Bloomberg Markets: The Close 12/07/2023

Tech stocks rally, Treasury bonds rest in crude oil sinking toward the longest slump of the year. Live from studio to here at bloomberg headquarters in new york. I'm Romaine Bostick and i'm Scarlet Fu. We're kicking off to the closing bell here in the u.s. you look at equities right now in the s&p 500 breaking out from two weeks of fairly modest moves thanks to big tech. It's up 8/10 of 1%. That is the biggest advance in about three weeks, well above 4500. And of course, the Magnificent Seven is the big reason why that group up more than 2% led by Alphabet after it released its offering called Gemini. We'll have more on that later on. The ten year yield barely moving here. You could see it's up 4.11%. A little bit of a pullback. Arrest the ten year yield, of course, coming off yesterday, a three month low. We'll see if tomorrow's jobs report really validates the recent rally in treasuries. And just want to highlight the yen. It's really on a roll here, gaining against all the major currencies. There's been a series of clues over the last couple of weeks, last couple of days, really suggesting the end of negative interest rates is perhaps coming. Comments from the DOJ governor as well as his deputies. For me, yeah, a big move in the yen, which points out a big move in Japanese government bonds as well, and a big move in U.S. government bonds. Two, in fact, a week ago Thursday, short dated Treasury sold off. 24 hours later, they clawed back the previous day's losses. By the following Monday, Treasuries sold off again, erasing Friday's game, then Tuesday, then Wednesday, and now back here on Thursday. The cycle has continued six straight daily flip flops in direction as part of a meaningful uptick in volatility that actually began in late September and really points to a meaningful by the dip mentality among bond investors, which in turn suggests that maybe we should be talking less about the peak in rates and more about where the bottom might be. We'll get back to what Japan is doing because they're going in the opposite direction. Meanwhile, the flip flop in equities today from selloff to rally really shouldn't be too much of a surprise. Quant strategists at Bank of America, led by Savita Subramanian, said market breadth has improved dramatically already and may actually expand next year and propel the S&P past 5000. Take the Magnificent Seven Apple and video Amazon Metal Tesla Alphabet, Microsoft. Take those out of the equation. Even if those Mega-cap names remain flat and the price to earnings ratio of the rest of the S&P, the other 493 stocks that hold steady profit growth forecasts would still put the index at 5100, according to her models. She also notes that only 24% of the S&P 500 stocks are trading within 10% of their record highs. That's way lower than prior bull market peak. But there's always a but mark decline of edge over at Jp morgan says maybe not. The risk reward for equities in his view is poor relative to cash and relative to bonds. And he sees a bit of a catch 22 year scarlet with risk assets unable to sustain rallies if monetary policy remains tight. But a Fed that says we're going to remain tight unless we actually see a correction and risk assets. Yeah, it's quite a situation, isn't it? In other words, he says that he doesn't see the Fed cutting rates unless markets tank or the economy really stalls out. And for that reason, Kilonova is pessimistic when compared to his peers. Take a look here. He sees the S&P 500 falling to 4200. That is a red horizontal line here by the end of next year. That is almost 12% below the average year end target of strategies, which is the dotted yellow line. And of course, Birmingham was just telling us about supporters of super non omnium who's at 5000. It's also down, by the way, from 4800, which was yesterday's close or I should say about 8% from yesterday's close. So quite a long way to go there. Let's in the meantime turn to the economic data, because today's offering was jobless claims, which show that initial filings for unemployment benefits did edge higher to 220,000. Those are the white bars, the 12 week average. The blue line shows that we've really flattened out at around 212,000. It's really yet another sign remain that the labor market is indeed cooling. Yeah, we're certainly going to find out when we get the monthly numbers tomorrow morning. Team surveillance will be all over that 8:30 a.m. Washington time. Meanwhile, right here this afternoon on the close, we kick things off with Seema Shah, chief global strategist over at Principal Asset Management. And Seema, I want to go back to some of the expectations for corporate profitability into 2024, deeper into 2024 profit forecast, at least when you average them out, seem to be much more focused on an expansion of margins. And I'm wondering whether you think we will see a meaningful expansion in those margins and if not, why hey remain so We are a little bit concerned about the margin expansion expectations. Typically, if you're expecting to see inflation continue to decelerate, there will be pressures. Companies can no longer keep adding on price increases when you have disinflation. So that is one of the concerns. It's actually one of the reasons why we think the first half of next year could be a little bit more challenging as you start to see a bit of an economic slowdown, inflation coming down. We do think there's going to be a few pressures, but I think that is fairly short lived. Right. As soon as you get enough economic weakness to prompt the Fed to cut rates. Which we think is going to be in the second half of next year, I should say June of next year. Then I think you start to open the airways for an equity market rally with fairly solid earnings growth. I don't think it's going to be a banger of a year in terms of earnings, but I think equity markets can do pretty well ending next year at a fairly higher level than where we are today. Well, will central banks be a big factor in, I guess, where markets go next or are we beyond that? No, I think they are. And I think that, as I said, I think the market is going a little bit too far with this rate expectations. And that's one of the reasons why I think the first half, especially the first quarter, could be somewhat volatile for the bond space and also for the equity market space. To get a sustained equity market rally, though you do need at some point in 2024 for those rate cuts to come through and that to be combined with a fairly soft landing. Now, the good news is that that is what we see as our scenario, but it is absolutely dependent on the Fed moving ahead with rate cuts. However, when it comes the Fed moving ahead with rate cuts, you see a different path than what much of the market sees. We're pricing in 4 to 5 rate cuts for next year. You're talking more about a gradual policy easing. What would that look like? Yeah. So we expect the first cut to come in June and then to move a 25 bips per quarter. So it's a total of 75 basis points in as a whole in 2024. And the main reason is, is that look, we're expecting a soft downturn and if you have a soft downturn, then you need some soft cuts. There's no real reason to go pretty aggressively. I think that's key. You know, the if we are wrong, the reason that would be wrong is that the economic downturn is deeper, in which case the Fed is forced to to slam on the brakes a little bit harder. That is not that would not be good news for markets. You need to have a little bit of both the cuts but also the soft landing. Yeah, it's a tricky needle to thread, isn't it? We talked a little bit earlier or Ramon mentioned the drop in oil prices. It's edging a little bit higher right now, but still below that $70 a barrel. How much comfort do you take from falling oil prices when it comes to the overall inflation picture? Or is it still too volatile to really be a source of much comfort? Well, it's clearly a comfort right now. I mean, one of the you know, in take back about six weeks, it was one of the main concerns what would happen to oil prices and how would the Middle Eastern tensions and spillover to the broader economy. And of course, so far we haven't seen that that happen. But as I go into 2024, I am a little bit worried. It feels like the market is a little bit complacent. It's underpricing some of the inflation risks and it's one of the reasons why we do think that the Fed will be watching all prices carefully. They know that inflation expectations typically follow oil prices pretty quickly. And we have heard time and time again that the key concern is making sure that inflation expectations don't become anchored. So, you know, it's not a key risk at this stage, but it's something certainly for investors to keep watching. And it's one of the other reasons why we don't expect the Fed to cut as soon as March, but pushing it back until they have real comfort and confidence that inflation is on a clear downward path. All right. It's always great to talk to you so much. Our chief global strategist over at Principal Asset Management helping to kick things off to the close here on this Thursday afternoon. Coming up after the break, a discussion about the health of the restaurant sector. Brian Nichols, the chairman and CEO of Chipotle, they're going to be joining the B program later today. Plus, Broadcom is set to publish its latest results after the bell. It'll be the company's first report card since closing its acquisition of VMware. We'll get you a preview of what to watch for in the numbers. And another great interview coming up a little bit later with the U.S. Trade representative Katherine Tai, David West, and those to Wall Street. We had a chance to catch up with her just a few minutes ago. We'll let you know what she had to say. All that and more coming up in just a bit. This is Bloomberg. And. The weekly US jobless claims came out this morning, setting the stage for that big monthly payrolls report tomorrow. Bloomberg International Economics and policy editor Michael McKee joining us right now for a preview of that. Scott, I was just talking about those initial claims it got. I was looking at the four week average. We've kind of been at Stacy's for a while. And when I look at non-farm payroll numbers, they've also kind of settled into a little bit of a range, too. Well, actually, we're forecasting a rise in payrolls this month, in part because of the UAW workers going back to work. So 185 is the forecast. But if you take off the 33,000 autoworkers who were left out last time, you get down to more around 150 and it is a little bit of an easing from where we have been. It was 150 the prior month jobless claims. The interesting thing is the week that they take the survey was the one week that we saw the big bump up in jobless claims. So there are some people thinking that could skew the numbers lower. So do you think the market will start to understand these little quirks or will they read too much into the data as they always do? They'll read something into the data. I think people will understand the headline quirk. They'll immediately do a 33,000 subtraction in their head, or they'll look at manufacturing jobs and and and subtract that. What will probably get people's attention is if there's any surprise in the unemployment rate or if we get a big jump in the average hourly earnings. We're expecting a slight jump month over month and a drop to 4% for year over year, which the Fed would see as good news because they see 3 to 3 and a half percent is sustainable with 2% inflation. I do want to pivot just a little bit away from the U.S. There's so much focus right now on these sort of rate hiking cycles coming to a close that the Fed and other major central banks. Meanwhile, of course, all the rage this morning was, I guess, some comments. I don't if they were offhand or not, because wait over at the BOJ and one of his deputies there seemed to suggest, I guess if you're a betting man, that we could actually start seeing some rate hikes going on in Japan. Well, Japan has been signaling for a while that it's getting close to yen of yield curve control. And yesterday the governor of the Bank of Japan went before the parliament. And during his testimony, he said that policymaking will become much more challenging from year end and into next year. Then he went to meet with the prime minister to talk about monetary policy, and people took that as a sign that something's coming up soon. The question is where? I mean, as I said, they've been hinting about this for a while. There's no real thought in the markets that they're going to do it next week when they meet. But when they meet in January, they publish a new inflation forecast. We get the results of the what they call the Shinto, the Countrywide wage negotiations in March, and they do an another inflation forecast in April. So right now the market is thinking April with the inflation forecast and and they will know now then what roughly the wage situation so that's perfect just in time for the Fed cuts just in time. Just in time. Yeah but at the same time. So of course, what's important here to remember and of course we saw the yen strengthen on all of this is that if Japan does move ahead with interest rate increases, make the rates less negative and move out of that that range, then that's going to influence a whole wave of money and it could come out of treasuries. And of course, the Japanese are big, big buyers of treasuries. It's a little bit hard at this point to know exactly what the impact is going to be. Remember, they move it like ten basis point increments. So if they went to zero, it's better for for if you're investing, but it isn't going to make you rich. So does it really mean we move see a lot of movement go through right away? And also there's so much involved in terms of what the carry trade is going to be and where the U.S. is going to be and where other countries are going to be. That the analysts I've talked to say it will have some effect, but we can't really predict too much right now. This has been the question of the day is like where does the carrying trade go? Because if you if you just go to the terminal and try to find a stable country, I should say, that's good. That's good. Like a good luck finding that. Well, not one with a very deep and liquid currency. Yeah, exactly. Mike, Micki, thank you so much. Bloomberg International Economics and Policy Editor, Michael McKee. Let's stay with the realm of policy and move to Washington goings on because Nikki Haley took the spotlight at the fourth GOP debate, willingly or not, because her opponents were criticizing her ties to Wall Street. Her major backers do include Jp morgan CEO Jamie Dimon, the billionaire Bill Ackman, and the industrialist Charles Koch. Even with that support, she's still in a distant second place compared to the frontrunner Donald Trump, who of course, has not attended any of the debates. The latest Wall Street Journal poll shows the former president with an unchanged lead of 59% healing, climbing to 15% in recent months. Bloomberg U.S. Politics deputy editor Laura Davison joins us now with more. So, Laura, is it fair to say that Nikki Haley won last night's debate? It doesn't even matter if she won, if the front runner isn't showing up and isn't a factor yet. Haley is a very strong debater. This is now the fourth time that she's had a great debate night. And it was clear from last night that she was the one that everyone else views as the one to beat. She was fielding attacks from all sides and did pretty well at holding up and fielding those attacks. One note in particular is that particularly DeSantis and the Ramos whammy, we're going after her for having some big name donors, the ones that just listed on the screen there, and she basically shot back, Hey, you guys are just jealous, especially DeSantis. You used to have these donors and now I do. So this is really shows the changing contours of the race where Haley was polling in the single digits and now is seems to be the main Trump alternative. Well, talk to us a little bit about how viable that alternative is. I mean, it's one thing to say she's surging in the polls, but last time I checked, I mean, she's still significantly, significantly trailing the former president. Yeah, it is not clear at all that she has the momentum to surpass Trump. You know, he is still leading in virtually every state and nationally by upwards of 30 percentage points. So that is a huge deficit to make up. You know, it's the candidates the theory of the case is that they can go into Iowa where things are a little bit less clear, there's less good polling, and they might be able to pull out an upset. That is still really a Hail Mary shot and unclear if that will actually come out, too, for Haley or for any other candidate. Laura, we mentioned a couple of people who are supporting her, but have they donated money to her? Have they put her at the center of their contributions? So Charles Koch and his network of Americans for Prosperity has committed to put money behind her. They haven't said how much, but some of these other folks, Jamie Diamond, as well as Bill Ackman, have not said affirmatively if they're donating to her. They have expressed support for her and the FEC, the Federal Election Commission. We're in a little bit of a blind spot on when those filings. But come January, we'll be able to see who are the big name donors giving to Trump campaign Haley and across the board. All right. Laura Davison, Bloomberg's U.S. politics deputy, really appreciate your joining us, giving us the latest on the Republican debates. I don't know if you've been watching any of these, have you? Oh, no. I mean, look, I watch them as a journalistic exercise, but I mean, I don't want to belittle her too much here. But again, you have to look at the differential impact on her. And it's one thing to say, okay, yeah, she's risen up in the polls, but that's like, you know, like I said, you go from, you know, single digits to 12% and Trump is at, you know, 50%. And it's like, okay, is that an alternative? I don't care how many, you know, big bankers are willing to give her money at the end of the day. They need real people who are going to vote for her in the primary to get behind her. And I don't know who those people are. And I think Bill Ackman and Jamie Dimon and any who they put up, they're one of the Koch brothers, Charles Koch. Are they both still alive or just one of them? I don't know. But Charles Koch did put some money behind her. Well, the big question here is a lot of the corporate donations have really dried up and they're back at the level since, I would think, before the 2016 election. Yeah. Just don't seem to like any of this. Well, we had a great story on the Bloomberg terminal yesterday about how a lot of the big donors going to have their pocketbooks closed for now. Probably just waiting. They're like crossing over. Yeah, it's like they don't want to drown. But, you know, if Trump is the nomination, I'm sure they'll go without the pocketbooks. So much politics in the U.S.. Yes, absolutely. Don't get us started. This is a close up Bloomberg. All right. We want to turn to a Bloomberg exclusive. We're learning that officials at the Pentagon, that's the Department of Defense here in the United States, they buy drugs for our service members. And apparently they've been in a battle with the Food and Drug Administration, another government agency over the quality of some of those drugs. Now, the issue centers around generics that are made overseas. Raleigh Griffin Joining us right now is one of the reporters who worked on that story. And really, this is a great look here because basically so for those folks don't know, the FDA basically approves drugs here in the United States. DOD, the Pentagon is buying these drugs for their soldiers. And DOD apparently raised some issues with the FDA as to whether certain drugs were being manufactured in accordance with, I guess, whatever baseline standards the FDA would have. Is that right? Yes. So over the past few years, decades even, we've seen production shift overseas. Now, 80% of FDA approved facilities for the production of generic drugs are in India and China and elsewhere abroad. And the problem that that's posed for the FDA is limited oversight. It's very difficult to inspect these facilities. And we've seen recalls and drug shortages for as a result. What the Defense Department has stepped in and said is they don't necessarily trust all of the generic drugs that they're serving to their troops. And so they've launched a study as of late to look behind the curtain and see which of the drugs are doing well, which are performing poorly in an effort to better scan those medicines. Okay. So there are still in the gathering information stage to understand, you know, just how much of an issue this might be, what policies, specific policies have been discussed across Washington to improve the drug shortages and the quality issues. That's a great question. Ultimately, this year we've seen acute drug shortages. And what I want to tell you now is that most drug shortages are actually a result of these underlying production and quality issues. And so we've seen the White House take an active approach. Earlier this year, they debated a $25 billion package of the likes of the CHIPS Act for the pharmaceutical industry. But that kind of fell apart in the beginning stages of the year, we reported. And so there are real questions of what the administration is going to do to address these quality issues and drug shortages. Today, we did see the Biden administration take a new tactic with the prices of large cap pharmaceuticals. But this does not go to addressing the quality issues with generic drugs. Let's talk about that as well, because that story really jumped out on me. That is the latest story. I mean, he's basically saying that they're going to claw back some of the patent protection on these things as a way to lower prices. I'm not sure legally if that's even allowed, but explain it to me how he thinks he's going to pull this off. Yeah. You know, it's still early stages, so we have to see how this pans out. But the Biden administration has looked at the law and said, ultimately, we think that with taxpayer funded research and development, so companies that have brought products to market through taxpayer dollars, they can if the product is priced out of reach of patients, clawback those patents and license them to an additional manufacturer to produce them potentially at a lower price competition, driving down prices. And so what we're seeing here is a draft proposal or a new framework, if you will. Senior administration officials told us last night that they haven't necessarily or they declined to identify drugs that they would target. And so we're not seeing Wall Street really react strongly to this today, even as trade associations are. And, of course, next year is a presidential election year. If a Republican, if the former president, Donald Trump, comes back, what has his administration done on this? Because they've been pretty vocal when it came to pharmaceutical pricing. You know, whether you're a Democrat or a Republican, drug pricing is always a selling point at the ballot box, especially for seniors on on Medicare and folks on Medicaid. And so the Trump administration has similarly at least said that they're coming after big pharma. The approaches they take are often different. And one approach the Trump administration had push when they were in the seat of power was to say that they wanted to set prices to the reference points that other countries pay for drugs. The United States pays more for drugs than any other country in the world. And so that was one of the approaches that they tried to push forward. All right. Well, everybody's been coming for big pharma for years, and Big pharma just keeps getting bigger. That's me laughing in Big Pharma rally. GRIFFIN A couple of great stories on the Bloomberg terminal, including the Biden administration, looking to seize past patents of costly drugs. Scarlet in order to lower costs. And the great story from earlier this week really on kind of an awful story really about some of the inconsistencies in the quality of drugs that our troops are getting. Yeah, absolutely. And of course, this is relevant, especially as all these big drug companies are looking to make purchases of other companies that make weight loss drugs because that has a patent. That's going to be paying off. Yeah. Yeah. I'd like to see the Biden administration pry that patent out of the hands of Novo Nordisk and Lilly and the other companies. That is right. A lot more coming up here on the program, including a closer look at the massive shutdown in eats that we had this year. That conversation coming up after the break. This is the close. The. This is the countdown to the close, just about 230 here in New York. A bit of a rally going on right now in the equity space. Treasuries taking a bit of a breather, but still a lot of activity going on in commodities. Let's get right to Abigail Doolittle, who's standing by with our commodities clothes. Abigail, there is quite a bit of action remain and scarlet, take a look at New York. Crude well down to the wire here and down ever so slightly. It had been higher earlier. A bit of a recovery from the big five day decline that we had below $70 per barrel. Well, we are still there. So those technicals that we took a look at yesterday and over the last couple of months, they're in play. The seller is very much in control. Supply fears to some degree that there might be too much and maybe on the demand side as well. Copper not talking about a demand issue of copper, a big tell on the health, a barometer of global the global economy and global demand doing very well today. We also higher up 1.4% and the big winner today, cotton up 3.6%. I think that there was some crop decimation near the Ivory Coast or in Ivory Coast, Romaine that is helping give a lift to cotton. But one thing to note, we do have that Bloomberg dollar index lower that helps all commodities except apparently oil. All right, Abigail Doolittle with a closer look at what's going on in the commodities space, we should say we're still waiting on that official settlement on ex crude. If it does hold in the red here, six straight days of losses here that would match its longest losing streak of the year. Meanwhile, we want to turn to ETFs, which also are not necessarily having a good year. They notoriously saturated $7.7 trillion industry riding the pandemic era wave of launches. But the tide's turning 234 issuers have either liquidated or delisted this year. That's compared to 159 last year and just 72 the year before. Emily Greer failed Cross as a reporter here at Bloomberg. Joining us right now to talk a little bit more about this. This is the second biggest rate of closures we've had, right, on an annual basis ever. Yeah, that's right. It's also the record year for launches, though. We saw over 400 launching. So I think it really underscores just how large and competitive the ETF market is getting to see this many funds closing and also issuers really coming out with new ideas. You really have to get it right, not just on the strategy, the marketing, but also the performance, because it is really getting more competitive in this world. And we know that the MEME stock ETF closed down ticker was Amy. But what have been what was the common thread across the ETF that did shut down? So we saw about 10% of the closures came for thematic ETFs. So the meme one is a good example, something where it's not just like a factor, but the issuer comes up with an idea, slaps a theme on it. There were some digital asset ETFs that closed, which this was a good year for digital asset strategies. It's not always the performance for why a fund closes. It's usually more the size if the fund can't get to a certain number of assets. I've heard 50 million, 100 million, 200, then usually that's why we see it shutter. So I think that meme ETF, it was like something under 13 million in assets. Some of the closures that we've seen in the space also have to do with ESG. What drove that? Was that just lack of interest underperformance or did have something to do with a political football that ESG has become a little bit of everything? I think one of the things was the lack of interest. This was actually the first year that we saw net outflows from ESG ETFs, and that followed ten straight years of inflows into ESG branded funds that Bloomberg tracks. We saw 14 ESG funds closed this year. But like you said, the term ESG has become really weaponized. Even Larry Fink, who at first was championing that idea, came out this year and said it's too politicized, it's too weaponized, I don't want to fund. But we had to about a few months ago. Like now, there's some funds that come out that aren't branded with ESG. Well, I was just going to say that. I mean, how many times have we seen this now where these funds just kind of kind of taken the back door still in ESG? Fine. But just not calling themselves any ESG funds. So like I want to actually look what's in there. I know no one who buys ETF actually looks at the holdings anymore, but, you know, they're supposed to that someone's supposed to do the work on that. What are the themes to watch for next year? Because you said it was a record year in terms of launches. I presume that there's going to be a lot of excitement about new ETFs. What what's the common thread there? There's a lot of active launches we saw about, which you'd like to highlight is of course, yes. Obviously more than 80% of all the launches, according to Bloomberg Intelligence, were actually active. And this year we saw about 25% of the inflows into ETFs at large go to active ETFs, which is a record. So a lot of superlatives for the active space. And I think when you have a lot of new legacy mutual fund issuers coming in, they usually come to market with an active strategy. It just blends more with what they've already been doing. You can keep the same portfolio manager BlackRock comes to mind. They had Rick Reeder, who obviously manages a lot of fixed income funds, come on to a fixed income ETF and actively manage that omni channel shopping. Give everyone to different rappers in different formats. But at this point, whatever they want, they can get it. Bloomberg's Emily Garfield, thank you so much. Emily Garfield covers Cross assess for us here at Bloomberg News. I think about ETFs and some of the leverage. ETFs have become really popular with Korean retail traders, especially the ones that are like four times, three times leverage on single stocks. Okay. Then we have that here in the U.S. And we saw, you know, these are the ones in the US that they're going up because they're looking for a little bit of excitement. This is I mean, Korean. It is a very retail driven stock market. Yeah. And the US stock market has gotten going gangbusters this year. Yeah, the leverage. Three times the leverage. Okay. All right. Well, I mean, like I said, we went through the double leverage, triple leverage phase of some of these ETFs before. And how did that end for a lot of folks? Well, you know, if you can get out beforehand, it is great. That's great. It's like musical chairs. Absolutely. You never lose. So fun. Always fun as long as music is playing. All right. Still ahead, Broadcom is due to post quarterly results after the closing bell as investors pretty keen to see the Chipmaker's performance since buying and closing out its VMware purchase. We're going to preview what to expect next. This is the close on Bloomberg. We. Let's get a view from the sell side with our top calls, the big movers on the back of analysts recommendations. And we start with Chargepoint. This is the electric car charging company. They came out with their third quarter results yesterday and the revenue was below estimates. That spurred a downgrade over at the Riley to neutral with the analysts also slashing the price target in half saying there just aren't enough near-term catalysts right now for growth. Investors beg to disagree, pushing those shares up for one of those best days in quite a while. Meanwhile, Biogen getting an upgrade today to outperform from market perform this over at Raymond James. What the analysts they are saying the biotech company has an attractive setup in the 2024 with progress on that company's early Alzheimer's treatment as well as improvement in its research and development costs. Shares of that company up about 2% on the day. And finally, let's take a look at Alphabet announcing the rollout of its new large language A.I. model Gemini Roth MKM lifting its price target to 166 one from 152. But the analyst saying that Gemini should usher in a new era over at Google and spark an uptick in valuation for Alphabet, putting the stock more in line with the rest of its magnificent Seven peers. It's outperforming those peers today higher by 5%. And those are top calls. All right. Let's stay in tech here and move a little bit forward. We're expecting to get results after the bell out of Broadcom. A lot of questions right now about the health of this company and more importantly, the integration of VMware. Vijay Prakash joining us, senior analyst covering chips and automotive tech over at Mizuho. He currently has a buy rating on Broadcom. All right. Let's first start off with the handset market, because we know this is obviously the legacy business and still an important one, although I know they are trying to diversify. How much is that handset business holding up right now? Yeah, thanks for having me on, Ramon. I think if you look at Broadcom, obviously they are the top supplier to Africa. And so if you look at iPhone 15 here, sales have held up, at least in the U.S., said the phone in the challenged or in China. But that said, you know, seasonally it's a strong quarter for them should be a tailwind for Broadcom in the October call and the guide. But obviously, you know, as you go into March, there's a little bit of seasonality and they have some challenges in China with May 16 out there. So something to watch. But obviously for Broadcom, there are other segments that will probably outperform like I networking except on the tails of, you know, on the back of Internet networking and customers think that the shift to Google. So why I'm curious then if you can kind of explain what is going to drive growth. Let's just take revenue growth, for example. We've gone from double digit revenue growth on a quarterly basis now into single digits. But when I started to look at analysts estimates, looking out a little bit further over the next, say, five, six quarters, I see a return back to those double digit growth rate. What what gets us there? Yeah, I think if you look at most of the segments outside of AI and networking, they have been fairly soft, kind of reflecting what the macro is. So if you look at enterprise storage, that's been fairly soft, industrial has been soft for them and much of the consumer exposed segments have been soft, including you and I would say broadband. But that said, you know, where they see very strong growth will be on the high side, but that's going 100% year on year, probably go under 70% year on year into fiscal 24 October. But also the the networking side with Internet networking. So everybody is starting to move the Internet as the most widely accepted standard open source. You know, you heard that from anybody yesterday as well. So we think that's where the growth will will come from. Broadcom looking out. So this, of course, will be Broadcom's first set of results since the VMware purchase closed, and it's completely integrated into the company. What could the company say? What could Broadcom say that might trip up investors or give them something to worry about? I think it's covered. VMware should be a nice, you know, basically a nice board to this president because if you look at Broadcom, they obviously have drive the industry standard in terms of 75% gross margin, 60% plus operating margin, 50% free cash flow yield. So just add to it, if you look at today's summit, the 30% operating margin, I think you could easily see Hauck drive that to 55, 60% operating margins. And so that should drive very big free cash flow, probably a big bump up in dividends for Broadcom from some of the 18 $19 dividends that they adhere to might be the mid twenties as we look at next year. So big jump in free cash flow, a big jump in dividends. Obviously it'll it'll need a lot of work from hock and trying to rightsize VMware Post acquisition. So that's what investors will be looking forward to here on the call. So do you anticipate Broadcom making further purchases or does it need to make any further repurchases at this point? Well, I think they have had a pretty, you know, pretty strong execution and. Be in the last five, seven years, I would say I started with, say, Optics and LSI. And, you know, you could keep adding CIA and Symantec and the whole list down there. So I would expect Ark to stop here. I mean, obviously software, this was a huge acquisition. Probably he probably needs a little bit of time to digest that. But I would expect him to get back on the horse probably in the next 18, 24 months. Might be more on the hardware sites. All right, Vijay, always great to talk to you. Thanks for the preview. Vijay Rakesh over at Mizuho Americas. We'll have full coverage after the bell when those Broadcom earnings do cross the wire later tonight. Meanwhile, after the break, in just a few minutes, a sit down with the U.S. trade representative, Katherine Tai, about the challenges of rapid changes and advancements in technology. That conversation coming up next. This is the close on Bloomberg. And. Welcome back to the close. It's time now for our Wall Street Week Daily segment. Our very own David Westin, the host of Wall Street Week, went down to Washington and they had a chance to sit down with the U.S. Trade representative, Katherine Tai. A fireside chat at the Aspen Security Forum in Washington where they covered a wide range of issues. Let's take a listen. We're starting to realize that the implications of a regulatory system that started in the nineties and hasn't evolved very far is creating disconnect with the implications of this technology advancement. So I'll give you one very, very specific example that I think may resonate with a lot of people because it's a large part of the conversation in so many ways. The unveiling of Chapter four in the spring, I think, was a wakeup moment for all of us that, wow, there is a lot of innovation that's going on in our economy. That is a great thing. But holy Jesus, what is happening here? And I would just say that even even five years ago, I had the opportunity to participate in a conference at Stanford where they did a whole presentation for us. And at the time, the prompts that you were giving AEI were coming out with hilariously funny outcomes. When you ask I that was being trying to write a joke and the jokes that came out the back end was almost never funny or it was funny because it was so unfunny, right? So at the time, I think just five years ago, 2019, 2018, we're thinking, wow, this could have a lot of potential. There's so much innovation, there's so much stuff that's brewing, but we don't have to be worried about it yet because it's still very rudimentary, short period of time. All of a sudden, for all of you who've experimented with GPT four and you start putting prompts in it, literally blowing everybody's minds, right. Which is the focus that we have now on A.I.. What is A.I. built on? It's built on massive amounts of data. We're come back to the issue of data. How do you develop A.I.? You have to have access not just to those massive amounts of data. You have to have access to incredibly powerful computing processes. You marry those two up and you're going to push that innovation and push that development. Who has access to that kind of data and that kind of computing power? A very small number of extremely powerful and dominant companies that are almost all, if not all American. And that's why our posture on the rules that apply to data flows, data localization and source code is so important. At the core of each of these proposals in these negotiations is the question that we have to answer around the balance of authority between the private sector and the companies and the government and our regulatory authorities. Who gets to decide or control how freely the data can flow and when it can be restricted, where it needs to be stored, and when access is required to disclose source code. And I think that those issues are very much consequential, not just for trade and economics, but for our entire society. And the cross-cutting nature of these issues means that if we're going to lead using trade rules at a time when there is no consensus but massive amounts of debate and questioning, then I, as USTR, am committing massive malpractice and probably committing policy suicide by getting out ahead of all of the other conversations and decisions that we need to make as a country. On the subject of expanding existing agreements we had, I believe it's your counterpart in Taiwan this week say we'd like to have a free trade agreement. Let's expand out what we have right now. Obviously, that would raise geopolitical issues, foreign policy issues. Are you open to that? So the negotiation we're having with Taiwan right now, and I'll just highlight here, every trade negotiation we're doing right now has an element of innovation that's baked into it. And this is because we're trying to be responsive to the data and the feedback that we are receiving from the world economy. There are so many changes that are going on simultaneously that I've not met even our smartest economists, even my colleague Janet Yellen, who is a legend in macroeconomics. No one can explain exactly what's happening or predict exactly what's going to happen next. And so from a trade policy perspective, what we have been very disciplined in trying to do is to say, let us bring a trade program to each one of our partners that's tailored to that partner, that's tailored to their interest and our interest in the partnership that's also tailored to the challenges and the dynamics that we are navigate. Being together in the global economy with Taiwan. What that's meant is that we have been negotiating agreements and the first agreement that's that we have with Taiwan is one that covers, I think, five issue areas. It's trade facilitation at small medium enterprises, good regulatory practices. And I'll have to look at my notes for the other two. But we've got a core group of five disciplines. We signed that agreement, Congress, in a fit of enthusiasm, even though they weren't legally required to. You took a vote on it to show their support for what we are doing here. And on the basis of that support, we are negotiating another set of disciplines right as we speak. We've been making excellent progress and we will continue to look at building out those agreements to to have an arrangement with the Taiwan economy that is fit for the Times. And the Times are very challenging. And so this is one of our accomplishments that we are particularly proud of and committed to. So you don't rule out a free trade agreement, but it's not. Now, look, so let me let me back up to what what what do you mean by a free trade agreement? Right. You mean the traditional kind of U.S. approach to you? A very, very comprehensive, maximally liberalizing, aggressively liberalizing agreement? We're not doing that with anybody right now. It's actually insensitive to the dynamics in the global economy and the U.S. economy right now to push on with that program, which may have been set for the eighties in the nineties, maybe was starting to show its age in the 2020 tens. It's 2023. We need new policies. There is innovation going on all around us. When we were negotiating those agreements, I don't know. I wasn't even a thing that we talked about. Right. So in all of these different ways, but certainly we hadn't experienced the pandemic supply chain discombobulation and disconnect, the fragilities, the geopolitical tensions where we've always had them, but they were different and at a different scale with different partners. So in all ways, as much as we embrace innovation instinctively as Americans and certainly in our economy, we need to be embracing innovation in our trade policy. And that's what we're doing. And that's why when you say FTA, sure, if by FTA you mean are we innovating trade agreements and are we doing trade aggressively but in new ways? Yes. When you say FTA, if you mean the old style trade agreements that we used to do, then no. And that was Katherine Tai speaking at the Aspen Security Forum with our very own David Westin down there in Washington. And just as a reminder, you can catch all of these interviews that we aired during the close with David on Wall Street Week, which airs every Friday at 6 p.m. New York time right here on Bloomberg Television. Meanwhile, we round out to the final hour of trading here on this Thursday afternoon, counting down to those closing bells and stocks staging a bit of a rally today with most of the major megacap big cap tech names out in front here with the Nasdaq up more than a percent here on the day. The Russell, the Dow, the S&P also posting gains on the day as well. Fractional to be sure, but we're still watching some pretty interesting moves in the rest of the market. And treasury market kind of resting on pause, if you will, ahead of that big monthly jobs report scheduled to come out tomorrow morning, 8:30 a.m. washington time. And WTI crude trying to move up into the green in the new session. But we should point out it ended the old session back in the red for a sixth straight day. This is the close on bloomberg. And. Just about 3 p.m. in a chilly New York. This is the countdown to the close. Let's get a view from the top. I'm Romaine Bostick and I'm Scarlet Fu. And it looks like we're back to stocks moving with more sizable move in that we're about 1.4% higher in the Nasdaq and we haven't seen that in a while. Yeah, interesting moves in equities. And we talk about this idea here of whether this rally or what was a rally, I should say, will sort of resume and carry over into 2024. You were getting a little bit of a juice here today, and that's largely because all the magnificent seven names really doing their part. Big gains today with Google Alphabet, I should say, up more than 5% here. You take a look at the Japanese yen, dollar yen right now. I believe that is the worst day right now that we're seeing going back into all year long, basically a December of last year relative to the yen, the dollar. Right. Right. It's a monster moves for the Japanese yen overall as investors start to anticipate the end of negative interest rates. When that actually happens is a separate story and how it actually unfolds is a separate story. But for now, there's reason to get excited. Yeah, and keep an eye on crude prices as well. Softness once again here on the day, kind of straddling the lines between gains and losses. But I do want to go back Scarlet Fu the equity market real quick here, because there is a sense here that you are getting a little bit better breath in this market. As a Veena Subramanian, I thought her note really kind of hit it on the head that if you are looking forward to broadening out from just the Magnificent Seven and I really want you to focus on the bottom of the screen on the far right and those yellow lines, that's basically taking the number of 52 week highs, minus a number of 52 week lows is a four. And why you see stocks that we're looking at here just to be pretty broad here and you're really styles's yellow lines. That's basically a positive number and that's what you want to see. And people you want to see a broader is not quite as broad as what we saw earlier in the year coming in like late, late last year and early this year. But certainly a big shift from what you saw on the belly of the year where it really was just all just a few dozen stocks leading the charge. Well, yeah, with Megacap Tech getting more and more expensive, people are saying now is the time to look at industrial stocks or some of the value stocks because they do offer potential upside or better upside. Let's take a look at one stock that is seeing quite a lot of upside at the moment. That's JetBlue climbing as much as 16%, the best rally in three months after boosting its full year outlook, it sees a narrower loss on the bottom line and revenue growth of 4 to 5% and apparently better than expected bookings and operational performance so far this fall. Yeah, it feels like the airlines just can't lose these days. It just seems like every time we think they're finally going to, you know, kind of moderate a little bit, they come back with the forecast. It just shows we're still buying tickets. All right. Let's also take a look at a company that we don't hear a lot about. It's a pharma company spiking higher to a 16 month high. The ticker here is C, r, E, several therapeutics, and you can see that's up 11%. AbbVie agreed to buy this biotech company for about $8.7 billion. And this comes less than a week after AbbVie announced it's buying ImmunoGen, the cancer drug company. Yeah, it's interesting our moves that we're taking in terms of M&A going on in that space and sprinkler, we talk a lot about these enterprise software companies. Here's another one to add to the list. Yeah, they're not doing well. No, not at all. Falling as much as 33%. Biggest drop ever. Full year guidance. Disappointed. That's got to be consolidation here. I mean, it's just too many of these names and everyone is trying and looking at their balance sheets right now, figuring out how they can cut costs. And unfortunately, companies like Sprinkler end up getting the short end of that stick. Stick with us. We'll be back here with our cross-platform coverage. It starts right now and. Come down to the clues. Bloomberg's comprehensive cross-platform coverage ahead of the U.S. market close starts right now. This is the countdown to the close. Romaine Bostick alongside Scarlet Fu, we're joined right now by our colleagues jess mountain and Paul Sweeney filling in today for Carol Massar and tim stanwick. A hearty welcome to all of our audiences across our bloomberg platforms, television, radio originals, and our partnership with youtube here on a day where the equity markets are doing well, the commodity markets not doing a whole lot. Treasuries just kind of measure. But upstairs from us right now, guys, there's a huge holiday party going on right now. It is. How many drinks have you had today, Paul? No, there's I mean, there's everything up there now. Most of it I don't know what it is, but it's some early. I try to get some of the chicken nuggets and it was impossible. But I did get a couple other goodies up there. But they've been taking care of us this way. Oh, they have been. It's been holiday stuff, but something Paul and I were chatting about is this story on the terminal looking at the hottest jobs in us. Also looking at this $80,000 a year that I know that you all are looking at remain. And but there's another one that I wanted to take a close eye on as far as something that really struck me, too, because boozy holiday office parties replaced by walk and pickleball. So we were just talking about sort of these goodies that we've had upstairs. I don't know about you, Paul, If you play pickleball, I like walk, though, but it seems like these buzzy holiday office parties or neighbors, everything. Maybe they were a thing of my generation. I can remember a few of them back in the day, but it's nice just having that holiday celebration. Everybody's back in your office today. Maybe it's the it's the food and all the party stuff. But yeah, there was nobody unless you are poor about in office. Yeah. So today we're back today. But again, a good day in the market and I'm just going to do this alphabet news, you know, with this Gemini I product, this the street really likes this thing is pushing that stock up high and again yeah it's the what's the holiday party over that for the iPhone it's always doing their holiday party right I mean I mean I don't know I mean open air that's got to be lit, right? Plenty of gotcha. Where are we going? Sighs Let's talk about that story that just mentioned. Mention, mentioned because we do have jobs day tomorrow. It's been a jobs filled week overall with all the data coming through. The hottest job in the US right now pays $80,000 a year. It doesn't require a college degree and you get to spend your time outside. It's not pickleball. No, no, no. It's being a technician of wind turbine. So being a wind turbine service technician and employment of this position will increase almost 45% over the next decade. This is according to the BLS. They predict this and it's going to be faster than in any other occupation. And we know the federal government is subsidizing this renewable energy push. That's because we're putting more of these when wind. Yes. And they will need advisory. Yes. Okay. This is not for me because I do not like heights at all. Yes. You have to be able to deal with heights. Oh, you have to climb up to the top of this thing. Yeah. And you go inside of it and that's terrifying. They don't have, like a software program that from 300 feet in here. And it's windy because it's a wind farm. Thank you, Paul. Yeah, I hope it's windy. Otherwise they have it in the wrong place. Exactly. But I mean, this is I always like these stories too, because, I mean, in all seriousness, it does show, you know, there are obviously significant structural changes to our economy and the way we live and the things we do and often with that brings up job opportunities as you need people to fill those roles, to keep these things, to build these things and keep them working, I'd imagine that you have to be a certain height and a certain weight so that you don't get blown over as well if you're into, Oh no, right. I'm only five foot, so I know. I think you're just too as someone who is five three on a really good day, you know, that's that like you won't be able to transition into that job. Yeah. Okay. All right. Looking at the. I don't know, I'm just kind of looking at this mark and seeing how we're starting off December in a pretty good way, because, I mean, that month of November, we had, you know, 8.9% move in the S&P 500. That's hard to follow up. But from a seasonality perspective, maybe we'll get some more good news coming in December. Well, I mean, if you look at the forecast and I'm not talking about the the price targets, but I mean, the forecast for profitability, the forecast for margin, the forecast even for revenue growth here, it seems to suggest that at least from a corporate fundamental side, there'll be a support there. Now, whether the economy is going to cooperate completely and more importantly, central banks, that's another discussion. Yeah. I mean, if you look at small caps, though, to Paul's point this month, taken off and especially outperforming some of its larger counterparts in latest weeks. But we have to go. We've got some exciting things on radio coming up the next few hours, but we'll be back beyond the bell close to the closing bell. So stay tuned for that. Coming up, guys, we'll see you then. All right. Meanwhile, the holiday party continues right here on the closed count. You're down to those bells, just about 50 minutes or so until we get there. And Mimi Duff joining us right now. She's senior client advisor over at John Trust. John Trust has about $3 billion in assets under management. Mimi, great to have you here. I hope you were able to partake in some of the holiday goodies upstairs. I'm going to have that guacamole afterwards. Yeah. And then I guess the. Question, though, are we going to be in a celebratory spirit sometime early next year or is this it? We just need to enjoy it while it lasts. I mean, because everyone's sort of looking to 20, 24 and I feel like most people are trying to stay optimistic, but I don't see a lot of people making really bold forecasts to the upside just yet. I would I would agree with that. I think that some of this the last move that we've seen is probably position chasing a lot of folks sidelined earlier in the year with cash rates as high as they were. And I think some of the improved data on the inflation side and frankly, even on the job side coming into balance has gotten folks a bit more optimistic. But I wouldn't say to your point that anybody's like Max long yet, but it gets to the idea and I'm glad you bring that up, too, because we were talking a little bit about the competition for for returns and whether it's equities, whether it's bond market and, you know, market kind of it's kind of made the point that when relative to cash and relative to bonds, equities don't necessarily look so good. And I was just taking a look at this. We focused so much on the benchmark yields. But I I forgot the six month Treasury is at 5.3. And I can just tell from personal experience, I have a savings account that's basically paying me for nine right now. Yeah, cash is good. Having said that, in the last month, I think that aggregate bond index is up 4%. So you're not going to do that in one month's time sitting in cash, which is why we had been advocating to get people invested or at least have a plan to do that. And I mean, what a move we've seen in ten year yields from 5% down to wherever of 411 right now and just over a month. So the market this recent move has been very broad. That's how I would how I would characterize it, this recent move that's been broad. Where's that money coming from? Is it people diversifying from big cap tech or is it people coming off the sidelines and starting new positions in things like small caps or value stocks that have been kind of neglected? Yeah, I think on the bond side, probably money coming out of cash, getting put to work. And on the equity side, some of both. I mean, it wasn't long ago, maybe three weeks ago we were talking about the S&P up 15% on the year and the equal weighted S&P flat on the year. And here we are in this recent move, we've seen that equal weighted outpace the S&P. We've seen small and mid-caps which had really been beaten up. And we've talked about that valuation gap between that group and the large cap being near its widest ever just a few weeks ago. So I think folks are looking for value and they're finding it in some of these other spots. And of course, when you look at the rate outlook as well, everyone's so excited about the possibility of a rate cut that they've kind of forgotten higher for longer. We need to get through that period first. How are you positioning your equity holdings to account for a period where rates will stay high but they will stay at a certain level for a while? Yeah. So I mean, just to put it in context, the market's pricing about 100 basis points of easing over the next year starting. There are some probabilities in March, we think that that could be a little premature even if the Fed's late to the party after they get to where they want to be. On the equity side, we do have allocations to small and mid-cap which will benefit from some of this rate stability and we've seen that we like also infrastructure. You were talking about the the windmills. We like infrastructure for a longer term play. Oh, yeah, you're on the windmill, on wind turbine train and also an inside run, I'll tell you that. Yeah, well, yeah, I mean, as an investor, not as a, not as a fix an employee, but get to the broader issue too, that a lot of the rally this year wasn't just really driven by macro. There really was a component of structural changes to the economy, whether it's AI, whether that's going to bear out or not. That was a certainly a driver. You could even put in weight loss drugs and JLP and all that here. And it gets to the idea of thematic investing and whether there are going to be themes that unfold in 2024 that are materially different than the ones that people gravitated to now. Yeah, I mean, we don't want to have the crystal ball, but I would also add to it that this year we really the market expectations were were more tilted toward recession and that recession wasn't delivered. Right. Next year is another beast because if we look at the savings of consumers across like that, savings has been drawn down right and higher for longer is starting to grip. And you know, the college loan repayments, if we do stay here higher, it doesn't work for parts of the economy like commercial real estate. So I like the optimism, but we do need to wait and see into next year how how this plays out. All right, Mimi, thank you so much for joining us. Mimi Duff is senior advisor at Gen Trust. We were talking earlier about guacamole. Coming up, we're going to discuss the health of the restaurant sector. Brian Niccol, chairman and CEO of Chipotle Mexican Grill, will be joining us. Plus, moving out with its global real estate outlook for 2024. Carly Tripp, who leads that team, is going to be stopping by the program in just a minute. And you thought earnings season was over. Think again. Lululemon, RH and Broadcom. Among the companies reporting after the closing bell. We'll have the results out as soon as they cross the wire. All that and more coming up. This is a close on Bloomberg and. And. All right. Let's turn our attention right now to food and the health of the restaurant sector. Chipotle Mexican Grill among the biggest outperformers in the S&P Restaurants Index shares up more than 50% year to date. And a big question going forward right now as to how much further that rally can go and what actually drives it. Who better to talk to you than the CEO and chairman of Chipotle, Brian Nichols, joining us right now here on the big program. Brian. Great to have you back here. And let's get right to it. We talk about dining trends and we know they shift kind of from month to month and year to year, obviously, depending on economic conditions. When you take a look at economic conditions right now, do you see any material impact in what's going to happen inside your stores? Yeah, you know, we continue to see a really healthy consumer that continues to come to triple-A. And I'm happy to say that I think our restaurants are better staffed, better deployed. And, you know, we've got our culinary right on point. So as guests show up, you know, we believe we're giving them great customized meals that they want. And we continue to see strength really across all income cohorts. I am curious about pricing and really the value proposition that fast, casual and fast food restaurants have for a lot of consumers out there. You've raised prices several times over the last couple of years, at least four times on your major items here. And I'm wondering, do you feel like you're going to get to, I guess, sort of that breaking point where you feel like that this is just as much as the consumer is willing to take or is there more room for you to maneuver? Yes. You know, the way we look at that is we always are trying to evaluate our value proposition specifically. Do consumers feel great about what they're paying for, what they're getting from you wallet? And what we've seen over and over again is the brand continues to be really strong from a value proposition standpoint. So currently we see we've got some of the best value ratings from our customers that we've had, frankly, in a long time. And then when we look at where our pricing is relative to the alternative, to have the same quality culinary, we find ourselves to be at a significant discount relative to those alternatives. So, you know, we see time and time again people are saying, hey, look, to get this great chicken burrito or chicken bowl or, you know, barbacoa quesadilla, they feel like, hey, the ten, $15, you know, if you've got wok and chips as part of your meal, they feel like it's a tremendous value because of the customization, the speed, the caliber of the culinary. They feel really good about what they're getting from travelling. Well, thank you for framing how you're thinking about it. Have you decided how much you'll raise prices by next year? You know, we have not made a decision on that yet. You know, we've got an estimate of where we think kind of food costs will be next year and where we think our labor inflation will be. And right now, we're estimating that's kind of like in the mid-single digits. We always kind of like to see how the year unfolds and then we make a decision on our pricing. Historically, you know, in normal environments, you know, we usually take about 1 to 3% pricing a year, but we've not made any decisions yet for next year. Okay. And should be noted that what is headquartered in Newport Beach, California. I'm curious, given that states new minimum wage law, how much more prices would need to increase in California because of that? Yeah, look, that's that's one that we'll obviously have to address. You know, currently we're in like the 17, $18 wage range. So obviously it is moving to $20 and put some additional inflation in the state of California. We've got about ten, 15% of our restaurants here. We haven't made any decisions yet, but I'm assuming pricing will probably have to be part of the puzzle in order to handle some of that inflation. But obviously, we first looked at what are other places where we get more efficiency? Are there ways for us to grow around it? But, you know, with that type of move in such a short order, I'm assuming probably pricing will have to be part of the equation. I am curious about some of the menu offerings and whether we can expect something new. I mean, obviously, I'm sure you've known there's been so much talk about large bowl. They doesn't do breakfast in the way that the other fast casual restaurants do. I'm sure you're tired of hearing that. But there is a growth story that investors want to see and they want to see that, okay, something new is maybe going to come down the pipeline that they can maybe think will be aid and profitability. Yeah, look, you know, I will tell you, I've had our treats over eggs and it does make a fabulous breakfast burrito. We have no plans right now to do breakfast. There. There. There's so much opportunities to grow at our lunch afternoon and dinner dayparts. Right now, we're closing in on about $3 million average unit volumes. We see no reason why we can't get to 4 million just winning in those dayparts. So significant growth from where we are today just by executing what I say is great throughput, operational. And why is that so important? Because. One thing that's unique about Chipotle is just how fast we can get to a customized, high caliber culinary created meal. And we see time and time again that when we execute the fundamentals of great culinary, great throughput, we are rewarded with more business. And we're seeing that play out in our most recent quarter. And we continue to believe that that's the right focus going forward. So you'll see us do things like right now we're doing carne asada. Yeah, we'll probably bring back a chicken El Paso or have some nice menu innovation. But look, the name of the game for us is build more restaurants and grow the lunch afternoon and dinner day. Pass through great throughput. Gotcha. Talk about expansion here. I mean, just yesterday we were talking about, I guess, one of your quasi competitors, if you will, with McDonald's announcing some pretty big expansion plans as well as some big changes to the insides of their stores as well. I am curious, I mean, you guys have had a pretty aggressive expansion, at least aggressive by what Wall Street, I think had expected here. Is that going to continue? Yeah, absolutely. You know, we only have 330 400 restaurants right now in the United States. And there's no reason why we can't have 7000 plus. So we're going to get what? But in what timeframe, Brian? You know, look, I think one of things we've really focused on is making sure that we open the number of restaurants that support our people capability. So we've given guidance for next year that will do, you know, 285 to 350 new restaurants. And we've also shared we want to grow about 8 to 10% a year. So, you know, when you start adding that up, you can see we're going to have nice growth every year. We're going to make sure we get the people capability to open those restaurants successfully, get great unit economics, and then grow our way to, you know, 7000 plus restaurants just in the United States. And we're just getting started outside the United States. So, you know, that number doesn't even take into account what I think we are going to be able to do outside the United States down the road. So as you expand, I'm curious how you're incorporating one of the buzziest themes out there, which is A.I. into your processes at McDonald's, for instance, just to throw an example out there, they're using A.I. to train employees, give instructions on how to use a repair equipment or using A.I. in drive thru ordering, which actually has been less successful. What have you found? Works for Chipotle? Yeah. You know, look, we're we've used this is more and more in the space of forecasting correctly. And the reason why that's so important is, you know, we do fresh prep every day, and when we get the forecast right, our teams that are set up with the right amount of prep in the morning. So they have a great lunch business and then we come back and do additional prep for dinner. And one of the places that we've seen this really benefit us is being sharper on our ability to forecast what's going to happen that day so that our teams are prepared and they create the fresh food correctly in the morning. So we're ready to go. So that's one place. The other place that we've really invested is more probably in robotics to make the job easier. You know, there's a lot of work that goes into making our handmade guacamole every day. So, yeah, we're working on a product right now to cut for and scoop the fruit so that then all our teams have to do is add, you know, the Halloween of the cilantro, the lime juice, mash it up a little red onion, and now you've got guacamole in saving time. That is a huge win. And then also, by the way, the process of cutting coring, scooping the avocado, That's a hard process. And if we can find solutions where it makes the job easier, sets our teams up to be successful at lunch. We want to invest in those things and bring those things forward. And before we let you go, I have to ask you about Ozempic and what kind of impact you're currently seeing from the class of weight loss drugs. Yeah, we're not seeing any impact, actually, as we've understood the way the drug works. I think Chipotle is positioned really well for those folks that end up on that drug. You know, our food is clean, our food is customizable. So you can get exactly apportioning that you want as well as the build that you want. So I think we're well positioned for folks that choose to use the drug. But too late today, we really haven't seen any meaningful impact. All right. That is a headline right there. Brian, thank you so much. Brian Nicole is chairman and CEO of Chipotle Mexican Grill. Not seeing any impact from Mpic. And maybe they'll use AI and robotics to help MASH and create guacamole, which does sound pretty good right now. But, you know, that's repetitive stress of work that is trying for employees. Yeah, I mean, it can help with recruitment if they can figure that out. I mean, there's a reason why humans still do a lot of this stuff, because they can do it in a way that the robots somehow can't do it. They would just like smash the avocado into like, you know, a mess on the floor. But if the has a technology that can do that job, why not? Why not take pressure off employees? Why not take pressure and presumably, of course, as well? Yeah, absolutely. But I mean, this is all it'll take. Long term investment says I did. You know, I had to chuckle when he gave the response about the breakfast because, as you know, I mean, everybody has been on his back and and it's Friday, even as producers are back. Why are you why don't you have a breakfast menu? Why don't you competing with McDonald's and and the other fast food chains and the. Breakfast at wonder value. But this time but they've all they've held firm on that The idea is that yeah I mean they found their niche and they want to dominate that niche rather than just trying to do what everybody else is doing. So I don't, you know, it's work for them. Obviously you see that in the share price and more importantly you see it in their fundamentals. Do what you do well, yeah, and forget about the rest. This is a closed on Bloomberg. This is the countdown to the close. Just about 30 minutes left to go here in the trading day, Scarlett. And yesterday, that's a lot of price action and equities today having a pretty good day, at least if you're a Texan. Yes, for sure. Let's take a look at how this is all reflected in the different sector performances and remain mentioned if you're big on big tech. Look at the biggest advancers here in terms of sectors, communication services, information technology and consumer discretionary. The Magnificent Seven on a roll today, you can see communication services up by three and a third percent. Most of this pie is green. I'm going to let Romain get to the details, the exact individual movers here in terms of weaknesses, we're seeing some weakness in energy stocks, in utilities and in health care. But really, by far, this is an overall update for me. Yeah, an overall update. You see 64% of the members higher here on the days, not the broadest of rallies, but I think some will take it. I do want to point out a couple of interesting movers here. We were just talking with the CEO of Chipotle about his expansion plans, saying that they can go from roughly 3000 plus stores to 7000. Well, Domino's is saying, well, hold my beer. They're planning an expansion plan of about 5500 stores. And the CEO there saying that they could actually achieve a long term annualized growth rate of about 7%, basically between 2024 and through 2028. Investors like what they heard pushing those shares higher on the day. Meanwhile, Walgreens Boots Alliance, take a look at this. 8% here on the day it rallied yesterday on the two day run right now is actually its best two day run all year long. In fact, I think in more than a year, if I double check that number here. Now, no real news, but there has been some optimism coming back into this space. Remember, this is like the second worst performer in the Dow and one of the worst performers in the S&P this year, as are a lot of its peers. So this could be a little bit of sort of trying to find the bottom and finding value. Meanwhile, PayPal lower by about 2% after Amazon said that it's going to discontinue use of PayPal's Venmo service and Klaviyo down 5% here on the day down, this is the fourth straight day of declines. And take a look at that price, 2883. Remember, it went public earlier this year at $30 a share. You don't need to do the math now, trading back below that IPO price. All right. We're going to shift gears here and take a look at real estate, because Nuveen has released its global outlook for real estate for 2024 and the firm expects differentiation across sectors and geographies will continue while pessimism around commercial real estate will cool as we get more clarity on interest rates. Joining us to discuss this report is Carly Tripp, global chief investment officer and head of investments for Nuveen Real Estate. Carly, it is good to speak with you. When it comes to commercial real estate, are we at the peak of when it comes to pessimism for real commercial real estate or have we passed it? I Scarlette Thanks for having me. Ramona and Scarlett. Great to be here today. I sure hope we're at the peak. What I can say is it's hard to fake the peak, however. If we look at valuations and what's happened since the Fed started its latest rate hiking cycle. Of course, real estate valuations have been under pressure. However, we have seen a lot of moderation, particularly in the in the last two quarters. So the wet blanket for the industry overall, of course, has been office. But if you look at other sectors, they're starting to turn the corner, particularly as it relates to industrial and retail. We're seeing very, very strong fundamental performance across housing as well. So not all real estate is created equal. Of course not. Are you seeing do you anticipate transactions to pick up, though, in 2024 as interest rates stabilize? Or are these kind of just paper gains in the in the meantime, net transactions are down about 70%. They have been for the last two years. And so that's that's hampering our ability, obviously, to have a fully functioning capital market system. And what we're seeing now is there's a lot of sellers that are a bit sick of waiting on the sidelines. Right. They're calling the end of the rate cycle see more clarity around stabilized valuations. And so in talking to a lot of large investors, particularly in the U.S., they are going to start taking some chips off the table because they do still have a lot of strong embedded gains. And so I think as we normalize and as the uncertainty around rates comes out of the market, that we will absolutely see more transactions next year. Carly, I am curious. I mean, as those if we do start to see a big pickup in that and it gets I think partly to your comment to the previous question, which is the idea that this is a market, I mean, we kind of lump everything into the same basket when it comes to commercial real estate, but there are some pretty significant disparities. And just yesterday we were talking about just how much office still lags other sort of real estate investments. But I was actually kind of intrigued by how well certain commercial real estate assets have done, at least in the industrial space. And I guess to a certain extent, when it comes to what is it like shopping malls as well? Yeah, it is surprising that malls have made a rebound. The American consumer, as we all know, has not disappointed us in in light of even the market. Uncertainty that we face. So consumerism is still really, really strong and supporting the mall space. There is a bifurcation, of course, between high quality malls and not, and a lot of retail has been repositioned. So about 130 million square feet of retail over the last five years has been repositioned into other uses. And you combine that with the fact that over the last decade, it's really been undersupplied. And so we have a lot of well, we have a lot less retail in the US than we did a decade ago, and that's really helped to support that market. If we look at industrial, it's really been the winner categorically. So real estate is an inflationary hedge. That's why we like it. That's why it's a great diversifier during these times to a portfolio. Industrial, if you look at the performance fundamentally operationally since the Fed, again we kind of look at it cyclically since they started hiking income has grown by about 10%, whereas inflation over the same period is tracking around 4%. So again, very, very strong performance there. I am curious if you've in this may this may be a little bit harder to extrapolate, but there's been so much talk about when at least in the industrial space, when it talks about got a modernizing or on shoring our supply chains and modernizing a lot of things that for years we've kind of outsourced to other countries. And I know that's a slow process, a much more longer term process. But I'm wondering if you see any upside for specifically real estate investment if that push here in the U.S. continues to bring more stuff back here onto our soil? Yeah, absolutely. And I think if you look at on shoring jobs, they've really picked up over the last year, year or two. There's a lot of data supporting that. So we are seeing increased jobs. From a historical perspective in on shoring, I think more supporting the industrial market, of course, is the continued infiltration of e-commerce. E-commerce has really become a necessary part of the omnichannel for all retailers and that continues. But also supply the bottlenecks that were created, the inflationary pressures, the lack of labor has slowed supply and deliveries. So whereas that was the concern two or three years ago, that's no longer a concern and we're still structurally undersupplied overall for industrial. So that will continue. I think that the most important quality of industrial is location and having access to the end consumer. So that tends to actually be older stock because the older the stock, the closer it is to consumer. So it's not necessarily the need to modernize space depending on ultimately who the user is. What we look for is really access to the end consumer. All right, Carley, really appreciate your joining us and sharing the overview for 2024 when it comes to real estate. Carly Tripp is global chief investment officer and head of investments for Nuveen Real Estate. Now coming up, we've got the top three hour news segment where we focus on the top three movers and shakers at the center of the day's biggest stories. This is the close on Bloomberg. It is time now for the top three. Every day at this time, we do a deep dive into the people at the center of the day's top stories remain. Kick things off for us. Who do you have your eye on? Well, let's talk about Sean Fain. He leads the United Auto Workers out here in the U.S. And of course, he has been the man in the spotlight for a while. Of course, the big fight against General Motors, Stellantis and Ford. And he made it clear after closing out those negotiations, he was going after the other non-unionized automakers, including Tesla and Volkswagen. And apparently, according to some media reports, he's already made some progress, at least at Volkswagen and a specific plant in Tennessee where apparently they signed up about 1000 non union workers who are interested in joining the U.S. doesn't mean they're in the union now. Right. This is just the first of many steps. But, you know, it's interesting because even with the UAW working to get those contracts, better contracts for GM, Ford and that was the last company name, I want to say Chrysler, but I still think, you know, my old school Stellantis makes no sense. We've had this conversation. I mean, think about all the great brands, Chrysler, Dodge, Jeep, all make it a name, the company, all that I know. Joseph, do they do that? I think it was like a management consultant came up with that. In any case, a lot of the non-union consultant still has his or her job. I don't know. That's a good point. Yeah. A lot of non-union workers also got pay increases as well, in large part because of what Sean Penn was able to accomplish. Yeah, absolutely. Here. And it'll be interesting to see whether the the labor gains that were made with unions this year, which of course we know was tied to the strength of the labor market and whether that can sustain itself beyond this year. That is a great point. Speaking of labor markets, Scarlett, you've been taking a look at somebody who I think is doing pretty okay. Yeah, we are talking about Juan Soto. He is the all star that was traded to the New York Yankees marking the second trade in less than 17 months for this 25 year old outfielder, a three time all star slugger. He is going to join Aaron Judge in the outfield. So Yankees fans are rejoicing right now. Yeah, I mean, well, that's going to be a killer. Well, not just an outfielder killer at the plate. And more importantly, assuming that, you know, he stays healthy and I know all the caveats about I'm confused by this because I saw you put this story out there to talk about Juan Soto. I like is is he the most important person in baseball right now? Because last time I checked, there was somebody else who was sucking all the oxygen out. Yeah, he's kind of like the drumbeat to the big one, right? Yeah. Shohei Ohtani, Where is he going to go? Who is he going to talk with? This is a big mystery. This is a big question mark during the off season. And he's going to be the price. Don't tell me he's not going to the Yankees. Well, I know that his team had spoken with the L.A. Dodgers. Okay. And, of course, he played for the Angels and maybe he'll want to stay in Southern California as opposed to New York. So, I mean, it's a big question mark and certain to have a big, big, big wallet. And could you fill out for him your reporting? According to the reporting I saw, they said basically anything he signs is probably going to be the biggest contract of any athlete. Is that correct? Or just baseball? Definitely baseball. I don't know about any ugly, but he is just what they said was going to surpass Patrick Mahomes. He's like at 400 plus million with the Chiefs. And there was another one who also had like a four year old Mike Trout, and they had like 429. And there's others saying he could be like around 500. He is a true two way player. Yeah, pitcher and hitter in every way. So even when when he was injured, he was still in the starting lineup every day. All right. Our third person out there. Why do you think Marc Benioff, I guess, is sort of related to the labor market? This has been a year of efficiency for him. Believe it or not. He's actually cut headcount that sales force by about 11%. And there's an interesting story in the Bloomberg Businessweek this week. The cover story, in fact, about kind of the end of an era, you know, kind of, you know, being a salesperson for some of these tech companies, software companies. It was a good gig. I mean, you know, you could come in, you could make three or four or $500,000. You had all these perks, including, as Bloomberg reported, you know, $800 dinners. And it was it was it was like lavish life. And, you know, if you're cutting costs, you know, that goes away. Yeah, that goes away. I know. And of course, you know, he named his company Salesforce. So it just tells you how much importance he places on the Salesforce to to peddle their enterprise software. And in fairness, I don't think he can completely scale that back. And this isn't just specific to CRM. I mean, there are so many other companies in this space without their salesforce, they're nothing. You go last Microsoft, you go as a service. Now you go ask some of those companies. It's those people on the ground who are doing the same thing in Salesforce, more efficient Salesforce. So only $400 dinners for you. That is the cover story on Bloomberg Businessweek. A great read here about some of the changes taking place under Marc Benioff. Richard Weiss I love CIO over a Multiasset strategies at American Century Investments. He's going to be joining the program in just a second to help us count down to the close right here on Bloomberg. And this is the countdown to the close Romaine Bostick here with Scarlet Fu 10 minutes Scarlet Fu until they ring those bell. It's not really a bell. It's like a button. But anyway, 10 minutes until they push that button on the bells here. Pretty strong rally going on, Lisa, when it comes to the NASDAQ. Yeah, The Magnificent Seven is looking pretty magnificent today and it's driving up the S&P 500 to a gain of 8/10 of 1%, which from what I can tell is the biggest gain in about three weeks. So it's been a quiet three weeks in terms of fairly modest moves. But you have a breakout today. And again, magnificent seven up by more than 2% right now. Yeah. And keep an eye on yields. That's going to be a big story tomorrow morning once we do actually get that monthly jobs report. I think the market's setting up for that. But then look at dollar yen. I mean, this is a huge move. I think the biggest move in the of the year. Yeah, the yen is on a major roll. Its higher against all the major currencies. We have heard from the BOJ governor and his deputies making comments suggesting the end of negative interest rates is coming closer. They haven't done anything yet, but they may be getting ready to do. They haven't done anything yet, but the market thinks they will and the market has been thinking they will for I mean, I feel like on several years now, but oh yeah, this time it does actually feel imminent, if you will. All right. Let's get right to it here. Counting down to the closing bell with Richard Wise Guy, CEO of Multiasset Strategies at American Century Investment. Rich, always great to have you here on the program. And I want to start off asking you about kind of the competition for return out there, the idea that, yeah, equities have had a phenomenal year, much better than what anybody expected. And if you believe most of the strategists, it'll have a relatively decent year next year. But as I was telling another guest, you know, I can still get basically four and a half to 5% in a savings account. I mean, I have to go into the Treasury market and if I go into fixed income, I can get six or seven on a risk adjusted adjusted basis. That is probably better than what I would get in equities. Exactly. That's exactly our thinking here. And if you know, you're expecting a slowdown of any degree, much as a recession, you'll have interest rates coming down further. So if you have any duration in your fixed income portfolio, you'll get that added on as capital appreciation. We think bonds are going to give stocks a good run for their money here in early 2024 in cash. Cash, I think it's fair to say, is still king. You know, granted, this past year, stocks have had a great return out, returning cash, certainly. But if you look back to the end of 2021, you look over the last two years, cash has significantly outperformed, let's say, the S&P. I think cash is up around four or 5%. Total return stocks are down 1% over that period. So fixed income is where it's at. Yeah, Well, so then what do you make then, I guess, of some of the moves that we've been seeing in the bond market, the idea that the peak in rates is behind us and people are now starting to look for four or maybe even five rate cuts into 2024. Is that just wishful thinking? I we think so. We think, first of all, stocks have gotten a little bit ahead of themselves. You know, you look at the VIX index, the volatility or fear index and you see a down at 12 or 13. These are levels we have of calmness in the volatility index that we haven't seen since before the pandemic. And, you know, I don't want to sound like what was it, Elmer Fudd? You know, it's quiet. It's too quiet. Yeah, I know, but but the VIX is that low. Now, granted, Fed Funds futures are looking for rate cuts early in 2024 and maybe four or five of them throughout the year. And I can understand why, because fiscal policy, accommodative fiscal policy is not coming to the rescue in 2024. It's just inconceivable that Congress would have the appetite to pass a big bill with the debt and budget deficits where they are. So it's going to be a lot of pressure on Chairman Powell and the Fed to lower rates as we enter this slowdown, especially if it nears recession, political pressure or market pressure. But that doesn't bode well for stocks either way. Stocks hurt earnings yield or what, around 5%. You can get five and a half percent in short term treasuries. I don't I don't see how you can bet on stocks. Yeah, but there are always people who fall in love with a story. And one of the stories that everyone's loved the last year is AIG. Is there still any juice left in that narrative? And is there any way to participate that aside from beating up the likes of NVIDIA or AMD? Oh, no question. You had the Magnificent Seven. There's certainly shown. Well, I mean, next to what Bitcoin, they're some of the top performers, the real stars last year. But we see the benefits of AI across a variety of industries. The productivity improvements in the medical field, the legal field and the investment field, right. There are many, many jobs requiring rote analysis, which AI is well-suited to replace. So, you know, human or ethical issues aside, the productivity gains. In some of these fields where I will be most applicable are going to be great over the next five, seven, ten years. So when you look at what's going on within equities, you talk about how the good news is all priced in at best, where at the end of the rate hiking cycle, maybe we avoid a full blown recession. How much will tomorrow's jobs report kind of give us a clue as to what the direction is for 2024? I mean, are you counting on it to move the needle in any way? Well, we know what the consensus is, right. But that there is this immaculate disinflation, Goldilocks soft landing, Santa Claus rally scenario going on. And one thing all of those have in common, of course, is they're they're myths, right? They're fantasy. They're made up. But as far as the labor markets go, that's when we start to see cracks in the labor market. It obviously means we're heading into this slowdown. You can debate whether it's going to be a hard or soft landing, but we are slowing down. And the labor market, the jobs market is always the last shoe to drop in an economic cycle. You know how fast the unemployment rate rises? What is it? The old Sam rule that's been bandied about recently is a good recession indicator there. So if unemployment jumps high, I think people are going to run to the more back to the recession scenario. It's a key set of indicators to. Tomorrow, all eyes on the job data. What Richard, you're drawing cold water on this. I mean, everyone is telling me they see the light at the end of the tunnel here. And, you know, you know, Romain, I know you bring that out. I forget if you're you're bringing it up because you're a metalhead. Okay. But you remember that. Yes. There's a song by Metallica, you know, Leaf clover. It's something like that. Soothing light at the end of the tunnel May just be a freight train headed your way. And I think that's the lesson there. Again, there's just too much weighing on the economy right now, combined with, you know, historically high debt and deficit levels. So the federal government's not going to be able to come to the rescue this coming year. Yeah. All right. Rich had a rough week. Yeah. All right. We're going to have to leave it there. That wasn't our first Metallica reference on the show, and it won't be our last, I should point out. You did give us Rich, our first Elmer Floyd reference, I think, on this program ever So always appreciative of your time. Richard White, CEO of Multiasset Strategies at American Century Investments. Helping us count down to the closing bell Scarlet Fu. We're just about 2 minutes away from that. You're metalheads. There's a lot you don't know about me, Scarlett, you know? Yes. I'm just going through another one. It's very powerful. So puppets for the markets? Yeah, that's right. Food market coverage right here on Bloomberg. Stick with us. We're about to take you to the bell and beyond. Beyond the Bell. Bloomberg's comprehensive cross-platform. Coverage of the U.S. market. Close starts right now. And right now, we are 2 minutes away from the end of the trading day Romaine Bostick alongside Scarlet Fu. We're counting down to the closing bell. Here to help take us Beyond the bell. It's a global simulcast joined right now by just met and Paul Sweeney in today for tim stennett and Carol Massar. A welcome to our audiences across all of our bloomberg platforms. That includes television, radio, Bloomberg originals, as well as our partnership for those folks streaming on YouTube. Jess, a good day in the markets all around, but particularly good when it comes to the big cap tech stocks. Yeah, when you look at this, especially communication services, right, leading the way up around communication. That's exactly right. So thinking about like discretionary tech, autos is just tech. Everything matter. All that stuff about all that stuff. Yeah, well, if you look at Alphabet, though, I mean, yes, it's housed in communication services as well. Yes. And number one, alphabet changes name. And everybody is the most radical Google parent alphabet. So it's always fun as a reporter. But still put that in my copy. I got to know how long you know, how long it takes us bankers to come up with these ticker symbols and then they go switch the name of digital. Well, I think it's funny, Paul, that they never switch the ticker symbol. Right. Shouldn't be like ABC. Yeah, true. Very good point. But Facebook did change it when it went to Meta. It did. Exactly. And I have a feeling they got to change it back at some point. Just around meta. All that stuff About all that stuff. Yeah, well, if you look at Alphabet though, I mean, yes, it's housed in communication services as well. Yes. And when Alphabet changes name and everybody here is the most radical Google parent alphabet. So it's always fun as a reporter, but still put that in my copy I got you know how long you know, how long it takes us bankers to come up with these ticker symbols and then they go switch the name of digital. Well, I think it's funny, Paul, that they never switch the ticker symbol. Right. It shouldn't be like ABC. Yeah, true. Very good point. Facebook did change it when it went to better. It did, Exactly. And I have a feeling they're gonna change it back at some point. Given the way matters go in the metaverse. Whatever happened in the metaverse, did I miss it? No. He's still investing in it. It's just not as robust and he's not making such a big deal about it. Just be quiet. He's focusing on cost cuts and that's word for the stock. Yeah, certainly so. And I mean, we should just point out, I mean, we kind of joke about this, but on a day where we're seeing all seven of the all seven of the magnificent Seven stocks in the green, but firmly in the green, too. I mean, alphabet up 5% on the day, metals up three. And in a video, of course, which is everybody's darling this year up more than 2%. Amazon getting a bit as well Apple and the likes as well about 60 plus percent of the S&P 500 moving into the green. And that gives us an 8/10 of a percent gain on the S&P on this Thursday afternoon. That's higher by about 36 points. The Dow Jones Industrial Average up by 63 points or about 2/10 of a percent, while the Nasdaq, which we were just talking about, up almost 200 points or about 1.4% on the day. And just let's take a quick look at the Russell 2000. The small caps higher on the day, but the relative laggard, a bit of a switch from what we've seen in previous days, but higher by 9/10 of a percent. If you look at the number of daily advancers in the S&P 500 up about 63% of them higher, you look at the daily decliners, 37% Scarlette. Yeah, and that shows up in the sector performances as well. There's only five sectors in the red. Everything else is in the green led by media and entertainment. So we talk about communication services. You want to slice it a little finer. It's media and entertainment that's leading way up three and a half percent chip companies and that's in video and AMD up two and a half percent. And autos, Tesla gaining 1.3% on the downside, energy, commercial and professional services and utilities in the red. Yeah, I'm looking at some of these gainers here since we've been talking about it's been the big tech names. I just look at my good friends at Google and I'm going to keep using Google. Apparently they have an AI offering as well, Gemini, and that's what the market likes to see there. So you got to think of a company with the size and resources of Google. If there's an AI play, they will find it. And then in the chip space, AMD, the CEO debuts a new chip again focusing on AI, and he puts out a really bullish forecast on his expectation for the market, for the chips, for a guy. And that got everybody's attention and that beat up a lot of anything AI related. And that includes in video which had been, you know, and probably still is the poster child for getting exposure to AI looking at these decliners. Paul, you and I this morning and pre-market we were talking about Chewy. Yes, I was the one and only Tom Keene. It came well off the session low. So closing about 6/10 of a percent lower now. So really paring back some of those losses from this morning. But the stock did drop after the company did cut its guidance for the full year on net sales. So that did miss those consensus estimates. Another stock I'm looking at is sprinkler C X, and that's a $3 billion market cap company. But this is an enterprise software company. So if you look at this dropping 33%, this is its biggest drop on record. It did come after the company did post a stronger quarter. That included a top and bottom line beat. But unfortunately, if you look at some of that growth outlook, it did disappoint investors. And then don't tell time. I'm keen on bringing this one up, but C3, I of course we talk about some of those and they're sort of crypto related stocks, but air is the ticker symbol on this. But looking at that stock dropping close to 11%, worst day since September 7th. But this is a data management company, though, if you look at this. So issued a forecast for an operating loss for the fiscal year. Yeah, a lot of the air names down which point out a lot of the enterprise software companies moving lower on the day, including Okta and a few others on the back of additional weak earnings in that enterprise space. And Klaviyo now dropping back below its IPO price once again. Meanwhile, you go to the Treasury market and the price action was a little bit more muted. Maybe a lot of folks are kind of waiting until tomorrow when we get a jobs report and next week when we get that big Fed meeting here. But you take a look at the moves across the curve here on most of the activity you're actually going to find on the shorter end of the curve that pushed the two year yield down just ever so just a bit here while the rest of the curve did move higher, just a little bit here. So the belly out to the log in a bit cheaper here right at the close. It definitely feels like we're in a holding pattern right now waiting for this jobs report. And I'm not sure it's going to clarify all that much. Right. I mean, the narrative is pretty much set that the labor market is cooling and inflation when it comes to wage increases is going to slow. Of course, it's not going to get to that three and a half percent year over year number that the Fed is looking for, but moving in that direction. Two interesting things in this report. We're talking at the average of estimates based on the Bloomberg survey, 183,000 jobs created. Now, Michael McKee points out that about 33,000 of those jobs are related to the UAW strike. So that puts us more about 150, which is in line where we were last in the previous month. But what I also think is interesting is that nobody really expects the unemployment rate to change and nobody really expects a material change in the rate of average hourly earnings. Yeah, well, I think still, you know, we're looking at real average hourly worsening earnings, up about 4% year, year on year on the consensus basis. That's the outlook. That's pretty darn solid out there in a fully employed economy here. So still decent, very strong labor market, very strong labor market. Now we're starting to see it again continue in wages, continuing in wages. And it's, you know, the definitely thinking point here for the Federal Reserve, just this is going to feed into expectations for inflation, which of course is going to be the next data point for everyone that's coming on Tuesday. So we'll have CPI then and then Pie producer Price is also a component in that is trade services, which is a key gauge for thinking about what that means for corporate margins on Wednesday ahead of the Fed decision. So we still have a lot of data coming up before 230. And obviously when Powell speaks on Tuesday within 2:00, we also got a lot of earnings still hitting the wire, including DocuSign and Lululemon. Let's get right to it. Lululemon shares down here in after hours trading. The headline numbers coming in for the third quarter. EPS at a dollar $0.96 a share. Not quite clear the comparison on that just yet. But taking a look at the revenue figures, it does appear to be pretty much in line with estimates, $2.2 billion. The adjusted EPS figure also does look like to be a modest beat. Their forecast for the fourth quarter. Here you go. Revenue a range, 3.14 billion to 3.17 billion. The Street was looking for 3.18. So the top end of that range, just a whisper below what the street was looking for here. And the company also saying that for EPS in the fourth quarter, for 85 to $4.93 a share, the street on average was looking for 4.93. So the top end of that range beats the average estimates here. So not really looking like it's going to be a major beat should those numbers actually come to fruition. You know what, I'm looking through the release here and what's interesting and what strikes out at me is this partnership that Lululemon has entered into with Peloton for using its content, its digital fitness content, so it no longer produce its own hardware, which is the mirror that it acquired a number of years ago. But it's going to use Peloton software. I know that it had been looking to sell the mirror but was not able to find a buyer just yet. So I guess this is it. Now, I'm actually intrigued by this because remember when they bought that, everyone kind of scratched their head and they say, is this really the direction they want to go? And I guess we are now the answer. BALL You know, the big news of the pandemic, which made Paul Paul's very big, big on the Peloton bike guys, you don't want to go up on the treadmill, right? We have to on this as well. But I do have the mirror and I repeat, I do not wear Lululemon when I'm on the bike. So just to get that immediately, can I just say, Paul, I'm sure you might want to change your mind. I was a Lululemon hater. And you know what I did somebody I was looking for a good golf shirt. I know you're a big golfer and somebody recommended one of their shirts and I'll give you the exact name of it off air. This shirt is fantastic. But all right. I mean, it is a shot of whiskey. Whiskey. If it starts raining, the droplets just fall off the ball. It's like a salesman for I'm a believer now. That's the only item I own from that. But sell it was you Wait because you wear suits every day because of what you do. But if you could dress down, you'd be wearing Lululemon. Well, from the waist. Well, from the waist up. No, we have full body shots, all of them on television. We know that you're wearing a three piece suit. Maybe that's hilarious. But any time I hear Peloton. I always think of parties. SWEENEY That was a pandemic. STARK Like no other boy. Talk to it. Look at you, Paul. Oh, yeah, yeah, yeah. But before we move on, I just want to get. Sorry to interrupt, though. We did. We did get some other earnings out of DocuSign, and I just want to point them out because this is one of the biggest movers in after hours trading right now to the upside. They had a big beat in the most recent quarter, those three Q numbers on an adjusted EPS basis, $0.79 versus an estimate of $0.63 year. And the revenue numbers also came in about 10 million above estimates. They gave a full year forecast of 2.75 billion for full year revenue here, which would actually atop their previous forecast as well as average on the street. And of course, we're still waiting for Broadcom to release its results as well after it absorbed VMware. Okay. Yeah, I think we got to go, guys. We should point out RH also crossing the wire. We'll try to break that down for you after the break here. But that net revenue number coming in a little bit light. That does it for our cross-platform coverage of the market close on Bloomberg Television, Radio and YouTube. And just a reminder that Bloomberg Businessweek is now on Bloomberg Originals will all be back tomorrow at the same time, same place. And we continue our coverage here on Bloomberg Television. We are awaiting additional earnings results, this time from Broadcom. We'll bring you those results up next right here on the close. This is Bloomberg and. A pretty solid day in U.S. equity markets. S&P, Dow and the Russell up fractionally on the day, but it was the Nasdaq was a big outperformer, up more than a percent. But here's the thing. Yes, the Magnificent Seven did their job today. But you continue to see when we have these rallies a much broader participation. The chart behind me ignore the headline, but you take a look at the lines down at the bottom here. These are basically the new highs and lows that we get on a daily basis here. On a percentage basis, I should point out to about 11% is the line that we have for the S&P 500. And that's significant here because you can see through a good portion of this year, particularly back at the end of last year and in the beginning of this year, we really were not seeing that type of breadth. So to start to see that daily breath perk up is a good sign and maybe a sign that this rally does have some legs to it. Take a look at the Nasdaq back above 16,000. Bitcoin taking a bit of a breather after breaching that 44,000 mark. Now I'm ex crude, now higher here in the new session. It basically straddled the line between gains and losses on the day. But the trend line, at least on a technical level, still remains to the downside. Dollar yen was the big outperformer on the day when it comes to the epic space year. A really, I guess, shocking, if you will, or maybe encouraging announcement or commentary because wait, over at the BOJ, there's a lot of folks betting on the yen strength as well as a rise in interest rates over there. Meanwhile, back here, the trajectory of interest rates will be determined not just by inflation but by the labor market. The monthly jobs report from the US government set to drop tomorrow and I took a look at sort of the average of nonfarm payrolls. This is a 12 month average. So just to kind of smooth things out, obviously you see the big blip in there on the far end of your screen. That's from the pandemic year, but we're still above trend. And that's a big issue here because we, the Fed, wants to see that softening labor market and at least based on the 12 month average, we are not there by any means yet, Scarlet. There's still a ways to go. All right. And of course, we will bring you full coverage of the jobs report when it comes out tomorrow at 830. In the meantime, we do want to get you up to speed on what happened after hours with Lululemon reporting its results. It gave guidance that was a little bit light of expectations and that has left the stock lower in after hours trade. Let's bring in Bloomberg's John Edwards for more. And John, you look at how the stock has performed over the past year, up more than 40%. It was kind of priced for every good scenario and not priced for any kind of disappointment. Yeah, that's absolutely right. It was really priced for perfection and even Lululemon couldn't quite achieve that. So it's, you know, taking taking a bit of a breather there. But yeah, it looks like the the outlook is a little a little light. There is also some concern on the gross margin figures and operating margin. Those both came in a little below expectations. So something to watch there. You know, if they're starting to falter slightly on their profitability, but overall, a strong report from them, just not, you know, as gangbusters as perhaps people were hoping. I am curious, curious I know this is probably a little less consequential to their bottom line, but the mirror business and more importantly, that hardware business that I think a lot of people are scratching their heads when they moved into that space. But they saw a way, at least at the time when they made the announcement that, oh, this is going to bring more people into the store. It was a way to keep people connected to after they leave the store because they would have this at home here. They're now abandoning that more or less here and taking a charge on it. Yeah, well, it just didn't quite work out the way they were hoping. You know, the the growth just wasn't quite there. As, you know, some others in that connected exercise space have found it, you know, became a very crowded area with not just Peloton, which of course, they have a deal with now, but you know, with Yeah, yeah, things like NordicTrack and stuff like that. So that's still around. Yeah. Yeah. They've got a whole thing going now. Nevertheless, they wanted to sell it and they haven't sold it, so they're taking charges related to it. Is that something they talk about? I mean, what, how, how has it worked out for them overall? Like, did it actually bring in the traffic? I think, you know, not what they were expecting. Yeah. Basically, it's not something that, you know, they feel like it's going to be core going forward. And so, you know, it's time to basically, you know, get what they can for it and move on. All right. John Edwards, who leads our consumer coverage here, a closer look at Lululemon numbers that are coming in pretty much in line with estimates. But the Street clearly wanted to see something stronger. Broadcom earnings Avgo crossing the wire right now shares modestly higher here in after hours trading with four Q adjusted EPS coming in at $11.06 a share. The Street was looking for 1093 revenue coming in at $9.3 billion and semiconductor solutions revenue coming in slightly above estimates at about 7.33 billion. The company also giving a forecast for 2024 revenue of about $50 billion on a full year basis. Ed Ludlow joining us right now to walk us through anything additional that he might see and more importantly, Ed, kind of what we should hear or what we expect to hear once we get to the conference call. I think the important thing is that in the fiscal fourth quarter, just gone those numbers. This do not reflect any contribution from VMware, Right? Because that is a transaction that closed in the quarter on November 22nd. On the semiconductor side of the business, they were ahead of what we're seeing is pretty low expectations. We be in the fourth quarter on the top and bottom line. But remember, this is the slowest pace of growth for Broadcom since 2020. And the story for them is that their end market customers like Apple struggling to sell handsets, they also make the chips that basically help different computers within a datacenter system. All different server designs communicate with one another. Then when you look at the full year outlook for 24, that does include VMware. But the guide we're getting remain is that on the semiconductor side of the business, they'll continue to grow in the high single digit range, which kind of tells you that things might improve slightly from where they currently are. Top line growth of 4% in the quarter gone. With that, I love for Broadcom that everyone else has got. Yeah, well, that brings me to my question, which is A.I., and I'm sure it's something that they want to talk up. What? Yeah. What kind of concrete benefits are expected to see when it comes to Broadcom and AI? Because all the talk so far has really been about how you're not going to see any real result until the second half of 2024. Yeah, I mean, Hock Tan is really talked up the AI potential over a number of quarters, saying that the turnaround will be quick. Right. They could be 25% of revenue pretty quickly. If you think about it in the datacenter context, right, the GPU is stolen, the limelight in the AI story. But if you're going to build data centers and server designs powered by cutting edge GPU, you need all the other cabling and networking gear that goes with it. And Broadcom could potentially be a beneficiary of that. And that's where he's talked it up. And I mentioned on the call, we'll talk it up again. All right, Ed Ludlow, we will watch for headlines from the earnings call after Broadcom reported results. It was a beat on the bottom line here, 1106 for the fourth quarter adjusted EPS, but the stock is down. Thank you so much. Coming up on the close, we'll be hearing from Christine Benz. She is director of personal finance at Morningstar about where you should put your money in 2024 when you want to make the most of it. It's a planning series on where you should go for your money. Moving ahead. This is the close. I'm Bloomberg. And. Chip Bergh, the CEO over at Levi Strauss, will be leaving the company sometime next year. A berg, of course, who took over as CEO back in 2011, coming from Procter and Gamble, is said to be stepping down in April. They are going to promote Michelle Gass, who is currently president, and they will promote her to be both president and CEO. Chip Berg is going to be retiring April 26 over at Levi Strauss. And that's not the only change. We also got word from Crown Castle and Infrastructure read that their CEO is also retiring. Jane Brown is retiring as president and CEO. And so the company has named Anthony Malone as its interim CEO. Crown Castle, once again, the infrastructure. Also announcing a CEO transition. Yeah, that's interesting, too. I mean, he's been there for a while. Cameron when he exactly took over. But he's he's been with that company basically since the late 1980s. All right. We do want to pivot away from that and go to the world of, well, personal savings, personal investments, personal finance, money market fund assets continue to rise, rising to $5.9 trillion. That's a fresh all time high. It's a sign that people are getting more comfortable parking their money in these funds amid high interest rates. Christine Benz is director of personal finance at Morningstar. And I'm pleased to say she joins us right now. And Christine, I do want to start off talking about personal savings, because, as you know, there was a pretty extended period of time in this country where it didn't seem like anybody was saving any money. At least that was reflected in any of the aggregate numbers. Has that changed meaningfully or are we just talking more about it? Well, we did see a really great trend in savings during the Covid period. As you would expect, people didn't have a lot of things to do with their money. So we saw savings rates really jump in kind of the 20, 20, 2021 period. Last year we saw a significant erosion in personal savings. I think it's a combination of a higher inflation, more recently higher interest rates. And now with student loan debt repayment coming back online, I think those factors have conspired against savers and have made it difficult for people to find assets that they can put away for the short or long term. Overall, I mean, depending on how you were invested this year, this has been a pretty decent year, whether you're invested in equities or even in bonds and fixed income and other areas as well. Of course, as you know, that raises a lot of tax implications as you get to the new year, as people now have to kind of take stock of what they made and what they lost and how that is going to sort of be reflected in what the IRS wants you to reflect. Absolutely. So we cover a lot of mutual funds here at Morningstar. One thing we've seen is that these funds make these capital gains distributions typically in the December period. And because we've seen investors retreating out of actively managed mutual funds over the past several years into exchange traded funds which they perceive to be more tax efficient. The problem is if you're left in a an actively managed fund, you've had these big capital gains distributions which in turn trigger a tax bill. So it's been been a bad cycle for mutual fund investors, cash investors with yields higher. Of course, there's nothing wrong with that. But from a tech standpoint, that gives you a bigger tax bill as well. So my guess is that investors will see more taxes associated with their accounts for the 2023 tax year. Do you see investors worrying about the interest rate environment as they make their plans for retirement for 2024? Or is that something that they feel because I can't control this, because it's so data dependent, because it seems to change day after day? I'm not going to put too much stock in that. Well, my hope is the latter that investors just sort of maintain that long term mindset. One thing we've seen is that investors have been a little bit more active. You mentioned that, that we've seen great inflows into money market funds. My worry is that some investors are overdoing the cash accounts, especially given that we know cash will underperform bonds and certainly stocks over long periods of time. And, you know, if inflation is even a little bit above the two or 3% range, that gobbles up every bit of your purchasing power. So I am a little concerned that some investors are actually over doing the very safe investments. Maybe they're worried about interest rates or what might happen with the equity market if the Fed does end up cutting interest rates. How quickly would we see savings account rates, the high yield money market rates, the CD rates start falling? Does that happen instantaneously? Does it happen by the same margin? It depends on the product, but typically we do see a pretty rapid reflection of lower yields in the form of lower interest rates. On savings products. There's a pretty direct correlation. So savers will see that decline reflected pretty pretty quickly in their savings. Instruments that are on offer at their banks. I want to talk about some of the demographic differences. I mean, demographics, I mean, age, obviously, you know, six year old is going to probably invest a little bit different than a 20 year old, given the shorter time horizon. But I'm wondering, are there any sort of ties that bind that bind those two sort of groups, you know, meaning the younger sort of cohorts out there and the older folks who are closer to retirement? Well, the interesting thing is, you know, it's been such a great equity market for so long that even though the older cohort should be de-risking their portfolios a little bit as retirement approaches and as they get closer to needing their funds, my sense is that it's very difficult to get them to de-risk because they've had a great experience in stocks over the space of several decades. So I think that that's a tie that binds younger and older savers is there is a fairly strong risk appetite from both groups. And there's a sense, too. And I mean, I could just tell you, I mean, I've had family members who are either at or either in retirement or close to it who've got to raise this issue. Right. The idea that they know that they're supposed to be, in theory, moving into fixed income and things like that and basically preserving cash. But the idea is that they've had so many gains, they feel like, why would you want to miss out on another ten or 15% run rate? The FOMO is real for people who are getting close to retirement, and certainly bonds are just the least loved asset class, especially given what we saw happen with interest rates and their effect on bond prices in 2022. It's very hard to get older investors to even consider bonds. It's either cash or equities and forget bonds. Yeah, it's a little bit of a hard sell. Christine, really appreciate your joining us. Christine Benz is Morningstar director of personal finance. Coming up, will the rally in stocks continue? New contract CEO David Treanor is our next guest. This is a close on Bloomberg. Romaine Bostick here with a look at how stocks performed here on this Thursday afternoon. And up day after three straight days of either losses or basically a flatline here. The S&P 500 posting an 8/10 of a percent gain, flirting with that 4600 level. Now, we should point out, looking at some of the technical levels, there still does seem to be a trend line that kind of points to the downside, but that could flip in a big way Tomorrow morning, 830, we do get the latest monthly jobs report. And a week from now, we're going to get, of course, the next Fed meeting, the last Fed meeting of the year here. So what actually transpires there with regards to the rate tightening cycle and whether all these rate cuts being priced in for 2024, that could prove to be a big catalyst or maybe it could prove to be a wrong direction. I want you to turn your attention just real quickly to some of the other risk assets here. We did see a slight pullback in Bitcoin and we did see obviously a bit of a tamp down going on today once again in the commodities space. But nevertheless, a lot of people are still finding some degree of risk appetite out there Scarlette. In fact, the biggest mover in the S&P 500 today was AMD. Scarlett on the back of that A.I. optimism. Yeah, the optimism that lives on. And of course, it's driven the Nasdaq 100 up one and a half percent today as you were you are showing us will be boom will keep fueling gains in 2024. That's the big question here, given the big gains that we've seen in 2023. David Traynor is CEO at New Constructs and he joins us now. David, this idea that AMD is the next best thing, if you don't want to get in on NVIDIA at this moment because the prices have gone up so much so fast, does does AMD look like a good alternative to you? Doesn't it's really expensive. Also, the current price implies that their margins are going to triple while also growing the top line at 15% compounded annually for the next 15 years. So you know, it's it's it's got a huge turnaround in the profitability of the business already baked in and it's not nearly as profitable as in video. So yeah there's not there's not a lot of upside there. I think everyone has found it. That's not a secret that you can wear a secret stock and get into it and hopefully get in before everyone else has figured it out. Okay. All right. So if you can't get in on AMD because that time has passed, what's to stop you from getting in on NVIDIA? Because by and large, it has the most market share when it comes to these chips, right? Something like 90%. They can't make them fast enough to meet the demand. Valuations may be out of whack but it it'll it's the excitement that's driving the story and again Nvidia really doesn't have that much competition. Yeah, I mean, we say that now, but I think everyone else is looking to try to, you know, compete for the business that's making so much money that, you know, people don't leave businesses that are profitable alone. And so if you want to if you want to invest based on excitement. Absolutely. Chase the most exciting stock. Yeah. If you want to look at fundamentals. You know, and video is even more expensive than AMD. Yeah. Quite a bit more. Well, I think it's to the point and and we should point out, I mean, David, I mean, your background is really in kind of sussing out these types of valuations and whether they're right or wrong or at least attractive or not. And I do wonder, I mean, I as a thing it's been a thing for a while. It's going to be a thing in the future. If you look past Nvidia, AMD, Microsoft and a few other other big names here. Do you think we will get to a point where fundamentals are going to sort of match up to some of the hype and the media attention? I should hope so. You know, otherwise, you know, you're chasing a lot of good money after bad. Yeah, well, look, at the end of the day, we have a limited amount of resources if we're going to waste and overvaluing certain assets. That's bad for society. And so you want to reallocate that capital to other growth areas. Maybe the next thing after. Right. But just piling in because everyone else is piling on and seems popular is not a good strategy. It can be in the short term. And, you know, it works if you're into the greater fool theory. But we don't believe in that here in new constructs, you really care about balancing fundamentals with risk and making intelligent capital allocation decisions. That's what we're really trying to get at. Well, then doesn't that get to this idea of the application of of of A.I. that this isn't just about selling chips and any and running chatbot bots? If this is about how companies can sort of take this technology, integrate it into their own business or into their clients business in a way that aids in revenue growth and profitability, Have we seen that anywhere? I mean, I feel like there have been a few smaller companies that have basically seemed to suggest that they're on that path. Well, maybe not. I have not seen that with some of the larger ones. Ramon, I think you nailed it. Right. Look, we can talk about all we want, but until it actually makes the world a better place or makes a business more profitable, it's all just a bunch of talk, right? And so, you know, like, for example, here in New Constructs, we use A.I. to pull footnotes out of financial filings and get a true measure of earnings. That's a real application, right? And that takes a lot of hard work. It's not really all that sexy. There's a lot of meticulous going through lots of documents. It has to be built up in order to do that. Yeah, And at this point, yeah, I think there's just a lot of hype around. Oh, yeah, it's going to change the world. Yeah. Yeah. My checkbook wrote my paper for me. You know what I think it's really doing is, is what automated assembly lines did the factory workers, you know, 30, 40, 50 years ago. It's just forcing the level of value add up for society. That's not going to make people a lot more money. It's just going to maybe cause a lot of people to lose their jobs. That's one way of looking at it. I'm curious, David, when you get questions from clients on what does it usually what are they usually asking about and what are you usually trying to tell them? I'm trying to explain that that eye is not something as flashy and great as people think. I don't really believe that there's such a thing as artificial intelligence, because for me, intelligence means that there's some sense of discerning pattern and intuition that you don't ever get from a machine. Right. The Turing test is is a very, very super simple test that's not real intelligence. What I what I suggest is they understand how the A.I., like Romain was asking, is going to add real value, you know, And for us, you know, we've meticulously marked up hundreds of thousands of filings over the years so that we can feed that to a machine. And the machine can then go in and help us find footnotes faster because it's got 500,000 examples of how we found them in the past, in the past. And and that's where people kind of think that A.I. is like in machine learning. It's like some magical fix. So we want to do work anymore. Yeah. No, no, no, no. It only sits on top of what's really good hard work, first and foremost. Without that, AI's just a bunch of hype. Yeah, well said. I am curious so as to why you don't think. And I don't know, maybe this is a kind of an ignorant question, but why? Don't think more investors have sort of gravitated to that sensibility, right? I mean, it's easy to get caught up in the hype. And I understand there are a lot of short term returns that people are chasing after. Fine, go for it. But when you talk about this idea of looking at the fundamentals, going through the earnings release excuse me, the filings and things like that, it's almost quaint. I feel like who does that anymore? It's like you and like five other guys out there. But it does it get to a point where the market pricing and the market direction moves in a way that forces more people to take a closer look at those fundamentals. I mean, from from your lips to God's ears, you know, I have no idea. Right? We've been wanting that for a long time. And, you know, these phenomenons that keep coming in succession. First it was meme stocks and, you know, and now it's AI, right? It's like all these things are reasons for stocks to trade disconnected from fundamentals. And we've got people getting away with all kinds of things that, you know, when I was in Wall Street, they would have been perp walked. I mean, the things that Cathie Wood and Elon Musk have gotten away with saying to the public misleading statements, you know, it's like anything goes. I mean, you know, meme stocks, companies about to go bankrupt. You know, look what happened. We were right. You know, they faked they faked a buyout. I mean, it's like markets are bonkers and remain what it's going to take for people to kind of come back down to fundamentals. I don't know. I you know, I wonder. I wonder and look, I don't think that everybody wants that, though, right? Wall Street makes a lot of money tricking people into, you know, paying 15 billion for sweet grains or for Beyond Meat or for Peloton. In terms of, David, when you said Cathie Wood, what in particular did she say that that offended you? Because it's it's not as if she's making promises that can't be kept. She's just giving her projections for what she thinks would happen with the company. I was offended by anything, she said, but her misleading statements about the performance of her fund by saying what she was going to do and what kind of performance she was going to project for your project, that's that's that's technically illegal promising returns. That's the bottom line. That stuff is not supposed to be done by fund manager. So yeah, that's, that's what I'm saying would have been would have got people in a lot of trouble in prior periods. All right, David, always great to talk to you. David Traynor is a CEO over at a new construction. Scarlett, you know I love David. He has always has great insights as well. And there is a fundamental issue here about how Wall Street has changed and the promises that certain fund managers, as well as CEOs and things they make you reference, of course, Cathie Wood, as well as Elon Musk, we should point out, at least as of right now, we don't know of any sort of formal investigations into them and the things that they've said. But there's been a lot of anecdotal evidence about the kind of, you know, whether what they said did match up with reality. And we can have that debate here. And we've had Cathie on this program plenty of times. She can defend herself. And I'm sure an Elon Musk, of course, can defend himself, but I'm sure we'll never come on this program. But he's welcome to as well. One to the program. Yeah, Well, I mean, this always happens in any period where you have excessive gains and people get excited about something in too short amount of time. Right. People, people's emotions get the better of them and people start stampeding in, not looking at all the numbers carefully. Yeah, absolutely. Here. All right. Stick with us here. We're going to dive a little bit deeper into the labor market. Of course, there is a big report set to drop tomorrow here in the U.S.. Elise Gould, senior economist at the Economic Policy Institute, she's going to give us a preview. This is Bloomberg. It is all about the jobs report tomorrow, the crucial jobs report that will set the market direction. Abigail Doolittle has more on what we might expect. Abigail It is certainly a big one. Scarlett. And what we're looking for for the month of november are nonfarm payrolls added of 185,000. Now that's up from 150,000 in the month of October. And we're also looking for the unemployment rate to stay flat at 3.9%. In some ways, this could be considered a Goldilocks report because if it comes in around these levels, it won't be too hot or too cold to really move the markets all that much. We'll be talking about that in a moment. But first, let's talk about ADP earlier this week. So what we're looking at here in blue are the AP reports are excuse me, in blue, the non-farm payroll reports in white, the ADP reports going back there isn't much of a pattern here, as much of a pattern person as I am. And I always like to find a pattern. There were a number of months where ADP outperformed. More recently, nonfarm payrolls have been outperforming. What we do know is ADP reports came in at 103,000 jobs added, so about 100,000 less than what is expected for nonfarm payrolls. As for the two year yield and market reaction, well, if it comes in well above, that could certainly send yields higher as folks think that the Fed will stay higher for longer or maybe even have to hike. We haven't heard that idea in a long time or if it comes in better than expected in terms of lower, then you could see yield go down on the idea that the Fed's not going to have to cool down the economy all that much. Right now, the two year yield is hanging on to a trend line and a very cautious last grasp type of way of trying to get back above its 200 day moving average tomorrow might give us some clues. If it doesn't, we're going back most likely to Silicon Valley bank lows. Not sure that that's what the Fed wants. So, of course, we have the FOMC next week and then let's tie stocks into yields because, of course, when yields go higher, that means or investors take it. And it does mean eventually that liquidity is coming out. So what we're looking at here in white, the S&P 500 yields, you can see earlier this year when yields were going higher, that ten year yield going up close to 5%. The S&P 500 lower. An inverse reaction. That's why Ramon, of course, this is such a big report. All eyes on November nonfarm payrolls report tomorrow at 8:30 a.m. eastern and I set up there Abigail into our next guest at least school. Joining us right now, a senior economist at the Economic policy Institute to talk about tomorrow's jobs report. Maybe it is big, at least maybe it is small here. I'm curious about your expectations, particularly on the headline employment growth number and whether that growth rate is something that we need to be concerned about or is it more kind of in line with where it's supposed to be anyway? On a historical basis? I think it's very much in line. I am very optimistic about where the labor market is right now, and I think that we're going to see is a continuation of what we've seen. So there is some moderation, there is slowing in the pace of growth, but that's still growth when we're talking about job numbers in excess of 100, easily 150,000, that means we are keeping up with population growth, the working age population growth. We're pulling in workers off the sidelines month after month. That is a solid growth, that is a continuing strong economy. And it's an economy, as you point out, that is still been resilient to those interest rate hikes that we've seen over the last couple of years. I am curious about one trend or at least the potential trend that's a lot of folks have focused on, and that's the idea that we could actually maybe start to see a decline in the labor force, the idea that some of the pandemic era and other government measures that were made to sort of help get people back into the workforce, a child tax credit, childcare tax credits, etc., that with those expiring, that could potentially force a lot of prime age working women back to the sidelines. Yeah, it's an interesting question because we actually are seeing prime working age women that share of workers share women, I should say, between 25 and 54 years old. We are at an all time high in terms of the share of that group of women who are working. And so we're not seeing any declines yet. That is certainly been resilient, even though those policies have now long since expired. So it is a positive trend. I think that that is one that we definitely want to keep an eye on when the data come out tomorrow. And of course, the nonfarm payrolls number is a big headline number. But we're also looking at the unemployment rate, which is expected to stay unchanged below 4% at 3.9%. So no excitement there. But you are looking within that unemployment report at certain demographics, young adult employment and unemployment, black unemployment. What do you anticipate? Right. You're right. I think it expect overall unemployment to stay below 4% or at or below. That will mean two years of at or below 4% overall unemployment. When we look for signs of trouble. Right. I think we often tend to look at those historically marginalized groups. Those are the ones that are going to get hurt first often is. As that has shown us. So we look at young workers, look at black workers, look at their unemployment rates to see where that is going, not any one month trend, but to see, you know, is there sort of something troubling? We have not seen that yet, but those are some of the places that I would be looking. I'm curious at this stage of the economic cycle, given where we are now, given what has happened in the macro economy, what do we know about the sectors that tend to be strong in terms of increasing hiring or at least able to keep up the pace of hiring? Right. So we continue to see health care very strong. I think that in this report we're going to see this uptick, a larger uptick in manufacturing as workers have gone. Now those striking workers have gone back to work. Another sector that I'm looking closely at is the government sector. Public sector has been slow in getting back to pre-pandemic levels. Overall, federal, state and local has now returned back to pre-pandemic levels, both state and local. Just that part of it has continued to lag. And I'm hoping that we'll see a strong enough report tomorrow that those are also back to those levels. Again, those levels are low bar. When we think about what kind of benchmark we want to see because we've seen population growth, we've we seeing growth in, let's say, students so that we want to make sure that the services that those state and local employees provide can be provided. And that might take even higher employment levels than we saw before the pandemic. Is this the that immaculate soft landing, Elise, that everybody was talking about? I've been very pleased with what the labor market has done. I think it has been resilient to those interest rate hikes. So I think we can continue on that path and that will be great. Does this sort of remove or actually remove, but does this sort of mitigate maybe some of the inflationary concerns as well that are still lingering out there, at least if you believe that the Fed has to get down to that 2% target in order to claim victory. Right. So when we look at what is happening with nominal wage growth, that's one of the key indicators that the Federal Reserve will look at. We have seen deceleration in nominal wage growth. So I think we want to see wage growth decelerating. We want to see it decelerating. We've seen inflation coming down much faster. So as prices are the rate of price growth falls faster than inflation, then I'm sorry, the rate of price growth falls faster than we're seeing nominal wage growth fall. That means that people's purchasing power has gone up so their real wages are going up. That's a positive sign in terms of their purchasing power. And that deceleration in nominal wage growth is just what the Federal Reserve wants to see to hold off making any changes at this time. A lot of the times when we talk to people about the monthly jobs report, it's seen as backwards looking. It's there's a lag effect. And by the time you see it show up, it's already been happening in the real economy, which is why there's so much more emphasis put on the weekly jobless claims, which of course, do tend to be bumpy but can signal when there an inflection point. Have you seen anything in the jobless claims that that suggests any level of alarm to you? It's a great question because there are a lot of other data points that we have to look at. I have not seen anything in the jobless claims. When we look at the job Openings and labor turnover survey, that as well that came out this week. Again, more of a lag, but you're not seeing any uptick there at all in terms of layoffs. Things are normalizing there as well. Is there anything in the data that that doesn't shed light for shed light on the state of the labor market for you? I mean, is there anything that you wish the data would tell you that we still don't get? That's a great question. I think that, you know, we want to make sure we have accurate up to date data. I think it's important to look at all the different demographic groups to know what's going on. We want to make sure that we have really great sample sizes. And the Bureau of Labor Statistics works to make sure that we're getting the most accurate data as possible as as quick as possible. So I think that they're doing a really great job of providing that. And we want to look at all the different numbers that come under that. I think that another indicator we want to be looking at is work hours, make sure that that is is holding up. So even if hourly pay is going up, we want to make sure that people are getting enough hours of work. So that's another one to look at. All right, Elise, always great to talk to you, a little school senior economist at the Economic Policy Institute. A preview of those numbers that we're expecting tomorrow. The average of estimates of economists surveyed by Bloomberg puts it at about 183,000 jobs. So Bloomberg economics is a little bit lower on that scene. Only about 160,000 created and downward revisions from the previous month. Unemployment rate expected to stay at 3.9. Team surveillance will have full coverage at 8:30 a.m. Washington time tomorrow. Stick with us here on the close. As we close out, the show will set you up for some of the other big things that investors will have their eye on tomorrow. This is Bloomberg. Let's push ahead to what markets will have their eye on on Friday, I'm told, Scalia. There's a big economic data point going, yeah, one word, jobs, or maybe we should say it five times. Jobs, jobs, jobs, jobs, jobs. It's all about the payrolls number 183,000 is the consensus estimate. It's a range from 45000 to 275000. Our coverage, of course, will start tomorrow morning with team surveillance after those numbers come out. We're going to have a slew of interviews to break it all down, including with the acting U.S. labor secretary, Julie Su, and, of course, the former New York Fed president Bill Dudley Mohamed El-Erian. Other big thinkers will be joining us to give us their take. In the midst of all that, we're going to get the latest reading on the University of Michigan consumer sentiment data. This is now the data for the month of December, kind of the preliminary number. Yeah, and this is subject to revision, but I'm always curious about what people say about inflation coming out. How do you know how to project what inflation will look like in five years time? I don't know. I don't know what's going to look like in six months time. That right. There you go. Survey data is survey data. The NASDAQ 100. This is the annual announcement of the reconstitution of the Nasdaq 100. But I'm curious as to what they're going to do this time, because usually it's because some small company has become big and they want to put it in. But what happens when the big companies get bigger? There you go. Carl and I will be back tomorrow. Balance of power is up next. This is Bloomberg.

Channel: Bloomberg Television

Views: 18,625

Keywords: Abigail Doolittle, American Century Investments, Brian Niccol, Carly Tripp, Christine Benz, David Trainer, Economic Policy Institute, Ed Ludlow, Elise Gould, John Edwards, Katherine Tai, Laura Davison, Michael McKee, Morningstar Inc, New Constructs LLC, Paul Sweeney, Principal Asset, Richard Weiss, Riley Griffin, Romaine Bostick, Scarlet Fu, Seema Shah, Vijay Rakesh, jess menton

Id: ibRQOPrQ18c

Length: 137min 25sec (8245 seconds)

Published: Fri Dec 08 2023