WEBVTT - Bloomberg Markets Special Simulcast Day Five 0:00:01.800 --> 0:00:04.400 This is Bloomberg Business Week. I'm Carole Masser and I'm 0:00:04.440 --> 0:00:07.280 Bloomberg Quick Takes Tim Stanabek. We're here every day bringing 0:00:07.280 --> 0:00:09.799 you the latest news from the world of business and finance, 0:00:09.840 --> 0:00:13.600 plus technology, politics, economics, all furnising the power of Business 0:00:13.640 --> 0:00:17.119 Week reporters and editors, not to mention our journalists and 0:00:17.120 --> 0:00:19.600 analysts in more than one and twenty countries. You can 0:00:19.640 --> 0:00:23.200 download Bloomberg Business Week and iTunes, SoundCloud, or Bloomberg dot com. 0:00:23.360 --> 0:00:25.120 You can also listen to our radio show at two 0:00:25.160 --> 0:00:27.840 pm Eastern Time on Bloomberg Radio, or watch us on 0:00:27.880 --> 0:00:37.880 YouTube search Bloomberg Global News. This is Bloomberg Markets from 0:00:37.880 --> 0:00:41.040 New York to our audience worldwide, a global simulcast right 0:00:41.040 --> 0:00:45.080 now across Bloomberg TV, Radio and our YouTube platforms. Remain 0:00:45.120 --> 0:00:47.919 bostick here alongside Tim Stanivik and Greedy Group Dick Year 0:00:48.120 --> 0:00:50.720 on this New Year's Eve. Happy New Year, guys. Hey, 0:00:50.720 --> 0:00:53.159 Happy New Year, do you too? Yeah, they're already celebrating 0:00:53.159 --> 0:00:55.680 somewhere right I think Pakistan right now, just hit midnight, 0:00:55.760 --> 0:01:00.000 So congratulations to all our friends out there in Karachi. Hey, um, 0:01:00.000 --> 0:01:02.600 if we were going to go back to January Roman, Yeah, 0:01:02.640 --> 0:01:07.000 SMP five hundred. Uh, the estimates from analysts. They're saying, okay, 0:01:07.040 --> 0:01:10.640 the most bullish case back in January about forty four 0:01:10.720 --> 0:01:14.319 hundred points. Yeah, look where we are now, just shy 0:01:14.319 --> 0:01:17.280 of forty eight hundred. Yeah, forty eight hundred here on 0:01:17.280 --> 0:01:19.920 the SMP five hundred. You talk about the gains that 0:01:20.000 --> 0:01:22.319 we booked this year, I mean, look, three straight years 0:01:22.319 --> 0:01:25.120 of gains on the SMP five hundred, double digit percentage 0:01:25.120 --> 0:01:27.360 gains the nastac keep in mind, I think we're something 0:01:27.400 --> 0:01:30.039 like six straight years now here too, So Crety, this 0:01:30.080 --> 0:01:32.880 has been a remarkable bull run, or a certain leg 0:01:32.959 --> 0:01:36.000 of whatever this bull run has been, despite some of 0:01:36.000 --> 0:01:37.640 the weekends that we're seeing, at least on this final 0:01:37.720 --> 0:01:39.800 day of the year. Yeah, remarkable is I think the 0:01:39.920 --> 0:01:41.560 really the key word there. And you just heard him 0:01:41.600 --> 0:01:45.959 talk about that forty price target for the SP one. 0:01:46.000 --> 0:01:48.200 Well what's interesting is that's also the low end of 0:01:48.200 --> 0:01:51.560 the forecast for two as well. Essentially, the message here 0:01:51.600 --> 0:01:53.600 is that the stock market can go anywhere. Just because 0:01:53.600 --> 0:01:55.520 we had those really monstrous games in the last three 0:01:55.600 --> 0:01:58.040 years does not mean that they'll sustain. But hey, if 0:01:58.080 --> 0:02:00.560 you have tech on your side, why not have that 0:02:00.800 --> 0:02:03.480 pretty bullish case as well. Yeah, and I'm big concerned now. 0:02:03.520 --> 0:02:05.600 Of course there's a lot of the catalyst sail get 0:02:05.640 --> 0:02:09.040 us this gain on SMB five this year, those some 0:02:09.080 --> 0:02:13.119 of those catalysts might not necessarily be around in Let's 0:02:13.120 --> 0:02:15.280 get some perspective from our first guest here helping us 0:02:15.360 --> 0:02:18.640 kick off the show, Jay Hatfield. He's Infrastructure Capital portfolio 0:02:18.680 --> 0:02:22.480 manager and chief investment officer. J Let's start off with 0:02:23.800 --> 0:02:27.560 and what potentially could actually be an impediment for this market. 0:02:29.320 --> 0:02:32.760 Thanks for very Happy New York to to everyone. Well, 0:02:33.440 --> 0:02:36.880 as usual, the really critical judgment to make is what 0:02:37.080 --> 0:02:42.360 is FED reserved policy going to be. We're quite bolish 0:02:42.440 --> 0:02:46.120 about FED policy. If you look the FED is caused. 0:02:46.160 --> 0:02:51.920 There's been um nineteen tightenings of policy since World War Two. 0:02:52.360 --> 0:02:55.920 Eleven of those resulted in a recession, eight of them 0:02:55.960 --> 0:02:58.760 in a soft landing. But we do think that the 0:02:58.840 --> 0:03:01.280 FED got religion over the last couple of years. They've 0:03:01.280 --> 0:03:05.280 abandoned their single target of two, which it is completely 0:03:05.320 --> 0:03:09.079 uns substantiated by the way they just made that up UM, 0:03:09.160 --> 0:03:11.200 and now they're more flexible. Plus they're gonna have more 0:03:11.200 --> 0:03:14.680 Biden appointees, So we think that they'll focus on their 0:03:14.720 --> 0:03:17.160 dual mandate. They'll stick to the dot plot, just raise 0:03:17.280 --> 0:03:21.880 rates three times and not start quantitative tightening, which is 0:03:21.919 --> 0:03:23.960 a disaster for the market. That's what happened in two 0:03:23.960 --> 0:03:26.839 thousand eighteen because the Fed was shrinking the balance sheet. 0:03:26.880 --> 0:03:28.919 Right now, they're not slated to shrink the balance she 0:03:29.080 --> 0:03:32.720 just stopped the excess liquidity j what is you know, 0:03:32.760 --> 0:03:34.840 We've been talking to a lot of analysts about the 0:03:34.880 --> 0:03:38.320 week about many of them agree the biggest risk risk 0:03:38.400 --> 0:03:40.960 is a misstep by the Fed. What do you think 0:03:40.960 --> 0:03:45.680 the biggest risk is, Well, I think that I mean, 0:03:46.240 --> 0:03:49.880 obviously that is the biggest risk, But what goes along 0:03:49.920 --> 0:03:55.280 with that is really just disinflation accelerate beyond everybody's expectations. 0:03:55.840 --> 0:03:59.320 So a couple of months ago, our calculations were the 0:03:59.400 --> 0:04:03.680 inflation with run rate was double digits because keep in 0:04:03.720 --> 0:04:07.800 mind the BLS does not properly mark rents to market 0:04:08.560 --> 0:04:11.960 and energy inflation was raging at the time. So if 0:04:11.960 --> 0:04:14.360 inflation prints hot, then I don't know if it's a 0:04:14.360 --> 0:04:18.640 policy mistake, but the Fed may have to prioritize inflation 0:04:18.720 --> 0:04:24.080 reduction over employment. So that's really the key risk, is 0:04:24.200 --> 0:04:28.120 accelerating inflation, because I do think that you can't increase 0:04:28.160 --> 0:04:32.080 the money supply by and have no inflation. That's really, 0:04:32.440 --> 0:04:36.520 in effect what the transitory theory of inflation was so 0:04:36.800 --> 0:04:40.520 key risk is is double digit inflation. I would say, so, ja, 0:04:40.680 --> 0:04:43.359 what happens when the opposite of what you just said 0:04:43.480 --> 0:04:46.159 takes play? Let's say inflation, which is really where the 0:04:46.160 --> 0:04:48.719 FED is throwing all their firepower at right now their focus. 0:04:48.839 --> 0:04:51.800 As you mentioned, well, what if inflation has already peaked? 0:04:51.800 --> 0:04:54.160 What if we're already dealing with the supply chain issues, 0:04:54.279 --> 0:04:56.479 We're dealing with the omicron variant, We're also dealing with 0:04:56.520 --> 0:04:59.919 commodity prices that have peaked and perhaps coming back down. 0:05:00.360 --> 0:05:03.640 What's the trade there if the labor market turns out 0:05:03.680 --> 0:05:08.279 to be a bigger problem than inflation, well, and that 0:05:08.279 --> 0:05:11.120 that that actually, I think that could be worked out 0:05:11.200 --> 0:05:14.560 fairly well because that would, you know, really imply a 0:05:14.640 --> 0:05:18.360 soft landing, so to extent that their economy is slower 0:05:18.360 --> 0:05:20.160 than we expect. That I wouldn't think that would be 0:05:20.160 --> 0:05:22.880 a disaster for stocks at all. And in fact, also 0:05:23.080 --> 0:05:27.200 interest rates would probably stay relatively stable, So um that 0:05:27.320 --> 0:05:30.880 scenario I think would be positive. We're projecting three to 0:05:30.960 --> 0:05:34.840 four percent growth for a number of reasons, one of 0:05:34.880 --> 0:05:37.200 the biggest being that the US has a ninety percent 0:05:37.279 --> 0:05:40.360 cost advantage over the rest of the world in electricity 0:05:40.360 --> 0:05:43.200 and natural gas, So we don't see that scenario. But 0:05:43.240 --> 0:05:45.200 I don't think that would be a disaster because it 0:05:45.240 --> 0:05:47.760 would give the FED more headroom to not raise rates 0:05:48.440 --> 0:05:51.440 and not do quantitative tightening. Yeah, I mean, so much 0:05:51.440 --> 0:05:53.360 focus on the FED this year, and it's a fact 0:05:53.400 --> 0:05:55.320 that it's going to have on equities and I guess 0:05:55.320 --> 0:05:57.440 to a certain extent, on the bond market here, But 0:05:57.480 --> 0:05:59.280 what about some of the other risk assets. I mean, 0:05:59.279 --> 0:06:03.080 we talk about all of the sort of push out 0:06:03.120 --> 0:06:07.039 onto the risk spectrum because of that implicit FED support here, 0:06:07.080 --> 0:06:09.640 whether it's cryptocurrencies, whether it's some of the real estate 0:06:09.680 --> 0:06:13.160 and private equity deals out there. How does that how 0:06:13.200 --> 0:06:16.920 does some of those trades are affected by potential tightening 0:06:16.920 --> 0:06:19.839 here by the FED. Well, I think there's there's a 0:06:19.920 --> 0:06:24.480 great implicit point there remain, which is that people talk 0:06:24.520 --> 0:06:27.920 about interest rates being the key dynamic that drives the market, 0:06:28.520 --> 0:06:30.960 but you know, interest rates are so low the key 0:06:31.040 --> 0:06:34.320 dynamic really is the equity risk premium. So that's the 0:06:34.520 --> 0:06:38.560 you know, the premium plus treasuries is what the required 0:06:38.640 --> 0:06:42.040 rate of return is. So when the Feds reducing liquidity, 0:06:42.200 --> 0:06:47.839 that rises, so that disadvantages riskier stocks um like a 0:06:47.920 --> 0:06:52.159 Tesla has a two beta, and it advantages more conservative 0:06:52.200 --> 0:06:54.839 stocks like utilities that have a beta or sensitivity the 0:06:54.839 --> 0:06:57.720 market about point five. So we think that the DAL 0:06:57.880 --> 0:07:01.400 is going to outperform next year the SMP significantly, so 0:07:01.600 --> 0:07:04.280 the reverse of this year, because those value stocks will 0:07:04.320 --> 0:07:08.320 outperform the high momentum stocks when the equity risk premium 0:07:08.400 --> 0:07:11.200 is rising sliding. Okay, hey, j we were talking about 0:07:11.320 --> 0:07:13.600 year to date what the major industries have done. The 0:07:13.640 --> 0:07:16.400 doubt up closer, the s and P five fundered handily 0:07:16.440 --> 0:07:20.560 out performing over what's your estimate for how the SMP 0:07:20.600 --> 0:07:25.800 five found it is going to end. Well, we're optimistic 0:07:25.800 --> 0:07:28.120 that Dow will be up ten percent. I would see 0:07:28.160 --> 0:07:30.720 the SMP could be closer to flattish your up five 0:07:30.760 --> 0:07:33.760 because I do think that will you know large percentage 0:07:33.760 --> 0:07:36.440 of the SMP I mean obviously the easiest one to see, 0:07:36.440 --> 0:07:39.600 of course, as tests that just two but are trading 0:07:39.640 --> 0:07:44.000 at huge multiples five times in their case, so those 0:07:44.000 --> 0:07:47.680 stocks are likely to continue to underperform. Or even go 0:07:47.760 --> 0:07:51.440 down as that equity risk premium rises and it hits 0:07:51.440 --> 0:07:55.240 those high high value stocks. And we're also barish about 0:07:55.640 --> 0:08:00.200 cryptocurrencies for the same reason. They're about twenty five starn 0:08:00.240 --> 0:08:06.000 correlated with inflation expectations, so to the extent that expectations 0:08:06.080 --> 0:08:10.240 drop than that could hurt cryptocurrencies as well. J Hatfield 0:08:10.360 --> 0:08:13.640 of Infrastructure Capital, thanks so much for joining us on 0:08:13.680 --> 0:08:18.320 the simulcast. We really appreciated. Hey bearish on crypto. You know, 0:08:18.360 --> 0:08:20.800 we were speaking earlier to some folks on on Quick 0:08:20.840 --> 0:08:23.840 take Stock today, UM one from US Bank and one 0:08:23.880 --> 0:08:27.040 from City as well. Uh asked the same question about crypto. 0:08:27.160 --> 0:08:29.040 No place for crypto and their portfolio is at least 0:08:29.760 --> 0:08:31.840 two Yeah. I mean, look, I mean we've heard from 0:08:31.840 --> 0:08:34.040 a lot of folks who say that kind of the 0:08:34.080 --> 0:08:37.240 correlations that we've seen between the crypto sphere and I 0:08:37.240 --> 0:08:39.680 guess the real world here, that that's starting to catch 0:08:39.720 --> 0:08:42.320 up with a lot of those crypto investors. I'm not 0:08:42.360 --> 0:08:43.920 sure I really buy that, because, I mean, when you 0:08:43.960 --> 0:08:45.760 start to look at some of why people are sort 0:08:45.760 --> 0:08:48.400 of invested in this and the thesis behind it, it 0:08:48.400 --> 0:08:51.000 seems like at least there's some sort of degree of 0:08:51.040 --> 0:08:54.079 support at least on the downside here for thousand right now, right, 0:08:54.160 --> 0:08:55.800 you know, Imaan, what was the other thing he said? 0:08:55.840 --> 0:08:57.840 He said that value is the trade that he really 0:08:57.840 --> 0:09:00.400 bets on going into two. That's interest saying it's a 0:09:00.440 --> 0:09:04.000 contrarian take because that's a traditional post recessionary play. That 0:09:04.040 --> 0:09:08.559 was one trade, not necessarily the Wall Street CONCESSUSO. Yeah, 0:09:08.679 --> 0:09:10.240 I mean, I think we talked about this earlier this week, 0:09:10.280 --> 0:09:12.480 the divergence that we've actually seen between some of those 0:09:12.520 --> 0:09:14.880 value and growth stocks in the second half of the year. Remember, 0:09:14.880 --> 0:09:17.640 the Russell two thousand was a massive out performer in 0:09:17.720 --> 0:09:19.280 the first what two and a half three months of 0:09:19.280 --> 0:09:21.440 the year. It was something like a fifteen percentage point 0:09:21.440 --> 0:09:24.319 difference between the Russell and the SMP. There's still a 0:09:24.360 --> 0:09:26.920 fifteen percentage point difference between the Brussel and SMP, but 0:09:26.960 --> 0:09:33.840 it's flipped on its head. Right now. Welcome back to 0:09:33.840 --> 0:09:36.720 our simulcast of the close on Bloomberg Television, Bloomberg Radio 0:09:36.720 --> 0:09:39.280 and on YouTube. I'm Tim Stanivk, joined by Creedy Gupta 0:09:39.320 --> 0:09:41.560 and Romaine boss Stick. We are just over an hour 0:09:41.640 --> 0:09:44.160 away from the equity markets closed on this final trading 0:09:44.240 --> 0:09:46.880 day of the year. Let's bring in a Bloomberg markets 0:09:46.920 --> 0:09:50.400 Abigail Doolittle with an update. Hey have a go hate him. Well, 0:09:50.440 --> 0:09:52.719 you know, on this day, we're looking at stocks fluctuating 0:09:52.760 --> 0:09:55.720 between small gains and losses. The SMP five hundred the 0:09:55.800 --> 0:09:58.800 last moment that I looked slight, slight gain. So perhaps 0:09:58.840 --> 0:10:01.520 we'll see in the seventy one record close of the year. 0:10:01.520 --> 0:10:03.760 But again small moves on the day. On the year, though, 0:10:03.760 --> 0:10:06.080 it's a different story of massive games for the SMP 0:10:06.240 --> 0:10:09.400 five hundred the NAZAC one both up more than twenty 0:10:09.440 --> 0:10:13.240 seven percent, the daw up about eighteen percent, the Russell 0:10:13.320 --> 0:10:17.360 two thousand underperforming a little bit, up just fourteen percent, 0:10:17.400 --> 0:10:19.319 if you can say up just because, of course, is 0:10:19.320 --> 0:10:22.360 a double digit game, confirming the risk on tone bonds 0:10:22.400 --> 0:10:24.920 down in a huge way with that ten year yield 0:10:25.200 --> 0:10:29.080 backing up nearly sixty basis points. Yeah, Abigail, a quite 0:10:29.160 --> 0:10:31.040 day in stock market, at quite day in the bond market. 0:10:31.040 --> 0:10:33.720 But it seems like there's some action in the commodities market. 0:10:33.720 --> 0:10:37.520 I'm looking at oil down two percent, uh at the 0:10:37.520 --> 0:10:41.560 commodity's close. Why see such a divergence? There probably the 0:10:41.600 --> 0:10:44.080 fact that oil into today creaty had been up. I 0:10:44.160 --> 0:10:46.560 believe seven days in a row, a big winning streak, 0:10:46.640 --> 0:10:49.560 the best longest winning streaks since February, so just cooling 0:10:49.559 --> 0:10:51.720 off a little bit. Plus oil on the year a 0:10:51.880 --> 0:10:56.440 huge rally up. I believe nearly six w T I 0:10:56.520 --> 0:10:59.680 crewed on the years best year since two thousand nine, 0:11:00.040 --> 0:11:03.280 so locking in some profits. Also it could reflect to 0:11:03.360 --> 0:11:06.760 some concerns around the omicron. Will it dent the global 0:11:06.800 --> 0:11:10.520 growth picture? In two? One of many questions for us 0:11:10.520 --> 0:11:13.040 to answer in the new year. All right, Abigail Doolittle 0:11:13.040 --> 0:11:15.160 given us a quick update here on where we stand 0:11:15.320 --> 0:11:17.040 as we count down, of course to the close of 0:11:17.080 --> 0:11:20.880 trading on this day, and of course, of one a 0:11:20.920 --> 0:11:23.920 big story in of course, we're all the cyber attacks 0:11:23.920 --> 0:11:26.640 that we talked about, ransomware attacks and other types of 0:11:26.679 --> 0:11:29.160 cybersecurity threats out there. A lot of companies really trying 0:11:29.160 --> 0:11:31.920 to beef up their I T systems and governments for 0:11:31.960 --> 0:11:34.439 that matter too, to protect themselves. Our next guest knows 0:11:34.440 --> 0:11:36.400 a lot about this, don't he answer him? He's e 0:11:36.800 --> 0:11:41.400 set chief cyber threat officer joining us right now, Tony. Uh, 0:11:41.440 --> 0:11:43.680 you know, I guess the big question everyone wants to 0:11:43.679 --> 0:11:46.040 know is how if it all, can you stop this? 0:11:46.040 --> 0:11:48.480 This seems like it's just become its own animal, whether 0:11:48.520 --> 0:11:52.720 it's organized gangs, whether it's governments, or whether it's just 0:11:52.800 --> 0:11:55.080 sort of lone wolf types who just want to you know, 0:11:55.200 --> 0:11:58.600 mess around. Uh and you know, basically just screw something up. 0:11:58.640 --> 0:12:02.240 How do you stop this? How do you guard against it? Well, unfortunately, 0:12:02.280 --> 0:12:05.240 this is a business and as you just said, it 0:12:05.320 --> 0:12:08.840 comes from a series of different places. But cyber criminals 0:12:08.840 --> 0:12:12.600 are making huge amounts of money unfortunately from holding companies 0:12:12.600 --> 0:12:16.959 to ransom, and companies are handing over that cash. Realistically, 0:12:17.000 --> 0:12:20.480 I mean you're now seeing legislation come through of responsibility 0:12:20.520 --> 0:12:25.000 to disclose. I expect that in two maybe to become 0:12:25.400 --> 0:12:28.640 not just disclosed after the incident, but disclosed during the incident. 0:12:28.920 --> 0:12:32.520 But to me, you have to start regulating in some 0:12:32.559 --> 0:12:37.120 way or locking down cryptocurrency in some manner and actually 0:12:37.160 --> 0:12:39.800 cut the money off. How would you do that? I 0:12:39.800 --> 0:12:42.920 mean the idea behind that, of of course, and we look, 0:12:42.960 --> 0:12:45.920 we know that you can actually track cryptocurrency. We saw 0:12:45.920 --> 0:12:48.760 the government do that in the case of the Colonial 0:12:48.800 --> 0:12:52.080 pipeline ransom that was paid. Um, how do how do 0:12:52.120 --> 0:12:54.480 you do that? Though? How? What? What what do authorities 0:12:54.480 --> 0:12:57.520 have the power to actually do to help prevent this. Well, 0:12:57.600 --> 0:13:00.080 isn't this an investment just like anything else, It's an 0:13:00.120 --> 0:13:03.160 investment tool. So therefore, if I walk into any bank 0:13:03.200 --> 0:13:05.480 in the US and try and open account, I have 0:13:05.600 --> 0:13:11.560 to identify and be my identify. Identification has to be verified. 0:13:12.080 --> 0:13:15.240 If we were verifying globally, I mean this is a 0:13:15.240 --> 0:13:19.000 global issue, not a specific country issue. If globally, to 0:13:19.120 --> 0:13:22.360 hold cryptocurrency you have to validate identity, then you cut 0:13:22.360 --> 0:13:26.120 the money supply off. Tony, how much of this latest 0:13:26.120 --> 0:13:28.400 push to really kind of ramp up some of that 0:13:28.559 --> 0:13:32.880 cyber security comes from geopolitical tensions with say China, would 0:13:32.880 --> 0:13:37.280 say Russia or even Ran to that matter. Well, certainly 0:13:37.400 --> 0:13:40.800 the push to have better cybersecurity, I think it's become 0:13:40.840 --> 0:13:44.960 political because when you mentioned colonial pipeline earlier on, I 0:13:44.960 --> 0:13:48.280 mean that any any cyber crime that creates a line 0:13:48.320 --> 0:13:51.040 outside of a gas station is going to have political 0:13:51.040 --> 0:13:55.080 effect because no politician can have their citizens affected by 0:13:55.160 --> 0:13:58.480 this type of issue. But we're seeing you know, Interpol 0:13:58.600 --> 0:14:02.040 for example, back in I think there was November made 0:14:02.040 --> 0:14:05.640 a series of arrest but that covered seventeen countries. There 0:14:05.720 --> 0:14:08.839 was seven arrests for people that responsible for two hundred 0:14:08.920 --> 0:14:12.160 million in ransomware payments. So you can see this is 0:14:12.200 --> 0:14:14.679 not a particular country. This is a globalish and I 0:14:14.720 --> 0:14:17.280 think until the world comes together and actually has a 0:14:17.360 --> 0:14:21.440 summit on stopping cybercrime and puts all the right people 0:14:21.440 --> 0:14:24.240 in the room, then we're unlikely to see a lot 0:14:24.240 --> 0:14:26.360 of movement or a lot a lot of decrease. As 0:14:26.400 --> 0:14:28.400 you talk about us coming together to a certain extent, 0:14:28.400 --> 0:14:30.480 it feels like we're all sort of fracturing a part here. 0:14:30.640 --> 0:14:33.360 Seems like certain countries don't trust other countries. You know, 0:14:33.440 --> 0:14:35.720 we've obviously had a lot of concerns in the United 0:14:35.720 --> 0:14:38.840 States about are buying certain types of equipment and software 0:14:38.880 --> 0:14:41.720 from China and other countries as well. Here. I mean, 0:14:41.760 --> 0:14:44.960 where do we sort of find that middle ground. Well, 0:14:45.000 --> 0:14:47.720 that's a tough one. And just before the holiday period, 0:14:47.760 --> 0:14:50.120 I mean we saw an additional issue with a log 0:14:50.200 --> 0:14:52.240 for j so, which is a small piece of code 0:14:52.480 --> 0:14:55.200 that had a vulnerability in it that's used as it's 0:14:55.240 --> 0:14:58.040 open source, it's free code. A lot of vendors used 0:14:58.080 --> 0:15:01.720 that in hardware and so fear and services and companies 0:15:01.760 --> 0:15:05.880 you use it. So we see issues in supply of 0:15:05.960 --> 0:15:11.480 that time hitting and unfortunately they're huge. When they do hit, 0:15:11.640 --> 0:15:13.680 companies have to scan and find out where they use 0:15:13.720 --> 0:15:16.480 this code and then try and mitigate against issues. So 0:15:17.400 --> 0:15:19.440 it's a glocal it's a global issue that requires a 0:15:19.440 --> 0:15:22.760 global response, and countries coming together in groups is great. 0:15:22.880 --> 0:15:26.280 But until you bring every country that has a significant 0:15:26.280 --> 0:15:29.560 part of this into one room, I think you're you're 0:15:29.600 --> 0:15:32.880 not grasping the whole issue, hey, Tony. Oftentimes when we 0:15:32.920 --> 0:15:36.480 read about these saber attacks, we read that sabercriminals were 0:15:36.480 --> 0:15:39.800 able to penetrate a system based on an employee maybe 0:15:39.800 --> 0:15:42.400 clicking a malicious link or downloading a malicious file. So 0:15:42.440 --> 0:15:44.640 I always ask to like to ask people in your 0:15:44.640 --> 0:15:48.520 position about what individuals should do, how we should protect ourselves. 0:15:48.560 --> 0:15:52.120 Give us some best practices. Well, firstly, don't trust anything 0:15:52.160 --> 0:15:54.040 that lands in your inbox if it has a link, 0:15:54.080 --> 0:15:57.160 if it's to an external site for example a retailer 0:15:57.360 --> 0:16:00.640 or or something else, or it's asking for creditor verification 0:16:00.680 --> 0:16:03.440 of credentials is likely not to be real. So just 0:16:03.520 --> 0:16:05.640 don't trust links that land in your inbox, Go to 0:16:05.680 --> 0:16:08.360 the website, log on manually. And the problem is is 0:16:08.400 --> 0:16:11.480 people trust those things. They go in, they give away 0:16:11.520 --> 0:16:14.840 their credentials, and hey, the cyber criminal has access. But 0:16:14.920 --> 0:16:19.080 we've also seen other issues throughout twenty one where vulnerabilities 0:16:19.120 --> 0:16:22.440 in software have allowed cyber criminals to get access in 0:16:22.440 --> 0:16:26.600 other ways. But it's you are right, employees, and unfortunately 0:16:26.680 --> 0:16:29.480 human behavior. We like to click on things and we 0:16:29.560 --> 0:16:31.920 need to be the first line of defense, all right, 0:16:32.000 --> 0:16:34.280 so be careful when you click. Tony n Scum, the 0:16:34.560 --> 0:16:37.680 set chief cyber threat Officer, Tony, Happy New Year. Thanks 0:16:37.720 --> 0:16:41.160 so much for joining us on Bloomberg. Appreciate it. Well 0:16:41.200 --> 0:16:43.320 to him, we do have some breaking news here. I'm 0:16:43.360 --> 0:16:46.040 really sorry to report that Betty White, one of the 0:16:46.120 --> 0:16:48.880 most endearing and enduring based on televisence, she has passed 0:16:48.920 --> 0:16:51.720 away at the age of ninety nine at her home 0:16:52.080 --> 0:16:55.800 in Los Angeles. She was one of the just key 0:16:55.840 --> 0:16:57.800 faces when it comes to Golden Girls when it comes 0:16:57.800 --> 0:17:01.360 to television. We are very sorry to lose her. Uh 0:17:01.560 --> 0:17:03.560 and I mean, I'm I'm still in shock, and I 0:17:03.560 --> 0:17:06.440 imagine you all are all are as well. Just shy. Ever, 0:17:06.480 --> 0:17:09.280 one birthday, which would have been on January seen a 0:17:09.320 --> 0:17:11.359 pioneer too, I mean not everyone of course knows her 0:17:11.400 --> 0:17:13.439 from Golden Girls, but what she did back in the 0:17:13.480 --> 0:17:15.880 sixties with their talk show and with their sitcom here 0:17:16.440 --> 0:17:18.480 being one of the first women I believe to even 0:17:18.520 --> 0:17:22.160 have full production control, full creative control over her own 0:17:22.160 --> 0:17:24.600 show at a time where that was just unheard of. Yeah, 0:17:24.600 --> 0:17:27.040 And I think what's also particularly remarkable about her career 0:17:27.160 --> 0:17:29.080 is just how long it went, and well into her 0:17:29.160 --> 0:17:31.480 nineties she was doing commercials and you know, she was 0:17:31.480 --> 0:17:33.800 on Twitter too. Yeah, and like one of the few 0:17:33.800 --> 0:17:36.080 people out there that I think is beloved by everyone. Right, 0:17:36.240 --> 0:17:38.120 we live in such a divisive world. At least there's 0:17:38.119 --> 0:17:40.800 somebody I think we can all agree that we certainly love. 0:17:40.880 --> 0:17:51.000 We say goodbye to miss Betty Way. This is Bloomberg 0:17:51.040 --> 0:17:54.919 Market's a special edition here simulcast across Bloomberg TV and 0:17:55.119 --> 0:17:58.359 radio and YouTube as well. Two pm here in New York, 0:17:58.560 --> 0:18:01.399 eight pm in London, midnight out there in Dubui. Happy 0:18:01.560 --> 0:18:05.880 New Year to everyone out there. If you celebrate, are 0:18:05.920 --> 0:18:08.520 you gonna do? You know, Tim, you're kind of a grinch, right, Yeah, 0:18:08.560 --> 0:18:11.040 well actually so my sister actually is flying in so 0:18:11.080 --> 0:18:13.520 we're doing something. But yeah, I've been a real COVID 0:18:13.560 --> 0:18:15.280 grinch to be honest. Yeah, I think a lot of 0:18:15.280 --> 0:18:17.680 people are guys trying to hunker down today. A few people, 0:18:17.680 --> 0:18:19.919 I guess are gonna brave uh the outside and go 0:18:19.960 --> 0:18:22.120 out to their bars or out the time square. We'll see. 0:18:22.359 --> 0:18:24.080 As far as the markets here, I don't think anyone's 0:18:24.119 --> 0:18:26.960 really training right now. The bond markets already closed down here. 0:18:27.000 --> 0:18:29.920 The equity markets they're still open for reasons that I 0:18:30.040 --> 0:18:32.480 still haven't had explained to me. I'm told, Uh, Tim 0:18:32.520 --> 0:18:34.600 tells me that there's a whole story about why we're 0:18:34.640 --> 0:18:36.720 here today. But nevertheless, there are is an hour a 0:18:36.840 --> 0:18:39.240 left and training here. Apple Uh not gonna hit that 0:18:39.240 --> 0:18:42.960 three trillion dollars here in unless there's some major turnaround 0:18:43.040 --> 0:18:45.439 here in the final hour of training a Carnival corporate. 0:18:45.440 --> 0:18:46.960 Most of the cruise lines lower here as well on 0:18:47.000 --> 0:18:49.359 a daily basis, Ford one of the few bright spots 0:18:49.359 --> 0:18:51.480 out there, up about two percent. Right now, Let's jump 0:18:51.480 --> 0:18:53.760 over to Abigail Doolittle, who's taken a closer look at 0:18:53.800 --> 0:18:56.040 what's going on around the Market's Abigail Well Romaine with 0:18:56.080 --> 0:18:58.480 those small moves on the day, with the major indexes 0:18:58.480 --> 0:19:00.959 fluctuating between small games of law, sayes, Let's go right 0:19:01.000 --> 0:19:02.919 to where the real bright spot is, and that of 0:19:02.960 --> 0:19:05.520 course is the whole year of one a real risk 0:19:05.640 --> 0:19:08.320 asset rally, with the SMP five hundred of NAZAC one 0:19:08.960 --> 0:19:12.359 both up more than twenty seven percent, the socks with 0:19:12.440 --> 0:19:15.760 that chip index up more than Tech up about thirty three. 0:19:16.520 --> 0:19:19.840 Small cap a laggered but still up about fourteen percent. 0:19:19.920 --> 0:19:21.440 All of this, of course confirmed by the fact that 0:19:21.480 --> 0:19:24.800 haven bonds are down on the year, the ten year 0:19:24.880 --> 0:19:28.000 yield backing up about sixty basis points. Interestingly, though the 0:19:28.080 --> 0:19:31.240 two year yield backed up just a little bit more so, 0:19:31.400 --> 0:19:34.159 the yield curve has actually flattened a little bit uh 0:19:34.160 --> 0:19:36.320 and in the case of the five thirties even more so. 0:19:36.720 --> 0:19:40.480 But as for the risk rally, oil up fifties this year, 0:19:40.520 --> 0:19:43.439 the Besson's two thousand nine is really pretty incredible. The 0:19:43.600 --> 0:19:46.640 risk picture for this year. Yeah, Abigail, let's just talk 0:19:46.680 --> 0:19:49.320 about that. The recovery trade in was supposed to be 0:19:49.359 --> 0:19:51.360 the trade that really took off. You're supposed to see 0:19:51.400 --> 0:19:54.480 the small caps in in travel stocks and commodities. To 0:19:54.480 --> 0:19:56.359 your point, can we actually expect to see that in 0:19:56.400 --> 0:19:58.680 two or is that officially in the rare view mirror. 0:19:59.160 --> 0:20:00.879 I think we're gonna have to see what happens with this, 0:20:01.080 --> 0:20:05.639 oh Macron, and also with the economy, the influence on 0:20:05.680 --> 0:20:07.919 the economy. It seems that most I just believe it 0:20:08.000 --> 0:20:12.400 won't be the biggest deal. Relative to this year. Sector wise, 0:20:12.400 --> 0:20:14.679 it was really a nice blend. You know, you have energy, 0:20:14.760 --> 0:20:18.640 which of course is an icyclical and growth area up 0:20:18.640 --> 0:20:23.600 the most of Interestingly, another official growth sector, real estate 0:20:23.680 --> 0:20:28.080 ups strongly. Tech financials on bottom very interesting this year. 0:20:28.160 --> 0:20:31.600 The defensive sector such as utilities and staples. Often when 0:20:31.640 --> 0:20:34.840 that happens, you can see those reverse into next year. 0:20:34.880 --> 0:20:36.679 We don't know if that's the case, but I believe 0:20:36.800 --> 0:20:40.200 in energy was the worst sector this year the best, 0:20:40.200 --> 0:20:42.760 So if utilities and staples end up being on top 0:20:42.800 --> 0:20:45.280 next year, it could turn out to be a defensive year. 0:20:45.359 --> 0:20:47.240 Way too early to say that for sure, though. All Right, 0:20:47.280 --> 0:20:49.760 Abigail Doolittle giving us at up to date three pm 0:20:49.800 --> 0:20:53.639 in New York. He here ed Francesco CEO of International 0:20:53.640 --> 0:20:56.080 Assets Advisory, joining us right now to talk a little 0:20:56.080 --> 0:20:58.119