john: i'm john hyland with the first word news. in a major reversal, bloomberg has learned the biden administration is that to announce it will send m1 abrams battle tanks to ukraine. they say it does not make sense because it requires a special kind of fuel, requires too much maintenance and training come about germany has been wary of providing its leopard battle tanks. an announcement could come as soon as wednesday. former vice president mike pence is the latest high-level official to be found with documents labeled classified.

the documents were found at his home in indiana and turned over to the fbi after a recent search. to special counsel's are overseeing investigations found at president biden's home and the office of foreign that former president trump's mar-a-lago estate. this suit accuses google of abusing its monopoly power and marks one of the few times the justice department has called for the breakup of a major company since it dismantled the l telecom system in 1982. google responded to the suit saying the justice department is doubling down on its argument. senators blame a monopoly for ticketmaster at a terrible customer experience. >> restoring competition to our markets is about making sure fans get fair prices and better service. concertgoers today should be

able to have the same experiences i had when i was in my school when it didn't cost very much to just be able to go see a band and remember it forever. john: the live nation ceo spoke at the hearing and apologized to fans. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm john hyland. this is bloomberg. >> we are seeing a little choppy action when it comes to the markets. we started off today deep in the red, the idea -- that story has very quickly changed as we are halfway through the trading day and we are starting to see those losses getting paired.

the 10 year yield doing something interesting -- the volatility you are seeing in the stock market mirrored by the bond market. a bit into the bond market, about five basis points lower. with those yields lower, the dollar falls and the weakness in the greenback while you are starting to see weakness in the commodity picture as well. take a look at brent crude -- down about 2.2%. jon: under the hood, a lot of different earnings stories we are digesting. every company with its own flavor. verizon moderately lower, concerns about 5g costs. general electric modestly higher, some encouragement around air travel helping the business even though there's concern on the renewable energy side. lockheed martin getting a lift today after some well-received quarterly results.

and john hyland was giving us the latest details with alphabet and the battle with the department of justice. the tech giant shares off about 1.2%. kriti: ultimately, the united states versus the google -- eight states are suing the tech giant, calling for the breakup of its advertising business for what they say is monopolization of the digital ad market. google has since responded and is saying they are doubling down on a suit brought by the texas attorney general a while back. mandeep singh is here to help us unpack the details. you are seeing shares fall but what could the impact really be here? mandy: -- >> the argument is google controls pre-much all of the ad tech market, whether it's the supply side and they -- and

also the demand side because they aggregate the demand from different advertisers and make the market. clearly, the focus is on their ability to be market maker and be an ad exchange and that comes from their acquisition of double-click in 2008 and they have grown that business since then. the real risk for a company like alphabet is not from chet gpt, but what the doj can do in terms of forcing them to sell an asset like double-click. even though it is a risk, it is real and time will tell whether the doj is convinced in terms of what google has to say. jon: as we watch to see how things play out, just in terms of the market share breakdown, what can you tell us about what the numbers look like from your vantage point? mandeep: you look at the u.s. search ad market and even if you look at the overall digital ad

market, it is still alphabet, google, meta and amazon. there are a lot of smaller ad tech lenders who focus on the supply side were demand side and these are $1 billion revenue companies, so that market is quite stagnant when you think about the overall demand-side. the walled gardens, the three main ones i've mentioned, they play across the stack. the differences amazon focuses just on its own inventory, it does not focus on making a market for advertisers and acting as an exchange. that is where i think there are nuances in terms of what alphabet has and why there is so much focus on alphabets monopoly. kriti: interesting to see what other ad text fall under the same scrutiny. microsoft reporting after the bill. thank you for your time and

insight. a lot of the story this morning is coming from 3m -- corporate america continuing to tighten its belt with the industrial maker becoming the latest among firms shrinking their workforce with plans to cut 2500 jobs. the ceo says layoffs are a necessary decision to align with adjusted production volumes. we expect macroeconomic challenges to persist in 2023. let's bring in bloomberg's industrial reporter who covers the company for bloomberg news. let's start with what this job cut actually means. how important are those 2500 jobs for a company that has over 95,000 employees? ryan: that's a fair point but it does reflect that they are seeing a significant slowdown in some of their key manufacturing segments and are dialing back production as a result. particular in their consumer products division in the fourth quarter, every segment in the

consumer-products division -- think of command strips and home improvement products, they all saw declines. we expect this to last through the first half of this year. so much so that they took the unusual step of issuing first-quarter guidance, which they don't typically do this time of year. in that, they said they expect first-quarter sales to be down 10% to 15% year-over-year. it's a clear example of the belt-tightening you mentioned. jon: we have been keeping tabs on the covid complications tied to china's reopening. can you give us a sense on how those covid-related issues are worth consideration for 3m right now? ryan: that also came up in the report. they said covid slowdowns in china -- think of brief lockdowns order just depressed consumer activity from the spike in disease cases we've seen over there -- that cut into sales for

the month of december by 17%, a significant impact there. they are seeing weakness in some of their industrial product businesses. they pointed to weakening consumer electronics sales, tablets, smartphones, tb's -- they said their industrial businesses are pretty mixed right now. sequentially in the first quarter, they expect auto build rates to be down, mid single digits. 3m has this sprawling portfolio and they have for years, there's just not a whole lot of energy to offset some of these weaker parts of it. kriti: certainly something we will keep an eye on. thank you as always for covering the company and the inside on a pretty significant job announcement. coming up, we will get inside on the markets as a season rolls on. our guest is a senior vice president at franklin templeton solutions. stick with us.

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>> it looks so much in the endless earnings estimates like the fourth quarter was the recession and here we are sitting in the recovery and it actually looks a little bit like that in financial markets and it would be wonderful if that were really the truth, if we weren't just on the leading edge of a hit we are going to have an profits. but of course, help markets traded last year are not anticipating this to be some kind of profit nirvana.

we don't have 20% declines without something. kriti: this is bloomberg markets. i'm cree group to alongside jon erlichman. you are listening to stephen whiting talking about his concerns for the markets as traders sift through earnings for clues on the direction of the economy. let's bring in the senior vice president at franklin templeton investments solutions. this is the first time we've had you on the show since you have taken on that role. let's start with the earnings story because i'm wondering if this is finally the season on the margins to recover. what do you think? max: thank you. really great to be here at franklin. so far as margins, i don't think we are quite out of the woods yet. i think there is going to be a lot more pain. consumers are taking and demanding higher nominal wages but they are also aware that things on the horizon don't look

as rosy. they are spending less across discretionary sectors and that is going to squeeze margins on both ends. that could be tricky for a lot of names to get through. kriti: where is that margin pressure coming from? when commodity prices have come down and wage pressures are plateauing if not also due to come down, what's the source of that pressure? max: i think we have not seen the demand destruction and that's where you are going to see a lot more pressure coming on. i do think while wage growth has plateaued, we should consider the seasonality and there may be a resurgence in wage pressures as we get deeper into the year. jon: when it comes to painting the picture of what kind of economic reality we are living through, we are going to hear from the head of the largest

bank in canada, royal bank, says a soft landing is the scenario. just in terms of what you are hearing and how that matches up with your expectations. max: i think we are going to see a hard landing. this is something i have been saying for a while, as have a lot of economists, that there is going to be a lot more policy pain and we have not had the fed door any sense to tighten -- all the fomc, even though we have a new competition of some more dovish voters, they are saying we are going to get policy up to 5%. even with -- even if we take a path they are that conclusion is going to be painful for asset

prices. kriti: is it still the earnings story that will be driving the story broadly or is the federal reserve still in control? it feels like on a day-to-day basis, more and more of the individual market stories is turning the market action into the sum of all parts if that makes sense. max: a little bit, but the federal reserve is ultimately going to have the last word. in some regards, we are living through the age of sisyphus where traders keep rolling the stone uphill hoping that this time the fed won't come down and crush them. yet every time, we get the same ending. i think we just started the year with the best returns not just in the u.s. but globally that we have seen in quite a long time across equities and credit. it just does not seem justified. will earnings be ultimately the things that break this? i don't think that has to be the case.

it can just be the cumulative effect of policy with something that comes before the begin of almost every recession outside of 2020, which is euphoria. we keep getting almost right to that euphoric level and that coming back down. once we hit the peak, that is when the fall is much more profound. jon: great to get your perspective, as always. the s&p 500 just turning positive as we were in that interview. when we come back, my interview with the royal bank of canada ceo and how that bank is dealing with workers returning to the office. this is bloomberg. ♪

jon: this is bloomberg markets.

i'm jon erlichman with kriti gupta. our number -- 95,000 -- the number of employees at royal bank of canada which recently acquired hsbc's operation. they have also done a lot of deals in the u.s., acquiring the likes of city national. i spoke with david mckay about the banks footprint. david: this opportunity does not change our long-term ambition to building canada and the u.s. and europe. we are very proud of the organic growth, we've been able to almost triple the cnb franchise. we still look for opportunities to grow through acquisition. we will be delaying that for a couple of years as we focus on hsbc and executing that transaction. we are working on enhancing the technology platform to be a growth platform for the future but we still see allocating more capital in the future to the

united states, serving high net worth clients, and entrepreneurs in the united states. we will be looking at acquisitions like cnb and the u.s. wealth platform. we are proud of the progress we have made, we are the sixth largest wealth advisory firm in the united states and as we continue to build out a global wealth platform and you will see us focus our capital on the united states and somewhat on europe as well. executing the hsbc transaction is going to be all-consuming work. jon: speaking of the u.s., a lot of the chief executives there as they are weighing in on the economic roadmap are navigating things like the return to work. morgan making comments recently about that. you've weighed in on the process coming back from covid. i would love an update on how

you are thinking about that and what you have been communicating with employees and how you have been inking about that as far as getting back to the office. david: i think there is room for both. a hybrid world can be a more eco-friendly world, a better world for life balance, what i think we are still in and in balanced place. don't forget a quarter of our employees come in every day and deal face with clients and branches and we can't forget that. we are talking about three quarters of the organization and an office where they have the option to work digitally or in person. we talk about innovation, building relationships, up and down and across the organization , when you build your culture, in person work is very important. we are trying to move that three days a week.

there is resistance, honestly. particularly when you talk about middle-management, some of the employees with families and have other responsibilities, they really want to balance their lives. a lot of junior employees want to come in and senior employees want to come in. it's about connecting your organization and making sure you are on the same page at the same time. i believe a hybrid role has a strong, in person component and i see it every day in how you work and how you commit to kate. whether it's 2, 3, or four days a week, we are on a journey to make sure we are in half or more than half the time in the office place. jon: you use that word connection -- when a business is as big as yours and you are looking to connect, mention those people working at the bank branch, how do you go about doing that? david: it is so important to

connect with the front line all levels of the organization. i will do visits into regions, i will have town halls, meetings with employees. i spend a lot of time talking to the front line and getting a feel for the organization and how customers are feeling. that investment is invaluable in understanding how your investment goes from strategy to execution to customer response. you have surveys and see a lot of digital information, but talking to a front line employees invaluable in understanding how they feel about delivering services at how the customer responds. i put a lot of time in to do that. jon: when it comes to customers, you talk about the entrepreneurs, you are the small business owner. in particular, those who are navigating through what is going on right now. we talked about the rate environment which creates some

challenges. david: hang in there. we are having trouble finding employees. it is constraining their growth, constraining their ability to deliver services, they are dealing with inflation on a number of fronts including -- in addition to higher rates. they have built up some liquidity to absorb that. jon: the ceo of rbc. off-camera, we talked about some of the areas they are investing, including ai specifically. one of the big talking points in his office is the rapid rise of chat gpt and how that will impact the banking industry and experience going forward. kriti: it feels like chat gpt has taken over the world in the last couple of months. it's going to be a hot topic when microsoft reports. just yesterday, they announced a $10 billion investment in ai technologies like chat gpt. it's something we will keep an eye on.

the s&p 500 about flat on the day. the nasdaq flat on the day. down about five basis points on the 10 year yield. stick with us. for jon erlichman, i'm creepy group to. -- i'm kriti gupta. this is bloomberg. ♪ when covid hit, we had some challenges like a lot of businesses did. i heard about the payroll tax refund, it allowed us to keep the amount of people that we needed and the people that have been here taking care of us. see if your business may qualify. go to getrefunds.com.

romaine: a weibel-wobble market continues. really no traction here -- still struck -- still stuck in the range has been in for some time. katie: not much action on the benchmarks. a slight bid into treasuries. romaine: