5 Things You Need to Know to Start Your Day

Good morning. Apple is looking at workarounds for its smartwatches should a Christmas day sales ban stand in the US, dealmakers wrap up the [View in browser]( [Bloomberg]( Good morning. Apple is looking at workarounds for its smartwatches should a Christmas day sales ban stand in the US, dealmakers wrap up the slowest year in a decade and the Bank of Japan keeps traders guessing. Here’s what people are talking about. — [Sofia Horta e Costa]( What would it take to bring investors back to China’s once-booming markets next year? How will China's growth impact the global economy and commodity prices? Share your views in the latest [MLIV Pulse survey](. Apple’s rescue mission Apple is just days away from a [US ban of its smartwatches]( that will take effect on Christmas day, barring any last-minute veto by the White House. It’s a $17 billion business that’s one of the company’s biggest moneymakers in its home market. Now its [engineers are racing]( to make changes to algorithms on the device that measure a user’s blood oxygen level — a feature that Masimo has argued infringes its patents. But getting the new technology to market will take time: Apple’s internal software testing process is lengthy and the company needs to ensure that any changes won’t break other smartwatch features. The adjustments also may need additional testing given their medical purpose. Apple’s shares, which dropped as much as 1.6% on the news on Monday before paring the losses, are little changed in pre-market trading as I type. Separately, the chairman of Apple’s main chipmaking partner TSMC [will retire in 2024](. M&A winter Investment bankers are coming to the end of their worst year for mergers and acquisitions in a decade. The value of deals globally is set to [miss the $3 trillion]( mark for the first time since 2013, with JPMorgan’s co-head of M&A for North America likening current conditions to those experienced during the dot-com crash. A lack of activity by private equity firms has been one of the major drags on deal-flow: buyout firms spent 36% less on acquisitions this year versus 2022. While that’s partly due to struggles in securing debt financing for big deals, it also comes down to price. Buyers and sellers can’t seem to come to an agreement even when [buyout firms offer significant premiums](. In several cases, the target’s directors can’t decide whether minority shareholders are getting a good deal. Speaking of hefty price tags, Japan’s Nippon Steel is defending the [142% premium]( it’s paying for United States Steel. UBS investor eyes Morgan Stanley Stockholm-based Cevian Capital is making a €1.2 billion bet on UBS, saying it’s confident the bank can successfully integrate Credit Suisse and double its share price over the next two to three years. “We think UBS should at least be valued on a par with Morgan Stanley,” Cevian co-founder Lars Förberg told Bloomberg Television earlier today after his firm [announced it has built up a stake]( of about 1.3% in the Swiss bank. UBS’s valuation has trailed that of Wall Street’s titans, and Chairman Colm Kelleher has made little secret that he thinks it should be higher—as high, perhaps, as that of Morgan Stanley, where the Irishman spent most of his career. [But rivals like Morgan Stanley]( have much bigger client networks and bigger investment banks to craft whizzy financial products for them, and US banks have historically commanded a valuation premium over their European counterparts. UBS shares rose as much as 2.7% earlier. Japan’s negative rates Bank of Japan Governor Kazuo Ueda decided to keep interest rates  [in negative territory]( — where the policy rate has been since 2016. Ueda appeared determined to keep his options open at a press briefing: he said there was little data for his team to assess before they next meet to decide on rates in January, but he didn’t rule out a hike entirely either. He also said it was too early to give specific details on any exit plans. The yen [extended its decline]( in choppy trading as Ueda spoke, dropping more than 1% against the dollar. The Japanese currency had turned into one of the world’s [favorite macro trades]( in recent weeks after a comment from Ueda and one of his deputies sparked speculation of an exit from sub-zero rates as early as this month. The view subsided after people familiar with the matter told my colleagues in Tokyo that the central bank was in no rush — though bets this will happen in 2024 [are still very much on](. Coming up… We’re due data on US housing starts and permit issuance in November, with economists expecting a slight deterioration. There are three central bank speakers on the cards today: Atlanta Fed President Raphael Bostic is set to speak on the US economy, the outlook for business, and the Fed's role at a fireside chat at the Harvard Business School Club of Atlanta Alumni Leadership Lunch. Richmond Fed President Thomas Barkin is scheduled to appear on Yahoo Finance, while Chicago Fed President Austan Goolsbee will be interviewed by Fox News. What we’ve been reading This is what’s caught our eye over the past 24 hours. - Hamas’s makeshift drones are outmaneuvering [Israel’s military](. - Bezos’s Blue Origin is set to fly to space after a [15-month grounding](. - Watch a video of a [volcanic eruption]( in Iceland. - European officials begin to assess: [what if Putin wins in Ukraine](? - NYC’s 10 priciest home sales show the market is [doing ‘pretty darn well.’]( - One brand of Japanese single-malt whiskies [is hiking prices by 62%.]( - Black chefs around London celebrate heritages [in their holiday menus](. Tell us what you want to see in the Five Things newsletter! Please [take our quick survey here.]( And finally, here's what Joe’s interested in this morning With rates having come down substantially over the past month and a half, a big question is what it will it mean for housing. According to Freddie Mac, a 30-year fixed rate mortgage is now under 7%. Of course a mortgage in the 6s would have seemed extremely high even a year ago, but in the current environment it seems plausible that some would-be homebuyers might dip their toe in the water. Yesterday we got the latest reading of the NAHB sentiment index and it showed that for the first time in 5 months, homebuilder sentiment ticked up (though it remains at extremely depressed levels). One of the perverse outcomes from the Fed's tightening campaign has been to impair the supply side of housing. At a time when there's a universal view that we need more houses in the US, we've seen a big pullback in housing starts since early 2022 (right around the time the Fed started hiking.) Today we get another housing starts reading and the expectation is that they come in at a 1.36 million annualized rate, which would be a slight tick down from the month before. Regardless of what happens in the short term, it's not a great dynamic that when the Fed is in inflation fighting mode, it impairs the creation of a hugely important component of everyone's consumption basket. Basically the exact opposite of what you'd (in theory) like to see. [On this note, yesterday's Odd Lots podcast examined a county in Maryland]( that's trying to create a new model for public, affordable housing by having the government use its balance sheet to create new multifamily housing, and building it across the cycle. Because it's the public sector driving the construction, it doesn't necessarily need to shift its activity in the same way a private developer would have to. If the US is ever going to get out of this trap of perpetual housing shortage, programs such as this one may be part of the answer. [Check it out](. Joe Weisenthal is the co-host of Bloomberg’s Odd Lots podcast. Follow him on X [@TheStalwart]( Like Bloomberg's Five Things? [Subscribe for unlimited access]( to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. Tell us what you want to see in the Five Things newsletter! Please [take our quick survey here.]( [Bloomberg Markets Wrap: The latest on what's moving global markets. Tap to read.]( Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. 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