WEBVTT - Daybreak Weekend: Crypto Recap, Macau Recovery, Congress Wraps Up 2023 0:00:02.720 --> 0:00:05.280 This is Bloomberg Daybreak Weekend, our global look at the 0:00:05.280 --> 0:00:07.760 top stories in the coming week from our Daybreak anchors 0:00:07.760 --> 0:00:10.200 all around the world, and straight ahead on the program. 0:00:10.320 --> 0:00:13.320 It's shaving up to be a very merry cryptomis with 0:00:13.400 --> 0:00:17.160 bitcoin and ethereum soaring in value. Will the surge continue 0:00:17.280 --> 0:00:20.600 in twenty twenty four with the SEC poise to approve 0:00:20.640 --> 0:00:23.800 the first ever spot bitcoin ETF. I'm Tom Busby in 0:00:23.880 --> 0:00:24.319 New York. 0:00:24.520 --> 0:00:27.200 I'm calin Hedge in London, where we're thinking about the 0:00:27.320 --> 0:00:30.120 lessons learned from the past year in stocks. 0:00:30.360 --> 0:00:32.560 I'm Doug Prisoner looking at the odds for a better 0:00:32.640 --> 0:00:35.320 gaming business in Macau for twenty twenty four. 0:00:35.560 --> 0:00:38.320 I'm Kaylie Lynes in Washington, where we're reflecting on a 0:00:38.400 --> 0:00:41.639 wild year in Congress and the legislative winners and losers. 0:00:42.680 --> 0:00:46.680 That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 0:00:46.680 --> 0:00:50.520 Eleve on Free Own New York, bloombergon ninety nine to one, Washington, DC, 0:00:50.840 --> 0:00:54.880 Bloomberg one O six one, Boston, Bloomberg nine sixty, San Francisco, 0:00:55.120 --> 0:00:58.920 DAB Digital Radio London, Sirius XM one to nineteen and 0:00:59.000 --> 0:01:01.920 around the world on Bloomberg Radio dot com and via 0:01:01.920 --> 0:01:03.240 the Bloomberg Business Appen. 0:01:07.360 --> 0:01:09.200 Good day to you. I'm Tom Busby, and we begin 0:01:09.280 --> 0:01:13.320 today's program with a look at cryptocurrencies. Bitcoin, starting the 0:01:13.400 --> 0:01:17.000 year just under seventeen thousand dollars. Fast forward nearly twelve 0:01:17.040 --> 0:01:21.200 months later, Bitcoin is more than double trading above forty thousand. 0:01:21.640 --> 0:01:24.680 Why the big rally and will it continue? We're pleased 0:01:24.680 --> 0:01:28.160 to welcome Mike McLoone. He's senior commodity strategist at Bloomberg 0:01:28.200 --> 0:01:31.880 Intelligence and Bloomberg Markets editor Michael Reagan. Thank you both 0:01:31.880 --> 0:01:34.920 for joining us. What is behind the big rally in 0:01:34.959 --> 0:01:37.760 bitcoin this past year and what has changed if anything? 0:01:38.400 --> 0:01:40.440 Hey, Tom, Well, the potential the US is going to 0:01:40.440 --> 0:01:45.240 be launching Bitcoin ETF starting nine. The dates really January tense, 0:01:45.600 --> 0:01:48.040 but that's kind of more than micro The market sorty price, 0:01:48.040 --> 0:01:50.360 and it's the macro. I think that matters is virtually 0:01:50.400 --> 0:01:52.760 all risk assets were pretty well beat up at the 0:01:52.840 --> 0:01:55.680 end of last year, and virtually all risk assets are 0:01:55.760 --> 0:01:58.400 up this year. Bitcoin is just the riskiest. It's the 0:01:58.520 --> 0:02:01.360 highest beta up the most. So that's what I look 0:02:01.400 --> 0:02:04.760 at next year. That tilt is a pendulum, Mike swing 0:02:04.800 --> 0:02:06.600 the other way and kind of just revert a little. 0:02:06.680 --> 0:02:09.000 To me, that's the key risk. And it's the example 0:02:09.080 --> 0:02:11.200 of you know, bitcoin's up one hundred and sixty percent 0:02:11.240 --> 0:02:14.240 this year and the NASSEX up about fifty three percent, 0:02:14.840 --> 0:02:17.720 and on a voweltily weighting basis, that's just about what 0:02:17.720 --> 0:02:18.680 Bitcoin should be up. 0:02:19.480 --> 0:02:21.839 And Michael Reagan, so it's kind of mirrored the rise 0:02:21.840 --> 0:02:23.040 in equities this past year. 0:02:23.440 --> 0:02:25.120 Yeah, mirrored it and really out on it. 0:02:25.240 --> 0:02:25.440 Yeah. 0:02:25.480 --> 0:02:28.120 You know, Mike's talking about the beta in the market, 0:02:28.120 --> 0:02:30.200 which is kind of a technical term for if you know, 0:02:30.360 --> 0:02:33.920 one asset is moving one percent, a higher bait asset 0:02:34.520 --> 0:02:36.840 might move two percent or three percent. So, you know, 0:02:36.880 --> 0:02:41.800 Bitcoin just more a beneficiary of this return in risk 0:02:41.840 --> 0:02:46.359 appetites than the equity market, even both are really just 0:02:46.400 --> 0:02:47.959 putting in tremendous rebounds this year. 0:02:48.840 --> 0:02:52.800 And as Michael alluded to, with the SEC expected to 0:02:52.880 --> 0:02:57.840 approve January tenth, the spot bitcoin ETF, this could change everything. 0:02:58.360 --> 0:02:59.560 Yeah, I mean that's the thinking. 0:02:59.600 --> 0:02:59.760 You know. 0:02:59.800 --> 0:03:03.120 The idea is that there are a lot of investors 0:03:03.120 --> 0:03:07.440 and financial advisors out there who were reluctant to invest 0:03:07.520 --> 0:03:10.840 in crypto because they didn't quite trust all the crypto 0:03:10.960 --> 0:03:15.440 native platforms FTX obviously giving the best example of that 0:03:15.480 --> 0:03:18.960 when it collapsed last year. So, you know, the thinking is, 0:03:19.040 --> 0:03:23.000 now that it's available in an ETF, you can buy 0:03:23.040 --> 0:03:26.840 it from your traditional brokerage whoever that is that you 0:03:26.960 --> 0:03:29.840 deal with, and there's a little bit more safety there 0:03:30.120 --> 0:03:33.440 involved now, you know, to Mike's point, I think the 0:03:33.520 --> 0:03:38.080 question is is all that priced into the market already 0:03:38.120 --> 0:03:40.240 for the price of bitcoin and then some you know, 0:03:40.360 --> 0:03:42.720 is it a sell the news event, And it's really 0:03:42.720 --> 0:03:45.760 hard to predict that when the CTF one and if 0:03:45.760 --> 0:03:51.120 it is actually approved. But you know, I think the 0:03:51.240 --> 0:03:54.440 general thinking is that even if even if investors allocate 0:03:54.520 --> 0:03:59.080 a tiny percent of their entire portfolio, say one or 0:03:59.080 --> 0:04:01.840 two percent to crypto, now that's going to add up 0:04:02.000 --> 0:04:07.120 to tens hundreds of billions of dollars potentially. So the 0:04:07.160 --> 0:04:10.400 optimism is that these ETFs will be a big hit, 0:04:10.960 --> 0:04:14.080 and that perhaps while they might not rally, bitcoin might 0:04:14.120 --> 0:04:18.320 not rally the way it did this year, once they're introduced, 0:04:18.320 --> 0:04:21.200 that it will be a support going forward in the market. 0:04:22.160 --> 0:04:24.919 But to Mike's point, you know, this market rallied so 0:04:25.160 --> 0:04:28.720 hard this year that it would be sort of natural 0:04:28.720 --> 0:04:31.000 to expect a little bit of a pullback a correction 0:04:31.040 --> 0:04:31.280 from that. 0:04:32.080 --> 0:04:34.279 So what do you think, Mike mcloon, I'll address this 0:04:34.400 --> 0:04:37.200 to you. Why the change of heart from Gary Gensler 0:04:37.320 --> 0:04:40.400 federal regulators about now going forward with this? 0:04:40.920 --> 0:04:45.279 Oh, the good check and balances of courts. One example 0:04:45.440 --> 0:04:49.680 was coinbase and GBTC Gray Scale Bitcoin Trust. They won 0:04:50.120 --> 0:04:52.719 their actions in courts. There's been some other ones, but 0:04:53.279 --> 0:04:56.080 it's that pendulum and it's just a wonderful check and 0:04:56.120 --> 0:04:58.120 balance of our system. You might have people push back 0:04:58.120 --> 0:05:01.560 on this rapidly advancing technology, then people push forward, and 0:05:01.560 --> 0:05:04.440 that's what's happening. So I think what Michael pointed out 0:05:04.480 --> 0:05:06.479 is the key thing is there is just so much 0:05:06.560 --> 0:05:09.640 optimism and expectation. Okay, the ETFs are going to be launched. 0:05:09.839 --> 0:05:11.320 The key thing we like to say about it is 0:05:11.320 --> 0:05:14.039 that when we launched the Bloomberg Galaxy crypto inext in 0:05:14.040 --> 0:05:17.600 twenty eighteen, this was the goal to get ETFs tracking 0:05:17.920 --> 0:05:20.640 cryptos and most lightly a broad index, and we're just 0:05:20.680 --> 0:05:23.159 so far behind. Now they happen, They already exist in 0:05:23.200 --> 0:05:25.160 other countries. The US is just catching up. But it's 0:05:25.200 --> 0:05:28.080 Michael mentioned, it's the key thing that matters. The point 0:05:28.120 --> 0:05:30.960 I'm worried about is what it's doing for the space 0:05:31.200 --> 0:05:34.640 is since futures were launched in bitcoin in twenty seventeen, 0:05:34.839 --> 0:05:38.400 valtile is getting squashed. So what's happening is this teenager 0:05:38.480 --> 0:05:41.839 or this child acid is becoming an adult rapidly, and 0:05:41.839 --> 0:05:44.040 ETFs are going to push into the adult space really 0:05:44.040 --> 0:05:47.120 fast meeting. Can I expect those very big returns we've 0:05:47.120 --> 0:05:48.720 had in the past when it was trading at a 0:05:48.760 --> 0:05:51.600 volatility of one hundred to two hundred percent, and now 0:05:51.640 --> 0:05:53.840 that valtil is around thirty percent, that's the lowest ever. 0:05:53.960 --> 0:05:55.680 That's a two hundred and sixty day measure or an 0:05:55.720 --> 0:05:58.599 annual measure. And the thing is it's still much higher 0:05:58.680 --> 0:06:01.240 volatility than stock market goal. And that's where I think 0:06:01.240 --> 0:06:04.640 people I'm worried about if we do get that normal 0:06:04.720 --> 0:06:08.719 reversion in the stock market next year bitcoin keep thinking 0:06:08.720 --> 0:06:10.760 about Bitcoin. It's trades twenty four seven. It's one of 0:06:10.800 --> 0:06:13.280 the most significant leading indicators in the planet. It might 0:06:13.400 --> 0:06:15.760 lead that way down. That's why I look at is yes, 0:06:15.800 --> 0:06:18.920 there's always going to be small pullbacks. I'm looking at 0:06:18.960 --> 0:06:23.239 the pendulum for next year swinging more towards reversion as 0:06:23.440 --> 0:06:25.800 the best Maybe we've already seen the best buy the 0:06:25.880 --> 0:06:27.240 rumor in the markets. 0:06:27.680 --> 0:06:32.520 Michael, Yeah, and that falseeity issue is a fascinating once unpacked, 0:06:32.600 --> 0:06:35.039 because you know, that's something these traders like, you know, 0:06:35.040 --> 0:06:38.800 your typical buy and hold investor might not level lot 0:06:38.800 --> 0:06:43.080 of volatility in their portfolio, but crypto investors, that's that's 0:06:43.160 --> 0:06:46.440 their bread and butter, right, So you know, regardless of 0:06:46.440 --> 0:06:50.919 what Bitcoin does, it's fascinating to look at some of 0:06:50.960 --> 0:06:53.320 the other areas of crypto market and what's going on. 0:06:53.560 --> 0:06:56.799 I'll give you an example. Solana is the big star 0:06:56.920 --> 0:06:59.680 of the industry this year. Their native token soul is 0:06:59.720 --> 0:07:03.400 up like eight hundred percent. And the thinking there is 0:07:03.440 --> 0:07:07.520 this is a blockchain that's much faster and cheaper to 0:07:07.680 --> 0:07:12.760 run transactions on than Bitcoin or ethereum. So a lot 0:07:12.800 --> 0:07:17.239 of these really crazy sort of meme coins and NFTs 0:07:17.320 --> 0:07:20.600 and all that very very speculative and extra risky. I mean, 0:07:20.680 --> 0:07:24.120 all of crypto's risky, but this stuff is super ultra risky. 0:07:24.800 --> 0:07:29.080 Has really found a home on that blockchain and Avalanche, 0:07:29.880 --> 0:07:33.120 so you know, the market is kind of I think 0:07:33.160 --> 0:07:36.600 to Mike's point, there's a potential for sort of a 0:07:36.600 --> 0:07:40.000 a fork in the road where bitcoin becomes more of 0:07:40.040 --> 0:07:45.840 the mainstream, lower volatile the side of the market. But 0:07:45.880 --> 0:07:48.080 then you still have this sort of more wild west, 0:07:48.480 --> 0:07:52.680 wildly volatile and speculative angle of the market where all 0:07:52.720 --> 0:07:56.960 the true crypto you know, guys who like to trade 0:07:57.000 --> 0:08:00.680 and really actively go long, go short, we'll be happy 0:08:00.760 --> 0:08:02.920 to sort of move over to that side of the market. 0:08:03.000 --> 0:08:05.880 Well, it seems also there are always new ones, ones 0:08:06.240 --> 0:08:08.480 happening now you've never even heard of. Yeah. 0:08:08.520 --> 0:08:11.120 Absolutely, I mean it's so easy to create a new coin. 0:08:11.160 --> 0:08:13.640 You can basically copy the code from the last one, 0:08:13.800 --> 0:08:16.640 change a few variables in it, give it a new name, 0:08:17.120 --> 0:08:18.920 and you're off to the racist. And then it's you know, 0:08:19.400 --> 0:08:23.160 a matter of you know, how strongly can you market 0:08:23.200 --> 0:08:26.040 it and pump it up and get other people excited 0:08:26.080 --> 0:08:28.760 about it. It's kind of a crazy scheme, but that 0:08:29.000 --> 0:08:31.040 is sort of the nature of the market these days. 0:08:31.040 --> 0:08:33.760 Oh, it's a crazy scheme. Now, Mike mcgoon, I want 0:08:33.760 --> 0:08:36.000 to talk about something I know you have spoken about, 0:08:36.080 --> 0:08:40.760 referring to bitcoin as a form of digital gold. What 0:08:40.800 --> 0:08:42.920 do you mean, why is that and what do you mean? 0:08:44.320 --> 0:08:46.800 It really struck me when I was in Hong Kong, 0:08:46.840 --> 0:08:50.360 the twenty eighteen visying colleagues, and almost everybody met there 0:08:50.679 --> 0:08:53.079 when they're talking about mainland this and mainland that is 0:08:53.120 --> 0:08:55.840 a no. And that was a significant bear market cryptos. 0:08:55.880 --> 0:08:57.839 Yet there was one bull market, and that was the 0:08:57.880 --> 0:09:00.920 market capitalization of the number one stable going called Teather. 0:09:01.520 --> 0:09:03.720 And the key thing that really struck me is now 0:09:04.040 --> 0:09:06.160 on a global basis, sort of first time in history, 0:09:06.200 --> 0:09:08.680 everybody in the planet with an iPhone, which you can 0:09:08.760 --> 0:09:11.240 get now a phone in India for twelve bucks, has 0:09:11.280 --> 0:09:15.559 access to a stable currency or something more like digital 0:09:15.600 --> 0:09:19.720 like bitcoin, through their digital assistant or their phones. And 0:09:19.760 --> 0:09:21.920 the key thing I like to stay about bitcoin is 0:09:22.000 --> 0:09:25.040 in terms of gold is average Ask your average thirty 0:09:25.080 --> 0:09:27.319 something person or someone like the age of my kids. 0:09:27.640 --> 0:09:30.000 They don't really care about goal. And that to me 0:09:30.080 --> 0:09:31.560 is like to say, is if you are in the 0:09:31.600 --> 0:09:34.160 gold space, you're bullish gold. I'm bullish gold, You're you're 0:09:34.200 --> 0:09:36.319 involved in gold. That's kind of you have to have 0:09:36.400 --> 0:09:40.400 some consideration of the world's going digital and bitcoin being 0:09:40.440 --> 0:09:41.920 in that space. So it's me it has to have 0:09:42.000 --> 0:09:43.839 some bitcoin in that space. Now, how much you put 0:09:43.880 --> 0:09:47.080 in there is subject, but the world is going digital, 0:09:47.080 --> 0:09:48.839 and it's just a better way to transact. But one 0:09:48.880 --> 0:09:50.800 thing I really want to touch on it's happening in 0:09:50.800 --> 0:09:52.960 this space is Michael alluded to a little bit with 0:09:52.960 --> 0:09:57.880 Solona is proliferation of stable coins. This technology allows everybody 0:09:57.920 --> 0:10:00.160 in the planet to get access to the dollar. Call 0:10:00.160 --> 0:10:02.120 them stable coins, I call them crypto dollars because they 0:10:02.120 --> 0:10:04.560 all track the dollar and the AUM. And these crypto 0:10:04.600 --> 0:10:07.200 dollars now are almost about one hundred and twenty five billion, 0:10:07.960 --> 0:10:10.319 and that's something that's just happening more and more, and 0:10:10.400 --> 0:10:13.240 it's because the technology allows everybody in the will to 0:10:13.240 --> 0:10:15.120 get access to this, particularly when you live in a 0:10:15.160 --> 0:10:17.880 country with a melting currency, which most hour in the 0:10:17.920 --> 0:10:20.960 long term is just the dollars, the most, the strongest, 0:10:20.960 --> 0:10:24.199 and just in terms of bitcoin, to me, it's digital 0:10:24.240 --> 0:10:28.240 gold versus regular golden analog gold. You probably should put 0:10:28.240 --> 0:10:30.760 them together. And then in the space, what's significant is 0:10:30.840 --> 0:10:34.000 just the technologies allowing people to get to the dollar. 0:10:34.040 --> 0:10:37.720 And what's really it's called basically tokenization. What's next in 0:10:37.760 --> 0:10:39.840 tokenization through the technology, And a lot of people I 0:10:39.840 --> 0:10:41.160 hear say, are US treasuries? 0:10:41.520 --> 0:10:43.160 Yeah, well they've got a lot to look forward to. 0:10:43.480 --> 0:10:46.840 Our thanks to Mike McLoone, senior commodity strategist at Bloomberg 0:10:46.840 --> 0:10:50.720 Intelligence and Bloomberg Market editor Michael Reagan. Coming up on 0:10:50.760 --> 0:10:55.360 Bloomberg Daybreak Weekend runaway, inflation, raid hikes, job cuts and more. 0:10:55.440 --> 0:10:58.880 What lessons have we learned from this past year? I'm 0:10:58.920 --> 0:11:12.640 Tom Busby and this is Bloomberg. This is Bloomberg day 0:11:12.640 --> 0:11:15.000 Break Weekend, our global look ahead at the top stories 0:11:15.040 --> 0:11:17.640 for investors in the coming week. I'm Tom Busby in 0:11:17.679 --> 0:11:21.200 New York. Up later in our program the big winners 0:11:21.320 --> 0:11:25.440 in this year's do Nothing Congress. But first, twenty twenty 0:11:25.440 --> 0:11:28.720 three has been a year of inflation, rate debates, job cuts, 0:11:28.760 --> 0:11:32.520 geopolitical tensions. We'll look back at twenty twenty three through 0:11:32.520 --> 0:11:35.160 a number of different lenses and ask what lessons can 0:11:35.160 --> 0:11:37.600 be learned from the past year and how they can 0:11:37.640 --> 0:11:40.240 help us navigate the next twelve months. For more, let's 0:11:40.280 --> 0:11:43.959 go to London and bring in Bloomberg Daybreak anchor Caroline Hepger. 0:11:44.440 --> 0:11:48.160 Some might be asking what twenty twenty four could possibly 0:11:48.240 --> 0:11:51.720 throw at markets after a year packed with every challenge 0:11:51.760 --> 0:11:54.240 in the book. Again, as the year draws to a close, 0:11:54.320 --> 0:11:57.200 investors have been hit with a curveball at tax on 0:11:57.320 --> 0:11:59.880 merchant ships in the Red Sea, threatening to d stable 0:12:00.000 --> 0:12:02.880 as the global economy. There's also been a final surprise 0:12:03.080 --> 0:12:07.160 in the UK this week's CPI data showing that inflation 0:12:07.320 --> 0:12:09.320 slowed to three point nine percent. Now, that was a 0:12:09.360 --> 0:12:12.440 bigger drop than had been originally forecast. No one saw 0:12:12.480 --> 0:12:17.600 it coming, including Bloomberg's Markets Today reporter Dave Goodman. Here's 0:12:17.720 --> 0:12:18.680 his reaction. 0:12:18.920 --> 0:12:21.560 Pretty stll in reading, wasn't it. I sit next to Connor, 0:12:21.600 --> 0:12:24.040 who deserves squalwk on on Bloomberg, and I think everyone 0:12:24.080 --> 0:12:27.000 heard me shout wow loudly in the background as he 0:12:27.040 --> 0:12:29.800 was reading out to people a three point nine percent 0:12:29.920 --> 0:12:33.160 No one we Bloomberg had surveyed thirty five economists, Not 0:12:33.200 --> 0:12:35.400 one of them saw of reading below four point two percent. 0:12:35.880 --> 0:12:37.839 So that kind of shows you how much of a 0:12:37.920 --> 0:12:40.439 shock in terms of a downward surprise. It's it's the 0:12:40.480 --> 0:12:42.360 biggest since February twenty twenty one. 0:12:42.679 --> 0:12:45.440 That was Bloomberg's David Goodman there. So what are the 0:12:45.520 --> 0:12:49.600 takeaways then from an unforgettable year for global equities? We 0:12:49.720 --> 0:12:53.720 asked Bloomberg Stocks Guru, our director of Research, Tim Craighead, 0:12:53.720 --> 0:12:56.199 to help us make sense of it all, starting by 0:12:56.200 --> 0:12:59.880 asking him his biggest lesson from the past year in stocks. 0:13:00.320 --> 0:13:01.480 Here's what he had to say. 0:13:01.600 --> 0:13:03.880 I guess one thing that really comes to mind is 0:13:03.920 --> 0:13:08.360 that composition matters. If you look at the nature of 0:13:08.400 --> 0:13:11.120 the markets that have worked in Europe, or think about 0:13:11.120 --> 0:13:15.360 Europe versus the US, it really does boiled down the composition. 0:13:15.880 --> 0:13:21.360 The SMI has been awful basically because of four stocks Rosa, 0:13:21.440 --> 0:13:26.200 nov Artists, Nesle, and Richmond. If you take those out, 0:13:26.559 --> 0:13:29.920 that market's up twenty one percent. It's equal to the US. 0:13:30.200 --> 0:13:33.840 If you look at Europe, it looks awful at up 0:13:33.880 --> 0:13:37.080 twelve percent versus the US up twenty one percent. But 0:13:37.160 --> 0:13:41.520 if you look at the Eurostocks fifty, which is concentrated 0:13:41.679 --> 0:13:45.280 into some of the biggest important names in the Eurozone, 0:13:45.480 --> 0:13:49.160 it's up nineteen percent. That's call it roughly in line. 0:13:49.679 --> 0:13:54.679 It's the UK and Switzerland that have been awful for 0:13:54.920 --> 0:13:57.480 Europe and taking the whole index if you look at 0:13:57.520 --> 0:14:00.520 the stock six hundred down, So composition really matter. 0:14:01.240 --> 0:14:03.800 So then how do you think about Europe and how 0:14:03.840 --> 0:14:05.800 it will fare against the United States? 0:14:05.800 --> 0:14:10.040 Looking to next Yeah, yeah, well two things here come 0:14:10.200 --> 0:14:14.240 immediately to mind. One is clearly the US has gotten 0:14:14.240 --> 0:14:18.320 an awful lot more TMT and that's been a huge 0:14:18.440 --> 0:14:24.920 driver of the rally that we've seen since the October lows. 0:14:25.680 --> 0:14:29.720 They tend to be higher duration in terms of longer 0:14:29.800 --> 0:14:32.440 term cash flow growth if you get into the math, 0:14:33.000 --> 0:14:36.240 which makes them more sensitive to interest rate changes as 0:14:36.240 --> 0:14:39.280 well as longer term secular growth drivers. So that is 0:14:39.320 --> 0:14:42.160 a big difference in the last six weeks. That's really mattered. 0:14:44.280 --> 0:14:47.280 It brings up what happens from here, and we can 0:14:47.280 --> 0:14:49.160 talk a little bit more about that from the standpoint 0:14:49.160 --> 0:14:51.760 of how much the market is now baked in central 0:14:51.800 --> 0:14:55.800 bank pivots, which I think is definitely the case across 0:14:55.880 --> 0:15:00.120 both continents, but probably even more so in the US. 0:15:00.840 --> 0:15:04.520 The second thing is China. China is a big deal 0:15:04.560 --> 0:15:09.360 for Europe. Call it four hundred and sixty billion dollars 0:15:09.400 --> 0:15:13.320 in a billion euros in revenue across eighty big companies 0:15:13.400 --> 0:15:17.720 in Europe. That's a lot of exposure. It's roughly thirty 0:15:17.760 --> 0:15:21.880 percent of the market index that that's got China exposure. 0:15:22.120 --> 0:15:25.360 That's a tough first half comparison. I think there's a 0:15:25.360 --> 0:15:28.520 tale of two halts for European markets looking into twenty 0:15:28.600 --> 0:15:33.960 twenty four. Tough earnings to begin with, but maybe an 0:15:34.000 --> 0:15:37.000 interesting second half looking towards twenty twenty five. 0:15:37.440 --> 0:15:39.560 So there's loads to unpack there. But I just want 0:15:39.560 --> 0:15:41.160 to hone in on what you said about the UK. 0:15:41.960 --> 0:15:44.840 When do you think people will start deciding that Britain's 0:15:44.920 --> 0:15:47.239 cheap and it's a bargain and it's time to buy. 0:15:47.680 --> 0:15:49.040 Never buy. 0:15:51.040 --> 0:15:53.600 So it is cheap, but it's cheap for a reason, 0:15:53.680 --> 0:15:57.000 and that goes back to the composition issue. It's got 0:15:57.440 --> 0:16:00.000 a bunch of banks. Banks tend to trade cheap relative 0:16:00.160 --> 0:16:01.960 to do a lot of other sectors. It's got a 0:16:02.120 --> 0:16:07.920 heavy heavy dose of oil and metals and mining. Those 0:16:08.320 --> 0:16:10.960 are contra to earnings, and right now we're still at 0:16:11.000 --> 0:16:14.200 relatively higher earnings, so you're at relatively low valuations. The 0:16:14.200 --> 0:16:17.120 only time you're going to see real revaluation in those 0:16:17.200 --> 0:16:19.320 is when you have a down cycle in the commodity 0:16:19.360 --> 0:16:25.480 prices that really depresses earnings and inflates multiples. But as 0:16:25.520 --> 0:16:27.760 you look at it's interesting if you look over a 0:16:27.800 --> 0:16:32.000 two year period, the Footsie's actually outperformed both the EERO 0:16:32.160 --> 0:16:34.240 stocks and the S and P five hundred. Take a 0:16:34.240 --> 0:16:37.440 look at that. Going back to January one, twenty twenty two, 0:16:37.840 --> 0:16:40.760 and it's because it was relatively flat and when we 0:16:40.880 --> 0:16:44.600 had down drafts in the market, the FOOTE totally outperformed. 0:16:45.200 --> 0:16:50.200 So if you're concerned for whatever reason tactically at certain 0:16:50.240 --> 0:16:52.400 points in time, the Footsie is a safe haven. If 0:16:52.440 --> 0:16:56.640 you're looking for juice, you know, the foot sis global 0:16:56.680 --> 0:17:00.760 defensives don't give you that a space. The pounds a 0:17:00.800 --> 0:17:04.560 little bit stronger. Depends on what you think about commodity markets. 0:17:04.600 --> 0:17:06.320 It's got a lot of exposure there, but right now 0:17:06.400 --> 0:17:09.280 those are relatively depressed, and it's got a heavy dose 0:17:09.320 --> 0:17:13.359 in financials where margins are very inflated. And if you 0:17:13.440 --> 0:17:15.840 think we're going to have a central bank pivot, that 0:17:16.600 --> 0:17:20.240 puts those margins at risk a little bit of deflating. 0:17:21.000 --> 0:17:24.280 So how do we think about then the central bank pivots. 0:17:24.359 --> 0:17:27.680 I mean, we've been slower in pricing in the potential 0:17:27.720 --> 0:17:29.800 of interest rate cuts on the Bank of England than 0:17:29.840 --> 0:17:31.840 we have for the ECB and the FED, but it 0:17:31.960 --> 0:17:35.280 is there. And if you think about the GDP data 0:17:35.359 --> 0:17:39.200 that some are concerned about the stagnation slash recession story 0:17:39.240 --> 0:17:41.680 for the UK, you know, how do you think about 0:17:41.680 --> 0:17:42.119 the pivot? 0:17:42.560 --> 0:17:47.160 So between now and say year in twenty twenty four. 0:17:47.840 --> 0:17:50.159 I think it's a positive backdrop and it's good for 0:17:50.160 --> 0:17:51.800 the foot seat, and it's going to be good for 0:17:51.840 --> 0:17:56.680 the European markets because both central banks are humble opinion, 0:17:57.160 --> 0:17:59.080 likely to either be pivoting. You know, there's a lot 0:17:59.080 --> 0:18:03.280 more visibility on that progress continuing into twenty twenty five. 0:18:04.840 --> 0:18:08.359 The concern I suppose right now is that we've had 0:18:08.480 --> 0:18:13.240 in all markets such a big discounting of a pivot 0:18:13.480 --> 0:18:18.320 in the past six weeks that you know, just technically 0:18:18.760 --> 0:18:22.280 we're getting a little bit extended, and you know, does 0:18:22.359 --> 0:18:26.800 that balk a little bit, especially for the UK market 0:18:27.520 --> 0:18:30.280 and Europe as we get into January February and have 0:18:30.320 --> 0:18:33.760 to face fourth quarter earnings that are probably going to 0:18:33.800 --> 0:18:38.960 be similar to third quarter, where yeah, they were somewhat resilient, 0:18:39.880 --> 0:18:43.120 but we saw negative revisions and we think you could 0:18:43.119 --> 0:18:45.760 see a bit more on the negative revision front. So 0:18:46.040 --> 0:18:49.520 first quarter I think is a little dicey, especially at 0:18:49.560 --> 0:18:53.679 these elevated market levels, but an interesting second half of 0:18:53.720 --> 0:18:54.080 the year. 0:18:54.880 --> 0:18:58.520 My thanks there to Bloomberg's director of research, Tim Craighead. 0:18:58.600 --> 0:19:01.040 I'm Caroline hepget here in London. You can catch us 0:19:01.040 --> 0:19:04.240 every weekday morning for Bloomberg Daybreak Europe, beginning at six 0:19:04.280 --> 0:19:06.959 am in London. That's one am on Wall Street. 0:19:07.640 --> 0:19:10.280 Thanks Carolina. Coming up on Bloomberg day Break weekend and 0:19:10.359 --> 0:19:13.879 look at how Mcow's casino industry has weathered the challenges 0:19:13.920 --> 0:19:18.080 of a global pandemic and a slow economic recovery in China. 0:19:18.440 --> 0:19:21.359 I'm Tom Busby, and this is Bloomberg. 0:19:29.440 --> 0:19:34.640 Broadcasting from the Bloomberg It a active brokers studio in. 0:19:34.640 --> 0:19:38.320 New York, Bloomberg Eleving free own to Washington, DC, Bloomberg 0:19:38.400 --> 0:19:41.520 ninety nine one to Boston, Bloomberg one O six one 0:19:41.640 --> 0:19:45.159 to San Francisco, Bloomberg nine sixty to the Country, Serious 0:19:45.359 --> 0:19:48.800 XM one one and around the globe, the Bloomberg Business 0:19:48.840 --> 0:19:53.080 app in Bloomberg Radio dot Com. This is Bloomberg Daybreak. 0:20:01.840 --> 0:20:04.439 This is Bloomberg Daybreak weekend, our global look ahead at 0:20:04.480 --> 0:20:07.000 the top stories for investors in the coming week. I'm 0:20:07.040 --> 0:20:10.480 Tom Busby in New York. After a devastating pandemic and 0:20:10.520 --> 0:20:14.880 a prolonged economic slowdown in China, how has Macow's casino 0:20:14.920 --> 0:20:18.480 and gaming business recovered? For more, we go to Bloomberg 0:20:18.560 --> 0:20:21.320 Daybreak Asia co host Doug Krisner. 0:20:21.280 --> 0:20:23.800 Tom The major casinos in Macau are still in the 0:20:23.840 --> 0:20:27.119 process of recovering after being hard hit by the pandemic 0:20:27.240 --> 0:20:31.359 obviously when China closed its borders. Despite the sluggishness of 0:20:31.400 --> 0:20:34.600 the overall Chinese economy, though, many analysts have a positive 0:20:34.640 --> 0:20:37.720 outlook for Macau as we approach the new year. The city, 0:20:37.800 --> 0:20:40.840 if you didn't know, is the world's largest gambling center 0:20:40.920 --> 0:20:43.960 by revenue. For a closer look at gaming and McCaw 0:20:44.040 --> 0:20:48.240 let's bring in Bloomberg's Angela han Lee, gaming and Hospitality 0:20:48.280 --> 0:20:52.080 analyst for the apack at Bloomberg Intelligence. It's a pleasure 0:20:52.119 --> 0:20:53.919 to have the chance to chat with you, and I 0:20:54.040 --> 0:20:57.840 know that in peak times, Macau gets a lot of 0:20:57.880 --> 0:21:00.639 activity during the Lunar New Year festivity and the Golden 0:21:00.640 --> 0:21:04.359 Week holiday in October. But since the Christmas holiday is 0:21:04.400 --> 0:21:07.919 upon us and New Year's is just around the corner, Angela, 0:21:08.000 --> 0:21:12.000 I'm curious will these holidays produce any traffic in a 0:21:12.080 --> 0:21:13.600 meaningful way for the casinos. 0:21:13.760 --> 0:21:16.679 Yes, I think that in the past, the Luna New 0:21:16.760 --> 0:21:19.680 Year and October Golden Week were the major events for 0:21:19.800 --> 0:21:23.320 McCall casinos because that's basically where mainland China has the 0:21:23.400 --> 0:21:27.159 longest holidays. But now I think it's a bit different 0:21:27.359 --> 0:21:29.480 because we are having more young people who likes to 0:21:29.520 --> 0:21:34.159 celebrate Christmas. And also given that this consumption downgraade trend, 0:21:34.520 --> 0:21:37.479 people cannot travel too far. That's why they prefer to 0:21:37.560 --> 0:21:40.800 go make shock hold trips. And Macau is one of 0:21:40.840 --> 0:21:43.679 the popular places because it's outside Mala in China but 0:21:43.760 --> 0:21:48.760 still very attractive. So and also because the Macau's integrity 0:21:48.800 --> 0:21:52.320 results now have much more amenities. They are hosting a 0:21:52.359 --> 0:21:54.960 lot of concerts and also events. So you see that 0:21:55.080 --> 0:21:58.040 some TV stations of China is hosting some year end 0:21:58.240 --> 0:22:00.720 concerts and events in Macau as well, so that it's 0:22:00.720 --> 0:22:04.480 going to also bring more traffic from mailing Chinese people. 0:22:04.760 --> 0:22:05.240 So did the. 0:22:05.240 --> 0:22:09.080 Gaming companies use the opportunity of a decline in business 0:22:09.160 --> 0:22:12.919