announcer: from the financial centers of the world, this is bloomberg "markets" without like steel and guy johnson. -- with alix steel and guy johnson. ♪ alix: it is 30 minutes into the u.s. trading day, tuesday, january 10. here are the top market stories where following for you at this hour. powell is ready to be unpopular. he backs up a hawkish fed. how mean is he going to have to be? stocks pushing higher, yields also up. the inflation waiting game. the clock ticks toward the next

market data as investors try to figure out just how fast inflation could fall. slim jim's and hungry man. we talked to the ceo and get his take on margins, consumers, and jobs. welcome to bloomberg markets. die, i appreciate that everyone is going to say the panel jay powell was on was not appropriate to talk monetary policy paired but definitely anticipating more hawkish in us. they didn't get it and now financial conditions are little looser. guy: i found it amazing that every time powell doesn't sound hawkish, the markets take it as dovish. also, what is a slim jim? alix: it's like dried beef. you open it and you eat it. it is a meat stick. guy: just had to check because

i've never had that. i find it amazing we are in the situation. bostic yesterday, it jamie dimon today, talking about rates and holding them there. is that going to be enough to make rates -- make the fed unpopular? what do you think? alix: i don't know because i don't know how much markets are actually going to wind up listening. you have a full cup priced in for july. that is not necessarily something the fed is going to want to see and it goes against everything guys like bostic are talking about. guy: absolutely paired one thing that is clear is that jay powell does not think he can control the weather, which is interesting, because he pretty much controls everything else. he was speaking at the conference in stockholm. the focus of the panel that he was on was what was happening

with climates and how central banks should kind of deal with that. this is what he had to say on that matter. >> without explicit congressional wrote -- congressional legislation, it will be inappropriate for us to use our monetary policy or tools to promote a greener economy or achieve other climate-based goals. we are not and will not be a climate policymaker. guy: i suspect they probably have enough on their plate over at the fed. will 5% make powell unpopular? that is our question of the day. critique, i'm going to start with you. the market continues to price in cuts. the market continues to believe that we are going to get up to maybe 35%, then come down quickly. what is the market currently expecting from the fed and what do you think would make it unpopular? kriti: it is a 5.2% peak policy

rate that is getting priced into the market right now. this is been the story for the last few months. they are expecting that peak policy rate to come somewhere between march and may. the 5% itself is not what is going to make the fed unpopular. right now, i think it is not cutting that will make them unpopular. the irony here is that that's exactly what's priced into the market. we have a course heard over and over again that chairman powell and his colleagues said we are not cutting this round. it's not something in our toolbelt. the argument on the market side is that it has been part of your toolbox, playbook, take your wording, for the last two decades. you are using that rate cut as a means of saying we can go over if we need to. we heard those comments as recently as yesterday from rafael bostic at the atlanta fed, sing the risk of overdoing it is a possibility, but maybe the fed does, at the end of the day, need to overshoot. i think that is what would disappoint markets. alix: michael, what do you

think? michael: it depends on who you are talking to in the markets. the fed has to cut rates because the fed has to cut because they perhaps tighten too much. which group are you in? that will depend on whether you are happy or not. it is going to really depend on how the economy develops, i think. the market will change its view as time goes on. if we do see inflation significantly fall, more pressure will arise if we see the economy really start to slow. you have pressure from a different camp. the fed is just going to keep an eye on things and see what's going on. there was a research paper out from goldman sachs today that said the full brunt of the fed tightening policies are hitting the economy right now. the long and variable lags are actually short legs.

the economy is likely to go -- grow faster in 2023 and the fed may have to raise rates higher. they say it is possible, but not likely, that they have to go to 6%. that would make the markets unhappy. guy: mike, let me come at this from another angle. the market once a soft landing, but i would assume that means the fed doesn't have to cut rates, because if it can achieve a soft landing for the economy without cutting rates, happy days. it can leave them structurally higher for longer. which one of those two would make the market unhappy echo is a soft landing going to make the market unhappy because it will not be accompanied by rate cuts? michael: somebody pointed out the other day that the fed never gets to declare a soft landing. they are always adjusting policy because the economy is always adjusting. you cannot say when a soft landing hits. i don't think what you will see as the fed looking at a particular level of unemployment

or level of gdp and saying we are there. they will react to what inflation is doing. they made it pretty clear they want to see inflation strongly moving toward 2% before they even start to think about cutting rates. whether that encompasses a soft landing or not, it's hard to know. alix: which brings us to pricing for thursday. one camp is that inflation is slowing a lot faster and harder than we thought. the other is that we are still going to be sticky and 3% or 4% will be enough. where is market position the most? kriti: everyone is going to say this is not going to be a straight line down. that is why i think the sensitivity the wage growth numbers and payrolls data set has become an even bigger trading point in the last two data sets we have had. that has moved the market more than cpi has 30 minutes after the reaction.

i think that's really important to talk about. even if we see core services data come down a little bit, that wage growth data is still the issue. the assumption is baked into the markets that inflation is going to come down in 2023. even gina martin adams has said that when you have inflation coming down, volatility will come down, too. you will get some sort of move, some sort of peace and calm, or whatever phrase makes sense there. what i think is important to talk about is the wage growth, which is something much, much harder to pricing. it's not clear that that's coming down as consistently as the core numbers are. alix: this was fun. it's kind of like a roundtable, except that guy is not here. coming up, more on our question of the day. will 5% make powell unpopular? kate moore of black rock is coming up next. this is bloomberg. >> i think the tools we have at work, there is nothing wrong with our mandates.

we do not see anything about the laws and governance who provide our mandates that needs to be changed. it seems to have worked pretty well in these two very difficult situations. ♪

>> it is essentially this idea that there is a terminal any

point to the hiking. you don't necessarily need to see the easing. the market is probably, and i think we are going to get this in a few hours, incorrect in believing that there is going to be any sort of material easing in 2023. alix: that was julian emmanuelle. this take suspect to the question of the day, will 5% make jay powell unpopular? kate moore here is kate moore, head of blackrock's financial team. what does 5% mean for the market? how much will they hate it? kate: that's a great question. it does 5% make powell unpopular? he is not solving for popularity at this point. he is really solving for his legacy and what history books write about how he managed is really challenging economic period. he doesn't care what equity investors like myself think about 5%. if it achieves the right goals

in terms of employment and inflation, i think that's a really hard thing for equity investors to get their head around. market levels are not what the fed is really focusing on. they are not saying words to encourage us, not saying words to explicitly discourage us either, but at the same time, we are not the game. guy: inflation is the game. good morning, it is guy. i am fascinated that the market believes that we are on this glide path back down to 2% inflation, that it's going to be pretty straightforward from here. are we underestimating just how difficult it's going to be? powell talked about the challenge here. he clearly does not want to go back to the 70's and make the mistakes that were made then. is it still really about doing more rather than less? kate: i think it will be doing

more rather than less. as people have discussed on the show previously, we are likely to get to a rate and stay there. one of the things that sort of confused me has been that the market doesn't seem to want to believe anything the fed speakers are saying. if people give a very clear message, these policymakers, then the market is like, i don't believe you, you have to change her mind, we are right, you are wrong. i think we need to take them seriously and take them at their word. once we get to a rate they feel is appropriate for the economy, they are going to hold that rate for a considerable period of time. that phrase over and over again. i don't think that's going to be a bad environment for equities, by the way. we will have a level of certainty. there will be no significant policy changes. we will see markets and companies adjust to the higher policy rate. i think it's a much better environment for risk assets once

we hold. alix: what risk assets? kate: equities in particular. though to be fun, we have considerably increased allocation to credit. we think there's good total returns in this year. in the new year, i think there's too much uncertainty. i like to be a bull. it is uncomfortable bull -- uncomfortable to be uncomfortable right now. i think we need to get through fourth-quarter earnings, not so much what happen last quarter, but how companies talk about what they're going to be managing. how they will be managing costs, slow rather new growth -- revenue growth, and talk about full guidance for the year before we really get a picture for what this will look like. i am kind of in a holding pattern when it comes to equities at the moment. but i do expect that once we get past some of the policy uncertainty, get past some of

the earnings uncertainty, we will be in a better environment for stocks. guy: kate, our u.s. stocks still expensive? kate: well, they are not particularly cheap. i am not sure they are as expensive as some people have claimed. that has been an argument some people have used for allocating more outside of the u.s. but frankly, it u.s. companies deserve a premium. not just for their balance sheet or agility, but how much they have managed challenging economic environments in the past and managed their margins in rising input costs. i think they deserve a premium. it is a dynamic group of companies. that said, it is not cheap. i think you really have to pick your spot in the u.s. equity market right now. alix: outside of the u.s., do you pick spots in europe or emerging markets, particularly if china reopens?

kate: i think there are more interesting opportunities than there have been in the past outside of the u.s. with been adding to our exposure in the fund. there are scenarios in europe, those companies that are geared toward secular themes around energy transitions and automation. those are interesting. we also see opportunity more near-term and some of the european financials. and we are looking at emerging markets closely. resources have been a place we have had considerable overweight. emerging-market plays on that and i think that's going to be an interesting generator in 2023. guy: the big difference between europe and the united states over the last 10 years have been tech. he stripped that out and the comparison is easier to make. do you think tech has fallen? are you in the camp that still wants to buy tech and thinks

there will still be an opportunity in track -- intech, or do you think there will be a drop in opportunity for a while? kate: i am not in the camp that says in the next 10 years, it is done and over. technology innovation, the need for technology across all different industry, it really creates a firm environment going forward. two multiples need to come down a little bit further if rates continue to rise? yes, probably. what we are going to separate the week from the chaff. we're going to see slow growers in the economic environment. that will bring attention back. we have to look past the big mega cap tech and look at some software and services, and even some hardware companies that have the ability to grow over the medium term. everyone just focuses on the top couple of names and forgets that it is a giant sector important for all parts of our economy. alix: real quick before we let you go, dollar up or down this year?

kate: i'm going to chicken out. i'm going to say the dollar is going to be range bound. i find it dollar predictions incredibly difficult, but i don't expect the same type of appreciation we saw in 2022. guy: u.s. exceptionalism may be in the market, but not the foreign exchange market. kate, think you very much indeed. we always appreciate it. kate moore of blackrock. always appreciated. still ahead, failure to launch. virgin orbit shares tumbling after the first rocket launch out of the u.k. failed. that story, next. this is bloomberg. ♪

[office sounds]

♪upbeat music♪ ♪♪ ♪when the day that lies ahead of me♪ ♪♪ ♪seems impossible to face♪ ♪a lovely day (lovely day)♪ ♪(lovely day) (lovely day)♪ ♪(lovely day)♪ a bank that knows your business grows your business. bmo. alix: it is time for the bloomberg business flash.

crypto exchange coinbase will come about 950 jobs as it tries to whether a slump in the industry that has lasted more than a year. the copts -- the cuts represent about 20% of the workforce. they say this restructuring will be substantially complete by the end of the second quarter. the drugstore chain cvs is exploring an acquisition of oak street health, which runs health care centers for medicare recipients. it could be more than $2 billion, including debt shares. they are soaring today. microsoft is in talks to invest up to $10 billion in the creation of artificial intelligence for a bought chat. they will invest the money and open ai over a period of years. the two companies have been discussing the deal for months. that is your latest business flash -- his nest flash. -- business flash. guy: -- alix: silicon valley

starts its morning. ed ludlow joins us now. let's talk about virgin orbit not working paired what happened and what do we know? ed: this was the sixth mission, but the first from the u.k. the very tip of the country, this was a really big moment for the u.k. space industry. they are great makers of satellites, but not launch. the 747 you see on your screen now takes off, climbs around 35,000 feet. the rocket which is underneath of one of the wings detaches, blasts off goes into orbit. at about 35,000 seat -- 35,000 feet, it starts a classic separation. what we know is that when that happened, there was some sort of malfunction. ultimately, the payload, which is satellites for small makers, were not deployed. what was awkward was that

version orbit tweeted that they had successfully reached orbit. everyone assumed it was well. they then had to delete that tweet and backtrack. there was a significant stock reaction. this was a little shaky and this was a big mission for them. guy: absolutely. cornwall on the map. we will see what happens next. in scotland, some vertical launches. we will see how that goes. maybe a little more limited. talk me through if this were to happen again, how precarious with the position be? how close to the edge is this company now? ed: all i can do is look at their balance sheet. throughout 2022, they burned through their cash. they booked meaningful revenue in that quarter, two. what i don't know and would have to s the company is, can you book revenue on satellites that are not deployed? there is a pr exercise around us.

the u.k. space agency and government, all compatriots in cornwall, they were also excited about this. it was being dubbed massively as the dawn of the u.k. space launch age. it is from a plane, not a vertical lift off, but it's an embarrassing moment. there was a severe market reaction to this. we do want to speak to ceos of companies that have pulled out. it's interesting that they are not engaging on this. alix: before you go, i want to hit on apple. they are replacing chips and their devices that are homegrown. walk us through what we know here. ed: very recently, broadcom ceos were talking up how good their modem or chipset for wi-fi and bluetooth is. that's what were talking about. radcom currently makes that component for iphone, for apple handsets. according to sources, by 2025, apple wants to use its own in-house design chips.

we already knew, for example, that they were moving away from cloud, for the cellular modem. that will happen as soon as 2024. they point out this is bad for broadcom. apple is about 7% of their revenue. the timeline is very interesting. it seems to be happening pretty quickly. guy: do we know where apple will be making those chips? ed: the shift by 2025, we know that, for example, tsmc is investing heavily in the state of arizona. could they manufacture that chipset on apple's behalf in that time period? that is certainly a possibility. otherwise, we will keep digging and reporting. guy: great stuff. we look forward to. ed ludlow will be back on the west coast soon. coming up, the largest public

pension fund in the united states is making a big bet on small firms. we are going to see -- speak to nicole mussico about her $1 billion investment plan. this is bloomberg. ♪ these days, our households depend on the internet more and more.

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alix: about one hour into the u.s. trading session. it's like nothing from jay powell is good for markets. abigail: right now we have the s&p 500 up slightly. let's see how the day goes. the nasdaq doing a little bit better. up about it quarter of a percent. perhaps around jay powell a little bit although i'm not sure how much talk of monetary policies coming out of the meeting in sweden. there is an auction of three year yields so a possible move

lower for price. crude oil is basically flat. relative to the year we are looking at a pretty good start. the s&p 500 up over this time, when you have stocks higher in the beginning of the year it can -- we have to get the earnings season. a slew of data so we will see how that goes. we will see that the dollar is one big piece of the story in terms of stocks -- why stocks this year have been doing relatively well. a peak last october. breaking to the downside. speaking of ricks -- risk assets, we have at this point apple trading lower by eight tens of 1%. yesterday made the announcement, they plan on taking -- making

chips that are supplied by broadcom in-house. this has been in the works for the while -- for a while. qualcomm fluctuating lower. microsoft up about 6/10 of 1%. a small software company announced that. it could be good for other software companies. maybe fourth quarter wasn't as bad for some software companies as feared. guy: abigail thank you very much let's talk about one of the biggest asset managers out of their. announcing its investing $1 billion in upstart private equity firms. they are hoping taking a stake in small managers run by women,

minorities could boost its returns and reputation. joining us now, the calpers chief investment officer and sonali bassett. -- basik. sonali: there is a sense that the bigger these firms get that they lose some of that entrepreneurial spirit. when you're managing a half trillion to $1 trillion. when you are taking stakes in smaller managers, looking at ceding new firms, is part of it and affirmation of that? >> i think we have been fortunate to see tremendous data over a number of years that there's an entire ecosystem of these up-and-coming managers often which are run by under funded minorities if you will and they are absolutely outperforming or at best

competing very well against their peers. we see this amazing ecosystem that's been untapped and uncapitalized by most of the long-term patient investors. sonali: how does that fall into the larger perspective? you made a lot of news when you came out last year and announced her strategy to the board. this idea that you can do more on your own to bypass the larger managers? nicole: i think bypassing the larger managers is probably a bit of a stretch. it's important for us to have very strong strategic partnerships with the larger managers. we need that to hit our strategic asset allocation and building those capabilities. it doesn't mean that we shouldn't be constantly seeking out pockets of excess return. i think this initiative in its entirety is not only about excess returns but also precisely to give us the ability to start having some knowledge

transfer, it fosters a culture of entrepreneurialism and so i'm excited about not only the returns we are seeking but the benefits for our team as we evolve into being able to do more and more alongside strategic partners and in the future on our own. alix: to that point talk about the private market versus public market returns as pension funds are struggling to get a solid returns they need. nicole: for calpers we were late to the game or took a pause, we really had an era where we stuck out of the private market space. we are in catch-up mode. now we are focused on making sure we are looking at the entire ecosystem of private markets. from private equity infrastructure, a private credit and looking to build up our own in-house expertise, a build up

partnerships and eventually growing into our own so we can start doing coinvest alongside partners. alix: there's been concern of how private equity manages what's coming in the next few years in terms of markets. maybe it's kind -- that kind of leverage has never been tested in a massive downturn. nicole: we've been fortunate that we've been focused on the quality of the partners we've been investing in, we are confident we are well-positioned from a liquidity perspective. we have a lot of dry powder. partners have been on fundraising sprees, this a lot of dry powder in the system so we are confident about the opportunity within private markets in general and specifically private equity. we are looking for pockets which is why we support this initiative for merging investment managers, we think

there's tremendous opportunity to be generating excess return in that ecosystem. guy: you talk about excess returns, what do you mean by that? can you give us the size and scale of what you are thinking about? nicole: really what i'm referring to is there's been this long kind of understood notion that smaller emerging managers just cannot compete with their larger peers and so what i'm referring to is the fact there's been a tremendous mode of work done to support the notion smaller emerging managers can in fact outperform their benchmarks, their larger peers. it's just seeking returns outside of what we are already getting by investing in the jan pop of private equity where we have been historically. guy: when you think about the longer-term, what your pensioners will need going forward, is that changing?

we live in a world where central banks are struggling to get inflation back down to 2%. there's the potential we see inflation persisting for a longer period of time. is your assessment of what returns will need to look like going forward different than it was 18 months ago. nicole: i think that has not changed, the need for us to be able to deliver to our members their pensions is not changed. what has changed is the ability to execute strategy. we have a new strategic asset allocation that the board handed down to us to give us some more flexibility to be looking for outsized returns versus what historically we may have been investing. we are spending time thinking more in the context of the market today what we could be doing more in infrastructure, private credit and so we are continually trying to evolve our private market in order to meet

the needs of our return threshold of a 7% return. sonali: how much is in answer to the volatility of other markets. everything from the most vanilla of bonds to equities. you find that volatility difficult for you? nicole: i think everyone would say we have had a quite humbling time and that time could not of been greater. i am very excited about the opportunities we have in front of us because we were a bit late to the game in private markets we absolutely have tremendous opportunity to be leaning in to more alternative asset classes. we are still looking to strategic partners to form not only access to opportunity in and of itself but also to build up our own in-house capabilities. sonali: how much leverage do you

have here. think about alternative asset managers and the fees they charge right now. they're also going through difficult environment. you have some major funds like certain hedge funds for example that are having some of their best years in history. are the hedge fund players here attractive to you given the market volatility and do you have leverage when it comes to the structures. nicole: the hedge fund program at calpers was shut down prior to my arriving. we are looking at that, but as far as leverage with partners i like to think of it is how can we create win-win partnerships. we historically, it's been one of those mysteries if you will or one of those frustrations of large flows of capital. if we are finding partners generating the returns that we need, than we are happy to paper for 4 -- pay-for-performance.

we are looking for them to give us access to coinvestment which not only lowers our base but allows us to build that in-house capability. we spent a lot of time making sure that we feel we are getting a good partnership overall and whatever that structure will look like we are looking for more than just deploying the capitol and waiting to see what the return is. we need more of a hand in glove approach with the partnerships given we are generally deploying quite large sums of capital in any given case. guy: to circle back to the beginning and what you're doing right now in terms of the funds you will be deploying, is this an esg endeavor? what you think about esg? are you convinced, how big of a path will it play going forward in terms of the way you allocate assets. >> i would say calpers has been a long-standing global leader in

advocating for esg in general, when i joined one of the initiatives overall overarching themes was very important for stakeholders and our ceo and our team is this notion of being better sustainable investors so we are spending a great deal of time thinking about what could we be doing and should we be doing more across the spectrum of our asset classes through the lens of esg. that's through the risca lens and the investing lens. -- risk lens and investing lens. this is all to demonstrate that he think this is an extremely important thematic for us to be weaving through the opportunity lens threader investment program. alix: we appreciate your time today. we look forward to this conversation with you. thank you so very much. coming up, how covid is

reshaping the insurance industry. we will hear from the sigma ceo. don't miss that interview coming up next. this is bloomberg. ♪

>> you're looking at a live shot of the principal room. coming up, kristin pack -- peck. this is bloomberg. alix: the j.p. morgan health care in full swing. kailey leinz is on the ground with cigna. kailey: i'm here with the ceo of cigna. great to see you here the conference. it kicks off 2023 for health care. as you look forward to the year to come, what are you expecting in terms of the medical cost?

david: we've a large services business. you tend thing but the benefits business. we have several years of very attractive -- for 2023 we expected to be up somewhat relative to the strong levels. a little bit more cost pressure from hospitals with the labor pressure passing through. but thinking about that is less than a percent overall within cost will be intact for 2023 as our clinical programs provided greater value for customers and clients, our virtual services and overall value. we think costs will be in good order but up a little bit. sonali: in terms of medical and ash kailey: we are coming off of or may be in a gnarly respiratory virus season. we've seen an uptick in covid hospitalizations. what do you see going forward in that respect?

david: we are in a disruptive stage. we see elevated flu, rsv, thinking about flu is an example, the normal flu season may be a quarter of a percent of medical cost trends. a severe flu could be twice that from that standpoint. over the course of the year it's not a major driver. rsv in covid part of the cost equation but not driving the overall cost up to a tremendous elevated level. our clinical programs find a tremendous level of support from that standpoint so elevated but not a major cost driver. kailey: if we can talk about bio similars, you said they will be a tailwind for your business. do you still expect that to be a tailwind and 2023 and how will that impact and affect earnings?

david: first stepping back as a country we lag other countries that use bio similars. so it presents a tremendous cost savings for affordability improvement. for individuals, employers, government. our pharmacy capabilities have market leadership in the ability to help drive this transition from a u.s. standpoint so we see this is a societal win. we view 2023 as a transitional year. we will see more elevated use of bio similars that will phase in through the year. 24 will be another step forward, 25 b another step forward. it will present a cost savings. we are a leader in the space and we see is positive in 2023 and furthermore in 2024 and 25.

kailey: have you decided if you will be covering that? david: the national formulary was published at the end the fourth quarter and that's where a large number of clients and customers provide their recommended coverage with in that we have bio similars from that standpoint. and that will be revisited as we go forward we have the structural flexibility and i think it's a good example of the transition that's underway. in this case it means choice and more choice from that standpoint and more competition means more value. so we made the decisions, there's more choice but individual clients could opt for a bit more focused formulary if they like. kailey: we've also seen a transition in some sense of leadership in washington and a republican-controlled house. as you think about your medicare

advantage you have expanded and could reach about 50% as early as this year. how worried are you about the debt ceiling conversation potential pushback demand for entitlement reform and how that could impact medicare advantage? david: as we step back, medicare advantage has been a strong program for individuals across the united states for many years and therefore it continues to grow. individual seniors see it as high value. if you look at it across the united states, the typical recipient is a lower income individual than non-medicare advantage so it's a program that works for a variety of americans and has a coordinated care program. cigna and others provide great value relative to that. ensuring it's properly funded is important. we've seen that depending on the posture of washington. at the end of the day it's been a successful sustainable program that delivers great quality,

good coordination with physicians and we see it as a growth opportunity for cigna over many years to come. kailey: on the affordable care act as well you've expanded your marketplace, extending the subsidies through 2025. are you seeing any benefit from that extension already? david: we entered the aca markets in 2014 in the first year and we are one of the only entities that spin in it consistently throughout. we expanded another three markets in 2023 and we expect to see further growth from that standpoint. this is a market that need certain products and services of network designed access, clinical programs and navigation support services that we do quite well. we expect to grow that market again before the aca and 2023. kailey: as we talk about changes in terms of washington policy, the biden administration is shifting covid vaccines at some point towards commercial. what conversation are you having

with some of those manufactures about what that pricing will look like and what that means for coverage. david: if you take the business, our benefits business our commercial business and are individual business we have a large services business and a servicing business. there's two different dimensions. trying to get the best possible value for our clients from that standpoint and the significant uptick as proposed from the pharmaceutical manufacturers with price, that puts pressure on overall cost. importantly as a relates to total cost vaccine cost are relatively small amount of the total. the bigger overall cost is the hospitalizations. so while there's no -- a cost increase the comes forward it's a small part of the total. this is a case where both contracting and network management, our clinical programs and formula programs will deliver more value for our

clients, customers and partners. it's meaningful when you look at the unit cost but the overall cost equation it's not a major driver from that standpoint. we are well-positioned to mitigate those costs and coordinate the services for the benefit of individuals. kailey: your digital health formulary, what response are you seeing to that and is there anything that could be done on the regulatory side to help advance digital health services. kailey: -- david: benefit services, pharmacy services and care services. we serve employers, health plans, governmental agencies and health care professionals. over the last three years or so we've added organic revenue to that business so there is tremendous growth. in part through innovation. a digital formulary or the evolution of a virtual care capabilities and taking that not just for triage and urgent care

but behavioral health services or virtual primary care. so we see tremendous interest, adoption for the services. but for them to be coordinated with other services, not a plug-and-play solution but coordinated. so the other members of the care team see this as an extender of their carry equation, not something that fragments it. customer satisfaction in the clinical outcomes have been quite strong. kailey: we will leave it on that note. thank you so much for joining me. i will send it back to you, guy. guy: thank you very much indeed. some great interviews still to come from the jp morgan health care conference taking place in san francisco. decatur pharmaceuticals will be joining kaylee. a fintech -- some fantastic interviews lined up for a

critical conference into this year. let's talk about where we are with markets on either side of the atlantic. the stoxx 600 seeing right on the screen for european equities a stolid -- a solid start to the year, causing a little bit of concern across the equity picture, stoxx 600 down by around half of 1%. seeing a surgeon dollar, the pound, the cable rate down by 3/10 of 1%. big data at the end of this week on the gdp front. talking of what's happening with the u.k., one of the big recruiters in the u.k. shocking the european labor market story i think a bit of a wake-up call. quite a significant downturn and rolling off of demand coming through at the moment. the macro headwinds influencing that. you see that impacting the rest of the sector as well. this on a day when amazon comes

out and announces it will be shutting three warehouses in the u.k.. the chief european economist at goldman sachs will join us. goldman sachs does not believe the eurozone will have a recession. this is bloomberg. ♪

guy: european stocks soften up. we have had some solid days for european equities starting to see that a little bit. we have just about every sector bar one and negative territory. the count on to the close start right now. >> the countdown is on in europe. this is bloomberg markets: european close. with guy johnson and alix steel. guy: