WEBVTT - Bloomberg Daybreak: December 8, 2022 - Hour 2 (Radio) 0:00:00.640 --> 0:00:04.000 Live from the Bloomberg Interactive Brooker Studios. This is Bloomberg 0:00:04.080 --> 0:00:07.680 day Break for Thursday, December eighty two. Coming up to Shower, 0:00:07.760 --> 0:00:10.440 Wall Street looks to snap a five day losing streak 0:00:10.480 --> 0:00:13.520 as recession fears pile up. Socks in Hong Kong rally 0:00:13.560 --> 0:00:17.280 under force at mass wearing requirements, maybe scraped Elon Musk's 0:00:17.320 --> 0:00:20.680 bankers consider new margin LUNs to cut risky Twitter debt 0:00:20.760 --> 0:00:24.439 and disgrace. Crypto founder Sam Bankman Freed may soon appear 0:00:24.520 --> 0:00:27.440 on Capitol Hill. Governor hokel announces her plans for New 0:00:27.520 --> 0:00:31.040 Yorkers to avoid the Triple Demick. Plus, New Jersey Governor 0:00:31.080 --> 0:00:33.440 Murphy is out of the hospital, left of surgery. On 0:00:33.560 --> 0:00:36.320 Michael bar More Ahead, I'm John Stay Shower and Sports. 0:00:36.320 --> 0:00:38.880 Aaron Judge resigned with the Yankees, the Mets at a 0:00:38.960 --> 0:00:42.160 picture wins for the Knicks, Nets Rangers in St. John. 0:00:44.520 --> 0:00:48.080 That's all s Train ahead on Bloomberg Daybreak on Bloomberg 0:00:48.120 --> 0:00:51.960 eleven Free on New York, Bloomberg N one, Washington, d C, 0:00:52.440 --> 0:00:56.040 Bloomberg one oh six one, Boston, Bloomberg nine sixties and 0:00:56.120 --> 0:00:59.720 Francisco Sirius x M one nine Team and around the 0:00:59.760 --> 0:01:03.880 world old on Bloomberg Radio Dot Carmen the Bloomberg Business. 0:01:07.640 --> 0:01:10.680 Good morning. I'm Nathan Hagar and I'm Karen Moscow, and 0:01:10.840 --> 0:01:13.800 US stock index futures are mostly higher this morning. Sex 0:01:13.840 --> 0:01:15.600 So went on Wall Street and we check the markets 0:01:15.600 --> 0:01:18.320 all day long here at Bloomberg radios and p futures 0:01:18.360 --> 0:01:20.400 of four points or a tenth of a percent. Our 0:01:20.480 --> 0:01:23.319 futures that will change and nasday futures have two ten 0:01:23.440 --> 0:01:26.920 percent or twenty four points. Tenure treasury down eight thirty seconds. 0:01:26.959 --> 0:01:28.920 You three point four or four percent yield on the 0:01:28.959 --> 0:01:32.240 two year four point to seven percent. Nathan Karen. Stocks 0:01:32.280 --> 0:01:34.679 are coming off five straight days of losses, and the 0:01:34.680 --> 0:01:37.319 biggest moves have been in the bond market. The spread 0:01:37.360 --> 0:01:40.000 between the two and tenure yields, a gage often used 0:01:40.040 --> 0:01:44.160 to predict recessions, is it's most inverted since the nineteen seventies. 0:01:44.240 --> 0:01:47.840 David Harden is chief investment Officer at Summit Global Investments. Well, 0:01:47.880 --> 0:01:50.600 I think people are still a little bit focused on 0:01:50.640 --> 0:01:53.960 the possibility of this uh PAL pivot. I think that's 0:01:54.280 --> 0:01:58.320 in people's minds and hopes. I think maybe they're wanting 0:01:58.320 --> 0:02:00.760 that under their Christmas tree, if you will and and 0:02:00.840 --> 0:02:03.360 so I think this starts a little bit more focused 0:02:03.400 --> 0:02:06.800 on him playing Santa Claus for us. But in all reality, 0:02:07.120 --> 0:02:09.200 the bond market might have it right. They seem to 0:02:09.200 --> 0:02:11.120 get it right a lot more often, so we have 0:02:11.160 --> 0:02:14.200 to pay attention to that move. Some global investments, David 0:02:14.200 --> 0:02:17.120 Harden says the main focus for traders remains sharply on 0:02:17.160 --> 0:02:20.280 the FED well in Asia overnight, Nathan Hong Kong was 0:02:20.320 --> 0:02:23.040 the top performer in the region. The Hankstang game more 0:02:23.080 --> 0:02:25.239 than three percent in today's session, and we get the 0:02:25.280 --> 0:02:28.959 recap from Bloomberry, Yvon Man in Hong Kong, Karen and Nathan. 0:02:29.040 --> 0:02:31.280 The region really only being lifted by one story in 0:02:31.320 --> 0:02:34.160 Hong Kong after reports the city is looking at scrapping 0:02:34.280 --> 0:02:37.880 rules that require masks at public venues. Also cut in 0:02:37.960 --> 0:02:41.519 quarantine times from seven to five days. The reopening trade 0:02:41.639 --> 0:02:45.480 was once again on fire, from a calcasino's airlines to 0:02:45.639 --> 0:02:48.799 retail all up on the news. This clear preference on 0:02:48.919 --> 0:02:52.040 Chinese equities and M and B is quite clear now, 0:02:52.160 --> 0:02:55.600 with sources telling us Chinese regulators have asked the nation's 0:02:55.639 --> 0:02:59.600 biggest insurers to buy bonds after retail investors offload to 0:02:59.639 --> 0:03:03.079 cash from their fixed income investments. In Hong Kong, I'm 0:03:03.200 --> 0:03:06.320 Von Man Bloomberg Daybreak, All right, Von, thank you. Meantime 0:03:06.320 --> 0:03:09.200 in China, a senior health advisers warning the vast majority 0:03:09.240 --> 0:03:12.480 of the population could eventually contract COVID. The government is 0:03:12.520 --> 0:03:15.720 now taking steps toward reversing its zero tolerance policy. The 0:03:15.760 --> 0:03:18.880 former deputy chief of China's disease Control agency says sixty 0:03:19.360 --> 0:03:22.000 of the population could get infected in the first wave. 0:03:22.440 --> 0:03:25.200 Well back here in the US, Nathan Tesla and Twitter 0:03:25.280 --> 0:03:28.000 are the names where watching bankers for Elon Musk are 0:03:28.000 --> 0:03:31.359 considering providing the billionaire with new margin loans tied to 0:03:31.400 --> 0:03:34.160 the companies. Let's get the details live with the Bloomberg 0:03:34.200 --> 0:03:37.520 Steve Rappaport, Good morning, Steve, Good morning, Karen and Nathan. 0:03:37.600 --> 0:03:40.360 The margin loans are one of several options for Musk's 0:03:40.360 --> 0:03:43.240 backers to ease the burden of the thirteen billion dollars 0:03:43.240 --> 0:03:45.400 in debt Twitter took on as part of his acquisition 0:03:45.400 --> 0:03:48.040 of the platform. The banks, led by Morgan Stanley, put 0:03:48.080 --> 0:03:50.480 up their own cash to carry the entire debt package. 0:03:50.560 --> 0:03:53.680 Because of the decline and credit markets, Musk's tumultuous start 0:03:53.720 --> 0:03:56.160 at the helm of Twitter didn't help either. The company 0:03:56.240 --> 0:03:58.840 is estimated to face annual interest costs of about one 0:03:58.880 --> 0:04:01.880 point two billion dollars if the current debt structure remains 0:04:01.880 --> 0:04:05.320 in place. Live in New York. I'm Steve Rappaport, Bloomberg Daybreak. 0:04:05.360 --> 0:04:07.680 All right, Steve, Thanks. Turning to the crypto space, we 0:04:07.720 --> 0:04:10.200 could soon get more information on the epic collapse of 0:04:10.280 --> 0:04:13.240 f t X. Disgraced founder Sam Bankman Freed may appear 0:04:13.240 --> 0:04:15.320 on Capitol Hill as soon as next week. We get 0:04:15.360 --> 0:04:17.800 the details from Amy Morris in our Bloomberg ninety one 0:04:17.800 --> 0:04:21.679 newsroom in Washington. The Senate Banking Committee has asked Bankman 0:04:21.720 --> 0:04:25.480 Freed to appear on Capitol Hill December four. Lawmakers want 0:04:25.560 --> 0:04:28.160 more information about the collapse of f t X, and 0:04:28.200 --> 0:04:31.440 they want to know, quote, how client funds were misappropriated, 0:04:31.560 --> 0:04:34.480 how clients were blocked from withdrawing their own money, and 0:04:34.520 --> 0:04:38.279 how you orchestrated a cover up. The House Financial Services 0:04:38.279 --> 0:04:41.240 Committee hearing except for the thirteen Bank mun Freed had 0:04:41.279 --> 0:04:43.760 said he might not be ready to testify by then. 0:04:44.160 --> 0:04:47.719 Chair Maxine Water says a subpoena is quote definitely on 0:04:47.800 --> 0:04:51.039 the table in Washington. I'm Amy Moore as Bloomberg Daybreak, 0:04:51.200 --> 0:04:52.920 All right, Amy, thank you, and now it's not the 0:04:53.000 --> 0:04:56.960 only news on disgraced former executives this morning. Late yesterday, 0:04:57.000 --> 0:05:01.000 former theropised president and chief operating officer Ram Sunny Malwani 0:05:01.320 --> 0:05:04.440 but sentenced to prison, and Bloomberg said, Baxter has the story. 0:05:04.839 --> 0:05:08.000 The sentence coming from US District Judge Edward Davola and 0:05:08.040 --> 0:05:13.200 San Jose thirteen years for defrauding investors and patients of Pharanos. 0:05:13.600 --> 0:05:16.840 Dogwani ran the blood testing startup alongside its founder and 0:05:16.920 --> 0:05:20.880 chief executive officer, Elizabeth Holmes. The sentence is very close 0:05:20.920 --> 0:05:23.960 to what prosecutors had asked for a term of fifteen years. 0:05:24.480 --> 0:05:28.119 The judge said he'll decide later how much restitution must 0:05:28.160 --> 0:05:30.720 be paid. The government has asked for both to be 0:05:30.880 --> 0:05:35.320 ordered to pay about eight hundred million dollars in San Francisco, 0:05:35.360 --> 0:05:38.040 I'm at Baxter Bloomberg Daybreak, all right, and thank you. 0:05:38.080 --> 0:05:40.919 In the labor market, inflation plus a battle for talent, 0:05:41.000 --> 0:05:43.480 and now cost cutting efforts and making for an interesting 0:05:43.520 --> 0:05:46.000 picture of corporate America. And now we're learning X on 0:05:46.080 --> 0:05:50.000 mobiles awarding its employees in the US pay increases above inflation. 0:05:50.320 --> 0:05:53.679 Just weeks after posting record profit. Bloomberg's Charlie p Hellett 0:05:53.720 --> 0:05:57.640 has more. It underscores just how strong two has been 0:05:57.720 --> 0:06:01.039 for the fossil fuel industry. A lot of sectors, like 0:06:01.160 --> 0:06:05.960 technology and finance are cutting jobs. Sources tell Bloomberg workers 0:06:06.000 --> 0:06:10.000 will receive an average salary bump of nine percent on 0:06:10.080 --> 0:06:14.480 Those who got promoted will see an additional five percent increase. 0:06:14.800 --> 0:06:18.080 A spokeswoman four x on Mobile says in aggregate it 0:06:18.240 --> 0:06:23.360 is Exxon's biggest salary award in fifteen years. In New York, 0:06:23.440 --> 0:06:26.480 Charlie Pealty Bloomberg day Break, Great, Charlie. Thanks, and it's 0:06:26.520 --> 0:06:29.360 a different labor story At the New York Times, more 0:06:29.400 --> 0:06:32.200 than a thousand employees are preparing to stage a one 0:06:32.279 --> 0:06:34.720 day walk out today. It escalates a standoff with the 0:06:34.760 --> 0:06:38.200 management over a stamped contract. A New York Times spokesperson 0:06:38.240 --> 0:06:41.000 said the company was disappointed that the News guild was 0:06:41.080 --> 0:06:44.240 threatening to strike. In futures this morning are higher, s 0:06:44.320 --> 0:06:46.320 and P future is a five points or a tenth 0:06:46.320 --> 0:06:48.800 of a percent down. Futures are a little changed and 0:06:48.880 --> 0:06:52.279 ASDAC futures have a quarter percent or twenties six points 0:06:52.279 --> 0:06:55.240 straight ahead. We have your latest local headlines plus the 0:06:55.360 --> 0:07:03.840 check of sports, and this is Bloomberg Karen, Thanks six 0:07:03.920 --> 0:07:06.280 o seven on Wall Street. Fifty degrees in Central Park. 0:07:06.320 --> 0:07:08.400 Should stay sunny and cool today with highs in the 0:07:08.440 --> 0:07:10.760 low fifties, but getting ready for a big change at 0:07:10.760 --> 0:07:13.240 the end of the week and the possibility potential for 0:07:13.320 --> 0:07:16.800 some snow. It's bringing Michael bar for Look what else 0:07:16.880 --> 0:07:18.720 is going on in New York and around the world. Yes, 0:07:18.760 --> 0:07:23.080 I said it the S word. Thanks, You're welcome. You're 0:07:23.080 --> 0:07:26.440 having Tocalist pushing efforts to keep New Yorkers healthy with 0:07:26.560 --> 0:07:29.920 winter and the holiday is just ahead. Hocal says people 0:07:29.960 --> 0:07:33.120 need to take precautions because COVID cases are taking up 0:07:33.280 --> 0:07:36.520 alongside r s V in children and influenza. Are not 0:07:36.600 --> 0:07:39.320 all the woods. That thread is real and we have cases. 0:07:39.640 --> 0:07:43.400 Remember this. We're watching this intensely. The winter is often 0:07:43.440 --> 0:07:46.200 a tough time for the most vulnerable, but Hocal promises 0:07:46.240 --> 0:07:49.360 New Yorker will be ready. Complacency is our enemy. That 0:07:49.520 --> 0:07:52.640 is my biggest fear, that people are so desensitized and 0:07:52.720 --> 0:07:54.960 feeling that well, it is the norm. Yes, it has 0:07:55.000 --> 0:07:57.520 become our norm, but it does not have to be norm. 0:07:57.560 --> 0:08:00.440 That everybody gets sick Governor Hocal said as the state 0:08:00.480 --> 0:08:04.200 will provide testing vaccines and nearly eight thousand ventilators set 0:08:04.240 --> 0:08:07.080 to be sent to hospitals that need them. Mayor Eric 0:08:07.120 --> 0:08:10.280 Adams says the system to provide affordable housing is broken, 0:08:10.320 --> 0:08:13.360 not just in New York City, but all over the country. Adams, 0:08:13.360 --> 0:08:16.520 speaking at a faith based summits in New York, says, 0:08:16.560 --> 0:08:19.160 all we do is kick the can down the road. 0:08:19.440 --> 0:08:22.080 There's no desire to come and bring you together and 0:08:22.160 --> 0:08:25.400 say you have all of this property, why don't you 0:08:25.440 --> 0:08:27.840 come with a real housing plan. There's no desire to 0:08:27.880 --> 0:08:30.840 fix it. People are making money off the dysfunctionality of 0:08:30.920 --> 0:08:34.560 our cities across the America. Frustrated Adam says, we know 0:08:34.640 --> 0:08:37.040 at the beginning of the year we are going to 0:08:37.080 --> 0:08:40.720 fail a large number of people, and they're primarily black 0:08:40.840 --> 0:08:43.959 and brown in immigrants. The White House says President Joe 0:08:43.960 --> 0:08:47.800 Biden will announce the thirties six billion dollar bailout for 0:08:47.840 --> 0:08:51.120 the Central States Pension Fund, helping to shore up one 0:08:51.160 --> 0:08:55.040 of the nation's biggest multi employer plans. The President angered 0:08:55.120 --> 0:08:58.120 some of his labor allies last week by signing legislation 0:08:58.400 --> 0:09:02.600 imposing a contract he personally helped to negotiate between freight 0:09:02.760 --> 0:09:06.160 railroads and their unions, averting a possible strike that threatened 0:09:06.160 --> 0:09:09.920 to cripple the economy. However, four of the unions involved 0:09:10.120 --> 0:09:13.480 rejected the contract. New Jersey Governor Phil Murphy had minor 0:09:13.559 --> 0:09:17.240 surgery yesterday and his recuperating at home. The Governor's office 0:09:17.240 --> 0:09:19.760 did not specify what the surgery was for, but said 0:09:19.760 --> 0:09:23.000 it was a medical procedure. Officials also said it was 0:09:23.000 --> 0:09:25.719 not related to the kansaas tumor Murphy had removed from 0:09:25.720 --> 0:09:29.600 his kidney. In Global News twenty four hours a day 0:09:29.679 --> 0:09:32.680 on air and on Bloomberg Quick Take, powered by more 0:09:32.760 --> 0:09:35.240 than twenty seven hundred journalists and analysts more than a 0:09:35.280 --> 0:09:39.640 hundred twenty countries, Michael Barr and This Bloomberg Nathan Thanks Michael. 0:09:44.360 --> 0:09:46.360 Almost six ten on Wall Street Time for the Bloomberg 0:09:46.400 --> 0:09:48.040 Sports that Day, brought to you by Try State. How 0:09:48.080 --> 0:09:50.320 did U s Johnstad Show? Thanks Nathan. After the news 0:09:50.320 --> 0:09:53.440 that Aaron Judge had resigned with the Yankees, some details 0:09:53.440 --> 0:09:56.560 emerged about how it all went down. Believed to be 0:09:56.600 --> 0:09:59.719 a two horse race between the Yankees and Giants. The 0:09:59.760 --> 0:10:03.720 same Diego Padres swooped in offered Judge reported ten years, 0:10:03.760 --> 0:10:06.080 four hundred million dollars that got the attention to him 0:10:06.240 --> 0:10:09.400 Nankee owner Hall Hall Steinbrenner, who was vacationing in Italy. 0:10:09.840 --> 0:10:12.120 He got on the phone with Judge upped his offer 0:10:12.160 --> 0:10:14.640 to the nine years, three hundred sixty million that got 0:10:14.640 --> 0:10:17.839 the deal done. Yankee g M. Brian Cashman said Steinbrenner 0:10:17.880 --> 0:10:21.719 was the Mariano Rivera of the negotiations. The Padres then 0:10:21.880 --> 0:10:24.120 used some of that money last night to sign Xander 0:10:24.200 --> 0:10:27.240 Bogart's away from the Red Soft for eleven years, two 0:10:27.320 --> 0:10:30.560 hundred and eighty million. The Mets added a picture veteran 0:10:30.640 --> 0:10:33.080 Jose Quintana. This will be his seventh team. He pitched 0:10:33.080 --> 0:10:36.079 to an e r A under three last season nixt 0:10:36.120 --> 0:10:38.040 all of a sudden playing defense. They had allowed over 0:10:38.080 --> 0:10:40.480 a hundred points in each of the first twenty three games. 0:10:40.480 --> 0:10:43.880 They allowed under ninety in the last two being Atlantic. 0:10:43.920 --> 0:10:46.080 The Garden went thirteen to eighty nine. Big night for 0:10:46.160 --> 0:10:49.880 Julius Randall thirty four points, seventeen rebounds at Barkley's then 0:10:50.000 --> 0:10:52.640 estimated five of the last six beat Charlotte won two 0:10:52.679 --> 0:10:56.079 to one, sixteen. Kyber Yourving thirty three points, Kevin Durant 0:10:56.080 --> 0:10:59.040 had twenty nine and set Curry twenty but three of 0:10:59.080 --> 0:11:01.880 them combined for one three assists. Big third period for 0:11:01.880 --> 0:11:04.520 the Rangers. They scored four times and a span of 0:11:04.600 --> 0:11:06.640 less than six minutes, and they beat Vegas, the top 0:11:06.679 --> 0:11:09.520 team in the West, five to one. In Buffalo's win 0:11:09.559 --> 0:11:13.679 over Columbus, five goals for the Sabers, Page Thompson he 0:11:13.760 --> 0:11:16.400 ted NHL record, scoring four goals in the first period, 0:11:16.840 --> 0:11:19.440 Big East opener for St. John's eight six sixty seven 0:11:19.480 --> 0:11:22.520 win over to Paul John Stash Howard, Bloomberg Sports Nathan 0:11:22.720 --> 0:11:24.640 all Right, John, thank you. Bloomberg Sports is brought to 0:11:24.640 --> 0:11:26.599 you by Audie. Don't let someone else drive off in 0:11:26.640 --> 0:11:29.320 the Audi model you've always wanted. Visit your local try 0:11:29.400 --> 0:11:31.720 state Audie dealer to get behind the wheel of yours today, 0:11:31.840 --> 0:11:35.400 or visit Autie Offers dot com for more information. Just ahead, 0:11:35.400 --> 0:11:38.440 we'll get the latest on Elon Musk and Twitter. Could 0:11:38.480 --> 0:11:41.720 the deal be restructured for the forty four billion dollar 0:11:41.880 --> 0:11:45.120 take over. We'll get more on that shortly. First, futures 0:11:45.160 --> 0:11:49.080 are moving just a touch higher now, with SMP futures 0:11:49.120 --> 0:11:52.040 up three points, Staff futures little changed, up five points, 0:11:52.080 --> 0:11:55.280 and NASTAC futures are higher by seventeen points ten. Your 0:11:55.320 --> 0:11:58.800 treasuries down seven thirty seconds, the yield on the benchmark 0:11:58.880 --> 0:12:02.360 three point four four percent and at six twelve on 0:12:02.400 --> 0:12:04.640 Wall Street. Good morning, this is Bloomberg Day Break. We 0:12:04.679 --> 0:12:07.120 want to get to the latest on Twitter. Now. The 0:12:07.200 --> 0:12:10.880 saga continues with the new loan or elon Musk potentially 0:12:10.960 --> 0:12:13.760 in line to have the massive pile of debt he 0:12:13.800 --> 0:12:17.160 took on to buy the company restructured with new margin 0:12:17.280 --> 0:12:21.680 loans backed by stock from one of his other companies, Tesla. 0:12:21.920 --> 0:12:25.120 Let's bring in Bloomberg Quick Take correspondent Alex Webb for 0:12:25.200 --> 0:12:28.760 more on this news. Alex, good morning. How would this 0:12:28.920 --> 0:12:32.679 restructuring work exactly? Yes, So, as you say, he has 0:12:32.880 --> 0:12:37.480 pretty high interest payments right now on on the debt 0:12:37.480 --> 0:12:41.000 that was raised to pay for Twitter. In fact, Bloomberg 0:12:41.040 --> 0:12:43.839 has reported that the interest costs are about one point 0:12:43.880 --> 0:12:47.480 two billion dollars a year. That's considerably more than could 0:12:47.520 --> 0:12:51.720 has ever managed to post in free cash flow. Um. So, 0:12:51.960 --> 0:12:53.880 what this seems to be doing is that he would 0:12:53.920 --> 0:12:57.000 then take a margin loan backed by his Tesla stock, 0:12:57.240 --> 0:12:59.840 which would then presumably be at a far um more 0:13:00.000 --> 0:13:03.240 amenable interest rate UM and be able to then pay 0:13:03.280 --> 0:13:07.400 down some of those those other um uh, some of 0:13:07.400 --> 0:13:10.320 the there's other loans that he has taken UM in 0:13:10.440 --> 0:13:12.560 order from the deal. Oh say, so what could the 0:13:12.559 --> 0:13:17.280 potential impact v on Tesla's stock given that, as far 0:13:17.320 --> 0:13:19.719 as I understand it, these margin loans are going to 0:13:19.760 --> 0:13:23.440 be backed by shares of Tesla. I'm looking at the 0:13:23.480 --> 0:13:25.760 stock in the pre market this morning, it's moving a 0:13:25.760 --> 0:13:28.560 little bit lower. Does this put Tesla under even more pressure? 0:13:29.559 --> 0:13:31.880 It's hard to see how it doesn't put down Tessa 0:13:32.000 --> 0:13:33.600 under a little bit of pressure. Of course, you know, 0:13:33.720 --> 0:13:36.359 this is still going to be a very small proportion 0:13:36.440 --> 0:13:40.679 of the total um float of Tesla ches um. The 0:13:40.760 --> 0:13:44.280 unit stock has come down quite a lot since Elon 0:13:44.480 --> 0:13:47.400 got involved with Twitter, and it does mean that there 0:13:47.440 --> 0:13:51.160 will be a certain amount of volatility tied to Twitter's performance. 0:13:51.160 --> 0:13:54.920 You know, Twitter fails to um improve its financial performance, 0:13:54.920 --> 0:13:57.400 then there's an implication that some of the Tesla stock 0:13:57.520 --> 0:13:59.760 may go away from you know, you know, might have 0:13:59.800 --> 0:14:04.040 to sacrifice some of that tess stop extreme eventuality. But 0:14:04.080 --> 0:14:06.640 it's a possibility. Yeah, And how are we structuring like 0:14:06.679 --> 0:14:09.640 this effect the risks that the banks themselves have taken on. 0:14:09.679 --> 0:14:11.280 From what I understand, they put a lot of their 0:14:11.280 --> 0:14:14.080 own cash into the original deal for Elon Musk to 0:14:14.120 --> 0:14:16.720 buy Twitter. Well, well, that is unclear because we don't 0:14:16.720 --> 0:14:22.800 know exactly which part of the um the debt would 0:14:22.840 --> 0:14:25.640 be repaid. Blooms reported is po likely to be the 0:14:25.680 --> 0:14:29.360 unsecured debt um which from which Twitter pay is an 0:14:29.360 --> 0:14:32.640 interest rate of about eleven point seven five percent, But 0:14:32.680 --> 0:14:35.880 there are still other parts that, um, you know, the 0:14:35.920 --> 0:14:39.240 banks haven't been able to re sell given the the 0:14:39.280 --> 0:14:42.320 tightening conditions in in the debt market or the more 0:14:42.320 --> 0:14:45.040 difficult conditions in the debt market. So it may be 0:14:45.200 --> 0:14:48.120 that this is really about Elon Robin the banks themselves. Well, 0:14:48.120 --> 0:14:51.480 what does this say? What what are the implications for 0:14:51.720 --> 0:14:56.840 Elon Musk's own solvency here when he's thinking about taking 0:14:56.880 --> 0:14:59.960 margin loans like this? What what does it potentially tell 0:15:00.120 --> 0:15:04.680 us about Elon musks on financial security. Well, I mean 0:15:04.880 --> 0:15:10.760 it's clearly some slightly imaginative, Um, it's in a matching 0:15:10.840 --> 0:15:12.640 way for him to generate funding. He yes, he's the 0:15:12.720 --> 0:15:14.840 richest man in the world. His wealth has still come 0:15:14.880 --> 0:15:18.640 down from um, you know, the order of two hundred 0:15:18.680 --> 0:15:23.320 and eighty billion UM a year ago to only in 0:15:23.280 --> 0:15:25.880 inverted commas a hundred and seventy one billion today. This 0:15:26.000 --> 0:15:30.480 remains a small slice of his net worth, but of 0:15:30.480 --> 0:15:33.320 course he doesn't have that many liquid assets. Most of 0:15:33.360 --> 0:15:35.400 that network is tied up in his test stock is 0:15:35.480 --> 0:15:39.000 SpaceX stock UM and of course now Twitter itself, So 0:15:39.400 --> 0:15:42.960 he doesn't have the liquidity that the big tick sticker 0:15:43.040 --> 0:15:46.720 number would imply, and that's why he has to resort 0:15:46.720 --> 0:15:50.440 somebody slightly more imaginative financing options. Of course, a lot 0:15:50.440 --> 0:15:52.560 of what we've seen in terms of trying to get 0:15:52.640 --> 0:15:56.920 Twitter back on a firmer financial footing is to do 0:15:57.120 --> 0:16:00.920 huge rounds of layoffs and lots of cost thing. Since 0:16:01.000 --> 0:16:05.080 Elon Musk has taken over, does that change things in 0:16:05.200 --> 0:16:09.360 terms of how a restructuring of the debt could be 0:16:09.600 --> 0:16:13.040 handled here, Yes, because if it means that the debt 0:16:13.080 --> 0:16:18.520 repayments UM are reduced, then the need to find capital 0:16:19.120 --> 0:16:22.200 quickly and find cash flow quickly is diminished. You know, 0:16:22.200 --> 0:16:24.600 there's a little bit of a catch twenty two situation 0:16:24.680 --> 0:16:27.960 here where if he cuts jobs too quickly then uh, 0:16:28.000 --> 0:16:30.600 it poses risks to income because you've seen a lot 0:16:30.640 --> 0:16:33.800 of advertisers back away from Twitter, at least on a 0:16:33.840 --> 0:16:37.040 temporary basis. So you know, Twitter was expected before this 0:16:37.080 --> 0:16:41.680 deal was completed to have um negative free cash flow 0:16:41.720 --> 0:16:44.840 of about twenty three million dollars this year. That would 0:16:44.840 --> 0:16:47.040 have been increasing to an order of two hundred million 0:16:47.040 --> 0:16:49.080 dollars next year. That's a long way short of the 0:16:49.080 --> 0:16:51.280 one point two billion a year that he needs to find. 0:16:51.600 --> 0:16:54.280 He is having now come in and cleared the deck 0:16:54.400 --> 0:16:55.960 at the phase where he has to work out now 0:16:56.000 --> 0:16:58.280 how to make more money, and that you know, he's 0:16:58.360 --> 0:17:02.360 likely to require adding head count, certainly in some positions, 0:17:02.400 --> 0:17:04.959 not least in engineering roles. So giving a little bit 0:17:05.000 --> 0:17:08.320 of financial flexibility might enable him to do that. All right, 0:17:08.359 --> 0:17:10.919 Alex Webb as always good to talk with you as 0:17:10.960 --> 0:17:15.120 the Twitter Elon Musk saga continues. Alex Webb quick take, 0:17:15.160 --> 0:17:18.680 correspondent at Bloomberg News, joining US Live this morning and 0:17:18.720 --> 0:17:23.160 again Tesla shares onward that Elon Musk bankers are considering 0:17:23.160 --> 0:17:27.439 new margin loans backed by Tesla stock. Tesla's down just 0:17:27.480 --> 0:17:31.560 about two percent in the pre market. Futures little changed 0:17:31.680 --> 0:17:34.800 this morning. SMP futures are up two points, STOW futures 0:17:34.840 --> 0:17:38.720 down one Nasdaq futures are higher by fourteen points, the 0:17:38.720 --> 0:17:42.040 tenure treasuries down six thirty seconds, the three point four 0:17:42.080 --> 0:17:44.520 or four percent, and the yield on the two year 0:17:44.600 --> 0:17:48.600 right now four point to six percent. Still ahead. We'll 0:17:48.600 --> 0:17:51.639 look at Republicans priorities when they take back the majority 0:17:51.680 --> 0:17:53.760 in the House. Next. About the conversation on the way 0:17:54.040 --> 0:18:02.520 with GOP Congressman French Hill of Arkansas. This is Bloomberg Markets, 0:18:02.600 --> 0:18:05.680 headlines and breaking news twenty four hours a day at 0:18:05.720 --> 0:18:09.680 Bloomberg dot Com, the Bloomberg Business Attend at Bloomberg Quick Tape. 0:18:09.880 --> 0:18:18.880 This is a Bloomberg Business Flash and I'm Karen Moscow. 0:18:18.920 --> 0:18:22.280 And US dondex futures are steady after a five day 0:18:22.359 --> 0:18:25.680 routes sparked by concerns at the Federal Reserve overmain hawkish 0:18:25.680 --> 0:18:27.760 in the face of economic headwinds. And we check the 0:18:27.800 --> 0:18:30.720 markets all day long here on Bloomberg Radio, with US 0:18:30.720 --> 0:18:32.840 and P futures up four points of a tenth of 0:18:32.920 --> 0:18:36.080 Upper sent DAL future is little changed and NASDAG future 0:18:36.119 --> 0:18:38.240 is up almost two tenths per cent or twenty points. 0:18:38.480 --> 0:18:40.920 The decks in Germany is down about four tenths of 0:18:41.000 --> 0:18:43.960 a per cent. Ten Your treasury down six thirties seconds 0:18:44.000 --> 0:18:45.879 held three point four or four percent. That yield on 0:18:45.960 --> 0:18:49.000 the two year four point to six percent. NIMEX screwed 0:18:49.040 --> 0:18:51.760 oil is up seven tenths percent or fifty cents. It's 0:18:51.760 --> 0:18:53.960 a seventy two fifty cents of barrel. And that's a 0:18:54.000 --> 0:18:56.560 Bloomberg business flash. Now here's Michael Barr with more on 0:18:56.680 --> 0:18:59.159 what's going on around the world. Michael Karen, thank you 0:18:59.240 --> 0:19:01.959 very much. At least two more classified documents have been 0:19:02.000 --> 0:19:05.680 found in possession of former President Donald Trump, his lawyers 0:19:05.720 --> 0:19:08.800 saying they discovered the material while searching a storage unit 0:19:09.080 --> 0:19:11.840 in West Palm Beach, Florida. The House is set to 0:19:11.840 --> 0:19:14.880 take a final vote on protections for same sex marriages. 0:19:15.119 --> 0:19:18.080 Today's vote will sent the legislation to President Joe Biden. 0:19:18.400 --> 0:19:21.280 In the NBA, the Nets, Knicks and Celtics were winners, 0:19:21.320 --> 0:19:24.280 the Wizards and Warriors lost. In the NHL, the Rangers, 0:19:24.359 --> 0:19:27.840 Bruins and Capitals. All one Global News twenty four hours 0:19:27.840 --> 0:19:30.760 a day on air and on Bloomberg quick Take, powered 0:19:30.800 --> 0:19:33.800 by more than seven hundred journalists, had analysted more than 0:19:33.840 --> 0:19:37.679 one d twenty countries. I'm Michael Barr, and this is Bloomberg. 0:19:37.800 --> 0:19:40.560 Nathan all right, Michael, thank you. It is six three 0:19:40.640 --> 0:19:44.520 on Wall Street. I'm Nathan Hagar. This is Bloomberg Daybreak. 0:19:44.560 --> 0:19:47.960 Well after the Georgia Senate runoff at Raphael Warnock securing 0:19:48.000 --> 0:19:51.359 the final Senate seat for Democrats, the new Congress is 0:19:51.400 --> 0:19:55.679 outlining its priorities for the new year, and Republican Congressman 0:19:55.720 --> 0:19:58.800 French Hill of Arkansas spoke with our David Weston on 0:19:58.920 --> 0:20:03.800 Bloomberg's Balance Power to discuss financial regulation priorities in the 0:20:03.800 --> 0:20:08.960 new Congress, including cryptocurrency regulation. Let's talk about the next 0:20:09.000 --> 0:20:11.399 Congress and what you anticipate. Now you're gonna be in 0:20:11.400 --> 0:20:14.240 the majority position here, uh so you're gonna have more 0:20:14.280 --> 0:20:17.280 say over what happens. What do you want to get accomplished? 0:20:17.320 --> 0:20:19.280 You and your Committee Financial Service commedite. What do you 0:20:19.320 --> 0:20:21.000 want to get a complish in the next and the 0:20:21.400 --> 0:20:25.040 next Congress? This upcoming congress, we set the agenda in 0:20:25.080 --> 0:20:27.840 House Financial Services Committee. We have some key goals we 0:20:27.880 --> 0:20:31.400 want to pursue. First, we'd like to have a bipartisan 0:20:32.119 --> 0:20:36.919 oversight and regulatory measure for digital assets. We'd like to 0:20:36.920 --> 0:20:40.360 take the collapse of f t X and do something 0:20:40.440 --> 0:20:43.240 positive with that by having a consensus on both sides 0:20:43.280 --> 0:20:46.200 of the hill on the right kind of regulatory proposal 0:20:46.320 --> 0:20:49.239 for the digital assets and one that will preserve that 0:20:49.280 --> 0:20:52.600 business here in the United States and preserve the ability 0:20:52.640 --> 0:20:56.160 to innovate on blockchain. We think that's key. Next, we'd 0:20:56.240 --> 0:20:59.800 love to find a solution on a permanent reauthorization of 0:20:59.840 --> 0:21:05.800 the flood insurance program. We're on seventeen eighteen continuing resolutions there. 0:21:06.040 --> 0:21:08.960 I'd like to see a permanent reauthorization of our national 0:21:09.000 --> 0:21:13.640 flood program. It's important to our communities, homeowners, resilient communities, 0:21:14.000 --> 0:21:16.600 so that's a key feature. And look, we want to 0:21:16.640 --> 0:21:21.600 make sure our regulatory agencies like the SEC, the bank regulators, 0:21:21.960 --> 0:21:27.000 don't block capital formation. So you'll see US approve policy 0:21:27.040 --> 0:21:31.360 ideas and legislative ideas that enhance capital formation. So let's 0:21:31.400 --> 0:21:32.960 pick up a couple of as we could. Let's start 0:21:33.000 --> 0:21:35.439 with FTX in the crypto situation. As I understand it, 0:21:35.680 --> 0:21:37.480 before you get to the new Congress, you're plan on 0:21:37.560 --> 0:21:40.000 having some hearings in the current Congress. In the Lame 0:21:40.119 --> 0:21:43.480 Ducks edition, do we know whether Sam bankman Fried is 0:21:43.480 --> 0:21:45.119 gonna show up or not as he told you? And 0:21:45.119 --> 0:21:48.200 if he doesn't, will you compel him? Well, he tweeted 0:21:48.520 --> 0:21:51.760 that he wasn't going to appear, and I think Patrick McKendry, 0:21:51.840 --> 0:21:55.160