Bloomberg Daybreak: January 23, 2023

that left ten dead outside of Los Angeles. Plus Poland will ask Germany for the go ahead to send thanks to Ukraine. I'm Michael blog more ahead of John stash Our and sports NFL playoff victories for the Bengals and Forts.

The Knicks lost, the Nets and Devils both won. That's All's train ahead on Bloomberg Daybreak on Bloomberg eleven three on New York, Bloomberg one, Washington d C, Bloomberg one oh six one, Boston, Bloomberg nine sixties and Francisco Sirius x M one nine team and around the world on Bloomberg Radio dot Com and via The Bloomberg Business. Good Morning, I'm Nathan Hagar and I'm Amy Morris. Here are the stories we're following today. Let's begin in the hedge fund space.

We have word of a record profit for a fund manager. Let's get the latest live from Bloomberg. Steve Rappaport, Good morning, Steve, Good morning, Amy and Nathan. Citadel netted sixteen billion dollars for clients last year, far outpacing the rest of the industry. According to estimates from l c H Investments, that Hall accounts for more than seventy percent of profits generated by the top twenty hedge fund firms. While hedge funds overall

lost two hundred eight billion last year. Citadel's fixed income, tactical trading, and equities funds generated returns of more than twenty one percent last year. The Wall Street Journal reports the Miami based firm returns seven billion in profits to investors at the start of twenty three Live in New York. I'm Steve Rappaport, Bloomberg Daybreak. All right, Steve, thank you. No stock Center. This Monday, following the S and P five hundreds biggest gain in two weeks, it rose one

point nine percent. On Friday, the tech heavy NASAC one hundred had its best day since November, gaining two point seven percent. Miller Taback chief market strategist Matt Mayley says, we are entering a critical time for stock markets. We're gonna have to see what really happens over the next two weeks because that's when we really get into the meat of the earning season. And one of the big things, of course that everybody's been talking about it, you know,

our our earnings. A lot of people thinking they're gonna come down quite a bit, especially the guidance. And as we move into the meat of that earning season, what's going to happen, Because you know, the stock market on a long term basis, at you know, seventeen and a half times earnings and two points three times sales, it's

still at the high end evaluation levels. And as Millery Tabacks met mainly watches earnings, we hear from nearly nine d companies in the SNP five hundred this week, including Microsoft, Intel, IBM, and Boeing. Meantime, Morgan Stanley is making the bear case for stocks. Chief US equity strategist Mike Wilson says earnings are a major reason the bear market is not over.

Wilson says leading economic and earnings indicators are quota overwhelmingly week and that's a dynamic equity markets are not priced for. At the same time, Amy Morgan Stanley economists are sticking by their call for a softish landing in the US. They say even if there is a recession, it will

be milder than most. In a report to clients, Morgan's economists say it is far too soon to declare victory since higher interest rates take time to bite, but the US labor markets proved stronger than anticipated and quote inflation has turned down decisively, and corporate news we're getting word. Activist Elliott Management has taken a multibillion dollar steak in Saleforce, As Bloomberg's Dennis Pellegrini reports, the hedge fund is taking

advantage of recent vulnerabilities at the San Francisco company. Elliott Management's move into Salesforce comes after an announcement of massive layoffs and the stock plunge at the enterprise software company, and Salesforce market cap is now just about a hundred and fifty billion dollars. That's only about half of what it was at peak. Bloomberg Intelligence says this all means watch for Elliott Management to push for possibly more shared by backs and more cuts in sales and mark getting costs.

Also could see some top level leadership changes. Jesse Cohne, managing partner at Elliott, saying Elliott has a deep respect for Salesforce chairman, co CEO and co founder Mark Bennioff and what Bennioff has built. Denise Pellegrini Bloomberg Day Break. Then these thanks and Salesforce shares are of three point six percent in early trading. Another note in the tech sector, Spotify is slated to be the next firm to announce layoffs.

Bloomberg News has learned the music streaming giants planning layoffs as soon as this week. Amazon, Meta, Microsoft, and Alphabet are among the biggest companies to announce staff reductions in recent weeks. Elon Musk is back today for more testimony and that test La securities fraud trial. Under questioning from a lawyer for shareholders, Musk denied that his tweets affect

Tesla's stock price. The trial centers on his twenty eighteen tweet about taking the electric car company private, which never materialized, and one of Musk's other companies is also in the spotlight. The Twitter CEO says he will revamp the size and frequency of advertisements that appear on the social media platform. Musk says he also plans to roll out a higher priced subscription model that allows for zero ads on Twitter feeds.

Turning to politics, now, the controversy over classified documents back in the spotlight. The Justice Department found another six items containing classified information during a search of President Biden's home in Wilmington, Delaware. Biden Ally, Senator Chris Coons of Delaware says, the President has been cooperative from the beginning and has nothing to hide. What's going to matter going forward is how this is handled, and President Biden has fully and

promptly cooperated. Of the reason there was a search of his house here in Delaware was he invited them in. Senator Chris Coon's made those comments on ABC's This Week Herd every Sunday on Bloomberg Radio. Still, this latest discovery exacerbates an embarrassing political misstep for Biden ahead of an expected re election campaign, and it dampens momentum from a series of legislative victories and a better than expected Democratic

midterm performance. We've got one other note out of the White House this morning, Amy Bloomberg News has learned Joe Biden will name Jeff Z Science as his next chief of staff today. Science as a former business executive who was a chief architect of the president's initial COVID team. He will replace Ron Klain, who will leave in the

coming weeks. The White House chief of staff is among the most powerful figures in Washington, making Nathan thirty nine degrees now in New York, rain could mix with snow, but that will come later today. For now, breezy conditions, we're gonna go up to forty five degrees. 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 Michael Barr. Good morning, Michael, Good morning. Amy.

Police in California say the man who killed ten people and wounded several others at a dance hall in Monterey Park was a seventy two year old Asian man name who can Tron. Officers say they found Tron dead from a self inflicted gunshot wound in his van shortly after having stopped the vehicle. Los Angeles Sheriff Robert Luna says

investigators are looking for a motive in the killing. Sheriff's homicide detectives are working around the clock gathering additional information and working on determining the motive behind this extremely tragic event. Sheriff Luna says most of the victims were over the age of fifty. Meanwhile, in New York, there was increased police presence at lunar New Year events out find the deadly mass shooting in Los Angeles. According to the NYPD, the city had not received any credible threats and are

doing it out of an abundance of caution. Mayor Eric Adams is again calling on the federal government to help with resources in the rise of asylum seekers in New York City. At a rally outside City Hall yesterday, Adams called on Congress, AMTHEMA to do their part in dealing with crisis at the southern border, because if you look under the fingernail of every immigrant community in this country, you see the dirt and grime of climbing up the mountain,

one hand at a time. To participate in the American Jury. Mayor Adams says the city needs a lot more resources. President Joe Biden is issuing a memorandum aimed at protecting access to Miffa pristoon, a drug used in medication abortion. Vice President Kamala Harris made the announcement in Florida, where Republican Governor Ran des Santis signed into law a measure banning abortion after fifteen weeks. The right of every woman in every state in this country to make decisions about

her own body is on the line. Vice President Harris on Sunday said, on what would have been the fiftieth anniversary, we speak of the Roe v. Waight decision in the past tense. Poland's Prime minister says the government will ask Germany for permission to send the leopard tanks to Ukraine. The Ukrainian government says tanks and especially the German made leopards, are vital if it is to prevail over the Kremlin's

invading forces. Global News twenty four hours a day on air and on Bloomberg Quicktake, powered by more than the seven hundred journalists and analysts more than a hundred twenty countries. I'm Michael barn This is Bloomberg Gaming. All right, thank you, Michael. Time now for the sports report, brought to you by Try State AUTI. Here's John Stash our thanks Amy. Cincinnati Bengals only team of the Divisional playoffs to win on the road. It was fairly easy in the snow and Buffalo.

The Bengals jumped in front early on dropped by Parrow. The pressure comes from the left. He caught at the chase, straight ahead into the end zone, touchdown on the opening drive for Cincinnati Bengals radio the call. Cincinnati wonn to ten and now five and oh and an f C playoff games over the last two years. They'll play the championship game this Sunday in Kansas City, as they did a year ago when the Bengals rallied in one and overtime. Big question of this game will be the status of

Patrick mahomes is high ankle spring suffering. Saturday, the NFC title game will be San Francisco at Philadelphia battle the top two seeds. The Niners defense again on display in a nineteen to twelve win over Dalla. They intercepted Dak Prescott twice. The Niners rookie quarterback Rock Purty remains undefeated. The losing teams yesterday, Buffalo and Dallas both continued playoff disappointments. Neither have been to the super Bowl since the first

half of the nineteen nineties. Nicks in Toronto, third meeting in the last sixteen days and the Raptors pulled away and one one sixteen. R J. Barrett leather Knicks with thirty points. The Nets one at Golden State one one sixteen without Kevin or Aunt, Kyrie Irving stepping up thirty

eight points he had forty eight and the win. On Friday, Devil's on a Douwee Hamilton gold be Pittsburgh two one in overtime Australian Open fourth round battle of young Americans and twenty year old Bench Shelton outlasted J. J. Wolfe in five sets. No Vak Djokovic Plane now he's won the first two sets. John Stash Award at Bloomberg Sports Live from coast to coast, from New York to San Francisco, Boston to Washington, d C. Nationwide on Sirius x M,

the Bloomberg Business app and Bloomberg dot Com. This is Bloomberg Daybreak. Good morning, I maybe more, I just want to take a look at what's ahead for markets with Lori Calvacina had a US equity strategy at RBC Capital Markets LORI, Good morning to you, Thanks so much for taking the time, Thanks for having me is always Happy Monday. Happy Monday to you. What are you going to be seeing in the next uh in the next few weeks based on what you've seen so far in the past

few weeks, connect those dots for us? Sure, well, you know, I'm looking from my perspective, I think that our earnings reports that we're going to get over the next few weeks are probably the most important thing. We've seen about ten of SMP results come in so far. A lot of those have been in financials and sort of you know, kind of random industrials for lack of a better word. Um, but I think that you know, it hasn't been a fantastic start to reporting season. We've only had about sixty

of companies beating. The companies that beating haven't been necessarily doing all that well on a relative basis, and the companies that have been missing have been performing pretty poorly. So we think it's going to be a rocky reporting season. Um but I do think we're going to get a lot of useful information in the next few weeks, so we've really got to focus on those tea leaves. When you're talking about the next few weeks and the useful information that you are looking for, can you sort of

highlight some of those things for us? What are some of the flags that are going to be popping up? Sure, so you know, we really care a little bit more about the commentary necessarily, you know kind of what the actual you know, kind of dollar values and percentages are that are discussed. Um. I've been looking through a lot of the companies that reported last week. To be honest, I've been focusing less on the financials. Everybody's focusing on those.

I've been looking a little bit more at the non financial companies. One of the things that I've noticed is that companies have been acknowledging the macro uncertainty, and when they're talking about the outlook that they're they're putting out there, they're acknowledging that writing uncertainty. So there does seem to be even when the guidance is being put out, UM, you know, just a high degree of variability in terms of the number of selling forward and I think that's

having an impact on market psychology. UM. We've also been noticing that a lot of these companies outside of financials have been sort of highlighting recent signs of flowing or cups in terms of demand, and most of them have in saying, well, it's explainable, it's only temporary. We're expect things to get better in February marches. Things are already

starting to look better in February Marching. And I'm not trying to dismiss those comments, but it is a little bit interesting to me that, you know, we're sort of seeing everything so easily explained away, and I'm not sure if it's going to ultimately be that easily explained away in the end. So then what does that tell you that may be coming if it's a little less psychology and a little more data. In fact, well, look, I think that we're you know, we're expecting the US to

sort of enter this short shall over session. We think we're probably already you know, in the early days of that. On the one hand, yeah, I think it's gonna be difficult from markets to that. Yet nobody likes the onset of a challenging economy. We are starting to see the City US Economic Surprise Indicator vire into negative territory. Now, I think that there is a certain amount of relief though with equity people that we can we can take

from that. UM One, I do think it's that's the path the fad rather on a left aggressives path, and I think that's something equity markets need to see. So ultimately I think this will be a good thing UM. And also I do think that we've spent so long talking about whether or not we're going to have a recession, whether or not we're going to have economic challenges. Let's just get on with it. Let markets digested um and move to the recovery phase. So I think overall this

is a mixed bag. Ultimately a positive thing, but not too much fun in the here and now. How much of that optimism, Lorie can actually have an impact. Well, So it's it's interesting, yes, that Amy, because when we look at the CFTC data, UM. One of the things that's a little bit interesting is that you already saw equity investor sentiment if you look at futures contract positioning among gast managers already sort of hit sixteen lows last year, and we're really in the early stages of a rebap.

So I think, you know, just kind of this idea of the onset of this challenging backdrop. I do think it keeps that sentiment and positioning depressed. But at the same time, the fact that we're finally, finally kind of getting on with it does allow some some camps to start kind of looking at recovery, look a better days ahead, and can give us some stability in those metrics. So

I do think it's it's a challenging backdrop. It's a complex backdrop, but I do think it has impacts on on on those who are negative, but also on those who are looking for better days ahead. So better to go ahead and just get on with it. If we're going to have a recession, even a shallow one, let's go ahead and do it so we can bake it all in and then the dread of a recession won't

be as much of a factor exactly. You know, one of my my interesting sort of cocktail party staff about US equity markets and the economy is that if you look at negative real GDP years, stocks usually trade off pretty sharply in the years prior to when that happens, but the year of you actually have pretty decent games in US equity markets because markets get the pain out

of the way at ahead of time. But one of the worst backdrops you can be in for US equities in terms of stock price performance perspective is zero to two percent g d P. On the plus side, that's

below trend positive. But what I've learned over my career on those environments, people are constantly worried about whether you're gonna fall over the edge of economic am this and markets really don't price that dress very well but can handle, you know, just sort of a cycle where we sit where we kind of moved down on the economy and then moved up up. 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 by 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 thirty BLUs Listen coast to coast on the Bloomberg Business app, serious XM Channel one nineteen, the I Heart Radio app, and on Bloomberg dot Com. I'm Nathan Hager and I'm Maybe Morris. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak