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Speaker 1: Live from the Bloomberg Interacted Berger Studios. This is Bloomberg

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Speaker 1: day Break for Monday, February six. Coming up today, a

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Speaker 1: Chinese balloon up ends relations with the US and stirs

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Speaker 1: up criticism on Capitol Hill. The head of the I

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Speaker 1: m F has a warning if the US defaults on

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Speaker 1: its debt. Dell is the latest tech company to his

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Speaker 1: slash jobs, and Carlyle Group naps a former Goldman exec

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Speaker 1: to be it's next CEO. I maybe Morris. New York

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Speaker 1: City schools are having to take in children without proof

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Speaker 1: of vaccination, and Connecticut prepares for the possible arrival of

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Speaker 1: bus loads of migrants. John Stashtaward Swards, The Nets traded Kyrie,

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Speaker 1: Irving did Dallas. The next came from behind beat Philadelphia

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Speaker 1: at the Garden. That's all's trading ahead on Bloomberg Daybreak

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Speaker 1: on Bloomberg eleven three, on New York, Bloomberg one, Washington,

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Speaker 1: d C, Bloomberg one oh six one, Boston, Bloomberg nine

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Speaker 1: sixties and Francisco Sirius x M one nineteen and around

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Speaker 1: the world on Bloomberg Radio dot com and via The

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Speaker 1: Bloomberg Business. Good Morning, I'm Nathan Hagar. And I'm Karin Moscow.

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Speaker 1: Here are the stories we're following today. We begin with

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Speaker 1: the high flying international incident that is threatening to bring

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Speaker 1: US China relations to a new low. This morning, dive

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Speaker 1: teams are off the coast of South Carolina salvaging what's

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Speaker 1: left of a suspected Chinese spy balloon that drifted across

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Speaker 1: the US last week. Senate Majority Leader Chuck Schumer says

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Speaker 1: the Biden administration made the right call in waiting to

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Speaker 1: take the device down. I commend President Biden's leadership in

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Speaker 1: taking down the Chinese balloon over water to ensure safety

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Speaker 1: for all Americans and maximize the intelligence we gain. But

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Speaker 1: Republicans are arguing President Biden could have acted sooner when

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Speaker 1: the balloon was first spotted over Alaska. Marco Rubio is

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Speaker 1: the top Republican on the Senate Intelligence Committee. It really

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Speaker 1: would have been helpful for the President of the United

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Speaker 1: States to get on national television and explain the American people,

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Speaker 1: this is what we're dealing with, this is what I'm

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Speaker 1: gonna do about it, and and this is why I

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Speaker 1: haven't done it yet. Senator Ruby I was on ABC's

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Speaker 1: This Week Heard Sundays on Bloomberg Radio leader Schumer says

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Speaker 1: the Senate will get a full classified briefing next week. Well, Nathan,

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Speaker 1: those geo political concerns are weighing on global markets. Hong

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Speaker 1: Kong's Hang Sang index dropped two percent, while stocks in

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Speaker 1: China fel one point three percent. In US futures are

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Speaker 1: also lower. Meanwhile, Goldman Sack strategists say the eight percent

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Speaker 1: rally and stocks over the past month maybe as good

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Speaker 1: as it gets this year. Goldman says the SNP five

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Speaker 1: hundred now accurately reflects signs of better than expected economic

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Speaker 1: growth and a drop in bond yields. At the same time,

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Speaker 1: Goldman says higher valuations, lackluster corporate earnings, and an elevated

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Speaker 1: interest rates means there's little room for the rally to extend. Meanwhile,

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Speaker 1: Karen Wall Street returns to another busy week four earnings reports,

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Speaker 1: and we get more from Bloomberg's Charlie Pellett. There are

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Speaker 1: questions on Wall Street about whether the outlook for corporate

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Speaker 1: profits aren't still too high. Mike Wilson is chief US

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Speaker 1: equity strategist at Morgan Stanley. Earnings are disappointing everywhere. Okay,

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Speaker 1: this is one of the worst streets and earnings we've

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Speaker 1: seen in quite a while, and people are now saying, oh,

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Speaker 1: it's better than feared and this and the other. That's

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Speaker 1: like saying a tornado ripped through your house and saying, oh, well,

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Speaker 1: only knocked out the bedroom. I mean, earns are bad

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Speaker 1: and you need to be honest about that. So far,

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Speaker 1: we've heard from half of SMP five hundred companies. Among

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Speaker 1: the names scheduled to report this week, BP, Uber, and

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Speaker 1: Disney will also hear from young brands PepsiCo, DuPont, PayPal, Hilton,

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Speaker 1: and CVS Health. In New York, Charlie Pellett Bloomberg Daybreak,

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Speaker 1: All right, Churley, thank you well. The head of the

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Speaker 1: International Monetary Fund, Warren Stead, American consumers would suffer if

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Speaker 1: the US defaults on its dead Kristalina Georgieva says that

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Speaker 1: a fault would cause a spike and borrowing costs that

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Speaker 1: would squeeze average Americans. If US defaults, that would push

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Speaker 1: interest rates up. And if people don't like inflation today,

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Speaker 1: they're not going to like at all what may happen tomorrow? Yeah,

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Speaker 1: I m s. Krystalina Georgieva may have a comments on

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Speaker 1: sixty Minutes from CBS our Washington. Listeners can catch the

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Speaker 1: program Sunday nights at ten on Bloomberg. Let's turn to

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Speaker 1: corporate news now, Karen. The tech industry is seeing more

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Speaker 1: job cuts this morning. We get the story from Bloomberg's

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Speaker 1: Lisa Mateo. Dell Technology says it will eliminate about six thousand,

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Speaker 1: six hundred and fifty jobs. A company spokesperson says the

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Speaker 1: reductions amount to about five percent of Dell's global workforce.

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Speaker 1: After the cuts, Dell's headcount will be at its lowest

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Speaker 1: level and at least six years. Dell has been facing

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Speaker 1: plummeting demand for personal computers. Layoffs have hammered the tech

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Speaker 1: sector in recent months, including many of Dell's peers and competitors, HP,

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Speaker 1: Cisco Systems, and IBM have all announced cutbacks. The tech

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Speaker 1: sector announced more than ninety seven thousand job cuts. In

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Speaker 1: consulting firm Challenger Gray and Christmas says that's up six

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Speaker 1: hundred and forty nine per scent compared with the previous year.

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Speaker 1: Lisa Mateo Bloomberg Daybreak Right, Lisa, thanks well. Another corporate

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Speaker 1: news this morning, Carlyle Group has chosen its next CEO

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Speaker 1: again more from Bloomberg to Doug Kristner. He's Harvey Schwartz,

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Speaker 1: a former co president of Goldman Sachs. He departed in

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Speaker 1: twenty eighteen when he wasn't chosen to succeed Lloyd Blank

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Speaker 1: find a CEO. The job went to David Solomon instead.

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Speaker 1: We are told Carlyle is planning to announce the appointment

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Speaker 1: of Shorts as soon as this week. He'll take over

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Speaker 1: from co founder Bill Conway, who has been interim CEO.

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Speaker 1: After some management turnover. In recent years, Carlyle expanded beyond

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Speaker 1: its buyout roots to the business of credit. The aim

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Speaker 1: was to recover ground lost in two to bigger rivals

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Speaker 1: Apollo Global and KKR In New York, I'm Doug Christner

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Speaker 1: Bloomberg Daybreak, Doug Thanks in India the Stock Route, Royal

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Speaker 1: and Gautama. Donnie's indebted conglomerate entered a third week as

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Speaker 1: its flagship firms suffered a fresh fundraising set back in

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Speaker 1: a major credit rating agency downgraded the outlook on two

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Speaker 1: of its companies. Ever since US short seller Hindenburg's fraud

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Speaker 1: allegations last month, that Donny has lost a hundred eighteen

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Speaker 1: billion dollars, or more than half the market value of

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Speaker 1: its companies. Donnie has repeatedly denied the claims. Well, Nathan,

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Speaker 1: Tesla is raising the prices of its Motto Y suv

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Speaker 1: and the US The cost of the Model Y Long

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Speaker 1: Range is increased by one thousand, five hundred dollars to

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Speaker 1: just under fifty five thousand, while the Model Y Performance

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Speaker 1: is up one thousand dollars to nearly fifty eight grand.

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Speaker 1: And the move comes after the Biden administration introduced measures

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Speaker 1: to make more crossover suv is qualified for the newly

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Speaker 1: revamped tax credit. This is Bloomberg. It is forty one

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Speaker 1: degrees in Central Park. It's gonna turn sunny in a

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Speaker 1: lot milder today. We'll get up to your fifty degrees

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Speaker 1: down to the low thirties tonight with a few clouds.

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Speaker 1: Time not to take a look at some of the

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Speaker 1: other stories making news in New York and around the

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Speaker 1: world with Bloomberg's Amy Morris. Good morning, Amy, Good morning Nathan.

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Speaker 1: The US is offering help to find quake survivors in

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Speaker 1: south central Turkey and neighboring Syria after a magnitude seven

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Speaker 1: point eight earthquake more than six hundred deaths are reported

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Speaker 1: after the quake that was centered in Turkey, but it

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Speaker 1: was felt as far away as Lebanon and Israel. The

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Speaker 1: White House National Security Advisor has issued a statement saying

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Speaker 1: quote President Biden has directed U, S, a, I, D,

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Speaker 1: and other federal government partners to assess US response options.

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Speaker 1: The flood of migrant children into New York City has

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Speaker 1: forced schools to now take in children without proof of vaccination,

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Speaker 1: and estimated eleven thousand migrant children have enrolled in city

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Speaker 1: schools since the summer, and The New York Post reports

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Speaker 1: many of them are unvaccinated. Students in kindergarten through fifth

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Speaker 1: grade in city schools are required to have multiple vaccines,

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Speaker 1: including four chicken pox, polio, and appetitus B. One middle

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Speaker 1: school in Gramercy Park has already had one case of

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Speaker 1: chicken pox. Connecticut is urging cities and towns to prepare

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Speaker 1: themselves for the possible arrival of bus loads of migrants

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Speaker 1: for the southern border. The request was made over concerns

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Speaker 1: about the buses that were arriving in New York City

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Speaker 1: and in Philadelphia. State officials say the request was not

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Speaker 1: made because of any specific warning, only indicating it would

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Speaker 1: be good to be prepared. Officials say any migrants shipped

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Speaker 1: to the state would likely be housed locally in schools

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Speaker 1: or other public buildings until suitable housing can be found.

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Speaker 1: The sixty annual Grammy Awards are in the books Harry

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Speaker 1: Styles One Album of the Year, Lizzo One Record of

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Speaker 1: the Year. I look around and there's all these songs

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Speaker 1: that are about loving our bodies and feeling comfortable in

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Speaker 1: our skin, and and I'm just so proud to be

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Speaker 1: a part of it. Beyonce also made history. She won

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Speaker 1: four of the nine categories in which she was nominated.

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Speaker 1: That brings her total number of Grammys over her lifetime

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Speaker 1: to thirty two. That's the most of any recording artist ever.

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Speaker 1: Global News powered by more than journalists and analysts in

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Speaker 1: more than one twenty countries. I'm Amy Morris and this

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Speaker 1: is Bloomberg. Nathan. Thank you, Amy. Time for the Bloomberg

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Speaker 1: Sports Update, brought to you by tri State OUTI. Good morning,

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Speaker 1: John Stanshower, Good morning, Nathan. Kyrie. Irving has played for

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Speaker 1: three NBA teams. He has forced himself out of all three,

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Speaker 1: won a championship in Cleveland, then got tired of playing

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Speaker 1: second fiddld of Lebron James. His next stop was Boston.

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Speaker 1: That didn't go well, and his four years in Brooklyn

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Speaker 1: included the unvaccination controversy of last season. This year's controversy

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Speaker 1: was about anti Semitism. Kyrie just demanded the trade, and

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Speaker 1: the Nets traded him to Dallas. Nets get back at

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Speaker 1: old friend Spencer did when he flourished in his five

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Speaker 1: seasons in Brooklyn, and Nets also pick up Dorry and

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Speaker 1: Phinney Smith and three draft picks, the first rounder. But

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Speaker 1: that's not until nine at the Garden. Knicks trailed Philadelphia

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Speaker 1: by one, then got back in with a seventeen nothing

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Speaker 1: and runna seldom use. Nick played a big role in

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Speaker 1: the win. Exit up in front, top rivers, fakes to pass,

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Speaker 1: top top top four, to shoot Trodstas four y stay

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Speaker 1: the way three shot Vic four yea, what a performance

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Speaker 1: with fourteen He's big four threes hev Nicks lead on

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Speaker 1: ESPN New York. Evin Fournua last season set a Nick

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Speaker 1: record for most three pointers. Maybe, but he's been buried

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Speaker 1: on the bench. He saw time with r J. Barrett

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Speaker 1: out sick, and he scored seventeen and the Knicks beat

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Speaker 1: the sixers one O eight to nineties seven college hoops

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Speaker 1: Seaton All's won seven the last eight. Pirvates beat De

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Speaker 1: Paul sixty four. The Islanders, who just acquired bo Horvat

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Speaker 1: from Vancouver, signed him to an eight year contract before

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Speaker 1: he's even played his first game with the Oils. The

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Speaker 1: Mets hired Carlos Beltron to work in the front office.

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Speaker 1: He was gonna be their manager in until the revelations

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Speaker 1: of his involvement in the signs stealing scandal in Houston.

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Speaker 1: Justin Rose leads golf at Pebble Beach by two shots.

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Speaker 1: They'll finish play today. John Stasholler Bloomberg Sports Live from

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Speaker 1: coast to coast, from New York to San Francisco, Boston

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Speaker 1: to Washington, d C. Nationwide on Sirius xamp, a Bloomberg

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Speaker 1: Business app, and Bloomberg dot Com. This is Bloomberg Daybreak.

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Speaker 1: Good morning, I'm Nathan Hagar. We begin a new trading

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Speaker 1: week with more companies due to report earnings, new questions

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Speaker 1: about the fence policy path after last week's blowout jobs report,

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Speaker 1: and geopolitical risk back in play thanks to a Chinese

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Speaker 1: surveillance balloon. Let's get more on all this now, we're

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Speaker 1: very pleased to be joined by Lori Calvasin ahead of

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Speaker 1: US Equity Strategy at RBC Capital Markets. Laurie, it's good

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Speaker 1: to speak with you this morning, but not such a

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Speaker 1: good morning for markets when you consider the hang sand

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Speaker 1: closed down two percent overnight and we're watching futures begin

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Speaker 1: the week pointing to a lower open. How much is

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Speaker 1: geopolitical risk potentially a risk for this market in the

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Speaker 1: medium to long term. Well, thanks for having me, as

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Speaker 1: always and looks a political risk, as we you know

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Speaker 1: well learned last year, is something that markets often ruggle

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Speaker 1: to digest, at least initially and and can potentially have

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Speaker 1: negative consequences. And I think with China in particular, there's

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Speaker 1: just been one series of events after another dating all

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Speaker 1: the way back to that has told us the world

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Speaker 1: isn't going global anymore. Um. So that's really how I

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Speaker 1: interpreted this morning. I mean, I think one of your

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Speaker 1: reporters had a brilliant phrase, a turn of phrase when

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Speaker 1: they called it a bizarre saga, and and that's really

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Speaker 1: I think quite appropriate here. Um. But nevertheless, it does

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Speaker 1: highlight once again that deteriorating relations between US and China

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Speaker 1: are something investors have to keep at the forefront of

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Speaker 1: their minds, and that stands in contrast to the fact

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Speaker 1: that people are getting very excited about the China reopening

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Speaker 1: for the last few months. So, UM, I understand why

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Speaker 1: markets down a little bit on this news. That's a

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Speaker 1: really interesting point given that, yeah, we have seen a

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Speaker 1: lot of excitement around the reopening. I know you talked

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Speaker 1: to a lot of market participants in your role. What

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Speaker 1: are they saying in terms of how they're thinking about

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Speaker 1: US China relations and how it could impact their investments. Well,

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Speaker 1: you know, aside from this particular issue, where it's been

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Speaker 1: coming up the most have been in discussions of sector performance.

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Speaker 1: So if you want to play the China reopening or

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Speaker 1: just you know, kind of get exposure to areas with

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Speaker 1: high Asia pack exposure, technology and materials have been two

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Speaker 1: of the ways to play it, and those are two

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Speaker 1: areas that have been acting much better in recent months. UM.

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Speaker 1: But I think the other place it really comes into

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Speaker 1: into play as our conversations with investors about industrials, And

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Speaker 1: I want to be clear that industrials and the sector

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Speaker 1: that i've market weight on, I do have some concerns

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Speaker 1: about valuation. UM. But we we do point out that

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Speaker 1: industrials is getting caught up in the broader reshoring theme,

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Speaker 1: just this idea of you know, when I started in

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Speaker 1: the business two thousands, for the next ten years or so,

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Speaker 1: it was all about going global. Well, now we're reversing

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Speaker 1: that trend right now in industrials is really at the

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Speaker 1: epicenter of where you want to be if we are,

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Speaker 1: you know, sort of seeing companies, seeing governments want to

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Speaker 1: make more things close to home. Um, And that's really

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Speaker 1: where it comes up. And we point out to people

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Speaker 1: that it's not just about any one event, it's about

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Speaker 1: that series of it's again going back to where the

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Speaker 1: relations just seem to keep deteriorating. Other than industrials, are

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Speaker 1: there other sectors that are affected by the reshuffling of

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Speaker 1: supply chains that we've seen, uh, not just due to

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Speaker 1: geopolitical risk but post pandemic trying to bring things closer

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Speaker 1: to home. Well, I think that's certainly been an issue

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Speaker 1: for a number of consumer companies. We've already seen a

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Speaker 1: number of consumer companies after the trade warshift things around

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Speaker 1: and non US geographies. UM. I think materials gets caught

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Speaker 1: up into this to certain extent. As well. I'm just

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Speaker 1: as residual on the industrial impact, but I would say

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Speaker 1: your industrials is really at the epicenter of it. I

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Speaker 1: want to get your thoughts on where this rally goes

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Speaker 1: from here. We've seen an eight percent increase in the

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Speaker 1: SMP five hundred since the start of the year. Does

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Speaker 1: this have further to go? So? I think one of

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Speaker 1: the things that people were concerned about US equity coming

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Speaker 1: into this year was this rotation and the idea that

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Speaker 1: bonds looked more appeal, that non US equities looked more appealing.

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Speaker 1: And I think those are certainly, you know, sort of

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Speaker 1: issues at play, but we have to remember that, you know,

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Speaker 1: you tend to see in clothes go into all asset

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Speaker 1: classes at the start of a year, um and so

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Speaker 1: I think that's one of the things that's helped US

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Speaker 1: equity so far this year. You know, it's funny we've

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Speaker 1: been talking a lot about how the stock market. If

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Speaker 1: you look at daily trading in the SMP for the

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Speaker 1: past year, it's tracked very tightly that O two oh

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Speaker 1: three time period, which was another period of messy post

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Speaker 1: crisis normalization, and we're starting to see that breakdown recently

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Speaker 1: in the SMP five favor. You've had a positive breakout

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Speaker 1: from that O two oh three path, And I just

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Speaker 1: bring that up because if we are going to have

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Speaker 1: another sort of early year retreatment, now is about what

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Speaker 1: it should be. Starting perhaps a little bit later than

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Speaker 1: the historical playbook suggested, but now is really kind of

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Speaker 1: the time when you'd expect to see it. So in

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Speaker 1: our last thirty seconds at least in this part of

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Speaker 1: the conversation, are you looking for stocks to move demonstrably

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Speaker 1: lower before the first half So know, I would say

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Speaker 1: I'm not part of the sort of deeply bearished consensus

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Speaker 1: that's been pounding the table on the idea that we

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Speaker 1: need to go back and surpass the October lows. We

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Speaker 1: said that there's risk of retesting those loads. Um, I

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Speaker 1: think that if we do, you know, have that break

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Speaker 1: I would be surprised at this point in time if

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Speaker 1: we were to retest or really even break below those

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Speaker 1: October loads, because I think the market is still got

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Speaker 1: enough evidence that the soft landing thesis is intact for now.

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Speaker 1: I mean, we are, I think coming up on the

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Speaker 1: point when we'll have most of the earnings downgrades, and

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Speaker 1: traditionally that's a clearing event for market. So I think

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Speaker 1: there's was to the downside, but I think the Bears

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Speaker 1: have kind of overstayed their welcome and over articulated their case.

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