what keeps many players on the sidelines of the great software industry to this day. >> it is true that many players are on the sidelines. but increasingly, there are firms that want to compete with you. some of the largest private equity firms in the world are
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raising growth equity funds. they want to be the next softbank. hedge funds are becoming serious players in late stage venture capital all of a sudden. tiger global, d1, others. is that changing the landscape? it has to be. >> it is making it better. and this is why. competition is a very good thing for us. it is a very good thing for our peers. when there is competition, we alone don't have to create a market. when a company receives many different types of proposals, may be an acquisition proposal, they feel a lot better about where they should be valued at and where they should trade. >> so software is as attractive as you say it is, and i believe you, and furthermore you have a track record to back it up, why hasn't everybody figured this out?
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>> the lack of profitability in the industry overall keeps many players out. we started when we are very small so you are doing small deals. so you can take the risk of learning operations and learning how to run these things in partnership and management when you are investing $50 million. are you willing to take that risk when you are investing $7 billion and doing that for the first time study with the company from -10% percent while not hurting their growth rate and allowing the innovation to continue? that is the number one reason. the second reason which you astutely pointed out as it is interesting how things work in that favor when it does not seem like they should, which is the high-value wishes of software. those are a natural barrier to entry in this space. if software today traded for 12 times that, we would have 40 competitors. but that in essence keeps many players out of the business.
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tim: welcome back to a special simulcast of "bloomberg markets ." i am tim stenovec. we are live on youtube, bloomberg tv and, bloomberg radi -- tv, and bloomberg radio. the uber u.s. treasury index
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reporting a loss of 2% in 2021. that is his first anyone loss since 2013. let's bring in alex harris. typically when we see a down year and treasuries, we tend to see a rebound the next year. what is your reporting telling you about why that may not happen in 2022? alex: i think there are just so many wildcards. thinking about the fed potentially raising rates. the market has priced in three times in 2022 and three times in 2023. some inflation. after rate hikes, you have the balance sheet. you have all of these things pointing to why the treasury yield should be moving higher more than pushing it to the downside. that is not to say that we cannot see it and treasuries
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should we get some other geopolitical event, but more people are seeing a second straight year of losses for treasuries. there is so much more upside risk for yields. romaine: when you look at history and you look back at some of the other big downturns we have had with regards to treasuries, they all seem to be years where we had recessions. we had our reception effectively in 2020, but we had our reception, come out of it. is there any sense people are priming themselves for the idea we are headed for another recession? how is this different than 2022, 2013, or 1999? alex: when you think about it, there are so many more idiosyncrasies coming out of the pandemic. a global event and we are still walking our way through it and there are still supply chain
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issues. the economies look a whole lot different than they did in 2009, 2013, and years prior. but now, everything is so interconnected. you have to be mindful of that and how the dynamics in asia can affect what is going on in the u.s. in treasuries. romaine: but, alex, all year long looking at rates and how low they were and saying there is going to come a time when people are not going to buy the new issuances. that never really happened. people kept buying them. some of that was from support by the u.s. government and other nations buying up the debt, but is there any real line in the sand that you see out there that you are heaving from your sources on the day that they say we will not buy this issue? alex: not quite yet. don't forget the federal reserve in recent years. that will be an interesting
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question for 2022. it remains a really important question and raises a point. right now, again, people will take anything. seeing rates climb and new buyers come in, everyone is looking for deals. this is a local asset purchase program from all of these major central banks. some people are going and grabbing what they can in terms of yields so we will see a lot of that balance and the push-pull in the treasury market coming forward in 2022. kriti: what happened to the taper tantrum everyone was expecting? yields were supposed to skyrocket. why aren't they? alex: the market has been so conditioned to expect a certain thing. we have already been through it
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once and understand what it is. again, the market has so much support. the fed is buying quite a lot of treasuries. that is such a minuscule amount in the way they were tapering that it was a drop in the bucket relative to the fact of the treasury market now. when they were testifying in 2019, nobody knew what this was. no one had stopped it. so there remains a lot of questions. going forward, if you are going to stop buying assets, stop buying them at this point. the question is now about the balance sheet. how are you going to unwind that? what is the optimal size? the last time with the balance sheet, they ran into trouble because they did not stand the optimal level and all the forces at play and what ended up
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constraining them. i think that will be important for 2022, how do they manage the balance sheet? tim: what does this mean for portfolio construction? the 6% stocks, 40% fixed income -- the 60% stocks, 40% fixed income. alex: you have to ask someone smarter than me. i can't say. so many things going on. we have to watch the pandemic shakeout and where we return to. romaine: that is all right. you are pretty smart. it is always a pleasure to talk to you. you always bring contributions. we have to pour a little one out for libor. alex harris, just an absolutely wonderful reporter for us covering a lot of what is going on in the treasury market. it can seem mundane, but very important stuff as always.
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we are keeping our eyes on the equity market. someone has to do it. we are 35 minutes away from the closing bell. the last trading day of the year. it will be a flat day but still a great year. tim: a record for the s&p 500? kriti: maybe by one point. tim: still a record. kriti: still a record. romaine: we will see. i guess if we get that, they will drop some confetti in times square later today. this is a bloomberg simulcast on tv and radio. ♪
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>> secretary, have you changed anything in your lifestyle to help in the cause against climate change? >> indeed, i have. i have a solar system for my home. i am driving and electric car now. i still have invested in one internal combustion engine vehicle which is traded in for an electric car. we are making conscious decisions about our use of energy within the house.
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i have become a flagrant light switch chaser when i walked through a room or building. yes, there is a new consciousness. am i doing every thing i could be or should be? probably not. but i am superconscious about the need for all of us to try to do what we can to make a contribution here. the biggest thing i am doing is traveling around the world trying to do diplomacy and help make a larger decision in the context of glasgow that reduced a lot of the anxiety we are all living with today about where we are headed. >> there are people on earth wondering why we are investing all this money in space. tell me how you believe this will benefit us? >> we are building infrastructure. this is building a road to space so future generations can build a future.
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♪ romaine: this is "bloomberg markets." just about 20 and minutes left to go out -- 28 minutes left to go in the final trading date of the year. our first guest here to kick off the latest eckman of the show, she leads our equities coverage in the americas, joining us now to talk more about some of the gains we have seen this year. i have been giving tim pop quizzes all week long and he keeps getting them wrong every single day. i will pose a question to you. we are sitting on a 27% gain on
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the 500. the three biggest good to be just a those gains this year, who i think? >> my quick thoughts. romaine: ding, ding. tim: romaine, you have to ease up on me. i am still trying to learn how to do some stuff in the terminal. what does 2022 look like for these companies especially with regard to regulators? we have seen it from 2020 and 2021, something that brings democrats and republicans in washington together is the idea of raining in big tech. how much of a risk is into these companies? apple not facing the same scrutiny as meta-or others. how big is the revelatory risk for big tech? >> going into 2021, a lot of people thought the regulatory risk would play a huge role in the market performance and we have not actually seen that. we have seen big tech companies. have mostly done really well.
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even the ones that are suffering a little bit like amazon, it is not because of regulatory issues that are out there. i think that is what you will see in 2022 as well. investors are more focused on the balance sheets, the profits they can make, how strong the goals will be as well. yes, the revelatory risk is definitely an issue we will keep an eye on, but i am not too sure it matters too much from an equity investor's perspective. kriti: so inflation hedge, a growth player, a haven traded. what hat is going to play in 2022? >> basically the same thing going forward. we will have to pay attention to is the fed rate hikes that come through and whether or not they will have a huge impact going forward. but other than that, we thought would happen this year i what we thought investors would happen this year, the fact that value will see this massive
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outperformance. we have not seen that. growth stocks are still doing really well. big tech has added $2.5 trillion in market value. a look of these companies have still seen double-digit growth this year. you cannot take these companies out of your portfolio. if you can, add more. that is where they stand when it comes to these companies. tim: thank you so much for joining us. happy new year. from the world's biggest tech companies to the world's biggest hedge fund, we are talking bridgewater associates. the firm is giving the board that oversees its work more power. erik schatzker, one of the moves made in 2021 that shows ray dalio is continuing to move away. erik: he has been trying for a decade to loosen his grip on
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bridgewater with at times frustrating results. things started to come together in 2019 when david mccormick was named the sole ceo of the firm. now, ray dalio is taking a major step forward by taking it had been an informal gourd into a formal gourd of operations and adding in the past few months three new independent directors to help add some governance muscle and two point bridgewater in the right direction for a future that at some point will not include ray dalio and in the morning your future don't include mccormick because he is continuing to run for the opening senate seat in pennsylvania. romaine: what i think of bridgewater, we immediately think of ray dalio. you also think of gray jensen. where are the? erik: bob prince and gray jensen are part of the equation, and so
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is ray. he has voting control over the permit is the sole director of the holding company that owns bridgewater associates. but this is a sign that bridgewater is trying to bring some added muscle from outside. in the past of a bridgewater has had very mixed success bringing in outsiders to help run the firm. david mccormick, the karen ceo -- the current ceo, was instrumental in bringing the outside directors. brought in margo cook, who is president of nuveen, the asset management arm , and also a cognitive -- arm, and also a cognitive scientist and president of barnard college. these are not the people who associated previously with bridgewater. they are still very important players as co-chief investment
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officer is at bridgewater. this is a sign that bridgewater is institutionalizing and preparing for a future in which ray dalio will play a lesser role. that much is a certainty. kriti: about a minute here. let's talk quickly about bridgewater's performance. can you speak to that? erik: bridgewater had a rocky year. we would call that volatile at the very least. but the real issue for this new board overseeing operations is the fact that bridgewater's performance over the past decade is not even middling. it is lousy. bridgewater has generated an average annual return of 1.2 5% a year for the past decade. that trails many who have similarly volatile results but who performed better. ray and his colleagues will be looking to this new group to find a new ceo if david
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mccormick leaves, and to bringing in, i guess bringing on board a new focus if you will on performance, because bridgewater wants to grow beyond its assets. it is going to need to perform better. romaine: erik schatzker giving us an update on a reshuffling. not quite a changing of the guard at bridgewater. we should point out the any would like to the last decade. managed to eke out a gain in recent months, up 7.8%. a lot more coming up on the simulcast. matt miller will be stopping by on the final day of the year. 20 minutes to go in the trading day as we cap down to the close. this is bloomberg. ♪
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>> a lot of bright people think it has a bright future. i am telling you, i am putting
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my whole foot and four toes into the world. it is not something i gravitate to. i can think up a lot of reasons why it won't work. i remember when they were auctioning off spectrum for cell phones and saying, why would anyone need a cell phone? all you do is drive up in your car and pull up to a phone booth. who would carry a clunky thing? the point is, there are a lot of things in this world that have worked out awfully well. >> you sound for somebody who used to run a bank pretty constructive. >> i ran a bank. i ran risk. you cannot be closed. you have to separate fact from opinion. nobody knows. nobody knows the future. there is all sorts of things. there is a lot of things that move in directions i could not
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and would not have anticipated and nobody else would have either. so to just about and say a market that is already in excess of $2 trillion with regulatory headwinds that is what a people do not really like somehow managed. it does not every day look like it is flourishing but at no stage does it look like it is dying. >> are you joining crypto? >> no. ♪
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romaine: this is "bloomberg markets," a special edition simulcast on the final trading day of the year. we are just about 11 minutes or so away from the end of the trading day. we talk about the performance we
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have seen going back all the way to the start of the you to the end. philadelphia semiconductor index having a wonderful year, a 42% on a year-to-date basis. energy your outperformer -- energy is not your outperformer. energy sector of 48% year-to-date. when you look at the 24 s&p subsectors, the groups, the worst you will find among the telecom companies all over here on a year-to-date basis. the index down 12%. i want to highlight the bank stocks because everyone keeps talking about the underperformance of bank stocks. the kbw bank index is up about 35% on the year. the best year that index has seen going back to 1997. even the krx having its best year since 2016. so all of the handwringing, you have still seen some gains from bank of america returning 47%, if you
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can believe that, guys. kriti: it is really crucial when you talk about the banks in particular because the relation to yields so crucial. if you start to see yields continue to drop in 2022, continue to see the treasury yields, does that are up in the bank stocks? tim: let's not forget what a banner year it was in m&a and what banks got from ipo's an m&a we got yesterday. question is, do they continue in 2022? romaine: that is the big question. let's bring in our next guest, matt maley. let's talk about some of the catalysts for the market. we came out of 2020 and that was basically all about fiscal policy. that fed into the least portion of -- that fed into the portion of 2021.the focus it's on monetary policy and whether that will be a tailwind or a headwind on the gains in
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the market. matt: one of the things we have to realize is this headwind is a situation with the fed in the past. usually when they go from a two-way policy it is usually to a neutral policy. they are going from in altar accommodative policy to a tightening policy. it is not like they are slamming the brakes in a major way, but you can see by the level of the stock market, it is the biggest factor. we all know in the summer of 2020, the stimulus pushed the stock market ahead of the fundamentals. fundamentals played catch up as the covid problem eased off. the problem is we kept the emergency stimulus on so we were never able to fully catch up. stimulus will have two fallback get there is a case where we
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meet somewhere in the middle. usually it is the lower half of that middle. tim: one other option does the fed have going into 2022? inflation hits 40 year highs and we continue to see prices rise higher. matt: i agree. one of the biggest fallacies out there is the people saying the fed may make a policy mistake, and when they say that -- and when they say that is causing the markets to go down. we have gotten used to the fed. i think they have lowered that safety net. they are doing the right thing. you are absolutely right. they are doing the right thing. sometimes the fed has to do some things that are painful over the near-term so things will work out in the long term. my parents said that when we were kids all the time and we have to do that now.
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correction points are painful but also normal and healthy and part of capitalism, so people should embrace them, not fear them. kriti: you said the c word, correction. my ears perked up immediately. i want to ask about a correction in 2022. we had a guest calling for a 20% to 35% correction in the s&p 500 next year. if we see a correction, 10%, 20%, however much, do you see the dip buyers immediately hopped in and recovery gains within days? that has at least been the pattern you have seen in 2021, the shallow pullback we have seen in the s&p 500. matt: it goes back to the fed. one of the reasons they were successful is their were summoning the countries around. it will go from $120 billion a month on the federal reserve to zero in just a few months. i think those buying the dips will continue to try it and this time get burned. buying the dip is not a
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brand-new thing. it worked well this year and many other years. finally when we see the other correction, the guys get burned and that is what we see. if you are asking about a deep correction or a bear market or whatever you want to call it, it is possible because one of the things the stimulus has done, it has helped investors and risk and leverage. people de-risk and deleverage and we could see an outsized decline. if you have cash on the sideline, you will keep your head in when the market is being clobbered. romaine: we are in conversation right now with matt maley, a chief market strategist. he is sticking with us as we can't you down to the closing bell on this finding day of 2021. breaking news out of political.
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the head of the fdic plans to step down. this is a relatively controversial situation with mcwilliams, a trump appointee in 2018. she effectively refused to step down after the biden administration took over in their -- there was a lot of contentiousness between the board, who are primarily democrats. we are learning right now that she will step down effective february 4. one of the democratic members of the board will take over on a temporary basis. not quite clear yet if they will seek a more permanent replacement. some changing of the guard at the fdic some thing to keep an eye on in 2022. we talk about the administration and have a could affect banks and corporations and other companies we cover. let's get over to abigail doolittle, who is standing by with a little broader luck at the markets at a they're overlooked at one of the stocks
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we should keep our eyes on in 2022. abigail: indeed forget you were talking about the possibility of whether or not they will be a correction. it will have a lot to do with the mega cap stocks that has a big weighting. we have the s&p 500, nasdaq 100 up 27%. the stocks very healthy, up for -- more than 40%. a lot of the apple suppliers are part of the stocks. apple up more than 200% over the last three years. that is pretty extraordinary. the second-biggest point contribution to the s&p 500. the question is whether or not these gains can continue. from a purely technical standpoint, it could be difficult. we have been on apple $3 trillion watch this week. it has not happened. in the past, the other important milestones, $1 trillion and $2 trillion, apple shot above and came back in. there is strong reason to think
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that could happen again if it does shoot above. there is more reason to think apple could have a pullback at some point in 2022. kriti: you just mentioned apple is also the second-biggest point contributor to the s&p 500 gains year to date. so we do see the apple shares over the $3 trillion shares, it will show up in the s&p 500. abigail: it will permit there are some exceptions where apple d correlates from the market. in this case come apple beneath the surface, first of all, their iphone revenue share is sinking, but the growth for the picture of 2022 is also down in a big way. low single digits from big growth in the top line and bottom line from 2021. very highly valued. if this should show up in the stock, the sentiment of apple going down probably will weigh on some of the other big cap tech names and the sentiment
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overall and perhaps produce a cautious if not risk off tone for some time. tim: a big thank you to go doolittle. apple $3 billion watch will continue in 2022. still with us is matt maley. hey, matt, earlier in the segment we were talking about how well bank stocks have done in 2021. why are you worried about them in 2022? matt: a little over a year ago in september or october of 2020, interest rates were higher in the yield curve which steepen. i have become more neutral now permit in the longer-term, i still like it. when the fed strikes, the yield curve starts to initially flatten. that is what we see. if it continues to flatten, that will hurt the net interest
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margins. we know they loan out money at the long rate and pay out money at the shorter rate and the wider desperate, the more money they make. so if the yield curve flattens, that will have an impact on their returns. . again, a little more cautious than i was. i don't want to sound like i am really bearish. eventually, the rates will move up. i will not be chasing the banks here, buying them on the weakness. romaine: in conversation right now with matt maley. p is sticking with us as we count you down to the close. he will be back with us after the closing bell we are going to get in a minute here. 27% of the s&p, 22% on the nasdaq composite, 19% on the dow jones industrial average year to date. kriti: yes, so many gains. and then you look at small caps and you do not see the same momentum.
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we were talking but the banks index and yes they posted gains for example, but compare that to what you saw in big tech. the grass is always greener when talking about sector gains. romaine: just quickly come you talk about the first couple months of the year. -- as we end the year right now, the russell 2000 is underperforming the s&p 500 by about 15 points. finishing the day fractionally down on the day. the dow is going to finish higher by 19% on the year. the s&p 500 up 27% on the year. in the red on the day. the nasdaq composite higher by 25%. these are year-to-date numbers. the russell 2000 lower on the day, but going to finish the year up by about 14%. all of these indices are higher on a monthly basis and a quarterly basis. despite the weakness to date, this was a strong finish to the
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year. tim: i strong finish, but not surprising given what we've seen this week -- like volume. the s&p 500 did take a leg lower in the trading session. we didn't quite get to 27%. not quite reaching that gain. kriti: just shy of itkriti: -- kriti: just shy of it. catching us on a technicality. let's talk about what's going on in the sector basis. tech really led to 27% gain. in today's specific light liquidity session, they were the laggard. it brings to the question, do you start to see some rebalancing close? maybe on the last year of trading. maybe those were your sector laggards. your leaders were going to be transportation stocks and food and staples. the specific movers are going to be walmart and procter & gamble. the big question for those companies are simply, in this
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environment of the omicron variant and the fact that you may be looking at a more defensive play, what better spot to than the consumer staples? romaine: we should point out, i know tim likes to round here, but we should point out this is officially the lowest volumes of the year for the equity markets. equity investors get to go home now. tim: let's talk about the stocks that made some pretty up sized moves today but also for the year -- moderna shares finishing higher by close to 1/10 of one percent. still on pace for its biggest monthly decline this year as investor optimism wanes on the covid-19 vaccine maker. still among the best performers in the s&p 500 -- up more than 130%. pfizer finishing the day higher by more than 1.9% -- 1.1%. paypal finishing the day down by 1.7%. paypal is headed for the worst year since being spun off my eb back in 2015.
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-- the s&p 500 back in 2015. peloton gets the title this year,, timeshares were down another 3.8% after jmp securities cut recommendations -- siding declines and -- i n website business and views. the worst performer in the nasdaq 100. romaine: the biggest point contributors to the upside, microsoft, nvidia, tesla, meta-platform, formerly facebook, disney, moderna, as far as yields, movement to say the least. year to year yield will end around 73 basis points. your five year yield around 126. 10 year yield, a lot of people thought it would be a lot higher, it didn't quite make it to 2% this year, even your 30 year still camped out under the
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2% mark. right now at about 190 basis points. a lot of that could change as we got into next year with the fed potentially tightening monetary policy, whether you are talking about the taper or hiking rates. met millie is still with us -- matt m. still with us. when you position the portfolio, is there a way that you hedge, aware that you can say let me stay invested in this market but let me try to protect myself as well? >> you were talking about the consumer staples. here's a group, it is -- the stock was working great, but more recently, it is actually outperforming by quite a bit since thanksgiving. you look at names like walmart, what a great stock. it is flying higher right now.
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if inflation becomes a bigger issue, people are still going to go to walmart. also on these other consumer staples that i really like, many of them pay a nice dividends and many increased dividend for many years. those are the ones that failure to weights. so they should outperform and move higher. they won't go down as much, number one, but they will pay you to wait. the whole idea is making sure that you are the one keeping your head while all of those around you are losing theirs. most people panic at the bottom. have a little cash on the sidelines, have some dividend stocks -- we hear about the
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bible strategy, that works well this year. tim: there will only be about 15,000 people at times square, scaled back because of the omicron variant. hash and investors think about the spread of the virus going into 2022 and how could that derail your thesis? >> the biggest thing for me is that most of my concerns are based on the federal reserve. don't fight the fed. it works in both directions. they don't want to talk about it when they are tightening. it works in both directions. and even if we get a big relief on the pandemic, which i think we will, we will get a nice little surge of that in the markets and self. as things play out, inflation is going to remain high. i also believe one of the key
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reasons for inflation has much less to do with supply chain issues. but you also have a situation where wage pressures are going to remain for quite some time, plus all the stimulus is going to -- i guess my point is inflation is going to come down a little bit but it is still going to level out at a level much higher than anything we've seen in several decades, and that is going to cause problems. kriti: let's put the fed aside for a second and talk about the folks in washington -- the biden administration. we are looking at the build back better plan being put back on the congressional agenda, january 3 i believe is when they return to the session. i want to ask you how much of that is priced into the market. how much of that can markets really depend on to fuel growth going into the years ahead? >> the years ahead is such a key line. is going to be a stock pickers market and create opportunities.
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whenever congress comes in with some sort of a big stimulus plan, a fiscal stimulus, especially when building bridges and roads and all the stuff they are talking about in the build department or program, even if they pass it this year, they would've put it into the third and fourth year, so that mr. biden whether ones are not gets reelected. even if this passes, it's definitely going to be bullish. is going to be more bullish in 2023 and 2024 then it will be this year -- than it will be this year. tim: matt, happy new year so much for joining us. matt's saying this is going to be a stock picker's here. are you drinking champagne, roaming? romaine: we are done, right? new year's eve. kriti: i must've not gotten the
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memo. romaine: what do you guys have their? -- there? kriti: we've got water. tim: we will take a little break and perhaps find a bottle of champagne to share with the rest of us in a distant manner here. romaine: there are three straws and here -- in here. [laughter] tim: coming up, the program continues. we will be speaking to christopher ailman, the cio of the nation's second largest pension fund talking about 2022 and beyond. you're watching bloomberg tv, listening to us on bloomberg radio and watching us on youtube. this is bloomberg. ♪
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-- i'm very supportive. i don't think we can wait for the federal government to do something. because the sessions are local. i think our failure to articulate the vision of what we are trying to achieve is really part of the problem. i think in the civil rights and human rights context, we haven't really talked about remedies. for those communities that are designed to repair the decades of deprivation and denial that we created. >> encouraging americans to acknowledge that path can be a powerful tool for progress. stevenson hopes the museum is doing just that, by leveraging history's ability to shape the future. >> without diagnosis, there is no treatment. without knowing that we have
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a virus circulating around the world, we wouldn't have done the things that i've saved a lot of lives. that is the moment we are in right now, and that is what this museum is about -- helping us name these issues and identify these issues so we can get to treatment and correction and repair and restoration. that one day our children will be free of the burden so many of us still bear.
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tim: the says bloomberg markets. the final trading day of the year is on the books. . on a year-to-date basis, here is what you are looking at, we are going to rent it out. the s&p 500 finishing higher by 25%. the nasdaq up about 21%. 14% on the russell 2000 and 41%
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on the philadelphia semiconductor index. taking a look at the outperformance we saw here this year by the s&p 500 versus the nasdaq composite -- you have to go back to 2016, the last time the s&p outperformed the nasdaq composite, if you can believe that, about a 5.5 percentage point differential, the biggest outperformance we have seen going back to 2002. i wonder if that surprised our next guest, christopher ailman. he's a big friend of the show. the quality of our show is only as good as the quality of our guests, and christopher is top-notch. he is the chief investment officer at calstrs. he manages a team of a couple hundred people, more than $300 billion of assets. chris, give us your take as to what this year was like for you.
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>> it was a crazy year, obviously because of fighting covid, what the stellar returns, 25% returns in the broad market, driven by the fed. it might surprise me the s&p might have outperformed, no, if you look at small-cap value of all things growth, value across the board, small-cap value did ok and that is not in the nasdaq. i think that is why part of the performed ok. what i'm surprised about is how the u.s.a.'s stood out from the west of the world. you have the markets really being only up about 10%. japan was actually negative on the year. emerging markets were negative on the year. for a diversified investor it's going to be a trophy or to make a return. tim: the question is -- where do you go for yield and 2022?
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>> it's going to be a challenging year. i think that if you backup and look at the s&p over a very long time period, and look at those annual returns, you normally see the market and have a recession every couple of years. i'm not predicting 2022. the fed is still accommodated. they are backing off that accommodation. historically, what i would expect out of this is a very low single-digit year. a volatile year with some up and some down. you are not going to see a repeat of 2020 or 2021. kriti: the state of california has been a leader when it comes to environmental efforts, climate change in particular. one of the ways to play that in 2020 has been these massive flows into esg funds driven by big cap tech in particular. can you show us the marriage between the two? the esg space and the big tech space? >> it is really going to be
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about innovation and change. i think you are going to see more money focused not just on history in general, but specific on climate change. just this week, the horrible news about the fires in boulder, colorado being put out by snow -- it's just crazy, the weather changes we are going to see. whether it will be the headline in 2022. is going to be the inundation's and continuing to push the change and energy forces and the way we generate electricity, power. that's going to bring some opportunities that big tech is trying to get ahead of and solve. it may not show up as hard out in 2022 but it's going to be the next decade. romaine: let's talk about alpha specifically over there at calstrs. how did that shape up for you? >> i won't know the hard return for a while.
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real estate private equity takes a while to price. but i really do believe we are going to have a bout 15% return in 2021. that will be about average, relative to other funds. if pension plans had my own home country buyers in the usa than people would've done well. if you are more globally diversified, you are lagging behind. fixed income posted a negative 4%. the long bond was about 50 basis points over the year. fixed incomes can be a hard place -- it is a hard time to diversify. and real estate. i don't know how you price the building. economically we are getting lease payments. there's nobody occupying it. and malls -- we will see what real estate does. private equity is going to go up with the markets. tim: i want you to weigh in on
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the situation at exxon right now and whether you are satisfied with the company's progress since the election of new board members following the proxy fight from engine number one earlier this year. >> great question, i'm not satisfied with the way they have integrated our board members. they have not embraced them holistically and recognized the shareholders talking to them and wanting a change -- hopefully they will put them all back up for reelection and we will continue the dialogue. but i have to say between you and me, i think management has been a bit stubborn, and they need to be more open. if we need to raise our voice again on exxon mobil, we will. the change has to happen. changes going to happen around the world. if these companies want to survive and not be kodak, blockbuster video, they better get their act together and become energy companies, not just oil and gas firms. tim: the cio of calstrs, happy new year, thanks for
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putting on a tux for us, really appreciate you taking the time this afternoon. the argument about exxon, that it needed to do this in order to not become a dinosaur, that is a similar argument we heard from engine number one. romaine: and other activists and investors out there taking a hard look at these companies and saying you've got to change. we will see what kind of pushback they get. we will see of the change happens in 2022. tim: coming up, we are talking to howard hughes to talk about which companies are best positioned for the future in a post-pandemic world. this is bloomberg. ♪ >> do you see any progress being made? >> i see the potential for progress being made. --and the fact that we are not
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just talking about this as isolated incidents but understanding the longevity and the lineage of this. that the damage of george floyd was not just the fact that we watched a homicide on camera. but it was the fact that his name gets added to a much longer lineage of names that there's been no account ability four. we watch how these acts and how these issues of systemic racism to show themselves in not just policing. it is race. it's impossible to understand this without disaggregating the importance of it. i think the platform for progress is the fact that we are not having -- now having a
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mature and honest conversation about what is it going to take for us to move into better space, and a place where we are watching, is not just oppressed populations demanding justice? and that's the power of this moment. david: many african-american men of your age and older have told me of their own life experiences where they were stopped by police for things that didn't seem appropriate at the time for them, certainly. have you had those run-ins since you have been an adult? wes: absolutely. absolutely. and you know, but it's both the fact we've had these interactions, and the fact that the sound of a police siren has a different pitch depending on what neighborhood you're in, and your heart rate speeds up in a different way, when you're already anticipating that this encounter could go wrong, and how it could be interpreted by other people.
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>> crypto's are not currency, crypto's are highly speculative assets. i think we have to distinguish between crypto's that are highly speculative and high-intensity in terms of energy consumption.
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but they are not a currency. on the other hand, you have the stable coins that are beginning to proliferate. which some are trying to push along the way. which are a different animal. and need to be regulated, whether it is oversight. irrespective of how they name themselves. and and all that you have the central banks that are prompted by demand of customers to produce something that will make the central bank and central bank currencies fitness entry we are in, which is why we are not looking at central-bank digital currencies. so that we can have the same
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thing in a digital form. so all of us are working on this , to push the issue are an agenda, because i do believe we have to be ready for that. ♪ ♪ tim: welcome back. i'm tim stenovec joined by romaine bostick and kriti gupta. the future readiness and to get a report rates companies on how future ready they. joining us now is howard yu. he joins us from boston. what are the themes that tie these companies together in terms of whether or not they are ready for the pandemic economy or the post-pandemic economy? >> we have quite a specific
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definition when it comes down to future readiness. what we are trying to measure here is which company across the sectors are able to scale and build up those capabilities rather than build future competition. you think for a moment automotive -- every automaker can build electric vehicles, but what distinguishes those who future ready are the software capabilities, the chip manufacturing. those were not just talk about it were able to scale. classify them as future ready. we identify basic themes across different industries -- which are the ones who are more future battery than others. kriti: let's talk about the automotive segment you just talk about -- spoke about. the idea that these ev makers -- the regular automakers are turning to ev so they don't age out of the business. talk to us about why they are succeeding. throw some names if you can. >> of course, these days, if you
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think about ford and gm, they are all doing the same thing. the ability to really update your interface and software. all the way to the firmware lab, over the air. what you are seeing is tesla is really shining during this period. because their factory is able to continue to operate, they are able to solve any general-purpose chip setting in order to keep their factory going. versus other companies such as bw and honda, etc., they have to build production right now. it is a source of resilience but would help soup a bit when the uncertainty arrives. we were facing a lot more
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uncertainty. being future ready as ever more important these days. tim: let's continue through some other industries. i'm taking a look at the fashion and apparel companies -- lululemon ranked at the top on the heels are nike and heres. -- hermes. what makes these companies future ready? >> retail is interesting. for a long time, what you are seeing is those staying on the top of the rank are the ones who not just are talking about these e-commerce and omni-channel strategies, but they scale those capabilities around direct consumer relationships. so you take a lululemon or 90, the ability for you to customize those sneakers and ship it over and still make a lot of profit with nike illustrates the importance of digitizing on the backend, over the supply chain
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as well. 15 years ago, before anybody was thinking about this was even possible, nike already manufactured the chips or sensors for you to put in the back of your shoes at the time -- that is a first generation of direct consumer relationship, building an online community. those capabilities take time. those who invest ahead of the others, during the pandemic, we see them able to pivot to e-commerce. some retail and consumer brands are lining up for bankruptcy and nike and lululemon took off the roof. tim:tim: when it comes to the technology space, looking at returns this year for the s&p 500, and helped get powered higher by the big tech companies, the mega cap tech companies. on your list are companies like google, microsoft, facebook -- often times we hear large
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companies have a hard time pivoting and changing. that can be a dilemma for adapting to the future. we are not having this conversation about ibm. out of the large tech companies stay nimble? >> in the tech sector, being fast and able to branch out into new product services is absolutely key. those who get stuck with a single product will eventually languish. we have seen these horrific stories in the past like nokia and so on. what we observe here in the tech sector is those are the ones that are able to branch out into new business models and are more resilient and future ready during the pandemic. company such as amazon, how the branch out to alternative business models. but you have an nvidia ranking highly. they are the ones that are able to started all from the core business, where there is graphic cards or video cards, they can branch out into the eye all
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these other areas. compare and contrast someone like intel, because of the historic situation, because of all the factories they inherited, they cannot branch out into new areas and they are missing a lot of opportunity. that causes a lot of concern these days. tim: are big thank you to howard yu. joining us from boston. happy new year, professor yu. thanks for joining us. new year's resolution time -- do you guys have them? are you future proofing ourselves? romaine: i'm going to leave the house more. [laughter] kriti: i got really great advice from a colleague in london, if you have the ability to travel any the next year, given the ebb and flow as of the variance, you should. i'm going to take three international trips next year. tim: where are you going, have you picked a place? kriti: to of them have to do
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with weddings that are abroad. romaine: is one of them your wedding? kriti: no, still on the market, romaine. tim: you here to hurt -- romaine: you heard it here first, bloomberg. tim: we are hopefully going outside more in 2022. romaine: this has to be what, the second year now -- new year's eve that we have been in this pandemic? a lot of people are itching to get back out, some are going out. it would be nice at the end of 2022, to maybe go back to normal sick. tim: coming up, we are going to talk to the ceo of dave's hot chicken. this is bloomberg. ♪
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>> thousands of these homes are across the city. tracing the houses back to their origins is more difficult. the first official records of these houses in new orleans date back to the era of the louisiana purchase. these homes without hallways got their name because you could in theory fire a shot from the front door to the back door without hitting a wall. new orleans' signature house arrived in the city because of the turning point in the atlantic slave trade. one historian traced the format from people enslaved in africa and transported to what is now haiti.
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the sudden influx created a housing shortage. free black people were in a position to buy or build their own homes. many built the earliest shotgun houses. ♪ no single architectural style encompasses the house. there are greek revival shotguns. and federalist style shotguns. there are shotguns with hip root. some boast classical facades. the most common style is the victorian italian. known for segmented arched doorways and arched windows and stained glass. when it comes to floor plans, the houses come as a standalone single duplex homes known as shotgun doubles, and ones with
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the second story addition known as camelback's. the front door enters into a living room. the next door opens into a bedroom. the third room might be a den or second bedroom. the kitchen was at the back of the house. they originally didn't include bathrooms but instead had outhouses. summers in new orleans are brutally hot, and the home was designed to handle the heat. that are high ceilings to allow hot air to rise. the windows could be open to another breezes to pass through the house. -- i love the house. thousands of these homes were destroyed in 2005 because of hurricane katrina.
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today, people are still building and renovating shotgun houses all over new orleans, with many of the original features. and one more modern thing -- in a hallway. -- with one more modern thing, a hallway. ♪
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tim: this is "bloomberg markets," a special simulcast across bloomberg tv, radio, and youtube platforms. it's been a trying year for restaurants ever since the pandemic hit and shut down so many of them. some folks are finding a way forward here. our next guest is the ceo of dave's hot chicken. bill phelps.
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you know him as the ceo of wetzel's pretzels in the past. pizza is disney was concept here, they have opened more than 30 locations -- they have opened more than 30 locations. have you been doing? >> we have been doing great. we were scared to death when they closed down the restaurants during the pandemic indoors. we went to doing 10% of our business online. on the first of march, doing roughly 65% of our business online. just six weeks later -- it was insane, it worked really well. our product is phenomenal, but it travels really well. it tastes great after 45 minutes to an hour. so it's perfect for delivery or pick up. we have been doing really well. tim: talk to us a little bit about the wages this year, how much franchisees are going to have to pay workers right now to attack and retrain them -- to
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attract and retain them. >> it's been a total game changer. you think about people pushing for the $15 minimum wage, today, that is $15 an hour that's become kind of the baseline. i went to del taco a couple of hours ago and they were advertising $21 an hour as a starting pay at del taco, which is insane. on the other side of that coin, it is great for the employees. we have been talking for years about employees in the restaurant business being underpaid, and now that's changed radically in the last year or so. kriti: talk to us a little bit about the marriage between restaurants and technology. we've heard several restaurant owners come out and say that we are adopting more cloud technology or an automated reservation system. how are you doing that? >> the biggest move was going to
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the online ordering. we were doing 9% of our sales online march 1, then six weeks later, 65% of our sales online. that technology is what you have to do to adapt. and it works really well. romaine: in addition to the stores you open, you have to get all the chicken, the fries, the buns, everything else -- we've been talking about all the disruptions in the supply chain all year long, particularly when it comes to agricultural products, i wonder how you been able to navigate that space right now. >> the supply chain thing has probably been the biggest instructor -- the biggest destructor, both on the food side, people goods -- paper goods, and restaurants. i see us working through the
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challenges. probably over the next six to 12 months. i think it's going to be much better. tim: you talk about the rising cost not just on inputs, but on wages. how are you passing that on if at all in terms of menu prices? >> we tried to hold off on that. but with the increase in food costs, labor costs, virtually every single fast food person has increases, probably in the 6% to 9% range in the last six months -- and you have to do it in order to compete. kriti: let's talk about safety measures for a second, not just for your employees, but for your customers as well. california, new york, other states as well in the country have been dealing with perhaps vaccine mandates that are not necessarily a requirement in other states. how does that work for you? >> well, we are a franchise system. and we ask all of our people to be vaccinated.
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and if they have an objection, then they have to have proof that they tested negative 2-3 times a week. we have had to do that -- this new variant is obviously really concern, because it is so contagious. but i think we are taking the steps that would keep both our guests and the employees safe. we do everything we can. romaine: what's the plan for expansion in 2022? >> we are holding onto a rocket ship here. we opened 33 restaurants this year. we plan to open 85 restaurants next year. it's really fun -- we have a phenomenal team, we have absolutely incredible franchisees, and we have just an amazing product. so it is a great business model, and we are so excited about it, that is where we are opening up so many stores. tim: what's the plan to be on 2022, are you thinking ipo here?
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>> probably not. i think the best companies in this industry are the ones that stay private. that is my gut on its. and i think that we would love to on this forever. that is an honest feeling. tim: a big thank you to bill phelps. ceo of dave's hot chicken. also the cofounder and former ceo of wetzel's pretzels. happy new year. thank you for joining us. really appreciate it. we've got to get some of those stores here in new york city. romaine: they are just getting started. 33 stores this year. i'm told that drake is an investor. they've got a whole -- a high-profile of investors. how do you feel about how chicken? tim: love it. kriti: i'm a vegetarian, i can't comment. tim: hot clout -- romaine: hot cauliflower, same thing. kriti: i can't believe you did
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that. romaine: don't worry. i'm reforms. tim: we've got to look back here. this has been a crazy year by pretty much every metric involved here, whether you are talking about the pandemic itself or really just a trajectory of the market. earlier this year, it was all about the meme stocks. lumber was in the spotlight. we interviewed more lumberjacks in the first part of the year then we have in the history of bloomberg news. there's a lot of concerns here about what happens in 2022 -- whether the gains can continue. tim: questions about whether this omicron variant is the last variant -- how it will continue to disrupt supply chains, what inflation looks like, what the fed response will become of the fiscal policy response will be. if you look at the russell 3000, the best performers of the year, it is two meme -- two meme
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stocks, over a thousand percent up, and gamestop. the legacy is there, i think. kriti: i feel like retail trading, the mayhem they brought to institutional traders, was kind of a first quarter of 2021 story and it got lost in the noise. i wonder how much of that comes back in 2022 and beyond. perhaps we see robinhood and these other exchanges reach out to them. romaine: the bloomberg commodity index, how much did it again this year? tim: 60%. romaine: 27%, and that is without rounding, tim. it was a big year for commodities. that's a double-edged sword. it's great if you are investing, but there's concerns about inflationary pressures. kriti: also in the face of a surgeon dollar, which really magnifies how big the gains were. tim: happy new year, everyone. kriti: romaine has an orange hat
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on, folks. this is bloomberg. ♪ ♪
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>> from the heart of where money, innovation and power collide, in silicon valley and beyond, this is bloomberg technology with emily chang. ♪ emily: i am emily chang in san francisco. we will take a deep dive into the dramatic post-pandemic work shift, some companies going fully remote, some demanding all
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workers r