Bloomberg Daybreak: January 19, 2023

gets set to report hrnings this afternoon. I maybe Morris the Supreme Court will not block new gun laws in New York, and Mayor Adams doubles down on his call for a national response to the migrant crisis. I'm trying to stashon sports another home loss for the next meeting. By Washington, the Bruins beat the Islanders. The upsets continue

with the Australian Open. That's all s Trady ahead on Bloomberg day Break on Bloomberg eleven three, on New York Bloomberg one, Washington, d C, Bloomberg one oh six one, Boston, Bloomberg nine sixties, and Francisco Syrius x M one nineteen and around the world on Bloomberg Radio dot Com and via The Bloomberg Business. Good morning, I'm Nathan Hagar, and I'm kerin Moscow. Here are the stories we're following today. We are seeing a turn in the mood on Wall Street.

The tech heavy NASTAC one hundred snapped a seven day rally yesterday, and after rising for five straight days, the SMP five hundred fell for a second session. In fact, yesterday's one point six percent decline was the worst in a month week. Economic data are rekindling concern over the outlook for growth. Howard Marks is co founder of oak Tree Capital Group. With the appearance of the UH, of the inflation and the increasing of rates to try to

stamp out the inflation, things have gotten harder. I imagine people today saying, well, when are we going back to normal like it was five, six, seven years ago? And and the important thing to know is that that wasn't normal. That was the easiest, the best of times. And I my own belief is we're not going back there. Oak Tree Capital co founder Howard Mark spoke with Bloomberg's remain boss Stick Marx also says the current rally and junk

bonds is unlikely to last. Meantime, Nathan, the best start to a year for a bond returns is helping fuel an unprecedented debt sale bonanza. So far, governments and companies around the world have sold more than half a trillion dollars worth of debt. Virtually every corner of the new issue market is booming, thanks in part to a rally that's seen global bonds of all stripes searge four point

one percent to start the year. We'll still Karen. The FED remains firmly in focus for fixed income investors now too, FED officials are forecasting a downshift two quarter percent rate hikes as the economy softens and inflation cools. Here's Philadelphia FED President Patrick Harker. I expect that we will raise rates a few more times this year, though to my mind, and I this is my views, the days of us raising them seventy five basis points at a time have

surely passed. In my view, hikes of twenty basis points will be appropriate going forward. Those sentiments from the Philly Feds Patrick Harker being echo by Dallas FED President Lorie Logan, who says she favors cutting back the pace of tightening. A slower pace is just a way to ensure we make the best possible decisions we can, and if necessary, should adjust our overall policy strategy to keep financial conditions restrictive,

even as the pace lows. Lori Logan and Patrick Harker are both voting members on the f O m C this year. The feds next policy decision comes February one, but the global economy is also in focus at DeVos Nathan during Gay four of the World Economic Forum, recession talk remains on the front burner. European Economy Commissioner Palelo gent Aloni tells us Europe is already in the midst of a recession. We are, in my view and in the EU estimate, which is more important, in a period

of economic contraction. This is for sure we will have a couple of quarters, the previous one and this one of slight contraction. Well, growth is contracting. European Economy Commissioner Polo gent Aloni said the EU likely avoided the case scenario. He made the comments in an interview with Bloomberg's Francy Lakwa this morning. Let's turn to corporate news back here in the US, Karen, we're seeing a new push from Apple to take on Amazon and Google in the smart

home space. Bloomberg Steve Rappaport joins US Live with that story. Good morning, Steve, Good morning, Nathan and Karen. Apple's playbook includes rolling out what amounts to a low end iPad meant to control in array of devices. It will allow users to adjust lighting and temperatures, play videos, and much more. iPads already have smart home features, but standalone devices to

control everything from one location are gaining popularity. The tech giantess struggled to keep up in a market dominated by Amazon's Alexa and the Google Assistant. Apple will also make adjustments to its Sirie voice controlled service as part of the push. Live in New York. I'm Steve Rappaport, Bloomberg Daybreak. All right, Steve, thank you. Earnings also in focus today as we await results from Netflix the company reports this afternoon,

and as Bloomberg Jeaff Bellinger reports analysts are upbeat. Bloomberg Intelligence says things are finally falling into place for the video streaming sir Risk and it could meet or even exceed guidance for the addition of four and a half million subscribers. That's based in part on a solid slate of shows. Investors are hoping to hear more about the rollout of the ad supported tier, and plans for crackdown

on password sharing. Analysts say Netflix could report stronger fourth quarter revenue games given the recent weakening of the dollar. Jeff Bullinger, Bloomberg Daybreak, Jeff, Thanks, and California. Elon Musk's fraud trial is underway. Opening arguments are showcasing very different pictures of the Testless CEO. Bloomberg's Baxter has the story. The prosecution depicts Musk as a liar who callously jeopardized the savings of regular people, and the defense as a

well intentioned visionary focused on Testla's future. The issue that Musk tweet it he had lined up financing to take Tesla private at a time the stock was slumping amid production problems, and it fueled a rally. The prosecution says he never intended to take the company private. His attorneys say that isn't true, that he thought he had the money lined up. Musk will be the star witness and the two week trial in San Francisco. I'm at Baxter

Bloomberg Daybreak. All right, thanks, and let's turn our focus now to corporate earnings. We're seeing shares about CoA down about six and a half percent in early trading. The company said aluminum shipments will be weaker than anticipated this year. Alcoa blames ongoing uncertainty is caused by global inflation, dwindling demanding Europe, and a soft outlook in China. It is forty two degrees in Central Park, clear skies. For now, We've got rain moving in. Later today, we'll hit a

high near forty five degrees. The rain will taper to a few showers this evening as we head down to near forty. Time Now for a look at some of the other stories making news in New York and around the world. For that, we're joined by Bloomberg's Amy Morris. Good morning, Amy, Good morning Nathan. The U. S. Supreme Court has refused to block new safety in record keeping requirements that apply to New York gun retailers, letting those provisions stay in a act while a legal fight goes forward.

The justices, without explanation or dissent, turned away an emergency request by a group of gun dealers who say their Second Amendment rights are being violated. New York City Mayor Eric Adams spoke before the US Conference of Mayors in Washington, d C. Where he laid out a six point action plan to help alleviate what he calls the migrant crisis in New York, and he doubled down on his call for a national response. Cities and mayors have gotten us

this far. Nounce time for our entire government to support the rope that we save so many lives. Mayor Adams called for a dedicated point person at the US Mexico border, a decompression strategy, and congressional funding to implement strategies in cities with the greatest need. This as New Jersey Governor Phil Murphy announced free state paid healthcare for thousands of

undocumented immigrant children. New Jersey expects to add sixteen thousand non citizens under the age of nineteen for free routine medical care, emergency room visits, and other services. Meanwhile, Mayor Adams is also looking at ways to repurpose vacant commercial real estate because so many people are working remotely, leaving those offices empty. Adams tells Politico that ten million square feet of space is not being used, turning it into

the much needed affordable houses. That's that we're looking for childcare. We need to look at the spaces that are available. Mayor Adams estimates about fifty people are in their offices compared to thirty back in April. A bill that would give terminally ill people the right to end their life in Connecticut is once again before the legislature. The Public Health Committee will be taking up the bill, which failed to gain enough support in the Judiciary Committee last year.

This year's measure would allow a doctor to prescribe life ending drugs to a person suffering from a terminal illness. Global News twenty four hours a day on airand on Bloomberg Quicktake, powered by more than journalists and analysts and more than one of of twenty countries. I'm Amy Morris. This is Bloomberg, Nathan. Thank you Amy. Now it's time for our Bloomberg Sports Update, brought to you by try stayed OUTI Good morning, John Stanshower, Good morning, Nathan. I

gave the next figure to win. They won last weekend. Washington Wizards only eighteen wins on the season, losers of five of their last six, but at the Garden they never trailed, jumped in front by fifteen in the first quarter, and won one sixteen to one oh five. Kyle Kuzma score twenty seven Jalen Brunson lat the next with thirty two. Nicks made only seven of twenty six three pointers. Julius Randall and R. J. Barrett were together oh for nine.

The Knicks coach Tom Thibodeaux. We were playing from behind all night. That show that that heard their state. They came out, they were making shots early and h they got a lot of confidence from that. I thought they played really well in uh. You know, we missed shots and we couldn't get our defense. And the struggles continue at home. It's just eleven and thirteen, fourteen and eight

on the road at the Garden tonight. Rangers and the team that's dominating the NHL, the Bruins last night beat the Islanders for the one of the Bruins are twelve points better than every other team. College hoops Seaton Hall one point went over fifteenth rank Yukon, who was without its coach Dan Hurley, the Seaton Hall grad. He missed the game due to COVID. This Australian opened the first Grand slamming over twenty years, where the top two scenes on the men's side both failed to get out of

the second round. The day after after, you on the data lost. Casper Rude, the two seed who lost into Allen last year's final, upset by twenty two year old American Jensen Brooks. Be Taylor Fritz, the top seeded American, lost in five sets. The Mets have signed veteran outfielder Tommy Fan. Jets interviewed Nathaniel Hackett to be their offensive coordinator. He was just fired as the head coach in Denver.

John Stash that one. Bloomberg Sports live from coast to coast, from New York to San Francisco, Boston to Washington, d C. Nationwide on Sirius xamp, the Bloomberg Business app, and Bloomberg dot Com. This is Bloomberg Daybreak. Good morning. I'm Nathan Hagar, bringing you more of our conversation with billionaire Howard Marks,

the co chairman of oak Tree Capital Management. Mark sat down with Bloomberg's Remain Bostick to explain why he thinks financial markets maybe in the middle of their third sea change of the last fifty years. Let's listen into that interview. Now, you say we're basically in the middle of a third sea change. What is it? Well, if you look at the period from the end of the global financial crisis UH roughly oh nine through the appearance of the pandemic, and then in the one UH we were you know,

the FED took extreme measures to save the economy. They worked very low interest rates the lowest in history zero for much of that time, and UH quantitative easing, the buying of bonds, which puts liquidity into the economy. UM. These things produced what I would call was an easy environment UH in the economy and the markets. It was we had the longest economic recovery in history. It was easy to make money, We had low cost capital, was easy to make a profit, We had very few defaults

in bankruptcy. It was easy to stay in business, it was easy to access capital. Um. Everything was easy at that time. And UH in the last year, of course, with the appearance of the UH, of the inflation, and the increasing of rates to try to stamp out the inflation, things have gotten harder. I imagine people today saying, well, when are we going back to normal like it was five, six, seven years ago? And and the important thing to know is that that wasn't normal. That was the easiest, the

best of times. And I my own belief is we're not going back there. We're now in an environment of more normal and UH circumstances, and we're going to roughly stay this way. Well do we go back? I mean, what do we go back to? It all? Because when I sort of read that memo and I look at sea changes, it sounds like everything new is new. It's never really a reversion to where we were in the past. Right. Well, that that's what a sea change is. It's a complete transformation, uh,

not just a minor UH cyclical fluctuation. So you know, look, I think that the business world, the economic world, is not supposed to be easy. It's not supposed to be easy to make money. UH. It's not supposed to be easy for UH companies with bad business models to stay

in business, as it has been for the last fourteen years. UM. So I think we go back to a period in which we have moderate interest rates, we have moderate availability of capital, we have a moderate UH default rate, and so forth, all of which will feel much less accommodative, I think than the last fourteen years. But so much to the ada on the market right now is, of course people trying to figure out what that new rate is, if you want to call it a neutral rate or whatever.

But I mean, when was the last time that you can remember that we had a stable and assistant neutral rate. Well, it depends on your definition of stable time wise, But of course I think that the FED became activist with the arrival of Alan Greenspan in the mid nineties, and I think that it's you know, we we had you know, people started to talk about the arrival of the greenspand put that if there was a problem in the economy, the FED would just scored in some liquidity and solve it,

and and they frequently did. And they frequently did, including Y two K and another real and imaginary UH crises, the arrival of the bursting of the TMT bubble, for example. So I would say that that's twenty five years that that we haven't had what I call a free market

in money. But what gives you conviction that J. Pale and whoever his successor might end up be being are going to sort of move in a different direction where they're not going to necessarily cow to out to the market in a way that the market has come to expect. I'm applying common sense. Uh, you can't always count on common sense, but uh, you know, the events of recent years tell me that it's not great to have interest rates at zero. Zero interest rates are really in an

emergency measure. Uh, somebody gets a heart attack, you give them a shot of a greneralman. Works. That doesn't mean you start your day with a shot of a greneralman every day. For seven years. We had rates at seven at zero for seven years, and I think that you know, and by the by the way, by the time uh sixteen seventeen eighteen rolled around, people started saying, well, shouldn't rates be a little higher, so that if we have

a recession, the Fed can cut rates and and become accommodative. Well, if rates are zero or a quarter or a half, you can't do that. So I think that's an important reason why rates should be positive. And if you want to fight inflation and and kill off inflationary psychology, which is very important, you need a positive real Fed funds rate, that is, the funds Fed funds rate has to exceed the rate of inflation. And where we have a way

to go before that's the case. This is Bloomberg Daybreak today, your morning brief on the stories making news from Wall Street to Washington and beyond. Look for us on your podcast feed at six am Eastern each morning, on Apple, Spotify, and anywhere else you get your podcasts. You can also listen live each morning starting at five am Wall Street Time on Bloomberg eleven three oh in New York, Bloomberg in Washington, Bloomberg one oh six one in Boston, and

Bloomberg nine six in San Francisco. Our flagship New York station is also available on your Amazon Alexa devices. Just say Alexa play Bloomberg eleven Plus listen coast to coast on the Bloomberg Business app, Serius XM Channel one nine, the I Heart Radio app, and on Bloomberg dot Com. I'm Nathan Hager and I'm Karen Moscow. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak