tv Bloomberg Markets Bloomberg December 30, 2022 10:00am-12:00pm EST
tv. i am caroline hyde alongside paul sweeney. we are having a blast. paul: giving back some of the gains that we had yesterday it feels like this is a day, i don't think people want to go into the weekend with any exposure and that is how it feels to me. soft volume. caroline: we seem to be trying to have a stiff upper lip as the british would say. let's talk about this with abigail doolittle who can button up what has been an extraordinary year. abigail: the selloff has been so significant, the s&p 500 down when he percent. the nasdaq 100 down 30%. it extends across the board. the tech indexes some down 40%.
all of the mega cap names and stock your then you have on's down -- bonds down. not really doing all that much. what is interesting, yesterday i did a story on the s&p 500 and naturally we tend to goad to her it is negative and where we have big declines, 170 five stocks on the s&p 500 are higher. we have a couple doubles on big names. any guesses on the sector? caroline: energy. abigail: absolutely, double in 2022. we also had the defense contractors up about 40% and at like kellogg and general mills. it is not all bad, because we have stocks down 20% in bonds down 15%, the worst year since
1999. it is also credit, high-yield bonds down 60%, the worst going back to the history of hyg. and corporate credit down even more, 20%. nowhere to hide except for energy, energy utilities and consumer staples. paul: technology has been such a leading group for equity markets for a decade plus. i am not sure that will be the case going forward unless rates really do come down meaningfully. abigail: i would agree. we have known about it the whole time what i think we now cannot take it for granted. fed liquidity helped out the stocks that never seem to go down and they did have good fundamentals and amazing growth, but as growth slowed on alphabet from massive growth to more
reasonable double digits a couple years ago, they were trading in a big way but you have amazon down 50% and tesla down 65%, nvidia, what about in 2020? now we have nvidia down for percent on the year. ashley liquidity comes out, people are -- as the liquidity comes out, people are having to look at this more closely. paul: it will be really interesting to see how they perform over the next couple of years. let's fret about 2022, my theme for the last few weeks. let's look forward to 2023 and talk to some professionals. joe gilbert, integrity asset management portfolio manager, it says you are based in norman tells, i would guess that is cleveland. joe: i am on the side of
cleveland. paul: what are you telling your clients in your year ahead outlook letter to your clients? joe: similar to you, we are just throwing away the play before 2022 -- the playbook for 2022. it pays to be more constructive for 2020 three, as abigail -- 2023, as abigail laid out. fixed income factors down -- sectors down 20%. the set up for 2023 will be greater and we will basically see inflation will come down, the fed will stop raising rates, earnings estimates will go down in multiples will go up and that will be too strong equity performance. caroline: the only places to hide been oil and energy, also
the dollar. i am interested as to whether the dollar trade headwind for earnings if you are a global related company, will that come back in any sort as we see the fed perhaps take its foot of the bank -- off the pedal and the central banks continue? joe: we hit the peak in september. last quarter we are getting a preview of how we think the market will play out next year. investors starting in the fed toward the end of the rate hike cycle. this year has been about the fed and you sprinkle in the ukraine more and china with the zero covid policy. we get to a point where investors are looking forward that the fed will no longer be surging ahead and the dollar is
why will sell the weakness in the last quarter. paul: i look at the fixed income returns this year, the agri-it -- the aggregate index off 12%. some would say that is an historic underperformance. i say, i am going to jump in with both feet and buy some bonds. what do you think about that strategy? joe: is hard to disagree with that. the set up looks good for fixed income and 20's for next year. i am a little more biased because i think a lot of the bad news for equities has been priced in. granted, there will be sectors that outperform at different points of time but fixed income obviously, as soon as the fed intimates they are going to be done or pausing, you will have a
huge rally in fixed income but they will bring equities along with them. caroline: can you go as broadbrush with industry groups? joe: i think that really there are some winners and losers. the way we see it is we have had rolling corrections and the willing recession that could play through next year. within that, we are looking at a first in, first out, more of the way we think about it is the companies and sectors that have underperformed dramatically in the earlier cycles are where we actually are looking for opportunities. it looks like more consumer discretionary names which are trading cheaply and we are looking at home builders, because it is a short cycle in early cycle.
if we are right in the fed does stop raising rates, eventually we think they will cut through the end of next year and those are sectors that will do well. paul: a viewer/listener said how can stocks perform if we've still got some pretty significant earnings risk? how do you factor that in? joe: way we think about it is stocks went down 20% depending on where you were and went down because they discounted earnings coming down. we think a lot of that has been raised in. this year was about repricing risk and expectations. that is where we are. most of the times stocks rally and so we don't know exactly when it will be what we presume it will be early in 2023 and
that will basically clear the way for equities to outperform. caroline: are you going to look at broadbrush data, whether inflationary or what are you going to be looking for on the individual names or earnings releases? what will be your catalyst for getting in and out of the market? joe: first, we will always look at what the company management is telling us. we used it as a guidepost as far as companies are bullish about prospects. we will look on the macro sense and we have inflation continuing to come down
-- paul: let's get world and national news with kriti gupta. kriti: i am in london, a house panel released six years of donald trump's tax returns, ending a years long battle between democrats and the former president can the fight to keep his records private. the returns show that he and his businesses lost millions between 2015 and 2020. vladimir putin and xi jinping have a deepening ties between russia and china in a videoconference today. relations of the best in history and said that china is ready to expand the relationship. there are signs that beijing is
struggling. a week long meltdown, southwest airlines returning to normal schedule today. nelson's stranded across the u.s. because of cancellations caused by winter storms and overwhelmed technology. for than 13,000 flights canceled in week. global news 24 hours a day, online and at quicktake on bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm pretty. -- i am ritika gupta. this is bloomberg. caroline: it is an extraordinary year. global bonds, the worst since 1990. we have what is interesting in bitcoin had a terrible year. the worst year since 2018. paul: anything about all of the
things that happened in the crypto space when a major exchange fails so spectacularly and what a lot of observers are saying which includes fraud, you think number one asset would be. caroline: has held on and many will take that for the amount of news that has hit them this year. we are excited and will be celebrating the end of 2022 for whatever it was for you in cross assets. the index having stiller -- stellar year. we note some of the news around white it did well was not a positive one but the energy names were the outperformer. i wonder if this is the end of it for 2022. paul: i keep asking what is the bare case for the dollar in
caroline: welcome back. we are across radio and tv with this last day of trading of 2022 in full swing. just more broadly, geopolitical news follower from the early days of february. the amount we will be digesting and the relationships and we organization of the way the world converses, whether between russia, china, the rest of the world or within the u.s. itself. we still have the midterms coming out relatively unscathed and not much getting done in the year ahead. paul: there is a lot going on in washington, even today. talk about a data dump on the
day before a major holiday. the taxes for former president donald trump have been released. we will get the latest, we are joined by laura davis. i know it is the early moments, any takeaways at this point? laurel: -- laura: he has an incredible complex set of details with his personal returns and businesses. the businesses are losing money for a lot of years from 2015 to 2020. part of those were actual losses but some are the tax breaks and depreciations that are favorable to real estate and they are able to minimize any tax bill he might have to pay, including when year for he paid no personal income taxes. caroline: we have heard time and time again that it is a good
thing to do. what would you bring? laura: this is the point that democrats are raising saying this shows that the tax code is rogan. legal tax breaks for people to be able to have a separate tax code from what normal wage earners might pay is a problem. unfortunately for democrats, they will lose the majority going into next year. the democrats will retain control of the senate and the republicans will control the house which basically spells gridlock. it is unlikely the two will come together on any adulation resulting in raising taxes, particularly if this legislation were the result of findings from trump's tax returns. paul: tax returns will provide some data on personal income and income of his businesses. will it give analysts any sense of his net worth?
laura: the problem with tax returns is it is a snapshot in time of earnings for a particular year. because of the net worth being so tied to real estate and other deals, it is not reflected on these tax returns in terms of valuations. in terms of whether trump is as rich as he says he is or whether he gained or lost net worth in office, we can't say from these documents. caroline: talk to us as a reporter about what you are going to be doing and what you hope to glean from all of this. laura: the key question is how much did he benefit from his own tax law. he and the help of republicans past a tax code. this gives us a look at before and after and how taxpayers were able to benefit and what
deductions were they able to claim in what was he able to not claim? one was the 20% pass-through that was a key part of the bill that helped llcs and pass-throughs right off a bunch of income. trump was not able to claim that because he lost businesses -- money those years in those businesses. caroline: great to have time with you. we will achieve back to the data dump. let's talk more broadly about geopolitics in and of itself, because a key meeting happening overnight between vladimir putin and xi jinping talking about deepening ties. when we first thought this relationship was cementing itself ahead of the winter olympics, and then russia ukraine unfolded. let's get where it is. what did we learn from this
meeting? >> putin calling xi jinping a dear friend. we did not hear the same level of commentary. china has refused to publicly condemn the invasion or call it a war and their messaging is the u.s. has provoked russia in pushing to expand nato. china not giving as much support to russia as putin might like and continuing to distance himself as the war continues, as potentially beijing couldn't anticipate 10 months ago. i want to point out the scale this war has gotten to as of yesterday, the largest bombardment in the history of the war so far, attacks more
than 120, power is out 90% in kyiv and attacks showing russia not letting up on the strategy of literally trying to freeze out ukrainians as we head into the winter months. paul:'s or any sense our expectation of china stepping up -- is there any sense or expectation of china stepping up or is it just a show of solidarity? madison: we have to listen to what we do know from xi jinping, which is we haven't heard a deep condemnation of putin which is what the u.s. would want and we haven't heard deep support of putin from beijing, which is what putin would want. i think they are just trying to get there economy reopened and
to get covid under control and not necessarily freeze out putin. caroline: imports and exports have been crushed to russia because of the geopolitical tensions but they have increased exports of oil to companies -- countries such as china. it has upended the commodity markets and the gas economy. when we stand on attacks? medicine: you had the largest bombardment in history yesterday , within 120 missile attacks. one thing i want to zero in on, russia's attacks are very specific. they are not winning on the battlefield but focusing on the air in the attacks. where we are seeing the attacks
is interesting to me. we are seeing them at museums, historic streets, cultural centers, areas where ukrainian citizens go to maintain and learn and celebrate their culture. i think that tells us a lot about putin's evasions. we know that putin is hoping to get ukraine to recognize russia's annexation of four areas of ukraine that russia does completely control. russia is specifically targeting those historical sites and those annexed areas. that tells us a lot about where putin's head is in terms of motivation. i also want to point out where the russian citizens are standing in this. a lot of the russians who were against the war have already left the country paired we saw that exodus happening early on -- left the country.
we saw that exodus happening early on. we will be watching how the russians still there respond. caroline: let's have a quick look at the trading. up on brent crude. oil has crept up 5% on the year but has been a volatile year, was clearly in natural gas. paul: energy stocks surged across the board. a strong year for energy equities. caroline: from new york, stick with us. this is bloomberg. ♪
caroline: welcome back. bloomberg markets live on tv and radio. paul sweeney, caroline hyde, and the last day of training -- trading, pretty muted. the s&p itself is all .7%. we are seeing them as -- the nasdaq under pressure as well. joshua: -- paul: ending with a whimper. let's get some details on this last day of trading. we do that with abigail doolittle. abigail: it is interesting, because we have been talking all week about this santa claus rally.
it is going to be interesting to see with the first two days of 2023 bring. typically when you have a santa claus rally, that means the next year is going to be higher. when it doesn't happen it is going to be lower. we had one last year and it did not work out. right now we have the s&p down .7%. the nasdaq down a little more. yields are higher. volumes are low. the big news is the down year, the bear market for the s&p 500, down 19.8%. the nasdaq down even more. and yields climbing. nowhere to hide. hans lower too. caroline: how are people -- bonds lower too. caroline: how are people positioned? how are people been looking towards positioning themselves? abigail: it is interesting. in terms of the vix, something that has been baffling to folks is that it is so low. it has a 21 handle. the number one explanation for that is that institutional
money, they are not as long as they would be, so they don't have to hedge. is that true? it is hard to know, but it is an interesting explanation. the vix hanging onto the bottom of its range. if it should shoot back higher toward 35 it could suggest new year could start off with a selloff. paul: the s&p 500 energy sector index, up 58% this year. wow. abigail: it's incredible. especially given the fact it was up 50% the year before. now we have the energy sector over two years, double. i don't know that it is considered to be a sleepy sector, because it is technically a growth sector. who knew that could happen? i think that is a lot having to do with mega-cap attack falling apart -- tech falling apart. folks wanted somewhere to go. what stands out to me about the commodity complex in 2022, it is higher.
the commodity indexes higher. oil is up. on the other hand, weed is up. on the other hand you have metals like copper. the reason it stands out, of course we have fears around a demand recession. we also have the dollar index higher. it is not intuitive you would have commodities higher. you have this divergence between risk assets of stocks and commodities. what is 2023 going to bring? caroline: fascinating, the correlations. also the push and poles of the global economy that does all of this. whether or not we see commodities -- particularly with the china reopening. joshua young, chief investment officer of bison interests. you are focused on oil and gas in particular. talk to us about the china reopening story. it has sort of got everyone scratching their heads. in the immediate focus everyone feels nervous. we are worried about the spread
of covid. in the longer-term does this mean commodities could outperform once again? josh: yeah. i think if you define longer term in terms of more than the next two or three months it looks great. it looks like china is setting a target for a really high return in terms of flights. we are starting to see congestion, essentially traffic, on the streets in big cities rebound as they are on the tail end of their covid wave. i think it looks great from a short to medium-term perspective. as china turns back on that also start to turn back on oil demand in other east and southeast asian countries. there could be a step up in terms of multiple millions of barrels a day in demand relative to where he -- where we have been. paul: you are based in houston, as i recall. you have the energy stocks up to 60%. how good is life in houston now? josh: employment is actually not
up that much in the oil and gas space. capital expenditures are not up that much. and the small-cap stocks have lagged materially. what it is setting up for is, even those -- even though those stocks are up, it is setting up for a multi-year bull market where we see large and majors don't have as much upside after significant outperformance, the small caps and oil services stocks, there is potential there, and also some real potential for the revitalization of texas and houston. it is not the same as it was in the 2010 to 2014 timeframe. caroline: a lot of that has to do with federal policymaking, has to do with a pivot in terms of this economy. trying to focus in on climate change as well. how much are we likely to see the smaller caps start to turn on again? we start to see oil output
increasing in the united states. this has been this interesting tension between the aura producers in the united dates and the u.s. government. josh: i think we need higher oil prices to get production growth to you anywhere close to where people were expecting. coming into this year we expected production to grow by a few hundred thousand barrels a day. the consensus was 1.3 million barrels. that has come down a lot, and we have gotten production a lot closer to our expectation. what is going to drive the rerate is not substantial production growth, is going to be my outs, where we see large caps by companies at three to four times ebit the -- ebitda. there is potential for a rebate -- a rerate through acquisitions. when you trade that sheet you have the potential to pay off debt, pay dividend, and forced the rerate, is not something you have seen from small-cap oil and gas companies in the last decade.
paul: how do you guys think about the big picture of, i'm in the fossil fuel business, the world seems to be going green, it's probably going to take longer than people thought. how do you manage your business. when you talk to these companies, how do they think about the five to 10 year timeframe? josh: that is a great question. one of the interesting things is that institutional allocators are divesting from the oil and gas space. even though it has done well, i noted goldman and others have talked about this as well. there are funds leaving the space from an institutional allocation perspective. it is hard to see capital formation, companies and new projects funded, and oil production growth, when you see divestment. and a lot of that appears to be ideological. what i think is going to happen is, over the next year or two goldman's estimate is next year, money will start to flow back
into the space from institutional allocators, who are still pulling capital. private equity funds are still divesting. insurance companies are still pulling insurance coverage. when that flips, i think that is going to be the starting point for the recovery of production. the interesting thing is, it takes many years to restore the oil services supply base, the ability to supply services. two then drill enough wells to get enough supply to get into an oversupply situation. we are set up nicely for april market, and it comes back to this divestment from the space, partly economically, because this is pasted badly over the last 10 years, and partly ideologically. it is hard for investment communities to allocate, even though it is profitable and even though sectors are doing poorly, there is this ideological obstacle to investing. caroline: some have bought the
turning toward natural gas as a supply of energy in the u.s. is more friendly to the environment. natural gas has been the most extraordinary commodity to follow this year, for reasons we well know. to hit a high and excessive nine dollars, to the active four dollars 38 -- $4.38, how do you see that part of your world looking for 2023? josh: i think natural gas is oversupplied in north america. we will see more normal temperatures. it has been a relatively warm winter so far other than this recent winter storm. so, weather has been cooperating, and supply has been higher than expectations. money has been a natural gas would stay in this four dollars to seven dollars price range. i think there may be downside to that in 2023. over time supply and demand should balance out. there are lng export facilities that should finish construction and come on.
at that point i think we are set up for a meaningful move higher. in 2023 it could be rough on the natural gas side. paul: if i wanted to go down to corpus christi and build a refinery, could i do that? could i get regulatory approval? could i raise capital? josh: that is a good question. i don't think -- i don't think refineries are undersupplied. that has been one of the big stories in 2022. there have been points where the refiner margin has been really high, and there has been the story about an insufficient supply of refining capacity. there may be an insufficient supply in a few years. that was mostly driven by china lockdowns, and millions of barrels a day of chinese refining capacity, particularly the smaller, informal refiners going off-line. as those are back online, there is actually plentiful refining capacity. we see that with refining margins getting closer to normal levels.
it is hard to build them, but frankly we don't need them. caroline: talking about u.s. supply demand dynamics in oil and natural gas, talk to us about opec-plus. in terms of the geopolitical risks around oil. josh: i think opec-plus has been sort of an under told story, partly because there have been a couple of different price wars in the last 10 years. many of the opec-plus countries are hitting their peak production capacity and have had to produce materially less then their production quotas. so, there are a few countries that still have some access -- excess production capacity, but overall it does appear that there is limited spare capacity. as china demand comes back on and as russian barrels may be restricted from the market, we could be in a situation where there is a call on opec oil and opec is not able to deliver. this is a contentious call, but
it should be less contentious, because even senior executives from aramco and opec countries, they've talked about limited spare capacity. i think this is potentially a 2020 three story, potentially a 24 story. there is going to be a point where the world wants more oil from opec and opec is not able to deliver. paul: great stuff. josh young, bison interests cio, giving us the latest on the global energy space. i'm looking at crude oil. 7880 -- $78.80. a big pullback in crude. supply and demand, you have to have a call there when you are thinking about global energy. let's go to ritika gupta. ritika: former cryptocurrency mobile sam bankman-fried held at least four meetings with senior white house officials this year. it was part of a push to influence crypto policy and build connections before his ftx
empire collapsed. ftx's ties to washington have come under scrutiny. bankman-fried gave millions of dollars to democrats. some estimates of just how add that covid outbreak in china could be. according to air affinity, there could be as many as 25,000 deaths a day. daily infections could peak at around 3.7 million cases during lunar new year celebrations next month. it has been difficult to obtain accurate data since the covid zero policy was lifted. in myanmar, deposed leader suu kyi has been sentenced to seven more years in prison after being convicted of corruption. her total prison term is now 33 years. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries.
i'm ritika gupta. this is bloomberg. caroline? caroline: let's have a check on what is happening across the rest of your markets. we have been delving into the world of the performers. the commodity space has been your inner of choice on the year. everywhere else, no let up in terms of the pain trade. really in terms of europe as well, we have seen groep relatively speaking off about 12% on the year. it's still a pain trade. paul: they have less tech exposure, so that was the story there. caroline: minus more of the key oil companies for those benchmarks. from new york, this is bloomberg. ♪
i think we have got to decide what our words of the year were. i think transitory, unfortunately. supply chains. that was the word of 2021, and it still seemed to be the one of 2022. the hopes they were easing, and some concerns around china's reopening once again. paul: i should have stayed awake in my operations management class, because that is the go to story for the last couple of years. hopefully things are getting better. lisa anderson is a manufacturing expert and president of lma consulting. lisa, we have become quasi-experts in global supply chains. give us a sense of where we are today. lisa: well, we have improved in terms of our ability to supply product to customers. however, we still are in a scenario where supply chains are on the move, continual
disruptions continue to persist. caroline: it just keeps moving. where is it moving to? talk to us about the ramifications of covid in china and whether that longer-term on plugs, but shorter-term confuses supply chains. lisa: it definitely is going to impact supply chains, because china is a manufacturing powerhouse. with the zero covid policies, they have been shutting manufacturing down. it has certainly affected the iphones, as an example. the bubble continues to move. the supply chain is a system of systems. as it gets to the next point in the supply chain, you know, it was at the ports, then it went to rail, and now it is at the warehouses, because we are completely full. and we are still looking for more space. yet we do not necessarily have
the products we need, to your point, about zero covid policies, and some of the products the iphone. paul: when i was in business school we did learn about a thing called just-in-time inventory. presumably that is more profitable for manufacturers and the whole supply chain. has that been called into question? i'm hearing a new term which is, just in case inventory management. tell us how that evolved. lisa: you are absolutely right. just-in-time, everyone took quite literally for years. and just had inventory arriving as they needed it. however, the true concept of just-in-time does account for the lead times on your products and the risks associated with it. however if you took it that way, just-in-time make sense. people have family gone to just in case, and now they have more inventory than they need. and, of course, of the wrong products. because consumers change their
minds and products change. we are going to have to do something different in the future. caroline: it is interesting that some of that inventory buildup is a relief from the inflation pressures many of the consumer has felt, but more long-term the supply chain changes, bringing closer to home, is that inherently inflationary? are the companies you are helping having to pay more to get the comfort they need? lisa: absolutely are. inflation is -- has not stopped. it doesn't look like it is going to stop anytime soon, as there is a lot going on in the supply chain. and there -- they are still yet having problems finding critical materials. and there is plenty of shortages throughout. it looks like we are heading for a period of inflationary, yet stationary times at the same time, simultaneously. paul: i remember in the beginning of the pandemic when
economies were shutting down and we got the first taste of some supply chain issues a lot of folks were saying, we need to onshore more this stuff. whether it is making a semi conductor chip or any other product. give us a sense of, is there a follow-up on that thought within the c-suite? lisa: absolutely. the vast majority of companies are looking at re-shoring, friendly-shoring. supply chains are on the move. they are looking at new partners. they can -- they have figured out they cannot be resilient with the current state of affairs, so they are reshaping the supply chains of the future. even the logistics arena is reshaping. the west coast ports struggled to support the volumes, and so folks have been moving to the east coast ports. they are not necessarily moving back. caroline: what about technology in this? how much of that is going to be a fix from an r&d perspective,
an investment perspective? lisa: r&d is critical for many reasons. we need to automate. we do not have people we need to support the products need to have on the shelves. just take the baby aspirin as an example. we need to be producing closer to our consumers. that also can relate to, you know, utilizing technologies so we can make that more feasible. and we can do it at a profit as well. we can talk about technology for hours. paul: let's talk about labor. in -- when we talk to the trucking companies, you know, dockworkers, people in warehouses, they all talk about a lack of labor supply, and may be trained labor supply for some of them. i'm not sure what the solution to that problem is.
truckers have been having had since forever. lisa: right. and there are not a lot of truckers that are looking to get into the you know, into that industry. the same is true for manufacturers. four of my clients in the last few years, they have been limited in their growth by the number of people that have -- they have been able to hire. more proactive ones have been looking at outsourcing products to, you know, in the region. they have been doing all sorts of innovative programs in order to increase their outputs. but it has been a complete struggle, and, you know, it has basically limited their growth. we are going to have to be thinking about people differently than we did in the past, and need to utilize technology and automate. caroline: automation was thought to be a bit of a fix down by the ports of l.a., for example.
but everyone was blaming someone else within the food chain. either it be that dockworkers blaming the truckers, the truckers blaming the trains. what are we seeing from a federal level, some more clear-thinking, in actually fixing of these problems rather than pointing fingers? -- and actually fixing these problems rather than pointing fingers? lisa: i would say there is unfortunately quite a bit of confusion about the supply chain. so, you know, i think the good news is, we have realized the supply chain is critical. it used to be, what did those people in supply chain even to check how everybody knows that supply chain has relevance, even if they don't know what it is about. i think we have gained insight, but we still have a long way to go. caroline: it is always great catching up with you. ella macon sold in, lisa anderson there. -- lma consulting, lisa anderson there.
shall we check in on these markets? paul: we are approaching the european close. caroline: it is pretty ugly over there on the day, and has been on the year. are seeing the dax off by 1% at the moment. volumes are very muted. in the sea technology was lifting arts and minds in terms of an industry group. today, under pressure. paul: you were in london. how is the pope seen over there? that is such a fun time. caroline: i love a pop. get me wrong. it is painful for them. covid really accentuated a lot of the pains that already a lot of these companies have. a lot of the franchises and the way in which you track of the work people in with food, then the labor costs have been painful. a lot of these local pubs that have become part of a community, having to be shut because they cannot make the economics work. you are in the public still has a wonderful vibe. many pointed out that the world cup did not do them a favor.
because the world cup came around the same time as christmas. it sort of ended up just making everyone join -- beefing up an already busy period. it would have been wonderful if the world cup had happened in october, november. paul: like a lot of retail establishments, you had covid. and you had to labor shortages. all of which for the pub scene in england would be an issue. that is fun. caroline: you like an ale? paul: electrical local. that is usually what i asked the bartender. whatever you like, i will take. i'm not going to be the ugly american that says, give me a budweiser. caroline: i have to say i'm a seida person. a good cornish kind of flavor. that is the way i have to go in some of these pups. meanwhile, my husband is horrendous and orders a gin tonic. from new york, this is
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-- shadow to cabrera capital. thank you, friend. he points out that i am an 80. people need to hold me to account. i did not realize that the british to the sensible thing on the last day of the year and take half a day. so the ftse is already shot and the germans, having lived in berlin, also do the sensible thing and closed earlier. they are down more than a percentage point. but the rest of the southern europeans are still at it. the french, the italians, the spanish. paul: it ties into our pub discussion. the british shut down early and go to public. caroline: and they are going to get ready for their festivities. as we see across the world, the stoxx 600 under pressure. every group has been in the red today. the telecoms are really healing the pain as well. as well as technology elsewhere. we are under pressure here in the u.s. as well.
it is a damp day for a dampier. paul: it is a fitting coda. there is no place to hide other than the energy patch and some of the technology spaces. lisa abramowicz has that crude oil in her apartment uptown. she has had a good year. caroline: remain is still on a load of gold coins. i'm not sure that has faired too well. if you have been sitting on digital gold, godspeed. it's have a quick look at what is happening across the rest of the markets. aoifinn devitt, when that a group investment. set us up into the next year as we put that behind us. 2023, are we going to see any of these asset classes? -- asset classes push through these lows? aoifinn: i think it is going to be segmented.
that tech contagion, not helped by all of the bitcoin debacle. that is all going to affect bitcoin and digital assets. those innovation trends are continuing. nothing is changing there, but that is going to be a long-term play. you're going to see some recovery in equities. at the end of the day for a high-growth portfolio still need to be exposed to equities. i would see some pickup in those value names, health care, industrials, and a broad base of a holder companies. i look at consumer staples. the consumer is still spending on staples. there is an overhang. whether it is revenge tourism or picking up on what they couldn't do, i expect the holiday season to have shown some strong retail sales. we look at january, february, that is going to be dismal. there will have been a lot of borrowing, and we are going to
see that come through in earnings. if we learned anything from 2022, it is that people have gotten good at telegraphing batteries. they can only surprise on the upside. we have seen the fed telegraphing its intentions, but clearly tell --but clearly companies are telegraphing that too. paul: talk to us about earnings risk. how do you think about that? how do you quantify it and how much of it is in your calculus? aoifinn: to get back to that telegraphing point, he saw in 2022 was an earnings surprise on the upside. because they had been worked down in terms of expectations. when a company gets bad news out of the way, the expectations are low. you are on the floor it is easy to surprise on the upside. he saw 80% of companies beat expectations. the key is where expectations get set. i am not that pessimistic about earnings surprises on the negative side coming into 2023 because companies know how to play this game now.
there certainly will be a threat to margins, though. caroline: yes. then a lot of the price pressures, maybe we see someone soothing the price direction. but the labor side still seems to be costly. what sort of pictures that going to be painting for you, and what it means for global central banks? aoifinn: i see the labor market as being a lagging indicator. we are seeing it working through already. saw some massive layoffs at the end of 2022. certainly among some very select sectors. i think some of the froth is going to come out of the labor market. it will still be tight, though. the participant -- the precipitation -- the participation rate remains low. we could see all of these transmission recommendations already working their way through. we have seen it in consumer prices. we have seen it when it comes to the housing market. that is a strong component.
i think the fed will be assured that much of the inflation that is dampening is moderating into 2023. perhaps the only issue is employment, but the irony is strong employment means a strong consumer. that is ultimately a stronger economy. we don't want to see the economy taking either. we have all too many recessionary risks on the horizon. paul: talk to us about energy. we have been talking about commodities today. energy has been such a great story for 2022, one of the few areas where equity investors can make real money this year. is that trade played out what you think there is more room to go there? aoifinn: there will be a little bit of room to go. we are still seeing rhetoric around this energy terrorism. we are seeing statements out of russia. it doesn't seem russia -- it does seem europe is getting at supply and shape for this winter, and equally for next winter we are hearing about stocks increasing. we have this energy trilemma,
energy pricing, energy sustainability that all policymakers are juggling. it has seen the sustainability piece has been on the back burner this year. however, the sustainability piece is going to continue to come to the fore. i'm optimistic about energy sources. companies will need energy to grow. you will need to get it from anywhere we can. that means wind, solar, and other sources. i'm optimistic for that area. it may not have received the fanfare it did in 2022 because of security concerns. caroline: primarily in europe. go global for us. you know the dax ended up the year down 12%. we saw that it has closed early for lunch. the ftse 100 closed and managed to eke out a very small .09%. overall we did manage to see the ftse 100 keep its head above water. what about the rest of europe more broadly? aoifinn: getting back to
expectations, expectations have been so low when it comes to europe, primarily because of this overhang. inflation has been supply-driven, primarily by energy. suggesting the u.s. consumer is in a much better state than the european consumer. the ftse is interesting. it really has bucked the trend. much of that is due to the old economy nature of the ftse, as well as sterling. across europe overall most stockbrokers are seeing pockets of interesting opportunities. these multinational companies which have been admitted from a weak euro have not seen massive pressure in terms of the pricing of margins. i'm looking at upside for europe. also for u.s. investors, primarily because the dollar starts to weaken now. that is when those non-u.s. exposures will come to the fore. paul: do i buy bonds here? it is such a brutal year in
2022. they can't go any lower, can they? aoifinn: they certainly cannot have that jump lower we have seen. bonds do look interesting today. there are reasonable alternatives. they have been interesting for some time. cash is no longer trash. we have also seen investment-grade, high-grade investment-grade bonds looking interesting from a yield perspective. the question is how much of your portfolio you can leave in bonds today and how much extra pain you are likely to take. because clearly the fed is not done yet. nobody is done yet, so there will be -- it will get worse before it gets better, but in terms of the yields, and we see yields at 5%, then after inflation that actually looks very meaningful. the inflation number is eroding with those yields look like in real terms, as inflation takes down, those bond yields are interesting today. again, inching in, be very
cautious, because we do not see this tightening is done you. caroline: he started off the conversation by saying how crypto had had, perhaps, some correlation effects on dragging down technology. go global more broadly, cross-asset for us. if you are looking at a 60/40 that has not worked for 2022, are there areas you are looking outside bonds and equities? aoifinn: those clients that had diversification have done better. there has been some balance there. there has been something to take cash away from to rebalance into these weak markets. if you have 60/40 there is nothing to rebalance with. we like his private credit. certainly as the banks come under pressure, may be credit ratings start to look less severe when it comes to the corporate side. we will see the need of this lender of last resort, private credit, continue to take up. private credit and edgers are seeing strong opportunity sets.
that suggests there will be some nice cash flows that will come from that. paul: you have run 38 marathons. i have no idea why anyone would run 26.2 miles. it is the next when you are going to run? aoifinn: the next one is actually boston. i got a spot in boston, so i'm excited about that. i've done it before, but i was a lot younger then. paul: what is the best marathon you have run? aoifinn: i'm still going to say new york city. the first and best. it is so diverse in terms of the boroughs, the support from the street is electric. ending in central park is arconic. it was my first. it wasn't my best time, but it was the first psychological journey i made on the 26.2 miles. paul: that is good stuff. even debit, mendota -- magnetic group officer, and serious marathon runner. she joins us from chicago.
let's get national news with ritika gupta. ritika: a house panel has released six years of donald's tax returns. that ends eight years-long battle between democrats and the former president. the trump returns show that he and his businesses lost millions between 2015 and 2020. that let him minimize his tax bill. vladimir putin and xi jinping hailed deepening ties between russia and china in a videoconference today. putin says the relations are the best in history. xi said china is ready to expand the relationship. there are signs beijing is impatient over the political and economic impact of russia's struggling invasion of ukraine. in the u.k. a new poll shows the size of the challenge facing prime minister rishi sunak and his conservative party. the survey, conducted by people
polling, shows labor has a 26-point lead over the conservatives in the next election, expected to be held in 2024. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm ritika gupta. this is bloomberg. caroline? caroline: working late in london when everyone else, i'm sure, has hot-footed at home. let's take a look at what has been an ugly year. we want to go through some of those painful pauses you can put to one side later today. the stoxx 600, lagging further. every industry group in the red at the moment. the oil country index is down too. using a fit of its value over the course of the training you. the 10 year, maybe that is what is dragging equities lower. paul: you mentioned emerging markets. talked to damian sassower from
bloomberg intelligence, and it has been a tough space for many years. i want to check in with kimye next week and get a sense of what the reopening of china means for some of the emerging markets. it is such a big part of that msci index. it felt almost on investable for many people -- un-investable. caroline: particularly some of the tech names, given that tencent is finally getting the gains it wanted to be pushing through. it allowed people to think, this government is not only reopening the economy, perhaps some of the crack down from a regulatory perspective is easing. globally for you, plus radio and tv, happy last claim -- last trading day.
what has been a pretty poor day, and year, for your equity markets, for your bond markets. we have had a couple of guests today saying maybe consumer discretionary is a place you could be looking. we kicked off the conversation with that take. the strength of the consumer in the u.s. has been remarkably resilient, considering all of the headwinds this year. paul: it has been. the consumer, who is fully employed, effectively. wages are going up. generally the consumer has been hanging in there. we want to get a sense of how the retailers are doing. clear task and is a retail analyst at morning consul. she joins us from chicago. a balmy chicago relative to last week. talk to us about what we are seeing, from this consumer. we are getting to the tail end of this holiday shopping season. i was the consumer doing out there? claire: i heard the word resilient as we were starting
this conversation, and that has been the word of the year for the u.s. consumer. i continue to be surprised every month and we get the retail sales report, the people are continuing to spend, despite ongoing high inflation. we are seeing consumers lean into that. we know credit utilization is up as people continue to spend, while absorbing higher prices. there is good news in resilience, the debt has me worried. caroline: when he talked to the banks, particularly those with large retail parts, inc. of america or jamie dimon, they are not seeing much stress within the credit levels of their consumer at the moment. talk to us about the deferred payments, talk to us about why now, pay later. every time -- by now, pay later. how is that perhaps putting up some pain inevitably? claire: absolutely. consumers have been really attracted to by now -- buy now,
pay later. particularly gen z and millennial shoppers. it feels like it is much more control. it is a defined payment period, it is a defined monthly payment. the initial fees are not too painful, even though they can get you. like credit cards it is something consumers can keep a tight control over while extending their cash flow and making the budget aligned. paul: there are some big retail trends that i want to get your opinion on. the first one is concerning to me. buy now and pay later. what impact is that having on the retail space? claire: if you are one of the people who has not seen this when you are checking out online, it is an alternative credit option. it is a short-term loan that has very little scrutiny around it.
you can say, i would love to spread this payment out over a couple of months instead of paying for it all at once. you can spread it over a few paychecks. consumers have taken to this. the providers are affirmed, have to pay, clar not -- klarna are the big ones. in our data we see that people are using these loans for day-to-day purchases. one of the most popular categories is apparel. caroline: i've tried it out. hip boots, got them in installments. paul: is this like the old layaway plan? claire: it is a little different. yes, it is a modern context for that, where you can spread that payment out. retailers, the consumers having more options to pay is certainly a good thing. i will warn that the consumer financial protection bureau is increasing their screen on this
market, because we do see people getting into a bit of trouble taking out too many of these loans. caroline: i feel it is a gen z-led by now pay later -- buy now, pay later demographic. also iran's -- i call myself an old lineal, i live and die by rental the runway and renting my clothes. love it so much. i rent my jewelry now. what about secondhand? that is an area i used to go to. i'm lazy now as a parent and don't go out real shopping. what about some of the retailers in the secondhand areas and the ways in which you can buy? claire: in 2022 we saw many retailers and consumer brands standing up their own secondhand platform. it is a bit different. and die, i think we are around the same age, tend to think about shopping of having to go
through a store and sort through clothing racks to find treasures. it has really become a digitized experience, which is really attractive to our gen z and millennial shoppers. most people shop secondhand to save money, the sustainability angle or finding something cool and unique are also motivators. as inflation continues to hamper consumer budgets, we have seen more shoppers take to secondhand shopping. we are seeing this more from women, especially those who are more financially strapped, to really accelerate their secondhand shopping. when you see big brands like temperament -- timberland, blue lemon, have stood up their own versions of secondhand shopping, whether that be through their own peer-to-peer platform or actually through more of a consignment auto whether brand is authenticating and refurbishing some of these items before resale, that can make it feel a lot more accessible and a
little more certain for a shopper who is worried about things like quality and authenticity in the secondhand market. i think that investment retailers have put into secondhand has really made the market poised for a lot of growth in 2023. paul: i know one of the big themes in retail has been reducing the number of stores in this country, reducing the footprint. where are we now in the process? is there room to go, or has the pandemic accelerated that whole process? claire: the pandemic certainly accelerated it. it is important to remember that the u.s., specifically, was massively over-sorted in terms of retail space per consumer. had a few bama too many stores or square footage for a while. what we have seen is a rebalancing. we have also seen great stories from brands like dollar general,
opening additional brick-and-mortar spaces. it has really been about moving some stores around, taking sure they are in the right places for consumers. one trend i think is exciting is, all of these digital direct to consumer brands, part of their growth phase does include opening brick-and-mortar. the utility of brick-and-mortar for the american chopper is still alive and -- american chopper is alive and well, but there is reshuffling that needed to happen to make sure brands have spaces in the right size. caroline: i'm interested broadly in the have sent have-nots, the bifurcation of this market. as earnings started to come out and we started to see this economy slope, people could still buy luxury. inflation tends to hit the lower income demographic. those that depend on the stock market get hit, but they can still continue to purchase at higher price points. then people trading down. who is best placed as we go into
2023? is it the cheaper stores and high-end ones? what about the painful metal? claire: the murky middle is what -- is where we are seeing the most pain. stores that don't have a differentiated experience for their shoppers are where we see there is not a strong reason to buy for shoppers looking for something in that middle. the only motivator is going to be discounts and convenience, which, you know, from a marketing perspective is boring and not a lot of fun to play with. we are seeing even brands like walmart have said they have done a good job of capturing higher income shoppers. we know the luxury market has been well-insulated. i will go back to brands like the dollar store family, who are -- you have captured a lot of shoppers where there has been a lot of disruption in terms of the stores that consumers are loyal to. so, where people have been able to be more competitive on price there has been a continued
hollowing out of that middle. paul: appreciate you taking the time. clear task and is an e-commerce analyst at morning concert -- clear tacit and is an e-commerce analyst at morning consul. coming up, we need to get the latest on china. they continue to reopen, and i think this reopening, the pace of the reopening caught a lot of people around the world a little bit flat-footed. you're going to get the latest there. can the shiite -- can the chinese folks leave china and come to other parts of the world? we will see. we will get the lowest coming up. -- the latest coming up. this is bloomberg. ♪
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caroline: back to bloomberg markets. we are across radio and tv for your last day of trading, 2022. has been interesting is, the only places to hide this year -- it has not been equities, it certainly has not been bonds -- the dollar has continued to be an outperformer. but that has been painful -- painful for emerging markets. as we start to see this reopening trade, especially china, i wonder if we start to see a reprise of emerging markets. paul: we are going to talk about that in a moment. we are going to check in with someone from hsbc. when you talk about emerging
markets, you have to get a call on china. when they do a reopening, they are not messing around. we want to get the latest. madison mills joins us on our bloomberg radio studio. she is from bloomberg first taken all of that good stuff. what is the latest news out of china? it is amazing, the pace of their reopening and have the reaction that the world has. madison: i made a huge mistake of requesting a slow news day today as we head into new year's eve. look at where we are at today with china. starting off with the big news this morning, vladimir putin and xi jinping having their video conference, their first meeting since there in person meeting in september. i think the big news to come out of that is what we heard from putin more than from xi jinping, saying that russia and china ties are the best in history, that their strategic partnership is a stabilizing factor amidst broader geopolitical tensions. what i'm looking at is what we
didn't hear from xi jinping. still not hearing in a massive support of rush's attempts in atmore in ukraine, and not even hearing him call it a war. caroline: geopolitics remains front and center for every investor. so does the reopening of china. where do we stand with, instructions in some way? madison: we heard calls for restrictions on travelers coming in because there were so many positive covid cases coming into milan. we heard 10% on it -- on a flight from china to rome tested positive. as they have simple test results we are seeing that it is the an -- the omicron variant. which is good news, because it could mean we have some herd immunity. the case comes in china itself are just astounding. it is difficult to get a sense of those case counts, because of
the lack of transparency around the data. we are hearing numbers in the hundreds of thousands of positive tests today, intentionally up to 25,000 deaths as well in one day coming out of china. paul: where are we with the data? it is not very transparent, and i guess no surprise there, but is there any third party independent means to get any data? i think even about the chinese beige book people who have people on the ground getting economic data. i wonder if there is any way to get a sense of this, because this could be astronomical, or not. maybe they are more vaccinated than we think. maybe their vaccines are better than we think. i'm not sure how this could play out in january and february. madison: it is the question to ask. the report as we have on the ground and are doing their best to get information they can from we chat groups, local, city health commissioner's are doing a lot of work to get the information out. there are also indicators you can look to, like pharmacies
running out of cold medicine throughout china. that shortage being an indication of a lot of positive tests as well. caroline: a great story on the terminal today, paul, using airfinity, who are saying come the peak of lunar new year festivities we could see deaths of 25,000. at the moment i think they see 9000 deaths a day. guess how many the chinese are reporting a day? paul: a fraction of it. caroline: 12. thank you to madison mills. this feeds into a discussion about what the reopening of china, as messy and as ugly as it currently seems, for the people on the ground up there, does it mean broadly for emerging markets? do that with a doctor in the house. a phd-holder. murat ulgen is with us. hsbc head of emerging markets research. wonderful to have some time with you.
we were discussing some of the reopening trade. what is that mean in terms of asia more broadly and the desire to long emerging markets in this space? murat: thank you very much for having me. i think it is a good place to start with the findings of our latest emerging markets sentiments survey that we conduct on a quarterly basis across institutional investors. the previous survey in september, we have seen a very downbeat mood. the survey we recently released a couple of weeks ago for december actually shows a distinct improvement in sentiment for merging market and esters. the net sentiment has turned positive for the first time since july 2021. we have seen emerging market investors putting cash to work in 2023. this is the first improvement in five quarters. we asked investors, what is your
current appetite for emerging market risk? that score has also improved. obviously the news about china reopening and supporting its property sector, they are helping with the sentiment, but is also the fact we have seen some improvement in the inflation outlook around the world. that is also helping with the expectation that the fed is nearing the end of the tightening cycle. these things are painting a relatively better picture for emerging markets. ride -- i'm saying relatively, because the last too years we had emerging -- last two years we had emerging markets negative across the board during two consecutive years. things are looking a little bit that are based on our survey. paul: i'm not an emerging markets investor, but as i step back and think about 2021, 20 and i think about what is going on in china, the harsher
regulatory take by the government, i could step back and say, i don't even think china is investable. what do the emerging markets professionals really think about china? murat: actually in our survey the expectation about china growth has picked up. china is one of the markets investors single out, alongside indonesia and india when we talk about asia. the first region they would like to invest is latin america, including fixed income. for fx and equities, more so over fixed income, it is asia, and china features in there. the beginning phase of reopening will probably bring some volatility. it will possibly be bumpy. we are seeing the latest data on the soft side. but they do expect a significant upswing in the second and third quarter of next year. and very strong improvement. caroline: what data do you like
to look at when it comes to china more broadly? murat: obviously we follow the -- i mean, he sentiment indicators like the pmi, the official one, and one for the private sector. but also the hard economic data. retail sales, all sorts of data. the expectation is a relatively soft start in the first quarter of next year, and a significant upswing. they're looking for a you-shaped -- a u-shaped recovery, which should help activity. the last two years he was production and manufacturing, but with the reopening, although probably bumpy in the beginning, the second and third quarter the expectation is consumption should start helping. paul: my indian friends have been telling me the next decade is going to be the decade of india, for a variety of reasons. not the least of which is china
is having so much trouble with its covert policy. it is the call on india murat: longer-term? murat:the longer-term is brilliant. i have to say. our economists have done a great report in 2030. they have done it a couple of years ago. india is the country that jumps the most in global leadership in terms of its gdp and gdp per capita. obviously we have seen significant reform efforts in india from goods and services tax, baking sector overhaul, etc. it has an educated population. the near term, again, some volatility perhaps could be expected, because obviously there is lots of investor positioning in the equity markets. but also at the same time inflation is rather high.
inflation was favorable, but core inflation is sticky. india is a major energy importer. especially oil. they are probably not complete a gun but there tightening cycle. they should probably have to get over the inflation, which we expect sometime early next year. that could bring volatility in the beginning. but the long-term, it is a very bright future stun our expectations. caroline: going -- based on our expectations. caroline: going back to your expectations, clear and simple, latin america most preferred region. break it down, the reasoning why. murat: absolutely. the markets that stand out are brazil and mexico. i mentioned asia in the context of equities, whereas latin america is across-the-board the board, all asset classes, fixed -- including fixed income. latin america was the first in the tightening cycle. brazil started tightening rates one year before the fed.
sicko has delivered substantial rate hikes in tandem with the fed. they are seeing inflation turning down, especially in brazil. economic activity will likely support the potential of cutting rates, which we expect in 2023. sentiment has improved. the external sector is pretty good. when it comes to mexico, there is also this fdi flowing into the country. in the first three quarters of this year mexican fbi has broken a record. -- fti has broken a record. these markets are really singled out by investors. latin america is earlier in the tightening cycle. paul: great stuff. appreciate the update. we're at olguin, -- you're right olguin -- -- m ohurat ulgen --
murat ulgen. right now let's get national news in london with ritika gupta. ritika: thanks, paul. the u.s. may give ukraine's ground fighting capabilities a boost. the biden administration may send bradley fighting vehicles to ukraine as part of another military support package. the bradley is used to transport troops, but also armed with missiles and a 25 millimeter gun. in myanmar deposed leader suu k yi has been sentenced to seven more years in prison after being convicted of corruption. her total prison term is now 33 years. here in the u.k. home prices
fell for a fourth month. that is adding to concerns that a deeper slump may be underway. nationwide building society said its measure of forecasts were up .1% in december. in mark, a separate report showed demand falling in london, and strengthening outside major urban areas. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm ritika gupta. this is bloomberg. caroline? caroline: thank you so much. in london the days trade was done hours ago. for them. they actually eat out a growth for the year in terms of the ftse. not in dollar terms, but pound terms they did manage to close up .9% on the year. we see everyone else there are drought -- there are drawdowns. your closed up shop with every industry group in the red for the day. he was mainly technology and
telecoms. those are companies on the downside, but europe down by 12% on the year. not nearly as good as global stocks. paul: i'm thinking of these great european technology companies like siemens and the big manufacturing companies. they have to be real -- they have to be loving this reopening in china. if china is reopening, i know they have a lot of export is in is to china. caroline: i will tell you another key set of european names that will benefit. lvmh. some of these caring groups. they are going to be willing, these chinese spenders, to be coming back to paris, london to do spending. not much luxury spending in terms of your spot -- in terms of your stock market today, there. this is bloomberg. ♪
through what has been a disastrous year for bonds, for stocks. talk to us about what really caught your eye for 2022. abigail: i think he just grabbed it all. it was the volatility. it was not unexpected at the start of the year, but it has been incredible. not in terms of measures of volatility, these incredible stock moves. because there have been so many moves up and down for the s&p 500. maybe those moves, a move higher in bonds, the move we have seen up in yields, down in price, commodities at the same time higher, which is not something you would typically think would happen when there is fear of a global recession, a demand problem out of china, and also with stocks higher. a real divergence. then there is crypto. you have bitcoin and the complex down in a big way. caroline, you were saying that going down 64% on the year.
will next year be a brighter spot? we will have to wait and see. paul: abigail doolittle covering all of the market stuff for us here. let's keep on the crypto story during it feels like we need a daily update on all things crypto. let's start off with hannah miller. that is the headline i woke up to this morning. what is the latest? hannah: that gives us more insight into what is happening here. there was this $372 million theft of assets from the ftx exchange shortly after the company filed for bankruptcy on november 11. there were these cybersecurity concerns, and it makes sense that authorities made a seizure. caroline: what is fascinating is -- what is it 150 entities that
filed for bankruptcy? ftx japan is going to allow withdrawals through mid-february. send bankman-fried build his reputation with that arbitrage between that arbitrage, being able to make money. perhaps not as much as he declared, but talk to us about the global nature of this, where ftx is being taken to task, legally speaking. hannah: we know spf and ftx's reach was far. this was a global company. there is a big question here of, which customers at which exchanges are going to get their money back first? we have had insight from jon wright, who is handling the restructuring, that u.s. customers might be further ahead in line. in terms of getting back their assets. paul: what is the next step in the legal process for sam bankman-fried.
hannah: we are expecting him to enter a plea on january 3. it seems like there might be pressure on him to enter a guilty plea. that is because his ftx co-founder and former alameda ceo have already entered guilty pleas. that they are cooperating and working with authorities in terms of providing evidence of what happened here with ftx. caroline: hannah miller. we hope you get some rest and celebration for new year's eve. unfortunately, as many in the crypto space no, it does not sleep. for all things ftx and sam bankman-fried, as we wrap up the year that was an issue for that space, that the contagion effects, whether it was crypto selloff because the nasdaq was selling off, then maybe you saw the nasdaq fall off because of the contagion from crypto, we can talk with ed ludlow, who
still works for us late in the united kingdom. we love him for it. he is my cohost of number technology as well. talk to us about what a wipe out technology longs had this year. ed: i have a bit of a holiday quiz for you guys. you guys tell me, and was the low of the year on the nasdaq 100? caroline: was it quite recently? ed: quite recently. caroline: was it your birthday? ed: we eclipsed that low on wednesday. do you guys know when the high for the year on the nasdaq 100 was? paul: january 2? ed: that was a sunday, but january 3. that is my point. we reach the heights of this index on the first trading day of the year and we had a fresh low just the third from last session. that sums it up, doesn't it? this sector broadly was the main victim when it comes to aggressive rate hikes from
central banks all around the world. also you cannot separate the stocks and bonds story, because the rise in yields makes those tech stocks less attractive. and it has been a year, goodness. paul: we have been asking experts about this tech sector and whether it can be a leader in this market as it has been for much of the last decade. i'm not sure if it is rising interest rates, which certainly hurt the tech sector in the first half of the year, but in the back half a lot of them were taking down their estimates, saying, we have some headwinds. they called into question their ability to plow through a recession. i'm not sure how people are looking at this sector right now. ed: i always go to forward 12 months price to earnings. earnings expectations. those have come down since september, october by 5% across the sector broadly. why? many of them did give -- cap it is kind.
they gave weak forecasts for the current period, which is the three months ending december, and very little outlook for the first three months of calendar 2023. whether we do have a hard or soft landing i think the concern for markets is an earnings recession, where we see week earnings, at least in the first few months of that year. it is hard to call a bottom, particularly on the nasdaq 100, which has you are mega caps, also software stocks which are -- which have week earnings anyway, because they are either very early revenue or pre-profit type companies. caroline: it is interesting, this week has been perhaps a slight change of narrative. some clinging to hope when it comes to chinese big names. particularly tencent getting gains made people think, not just a chinese covid u-turn, but may be a u-turn when it comes to the tamped down that has been on the tech names. ed: all performances relative,
but i think i'm right in saying the nasdaq china index, which is that basket of china -- china tech shares is down year to date. which is bad, but not as bad as the nasdaq. the worry is that for u.s. technology companies particularly, the hardware makers, is they get hit on both sides of the equation. if you look at apple, december was the worst month for four years. you have to go back to may 2019 to see those declines. they get hit on the supply chide -- supply side because of disruption from the spread of covid and demonstrations. now they are getting hit on the demand side as well. it is a really critical story. there are some bright spots. we got a lot of positive surprises from china e-commerce in particular, which is closely tied to that reduction of restrictive policy and reopening of the economy there. caroline: ed, go global for
us each time. love it. you are our friend. thank you so much for bringing us up to speed. happy new year. have a great one. at 7:00 p.m. new york time he will be partying hard over there. look at what has been not just a 33 percent selloff in the nasdaq this year, the s&p gets away with just 1/5 of its value being eroded. will billy speaking that is exactly the same. -- globally speaking that is exactly the same. paul: there is no place to hide. we just have not seen that before. caroline: i think some of the narratives that -- the superlative's would love to use on these days, the fact it was the worst day since 2000 eight, for global stocks, for global bonds, worst year since 1990. but traders, who invest in it,
people on the desks, knee, we have never experienced this before in our memory. paul: absolutely. there is no place to hide, so a lot of people are saying given that underperformance in fixed income in 2020 two, a bullish case can be made for 2023. like i told my kids who started working over the last four or five years, i said, you've got to look at the long term. 2020 was a good year for you. 2021 was a good year for you. now you have to pay back. caroline: maybe a better entry point. you have to take a glass half-full perspective. have been the outperformer? i'm not hearing much of a bearish case for commodities yet, particularly with china's reopening. bloomberg commodity index have been one of the wonders of -- has been one of the winners of the year. paul: where do we go next year in crude and some other commodities? caroline: it is a shame. i really enjoyed this week. thank for having me. it has been a joy to be in this