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00:00The most crucial moments in the trading day. This is Bloomberg Markets the close with Caroline Hyde Romaine Bostick Ken Taylor Ray. It is 2:00 p.m. in New York 7:00 p.m. in London and we are live from Bloomberg's world headquarters. This is Bloomberg Markets the close and Caroline Hyde Romaine Bostick. I'm Taylor Riggs. And we have more breaking news this time on sanctions. We're expecting them coming from the Biden administration expanding Russia's sanctions to the all important Nord Stream to guys. That of course being that important got gas pipeline between Germany and indeed Russia and remain. It was anticipated. It was anticipated. And this is sort of the drip drip drip that a lot of people have said we're going to get. With regards to the sanctions I guess the big question right now Taylor is how far. Not only is the U.S. willing to go but more importantly how far is Europe willing to go along with them. Yes certainly seems like as the statement says they are on board of course with Germany stopping not only Nordstrom too but now of course the U.S. side of that imposing sanctions on that. And some of those corporate officers you take one look there at the ruble and it is dollar strength massive ruble weakness up now to an 80 handle. What's interesting as well that you're not seeing the kind of reaction in the oil markets. Brent earlier this morning touched ninety nine. We're almost at triple digits and yet mostly unchanged on this news here. We have pulled back from those highs of course a little bit in oil. And it's notable we have EU leaders holding that open point emergency summit as soon as Thursday. So we'll have to see how they continue to impact the sanctioning. They got twenty three high ranking individuals bank executives military chiefs media figures top Kremlin officials. But how much more could they do. They say rushing to chef to set to discuss all of this. It's is Max chief Washington correspondent. Annmarie Horden great to have you in the house. Talk to us about the impact of the Nord Stream to corporate offices and the business itself. I think it's incredibly significant that they took this step. Right. This is also something the administration had tried to avoid. German Chancellor Angela Merkel the former chancellor came to the White House. They signed this degree. They were going to allow it to continue unless Russia started weapon izing oil and gas and oil off. Schulte saying we're going to we're going to stop the certification. But today we heard from his economy minister saying in the future that doesn't mean it's done for good. Putting sanctions on it pretty much means it's dead. Well that's what I'm curious about because is there any sort of I guess out for the Europeans if they did want to sort of go it alone it would be incredibly difficult. They're sanctioning the company. I mean it less you want to get in the cross fires of U.S. sanctions which means what you can't trade with U.S. banks et cetera. It's incredibly difficult. It was interesting yesterday we were talking about the initial sanctions start hard and stay hard. Right. And then you and I discussed why we're not saying Putin directly. And it was sort of going level at level and being maybe reactive and defensive instead of offensive which is sort of the image that we're trying to give out. Did this does this feel like sort of that escalation. This does feel like an escalation for sure. I would say the administration now is going to actually benefit domestically because Ted Cruz has already come out with a statement saying this is the right thing the administration to do. And this was a senator that's been holding up all of their nominees. So they're going to win on the domestic front with Republicans big time. And that's going to play very well internationally especially with Ukraine. Yeah. And you've of course I've been all over this report and I think you got some reporting coming up a little bit later. Annmarie Horden there are chief White House correspondent helping us kick off the show of course with news of those sanctions. And I believe Emory is going gonna sit down there with Ukrainian foreign minister a little bit later this afternoon. So stay tuned here on Bloomberg Television here. We are keeping our eyes on the market. We are seeing stocks move to the lows of the day on the back of those headlines. Now the S & P 500 which opened higher and moved significantly higher on the day now down a percent here. Of course we closed in correction territory on Tuesday. We're sliding deeper into that hole here on this Wednesday. Consumer discretionary stocks leading part of that decline as are a lot of those big cap tech names. Your apples Amazon's Microsoft Teslas all lower here on the day. You mentioned the ruble just a second ago Taylor. Eighty one right now. A lot of people now I that record low which I believe is around 85 back in 2016. And they're at the bottom of your screen some representation here of the flight to some of those Haven assets spot gold back above 99 and flight to inflationary hedges. Right. Particularly if you think about a two year yield and further inflationary pressures that are under way. We're additionally up four basis points on the day to 159. Earlier this morning at 160 the highest since December of twenty nineteen. So well before some of the pre Covid levels that we've often talked about. And we asked though the auction going really well. Good point I believe. Yeah. Are we looking for a haven in bonds or at the moment. This is purely what we're anticipating times of inflation going higher and what the Fed will do. You know great question. You know I think investors are thinking about further of that flattening of the yield curve. Is the Fed behind. Are the five year five year break evens anchored enough that maybe inflation on the long end won't pose as much of a problem. Something that I know that we'll ask our guests a lot about. We change up the board and you know remain we showed this chart a lot yesterday. Caroline do when great one officially love closing in correction territory yesterday. The pullback today that continues 11 percent from the recent high January 3rd. And you know a lot of people sort of pooh poohed oh this is just sort of the arbitrary number the 10 percent. But psychologically it's. And it's also significant that we've kind of been here now for a few weeks. I mean we haven't been at that official 10 percent closing level but we've basically traded in this range now for several weeks technical marks lines in the sand. So please that we have the focus on treasuries the focus on equities cross asset for you. And we want to talk a little bit about that correction territory we're just talking about how psychological is it. We asked our guests. Take a listen. Equities have already had a 10 percent correction YTD. There are a lot of crosscurrents for sure. If two distinct risk drivers we've got a geopolitical environment tensions with Russia and the Ukraine. But also what was going on before the angst around the first Fed rate hike. Central bank's been behind the curve and the market has priced them at a very different way. Well I tell you what it's going to. It's going to remain volatile. Risk assets can definitely grind lower from here. Get to read and react market. There's lots of potentially negative news flows. We're being very very patient very very cautious of the next couple of weeks are likely to continue to be very volatile or still in a in a band having broken mode. Only thing certain this year with uncertainty. Let's get more market analysis right here right now with Meghan Hallman of course director of portfolio strategy at Verdant Capital Advisors. Megan your perspective on the psychological impact of a correction territory in the S & P. The psychological impact of raising tensions between Ukraine and Russia. Does it make you change your portfolio allocation. Not. No I don't think it does. It's just another wave of uncertainty and investors hate uncertainty. It started this year with the uncertainty about what the Federal Reserve was going to do and the magnitude of their rate hikes. And now it's the uncertainty around how far Putin will go with this. And in with her Ukraine in our opinion you have to try and drown out some of the headline news. We admit that you could see continued volatility in the markets because we don't know we don't know exactly how far he will take this. We know that additional sanctions will come down the line. But you gotta focus on your long term risk objectives with your portfolios. Look at some of these pullbacks assess areas of the market whether it's from a regional perspective or a sector perspective and see if these have changed. Given what's changed what's happening in the economic environment and I don't see fundamentally the U.S. economy going into some sort of a recession because of what's going on in Russia. Do you anticipate though that there could be potential I guess ripple effects that could affect the bottom lines of some U.S. companies particularly when it comes to the input costs whether it's of oil and gas whether it's of commodities like wheat or whether it's something like a finished product like a semiconductor. If you look at the market as a whole. The higher energy prices will weigh on certain sectors sectors but also benefit other sectors. So as you mentioned energy oil gas these sectors may do better at the expense of potentially consumer discretionary sectors. So this is a this is in an environment that we're in this entire year regardless of what was happening with Russia. We talked about this with the Federal Reserve as well. Active management is very important there. You know index investing you're going to be capturing all of these different sectors. You want to have active managers that can look beyond some of this noise look at the underlying balance sheets look at the fundamentals of the economy and find the right allocation for you. Caroline mentioned a good point earlier. We talked about some of the auctions that we've seen lately sort of the inflationary hedging that might be underway. But also the role of bonds in a portfolio was the safe haven. How were you thinking about what that role in a portfolio is at this moment. It's really just as far as using them for a diversification benefit. Unfortunately the benefit that bonds have had in the past whether it was from a flight to safety. It's not going to have that same benefit this year because we still are talking about a Fed tightening cycle. We still are talking about some inflation pressures. So I don't think you're getting that same benefit. However diversification is important. They will still still serve that purpose. Where you want to focus in fixed income is just be defensive. I don't see the need that you need to go into the credit areas right now. There still is stress there in the credit markets and they're way too expensive in my opinion. The other areas that you would focus on is in the short term part of the market and that's where we see more value right now is a diversification tool. And Meghan talk to us about cash allocation. We've had more and more people going to hide out there. But talk to us about the opportunity cost. In so doing all people willing to get into cash or are they more reticent. Do they want to remain invested. There's there's a nervousness I think that that could be said in the market. We do have an overweight cash position and a lot of our accounts specifically and our more moderate to moderate conservative accounts. And we've had that for for some time. We did deploy some of that cash in the first 10 percent correction this year because we do think that the underlying fundamentals of the economy are still solid. I do think that the people right now with this overall risk off sentiment aren't giving us a lot of questions about holding some excess cash. We'll be looking to deploy that as well. But right now we're sitting tight where our allocation is. Right. And always wonderful to catch up with you. Megan Hardiman in there. See I over at Verdant Capital Advisors helping us kick off the show. And coming up we're gonna talk a little bit more about a current Ukraine with a Bloomberg exclusive. Ukraine's foreign minister is going to be joining us to talk about the latest developments in the region including the potential for a nationwide state of emergency in Ukraine and whether he thinks the new sanctions on Russia from the U.S. and Europe will even work. Plus energy prices extending the rally on the back of those tensions. The International Energy Agency saying its members are ready to act to ensure global supplies. And we're gonna get some insight on food price inflation the supply chain. We talk a lot about it here. Carlos Abrams Rivera. North American Zone president for Kraft ISE. He's going to be joining the show. All that more coming up next. This is Bloomberg. All right. Back to the latest on Ukraine the European Union imposing new sanctions on twenty three high ranking officials. And we're now learning that the U.S. has expanded its slate of sanctions against key officials in Russia. Joining us right now to talk a little bit more about this is Joe Matthew Bloomberg Washington correspondent and the host of Sound on on Bloomberg Radio. And Joe I want to start off talking here not only about what the president himself is doing with regards to imposing these sanctions but about whether Congress is actually onboard with this and whether they themselves may be willing to take some measures themselves. Well you know they had a chance romaine and they didn't get it done. And so I'm not sure there's a great expectation for much coming from Capitol Hill. The Senate Foreign Relations Committee just about a month ago now went on television with the chair and ranking member to announce to the world they were on the verge of a breakthrough. Bob Menendez the senator from New Jersey Democrat chairs the Foreign Relations Committee said they were at the one yard line. Then everything fell apart because Democrats and Republicans could not agree even on the timeline. And by the way they're still arguing about this. Romania's we hear the chorus in Washington grow louder to add to sanctions. Now go for the mother lode. Now instead of the incremental steps Democrats had said all along they wanted to wait for Ukraine to cross the border and maximize the leverage of sanctions. And so that whole deal in the Senate Foreign Relations Committee fell apart. Nancy Pelosi on the other side in the House just held a news conference a short time ago to try to throw support behind what President Biden was doing saying that she thinks this is the right approach and that he's prepared to go all the way. Were the words that she used if necessary. Now this White House as we know announcing the sanctions against the company that built Nord Stream today we have to remember President Biden Romaine yesterday said that he would in fact add more sanctions if the Russians went further into Ukraine. But he's apparently now waiting to see that that happens. Joe it's interesting that you bring him Nord Stream to a lot of the analysts yesterday said this has actually brought NATO and some of the Western allies closer and more coordinated than we have been in decades. Would you agree with that assessment. Yeah. Who would have thought even a couple of weeks ago we weren't sure this was going to happen that these sanctions are something the president resisted into the great criticism from Republicans earlier in his presidency. In fact Senator Ted Cruz and a group of Republicans on Capitol Hill were holding up nominations for some time leading up to that. But now apparently there are going to be lifting the hold on those nominations as far as the rest of the world is concerned though. Yes NATO has been united by this standoff with Vladimir Putin. And even the German chancellor finally came out with it yesterday saying there would be no certification no operation something he wouldn't say out loud even a couple of weeks ago. Joe how much does the impact on gas prices energy prices factoring into what the administration is doing. How much can they sell this to the U.S. consumer right now. Well it's a great fear really because the president did warn that yes there could be some collateral damage here not just for Republicans but we know that prices could go up here and not only for energy for. For a number of commodities that we've seen the market respond to. Here the president knows that gas prices are a problem. When you start talking about four and five dollars a gallon in some states that may not be changing. The market is telling us that story now and probably being a little more straightforward than any politician would be in Washington and built it. Jay Mathews we thank you so much for the inside track. And in the next hour having an exclusive interview with the Ukrainian foreign minister to meet you. Labor 330 p.m. New York time. You do not want to miss it. Still ahead we dig deep into the commodities impact. Oil prices have been whipped soaring but wheat soybean futures have been steadily marching higher. We've got the commodity index and bream that got another seven year high and we discuss it being back. Nine minutes away from commodities close and it comes back to all of the geopolitical tensions as well Ukraine of course and those tensions sending shockwaves through the commodity space. Oil nat gas prices those that were spiking before paring back some of those early gains and supply concerns as well said wheat and soybean futures too. I think a nine year high at one point a Bloomberg commodity index the highest as well since 2014. Let's do all of this with Mike McGlone of Bloomberg Intelligence. And we say all of those things to highlight the diversity of how broad based this rally has become. When you take a look at all those different sectors that we mentioned. What stands out to you is the key focus. Well hello Taylor. The key thing I like what you and Caroline mentioned are those who go to stores soybeans right now one of the best performers but not really impacted too much by what's happening in Ukraine and Russia because it's not a major export from Ukraine but one of the largest exports from us is more related to a bad crop this year in South America. But the key thing about this time of year this is when the U.S. Corn Belt producers are making their decisions and they're going to be producing lots of soybeans. The key thing about soybeans you don't need a lot of fertilizer that adds fertilizer. Ground fertilizer got very expensive. They're going to be tons of supply come in soybeans. So expect this rally now to lead to a lot of supply the incentive. But the number one thing in commodities right now is crude oil. And it looks like we might be getting near that peak. Most notably if it's more of a takeover by Russia rather than an invasion by Russia. All right. Let's talk a little bit more about oil then. I mean obviously everybody was looking at that. Ninety nine fifty we saw on Brent crude yesterday. It's come down slightly from that. But most people are betting right now that we're going to hit 100 bucks a barrel and some people are going as high as 150 in pretty short order here. What are you seeing out there. Might well remain. If there's scorched earth we can get there. But you already mentioned in a previous segment there's a lot of incentive for other producers to bring on supply now to help alleviate this issue. This transition period to Russia taking over Ukraine and it's basically a boom for North America. Remember North America production this year and liquid fuels is probably going to exceed consumption by about 15 percent. Now you're adding price incentives. So that to me is what's going to lead to a problem in the longer term. But what's just been happening recently is this correlation of crude oil going back towards the stock market. When the stock market starts trickling down crude oil starts peaking down again and which is was different than earlier in the year. And now I think that's where it's pointing out that OK unless there's something a major to disrupt those flows which might not be happening i.e. you know scorched earth then crude oil is going to be the you know it's the higher the higher price cure is going to kick in eventually. So it's becoming a risk asset rather than what we anticipate with supply demand. I'm interested in the haven trade. My Carol Massar looks at all that digital gold. We also look at gold gold spot gold up five tenths of a percent. Are we likely to see that become the haven of choice at the moment. Oh yes. Caroline infect you with your accent in the haven of gold in the world is London. I fully expect gold to soon cross that two thousand dollar Rubicon and never look back. It's that kind of technical and fundamental pattern I see there. It does face competition from Bitcoin. The way I look at it is you can't hold gold anymore without some bitcoin in that bucket. But bitcoin is still more of a risk acid and it's taking back some of those. No those gains we've had from the last few years most notably last year are Bloomberg's intelligence is Mike Malone. They're giving us an update on what's going on in the commodity space. We're gonna keep an eye of course on some of those crude prices the bit that we're seeing going into gold. We should take a look though at what's going on back in the equity market. Stocks now back to new lows of the day here. The S & P 500 is down more than 1 percent. The NASDAQ indices Caroline right now down about one point seven percent. Volatility just picking up once again. Twenty nine handle. This isn't real. Like throw everything out bucket. We're still seeing one. Not at that moment of sort of tipping point with Europe in particular. Still not seeing sudden complete. Yeah. Throwing the baby out with bathwater. But we are seeing the VIX tick up twenty nine point nine. It's suddenly elevated to the level we used to over the course of the year. It was interesting. I was doing this statistic this morning. Shout out to Pete dear terrorists who said this 35 percent of the losses on the year to date on the S & P are coming from six stocks. And those are like Microsoft. It's Facebook it's Apple. Yeah. Oh I thought it was interesting. There was that great no doubt by the folks over at Goldman Sachs. It kind of crunched all the numbers from the thirteen filings. It shows kind of back tilt the least among hedge funds away from tech into sort of the quote unquote value names. But then you had this no doubt by Morgan Stanley where they're saying well maybe this is a contrarian signal. Everybody jump back in the pool. But I guess we had to wait until the Russian front running our chat. That's an hour from now. Oh we have a chat on this. Yes it's happening at 320. So come into these meetings. I'm just teasing. You're just teasing our audience. Keeping them engaged. We're going to deep dive much more into tech of course in the selloffs that European volatility only puts you in Idaho I was told just for a blink of an eye of the night. You don't want to stay longer. No. I wanted a three hour flight home. This is Mac. This is Bloomberg Markets to close it off to two thirty here in New York keeping an eye on what's going on in the commodity space. Someone of Nye makes crude futures. Crude futures once again have been all over the place here. At one point on the day we were up around ninety three ninety on WTI crude basically unchanged at the moment. Looks like we're going to settle right above a right below I should say. Ninety two bucks a barrel. Brent crude we should point out was almost as high as ninety nine on the day. Kind of a push pull right now between the situation going on in Ukraine and some of the concerns right now about Iranian supply. Those talks continuing to go on those nuclear talks. There are reports here that Iran has actually been preparing for a nuclear deal and actually loading more oil onto cargo ships. So something to keep an eye on here as the push pull here between these two forces are tamp down energy prices is not tamping down natural gas prices. Dutch prices up. Eleven percent once again here on the day. Europe of course going to be most affected by any escalation of the Russia Ukrainian crisis. If it does sort of I guess ripple into the commodity space. Gold futures higher here as are wheat futures as well. We're also getting some other headlines here on Ford. Ford Motor Company. Interesting commentary coming out of the CEO over at the Wolfe Research Auto Conference. He's basically saying that even ISE and gas vehicles in his words are under earning and that he plan to look for ways to boost margins on both. He also says that the Ford has too many people and too much complexity and really comparing itself to Tesla. Once again he hasn't been afraid to do that. He's saying in particular he has a 3000 or 4000 dollar more well higher distribution cost than that of Tesla. And when need therefore tackling these sorts of restructurings within talent maybe looking at stripping out costs I mean notably really saying that the company needs more restructuring talent. I wonder why this pressure on the stock that takes. Well listen but they do have higher costs but they're not really producing though. I mean isn't this whole issue of scale. I mean I mean not a dig at Ford but I mean for all the talk about all these new models that they keep talking about they're nowhere near the scale that Tesla has. And just to be fair the CEO of course saying that they're looking to boost margins on both segments of the company. So even as well as maybe more than traditional cars as well as you know auto going it's not here. It's still burning in the Atlantic Ocean. Yes. Senator I think you back in Lamborghinis. Let's go on over to another stock here that we're watching. Look at this you guys. This is Kraft Times trying to today claw its way back to gains. This is after a five percent rally yesterday that we saw here. Look. Net sales. We got some long term target updates from the company. Net sales now two to three percent. Previous guidance was 1 to 2 percent. Bottom line EPS growth up to 6 to 8 percent. Previous guidance was 4 to 6 percent. And a partnership guess this a partnership to boost plan based offerings. You can have your hot dog and eat it too. Caroline Hyde. I'm going to leave all the vegan questions to you Taylor. But we are now pleased to welcome Carlos Abrams Rivera with US President on the North America Zone at Kraft Times to talk about the partnership but talk about the consumer right now for us to call us. I'm interested in are you able to pass on higher prices. Are you able to raise these longtime growth outlooks because people want to be buying your products even if you pass on those cost increases. Well first of all thank you for having me. As you know the algorithm for the long term. So I mean everything that in terms of what's happening right now I think it's less critical in terms of a long term algorithm. Having said that you know the way we're dealing right now with inflation is really focusing on making sure we have options for our consumers in a way that we look at pricing as the last option. So we're thinking through what may be better places that we can actually bring different ingredients different packaging cost in a way for us to make sure that our products continue to be accessible and affordable for consumers. Yes. You know so far consumers have actually looked like they have been lower elasticity than we had expected. But at the same time as we go into this year we expect that to return to more normal level of elasticity. I am curious though Carlos I mean you say looking at other maybe different ways of packaging or different ingredients how do you sort of manage that. How do you sort of get your hands on those things when we know that the supply chain has been significantly disrupted even for a company with as much weight as you have. Right me for us the important things is that we are leveraging our scale that we have a scrap ISE with agility that we have as a company. And if you think about the fact that we are able to then look at different ingredient from different suppliers. Let me give an example where there is a particular ingredient Capri Sun or regional in the pandemic. We actually had some challenges on apple juice. We were able to switch over to grape juice as a base and root for different suppliers who can help us get those products in at the same time. We are also looking creatively how we think about reducing the amount of packaging we have in our products. We're doing that and things like Lunchables we are actually removing the amount of plastics in our packaged waste to actually also deal with both inflation and the tightness of supply. And as we go forward we want to continue to grab those kind of different type of solutions to consumers always thinking about pricing as the left option in our arsenal within some of the input cost and the inflationary headaches that you are facing which is causing you the most difficulties the most problems at this moment. Listen I think that if you think about the fact that we you know we have a scale so we have an advantage. How we deal with those tight supply. What I could say though is the challenge is that things that we don't control. If you think about a number of ingredients and number of suppliers that we work with and the fact that they themself may have labor constraints or their tightness in supply because of different global situations that obviously creates a different level of tightness in the overall supply chain. Our job is how do we move with agility based on what's available. And so far we have been able to do that. In fact just this morning we announced a different strategic partnership with one of our supplier Simplot in order for us to secure frozen potatoes and be able to grow the brand in a different and a unique creative way that we haven't done prior to the situation in terms of tightness of supply. So again we're thinking differently both leveraging our scale and our agility thinking creatively. I like the way you put that at any point. Do you just have to put less in. We talk a lot about so-called shadow inflation and the fact that perhaps you're just getting less within that packet. Is that something that you have to turn to if you're not willing to to put up the price. The way I think about it is we always started with the consumer first. What is it that really matters to them at Craft Hines. We have a process called grand design designs. The value is about making sure we have been the product the things that consumers do care about and we've removed the things they don't care about. So those are the things that for example places where we can add more vitamins different types of benefits and sustainability and maybe remove things that consumers have told us they don't really care about. Does a lot of the reasons why we have been able to then think about what else we can be offering consumers in things like plan based solutions. We knew that there were some opportunities based on the insights that we can find ways in which we can actually offer consumers solutions from their favorite brands with the right kind of quality and flavor and taste that they have. All we expect it from us now with a plan based solution for us again is bringing deep insights into a consumer we really care about. All right. Well let's talk a little bit more about that and specifically the partnerships that Kraft Hines has with the Knot Company which of course has been out in front with a lot of these sort of plant based alternatives. I am curious as to why there was a need to do a joint venture with the Knot company rather than for Kraft Hines to find a way to do this organically. You know for us it's actually be able to move with agility in a space that we identify as something that is fast growing. There is still about 30 percent of consumers in the United States that are looking for a more flexible Shery Ahn diet. So we know there's still a huge space for us to continue growing this space. We can bring what we know about consumers the scale that we have in the states and Canada and actually link it with a company that is very much a driven solution company in the planning environment. So they give us new technology new ways in which we can bring solutions to the marketplace. We bring this gray brand to scale that we have and we come up with products that taste just as good as the regular thing. And one of those a huge kind of way to think differently about how we go forward and grow. When do you think about more international expansion when it comes to plant based options. You know for us we're going to continue to build on that. If you know Hines Heights it's a brand that actually internationally is really have many options that already our plan base. You know we certainly are already the largest consumption consumer of us in the world because of our Heinz ketchup. We have a strong business and beings across the world as well. And we are going to continue to build them that accesses with this joint venture for us to produce to bring new offerings. Now with old new brands from Oscar Meyer Depressed Mac and Cheese to Lunchables in a way that also continues to build on a plan based knowledge. Carlos I really appreciate you taking time to be with us Carlos Abrams Rivera there. He's the president of the North American Zone over at Craft. Hi. All right. Turn your attention back to Ukraine specifically on the energy market. We're now learning that the United States plans to release more oil reserves from the Strategic Petroleum Reserves. Again the headline. The U.S. ISE a release from oil reserves. As prices rise of course on the back of the situation in Ukraine no real reaction yet here in prices. But something will definitely keep an eye on something that I believe it was. Libby cancel over at PIMCO talked about yesterday is certainly an option that could be discussed as you heard from the president yesterday saying that trying to do what he can to relieve the pressure that's heading the consumer and does not become a global effort. Of course before previously we've seen the US want to tend to allies to tap those reserves. How much how much impact can that have though. I mean like what are we talking a couple bucks off or something. That's the big question. Not an issue before this anyways. To what about natural gas. That's the key pressure point isn't it. Inflation. We're going to talk a lot about it. This. Now as we see the S & P 500 continuing to extend its decline we want to focus in on individual stocks and time for our Stock of the Hour because those fourth quarter results and 2022 outlook it topped touch should just pick a rival Home Depot sending shares to see higher. But the question always is how long will this last risk kick up with the breakdown. So what worked and how sustainable is that. Yeah. Caroline question of sustainability is always there. But let's break down with lows. It actually had a pretty strong quarter here and beating on pretty much every metric because you look at sales coming in from a year ago up some 5 percent. And also really boosting its fully outlook here as well even if it was just marginally. And also this is key here. Its gross margins those also improving slightly for the year. And as to how they've managed to do this. Well one thing of course is this larger ticket items. So if you actually break down the numbers you see those items of ISE some 50 dollars. Those sales are down some six point eight percent. Those that were above five hundred dollars. Those were up fifteen point six percent. So that brings the overall higher to 5 percent. And I also just want to point out as well is that they also managed to bring. So when you look at this it says more professionals. This is contractors. Yes. So they don't they don't need me anymore. This is what I was going to get on to. This is another reason as well is that they managed to lure in more professional contractors here. They did some sweeter deals. Also expanding loyalty programs now. Also point out that the Home Depot does actually have a larger market share for this. But Lowe's is not catching up. And that's a big deal because I mean for a while those sort of position itself is more for the consumer the regular consumer and Home Depot. It's kind of push more towards a lot of those contractors. So this is a big pivot. Yeah. And this is really what you're seeing is Lowe's catching up here. And that's what you've actually seen over the past two years. The Lowe's actually outperformed Home Depot during the pandemic. So you're starting to see those stocks now diverging after obviously what we saw with Home Depot's results yesterday as well. I mean. All right. One of the bright spots on the day Lowe's shares up a percent while we're looking at S & P down one point four percent NASDAQ. Right now roughly around 2 percent lower on the day. Bloomberg Quicktake Gupta with our Stock of the Hour. Let's toss it over to Taylor for you any moment. Remain. We are exactly three weeks away from that Fed meeting. It's not just treasuries but muni bonds that are anticipating and reacting to that. Take a look at this. You want to do the VIX or the MOVE index remain. We could do muni bond volatility all day long. Take a look at that. It just highlights some of the volatility within this segment. Let's do all of this. The more of a team. Iceland had a municipal fixed income for Neuberger Berman. And Jamie first talked to us about the Fed meeting. And we've talked a lot about treasuries and the rise in yields. How do you anticipate munis are preparing for that. It's great to be in the studio again with you Taylor. Look I think the muni market knows as the market does that the Fed is going to go at the March meeting at Neuberger. We learn a little bit more towards a 25 basis point move in that meeting and probably something more in the range of 4 to 5 moves this year. I think the market is ready for that. But as you point out we've had a really really big backup in rates so far this year and it's been sort of an outflow cycle for munis. Is that technical traditional January February. And do you expect that to reverse. We do. This is unusual. Usually the muni market does great. In January this was there's no other way to describe it. This was a rough January. We've been talking to clients nonstop and we've been explaining to them. Here's the good news. This is not a liquidity event. This is not a credit event. The economy is good. Muni credit quality is really in good shape. This is a function as you said Taylor of interest rates moving higher. And now you're getting really really compelling yields right now in 10 years for triple a munis. You can buy a muni at almost 85 90 percent of treasuries. If you buy a double a muni in 10 years that's a three and a quarter taxable equivalent yield the 10 year treasuries at 2 percent. We think that's a great deal. You talk about it not being a credit event on the high yield side in the corporate world. We've talked about spreads up to 350 380 basis points over treasuries. Is this spread widening happening in munis and are you comfortable with that. We are. So the spreads have widened because of those fund flows and because of the rates volatility not because the market has lost confidence in the underlying investments. As we've talked about in the past we've talked about Illinois spreads have widened out about 30 basis points. And then there's some other sectors in the market that we think are really compelling like the transportation sector. Let's talk about that because it is not lost on us that when we think about transportation the reopening trade you and I are sitting here in person for the first time since March 20 20. Is this the signal that those the MTA roads and bridges those are back. Yes we love the toll roads. We had a secular change in how people are coming to work. They're coming in less. They're driving more. You're seeing really really good results at the toll roads. The other area that I like are airports. Everyone you talked to friends family co-workers clients they can't wait. Get out there and start taking trips again. And if you look at the big airports Chicago O'Hare is an example really good investments. And as you point out spreads have moved wider on the volatility. I think it's a good time for investors to think about those names and get involved. Pleasure to have you. Genius Lin had a municipal fixed income for Neuberger Berman. We'll be back with much more on these equity markets as well. This is a market. More geopolitical breaking news we are hearing indeed the Ukrainian parliament has backed a nationwide state of emergency. Now we heard this morning that they were expected to back this. It was somewhat expected here. But what we do know is that the state of emergency would allow Ukrainian officials to impose restrictions on both movement and media. It may last an additional 30 days. And this is even as you've got some of the hacks off the government Web site this morning in Ukraine trying to downplay that but now officially coming out and backing that nationwide state sort of emergency Shery Ahn. Let me bring you in here. This is ruble volatility as we're thinking about the sort of cause of this and the geopolitical tensions that this has created in these markets. Is that volatility continuing or some sign that this is a buying opportunity. Yeah I mean the. When it comes to the ruble and the Russian currency we are seeing options traders now being the most bearish ever. It seems as this GEO TV chart on the Bloomberg shows in fact we haven't seen this sort of bearishness since what the Crimea conflict almost a decade ago. So we are now at the weakest level since March of 2020 for the Russian currency. And we continue to see expectations that it might even weakened to a record low against the dollar in the next two months. But very interesting. Just before we saw all of this escalation over Ukraine in the weekend investors were actually crowding these ETF. Stung by Russian stocks in the Vonnie Quinn Russia is seeing its best month since 2020. Russia capped ETF also saw its biggest inflow of funds last Tuesday. Caveat before the escalation over the weekend. And now of course risk off. Sell your Russian shares but seemingly still see oil prices elevated. Usually they work in tandem but that correlation is broken down. Yeah not anymore. So we saw that correlation. They'll turn negative. So despite the fact that we have oil above 90 the High Flyers a barrel Russian stocks are not following suit. And we are now seeing the Russian mohawks at the moment with cheaper valuations given the sell off but really not enough to entice investors back into the market. So when we talk about oil prices and the rise in oil prices there are some countries out there that have benefited greatly from this one country. That was interesting was Ecuador. There was a big write up on this day. Yes. There has been a huge outperformance ever since we saw the conservative president and will also take power back in April. And we saw those Ecuador bonds actual rally. And we're talking about jumping about 45 percent since then. And then given that their main export is oil they're benefiting here as well. But it seems to be that whole business friendly environment. This TV chart on the Bloomberg will show you that spike in the bonds from Ecuador. But it seems that business friendly policies are helping there. All right. Did you have that on your bingo card. Ecuador. Yes. Didn't you. Fortunately. All right. Sure. One nil to me at this hour watching Shery Ahn more every day co-anchor of Bloomberg Daybreak Asia. All right. Of course back here on the U.S. markets once again repeat after me. Down near the lows of the day goes down and the lows of the day S & P 500 being waited through. The drip drip effect of these sanctions that continue to roll out particularly is going to be affecting natural gas prices in Europe. And I will just point out we have the Russian one of the main Russian ETF Symantec that she was just talking about there. And the big people were running into that. But of course the last four days were down 33 percent on a four day basis. Bonds certainly not providing that safe haven bid today either. It is the sell off in bonds. This is Bloomberg. Come down to the clue Bloomberg's comprehensive cross platform coverage ahead of the US market starts right now. And this is the countdown to the close. Just 60 minutes left in the trading session. Caroline Hyde Romaine Bostick Taylor Riggs joined now by our partners in crime Connie's Carol Massar Christine Gutierrez. We welcome across TV radio YouTube a day where once again when the lows of the session Carol on a drip drip effect more sanctions more tension. Yeah absolutely. Continue to weigh on the overall market. I've been kind of keying in on the retailers T.J. Max Ross stores under pressure kind of dragging down the overall S & P retail select index and that after disappointment Kristie about some of their results. You know what's interesting is that even on a down day you would think with all the geopolitical risk you would start to see a little bit of a haven bid going into tech. And yet they're the ones that are actually leading that decline. Yeah. Well where is your safety today. It's not in bonds either. It's currently not in stocks off by one point four percent on the S & P 500 almost 60 points lower on the day is coming where we stand in the S & P. But big tech once again feeling the pain. This is what drags your benchmark slower up by one point nine percent to 152 points to the downside for the Nasdaq. The Dow Jones also off by more than a percentage point. Now as we speak and Russell 2000 the small caps no finding any level were off by one point zero seven percent. That's 21 points lower. I feel a little bit like a broken record. Energy again the only sector in the green for the year and the only sector in the green for the day as well is you're really getting I mean Brent earlier this morning touching the ninety nine handles. So energy stocks of course are up about six tenths of one percent and remain. Of course this is sort of the story of the year of this rotation out of technology. His value technology there at the bottom of the screen you're off 2 percent in discretionary as well. That sort of risk taking behavior that is off the table it's off almost three percent. Yeah. I mean there's so much talk about the S & P hitting correction. We're now potentially talking about a NASDAQ potentially getting into bear market territory down 17 percent from their all time high. Eighty five of the Nasdaq 100 stocks we should point out since that all time high are down by 10 percent or more. So this is broad based selloff you're seeing and you're seeing it again today here with Amazon lower by about two point eight percent here which point out most of the big cap tech stocks are lower here on the day including Apple Microsoft Tesla and Video Visa Comcast alphabet you name it. One of the few bright spots is in the energy space you're seeing in Diamondback Energy. The original fang by the way up one and a half percent on the day that was on the back of their earnings which are actually pretty good. And more importantly the idea that they talked about discipline discipline and not necessarily going back out there and drilling more. Remember this is a big pioneer in the shale space here. And even they're saying even with a hundred dollar oil here they're holding back a little bit. Let's talk a little bit later about TJX companies and some of the inflationary pressures they're dealing with some of the supply chain issues they're dealing with. And then right there at the bottom of your screen one of the few Russian stocks that actually trades here in the U.S. Yandex a big Internet company ride hailing service down 12 percent. And meanwhile I like the way that you talked about the breadth of the selling remain. I'm going to talk about the lack of breadth and the buying and where we are from a technical level. This is sort of a great chart that was being brought out by Oppenheimer technical analysts over that area. Well talking about how at the moment only about a third of stocks low New York Stock Exchange and above that 200 day moving average. You go back a year 85 percent for all radio audience. But looking at short it's 5 percent. We're above that 200 day moving average on a day where we see only 78 of the S & P 500 players climbing. We are having broad based selling. There is no breadth in your buying. And it's still not quite that buying opportunity Carol. Yeah. And you know Carolyn you do wonder how much of that has to do with the companies reporting. We've got fewer companies that are actually beating earnings expectations than ever. Mean you wanted to say something. Well I was just in what was the percentage that you said there. Caroline Hyde on the on the company 36 36 percent. Wow. Yeah. Yeah. So there's a lot of volatility. You do wonder about kind of the outlook that we're getting from global CEOs. Speaking of global CEOs there's so much on their plate. And Carolyn you had a great interview with the CEO and chairman of Macy's. We're talking about Jeff Janet and you guys. As always it feels like. Supply chain comes up. He did seem to indicate that maybe things are getting a little bit better. Check it out everybody. You look at kind of fresh receipts which is the lifeblood of a retailer. About 60 percent of what we brought in last week were shipments that were intended for the month of February. That was a big change from where we were over the past year. So it is getting better. But I will tell you that we're not through the supply chain issues. They will continue into 22 and into that we believe in the beginning of 23. All right. Of course that's Jeff. Good net of Macy's the CEO and chairman. I mean clearly what did you take away from your conversation with him. Because this is such an iconic brand plays to a lot of American consumers out there shopping. He talked so much about the various headwinds you still talk about the tailwinds that they've got the fact that we've got a strong fundamental economy a strong consumer but that headwinds all still their supply chain not ending really anytime soon. Also of course the overall inflationary pressure that he still sees. But what one area a bright spot that really stuck out to me labor. He actually said look the labor issues that we had a kind of past tense. We've now got the right sort of talent. We're able to bring them in. I don't know how many businesses can say that at the moment. You know it's fascinating that you bring up labor in kind of a conclusion or say in coinciding with some of those supply chain issues because to your point some of the Biden masturbation has been very very strong about saying the supply chain issues are going to kind of last for longer. But the labor side of it that's going to kind of ease as we start to see some of these pandemic restrictions kind of ebb and flow. And as we start to see this Omicron cases drop you are actually seeing some improvement in the labor market. Interesting. I'm laughing a little bit because then we hear from the B of A report that consumers were willing to still spend on clothes and goods but it was just like the grocery prices that we were getting a little bit uncomfortable with. Yeah I guess I you know look I mean it's kind of interesting. You go from sort of one head went to another. And I think you have to kind of loop this back to I guess the geopolitical fallout from Ukraine. I mean there's been a lot of talk here about whether markets should be down on something like this. I mean when you look at sort of past military conflicts that the U.S. has been involved with the Gulf War the Iraq war the 9/11 attacks you know there was a significant draw down in the markets at least in the short term. Over the long term though things tended to right size themselves. But again we're right now as we speak we are moving back towards the lows of the day here. And a lot of people are concerned about those ripple effects. You talk about inflation. Well what's inflation going to mean if oil prices goes above hundred bucks a barrel. Wheat prices continue to move higher. Soybeans at a nine year high. These are real issues there. Well it's certainly real issues. If you're over in Europe who are feeling it firsthand they have already. And you do wonder how much of this you know ultimately impacts that economy and what it means for their global growth going forward. I mean we've already been talking about recession right. We've talked about it in the U.S. and we've already seeing it Caroline over in Europe. But what's so interesting is we worry about inflation is actually how the market is pulling back on its rate hike expectations here in the Fed. We're now seeing what six rate hikes being priced in over the course of the year. The ECB they're now saying that the market the swaps market sees maybe a rate hike only in October. Previously it was September. And Taylor I'm kind of confused therefore what the bond market is trying to tell us at the moment. Other is the bond market not getting a bid right now because of weeks titillate the Fed to raise rates or is it not a haven trade. I'm sort of trying to work out what the auction tells us and what yields tell us. Yes certainly we've had some good auctions as of late. And I think a fight yield curve it just 37 basis points on the 2s tends you're only a little bit away from getting sort of near to that inversion. But it certainly seems to be Carol this pricing on the front end up 5 basis points now to a 160. What is that telling you about what that market is expecting. It does feel like both the fixed income market and the equity market trying to find what are their floors and ceilings in terms of how they settle in on levels. And it's really hard. Certainly with this conflict going on. Right folks. That's going to do it for now. We'll be back in less than an hour's time for our cross platform. Coverage on TV radio and YouTube are beyond the Bell coverage. We'll take you through today's market close. All right. Let's hone in on what's going on here in the markets and get some analysis from Lolly O'Connor senior investment strategist for being Y Mellon Investment Management Lally. A lot of talk right now about geopolitics and how they're feeding into this market. I guess the big question is here is how much do you I guess reprice based on what we know now and what we think could potentially happen. Yeah. Well thank you very much Romain for having me. I think as I you know because set up expects volatility to really persist in the next few months. Of course it's a very inopportune time in terms of having this in an environment where the markets extensively pricing in the artificial liquidity that has been pumped into the markets for the past two years to be taken out. So the market breadth was already pretty weak. And now the sentiment is getting worse due to the increase in chip what's called risk tension. So we tell people that look keep portfolios as diversified as possible to hedge against any unintended consequences. Interesting. What is the key sort of hedge that one uses at the moment. It's interesting. We're seeing the flight to gold at the moment. We are seeing certain of the haven bids come in from a currency perspective. But when you're looking at equities it feels as though tech is definitely the one under pressure where finds the love. Yeah I mean we always say Caroline Hyde. Look I mean this is going to be a year where short duration assets will outperform long duration assets. I think from a tactical perspective to your point now we have another factor which is the geopolitical risk which is the big unknown at the moment. I think I would say that it does warrant an increase demand in the U.S. dollar of course energy sector and gold from an equity perspective again based on today's movement which supports our thinking that it's a positive developments for energy for probably basic materials is going to join energy in terms of outperforming rest of the sectors as well. But especially long duration assets will come under pressure that such as you're seeing it in the tech sector. Also I think we agree that the consumer discretionary sector will will feel the pain as well with the next couple of weeks. Are you thinking about us versus the rest of the world. I think look in terms of the geopolitical risk of course Europe is feeling in a much more in a bigger way compared to the US and that is because Europe is heavily reliant on the Russian energy at the moment just to give you a sense. I think it is importing at around 40 percent of its gas from Russia and 25 percent of its crude oil from Russia. So and we always look at economists we always look like well are there any substitutes at the moment. We do not see so much of a substance at least in the short run. It's not very possible. Of course there are other countries coming into the picture such as the US Norway Canada and Qatar. From it. From an equity perspective I think Europe is feeling the pain much more than the U.S. at the moment just because of that economic dependency on the Russian energy at the moment. Do you think that there will be a shift I guess in alliances economic alliances. I mean on the back of what we're seeing now with Russia and Ukraine the idea that Russia may move closer to China and that's some of the smaller emerging market nations may have to follow. Look I think that first of all when you look at all emerging market countries remain we think that Russia is actually going to be the most hit country. The worst outcome is going to happen for the Russian economy itself because really its economic leverage is quite low. So it does actually need those types of alliances. I think for for Europe again as I said it is going to look at substitutes. It's hard to switch to those substitutes in the short run. But again there are substitutes such as Norway kind of Qatar the US for emerging markets. I think the picture is going to be really about well am I a as a country. Am I an oil exporter or commodity exporter. Nor am I an importer. I think what we're going to see that in those exporting countries the platform is going to going to be quite solid. But in important countries I think it's going to suffer. I've asked it again and again of all current guests and we had Megan Huntsman on earlier from various capital outlay. Your take on cash right now. All people seeking out cash. Are people looking to get less invested at the moment or are they willing to commit to whether portfolios are. Yeah I mean I get this question a lot to Caroline. I think it's not a bad idea to raise some cash at the moment because as I've said before it's really a guessing game at the moment. Nobody knows what will happen next. Then the volatility is here to stay. And on top of that make sure that your portfolio's ISE are as diversified as possible. Again hedge those unintended consequences. But I do agree that you need to raise some cash moment given the recent developments that we're seeing. Does that also then mean further dollar strength. Yes I think the dollar is going to strengthen further. We have always said that look the Fed is ahead and its tightening cycle as opposed to the board ECB and the Bank of Japan. While add to that also the safe haven demand that we're seeing at the moment at least towards the second half of this year I am expecting an overall U.S. dollar appreciation against major process. Always great to have your calm methodical full process with us leveling with a corner of course senior investment strategist with the NY Mellon Investment Management on a day where we continue to see of course the market under pressure. We've got a stellar lineup for you as we countdown to the closing bell. Shery Ahn is gonna be with us. Private Wealth Advisors senior portfolio manager for Morgan Stanley Private Wealth Management where she sees allocation right now. Plus you do not want to miss this exclusive conversation with the Ukrainian foreign minister says of course tensions with Russia play that part in the market sell off. And of course our conversation with none other than Dr. Anthony Fauci chief medical adviser to the president of the current state of the pandemic and whether additional booster shots could be in our future. All that so much more coming up. Stay with us. Let's bring back. This is Bloomberg Markets the goal is 43 minutes left to go here on this Wednesday coming off a Tuesday where we saw the S & P closed in correction territory now sliding deeper into that hole down about one point six percent here on the day. That's right around the lows of the day as of course everyone now positions for what potentially comes next. With regards to Russia Ukraine and the response from the western nations here you can see the main Russian ETF that tracks a lot of the stocks over there. That's lower here for a fourth straight day. The Bloomberg Commodities Edge NIKKEI that's higher here for yet another day and a flight. Now to some of those havens out there. You're seeing the VIX move higher here back above 30 year for the first time in several weeks. Take a look at some of the individual movers. Let's take a look at 3 AM here. I thought this is interesting. Nine straight days. The stock has been lower here. A lot of this has to do with more idiosyncratic issues rather with and with anything macro economic related but definitely something to keep an eye on. You're not going to get any help out a big tech today. Tesla shares down about 6 percent. One bright spot though is Tenneco. That's a lemonade deal. The big auto parts maker are going to be bought be taken private by Apollo. You see in the shares of 93 percent of course the deal is worth about 20 bucks a share. And Kodiak Science is the biotech company that I've been working on. Macular degeneration a drug down 80 percent here on the day after the latest study there failed to meet the primary endpoint. Let's bring Taylor back into the conversation here for our Options Insight segment. Taylor what are you looking at. Well you know we are 40 minutes away from that closing bell and is always counting down remain as you know to three weeks away from the big left off what is expected to be the big lift off meeting. Joining me now is Carley Garner of de Carli Trading Dot.com. And Carly talk to us about sort of QE as you describe it. Is the big drug when you take away that drug particularly when we're looking at the massive rally in commodities and the geopolitical news. What typically has been the reaction. Well I mean obviously we're starting to take the punchbowl away from the party. But the reality is the money supply is still really high and there's a lot of cash out there looking for a home. We've seen a lot of allocation from treasuries and stocks into commodities almost blindly to be honest which has pushed commodity prices on unbelievable levels. And I think that that's going to kind of reverse itself as interest rates are now starting to stabilize. And I think the stock market could stabilize at least in the short run. Here to here on a weekly chart we're sitting on support. We're a little oversold. We've retested the lows from last month which we haven't seen in a while. This crazy market we've been in since March 20 20 has been a one directional market without any retest of corrections. And we're getting that. So this is actually a little bit more normal a bit from what we used to see you know years ago when markets were a little less wild. I would pull up this chart here Carly that we have showing some of the key technical levels as we're looking out in S & P off about one point six percent in technology. Clearly the worst performer here and the RSI chart of course back down to 38. So you're nearing some of those oversold levels that many would say that there is still more selling to come. What are the technicals telling you. So what I see here is a weekly trend line is still intact. So we haven't broken that. The way I'm looking at things as long as we hold 40 200 in the S & P we should get at least a temporary bounce. Don I'm not saying this is a low for a year and it's all a party from here. That's what I'm saying. But for the next couple of weeks we should have a really sharp bounce of 40 200 holds. I think we could see 40 600 really quickly just as we get a lot of those people that were flushed out on the sell off will be chasing prices higher. You know fellow traders is probably still alive and well. So we'll see what happens. How do you think then about a trade in option strategy that lets you take advantage of maybe that short term bounce but doesn't make you go all in without some of strategy. Right. So what we like is the idea of buying call spreads using the March Mini S & P you could buy a 43 hundred forty four hundred call spread. But then the the the caveat here is we'd like to pay for it by selling a 4000 put. Now that gives us two to three hundred and fifty two to three enter points at room to be wrong. So there is some room for error but it's basically a free trade at current prices. When I put the trade together earlier was it cost your money. But it's a free trade. Now all you have to do is accept the risk of unlimited losses below 4000. You can pick up about 5000 if the market's above 40 400 in 22 days. And you know on paper looks pretty good. We'll see. Well and to your point still holding above a 40 200 level. I keep talking low level here. Really appreciate it. Carley Garner Dick Trading Dot.com always for joining us here for Options Insight today. And Caroline are rethinking the U.K. business class. Am I. I don't think so. I think it's gonna be a close one. If anything we keep things international here but it is a business flash Haidi Lun. I invest up close is signaling that Americans increased spending on home improvement projects and it still has room to grow. The chain posted better than expected quarterly sales and raised its outlook for the full year. Knows also saw operating margin improvement in the fourth quarter. Meanwhile auto parts supplier to narco is going private. If any parts of Apollo global management will acquire the. And a one point six billion dollar deal that represents a 100 percent premium to yesterday's closing price including debt. The deal has an enterprise value of seven billion dollars. The stock prices plunge though only 5 percent in the last five years. And a recent Goldman Sachs report is pointing towards a regime change. U.S. hedge funds have been slashing their positions in tech stocks and has started 20 22 more tilted towards cheaper shares than at any time in over a decade. Tech giants Apple Microsoft are still among of course the most popular long positions. But guys it's an interesting trade and tendency that we're trying to work out where the bottom is. When you're looking at big tech when you're looking at the continued selloff remain and whether or not it's time to buy or whether we're going to see further capitulation here. We've seen competing sort of I guess theories about that by strategists over at Goldman and strategists over at Morgan Stanley which tend to say that maybe this could be the good trend rate. And in fairness to Morgan Stanley over there they talk about it over Katie who pretty was talking about this idea that when you look at sort of the weightings right now of a lot of these names within these hedge funds portfolio it's well underweight where you would normally have in some of these markets right on cue because we did this at 220 tunes at 60 Minutes as we preview them right on Romaine. Some of the big sort of market commentary that we've got though we notice that there has been some certainly a lot of selling pressure technology year to date. One of the hardest hit sectors. That trend continues today. This is Bloomberg. All right. We're looking at another broad based selloff in the markets the S & P down about one point six percent but the Nasdaq and a lot of those big cap tech names are really dragging us down here. 91 stocks of the Nasdaq 100 lower on the day. And if you look at the draw down that we've seen on jobs tech stocks Apple's Amazon Netflix Facebook Meadow whatever they're called now it's down 50 percent from the September peak. I mean it was a 400. Now it's in the tubes. It's pretty incredible. I know that we typically do this sector one level. And I don't mean to front run this chart but technology is off now 17 percent from the peak that we had on January 3rd. The sector within the S & P right now we have to retire. Why. And my thing index don't we. I mean it's over. Well they've changed the name as well. So steep. Irritating. Yeah. I mean it's not even paying rent or she's going to be triple leverage cuz. Yes but I'm interested as to why. Like is this because rates are pushing highs and yields get high. Is this because we're worried about inflation. Is this because we're flying to cash because the risk off isn't enough. Did you see that juicy story though about the flows into the triple QE. This is the equal weighted triple Q's and the idea that some hedge fund managers way. And now because I know we're talking equal weighting you know in a field. Thank you Caroline. She was also behind the curve doing. This is Bernie Mac. The most crucial moments in the trading day. This is Bloomberg Markets the close with Caroline Hyde Romaine Bostick and Taylor Ray. Counting down to the close as the 20 minutes ago. Yeah. And another down day as stocks move deeper into correction territory. And it does feel pretty broad based sell off particularly if you take a look at the sectors that are down from some of the latest peaks that we had on January 3rd. Indeed it also looks not so healthy when you take a look at days like today as well. Technology clearly at the bottom along with discretionary. And this may be where some of those inflationary stories come in with those discretionary. Are people pulling back. Are they not the one sector. Romain I am a broken record. Energy is up 1 percent for your day. It is the only sector in the green for the year as well. That's 20 percent for the year. Yeah. This is basically where it's been all at least based on the trajectory that we've been seeing right now in the commodity space that could continue here. As far as big tech here. We're talking about valuations and a lot of people I guess are not really feeling it in the face of inflation in the place of what a Fed is could potentially do three weeks from now. And of course with all the tensions out there and geopolitics Apple Tesla down pretty significantly year on the day of course Tesla well into correction Terry. Apple also down 10 percent from its all time high. But look at this. I thought this was interesting. You know I have this on the board five record high on the day and not too many stocks hitting record highs and more out there up 1 percent on the day unfortunately also with lemonade up there because that's now at a record low since its IPO. No loving insurance like no to health care. What can we read from that. Well what can read at the moment is while we're worried mainly about inflation this is a great chart that was up on the bring back earlier. And I think it really speaks to the worries. Why is geopolitical tension between Russia and of course Ukraine. Why is that paying into a selloff in the US right now. It's all about the inflationary pressures. It's all about. Speaking of what happens in commodities it's why the remote commodity index is another 70 year high. Oil prices high. Metals much higher. Soft commodities too. And this is why perhaps the U.S. consumer is worried about it. We're seeing the two year break even rates at an all time high so that differentiation between the yield on the U.S. Treasury and the inflation protected version and we're pushing up to almost 4 percent at the moment we have never seen levels of this high the five year break even as also at elevated levels we are seeing a market pricing in inflationary pressures and that is wreaking havoc upon a U.S. consumer that is worried about it. We've seen what it's done to the confidence sentiments. Taylor Yeah really interesting. Caroline Hyde let me talk about the two year inflation break evens. We're going to come back to that and also do the five years because those are actually pretty well anchored. You're thinking about how inflationary how maybe immediate inflationary this story is. We want to talk about what is well also immediate inflationary and that is wage inflation that is going on in Goldman Sachs. Well they're saying that if you leave they want to read CLOs some of those bonuses. Now we know this story. The Wall Street bank was avoiding bigger pay outs to keep executives from leaving but now also maybe looking to retaliate against those who do. Let's bring in our Bloomberg senior banking reporter Shery Ahn. For more on today's big take. And I guess talk to us. Right. Couldn't you just did that actually first of all prevent people from leaving. Let's start there. It's an interesting question. If you're a senior executive at Goldman Sachs right now there is a very loud and clear message being sent from the top of the house from the CEO David Solomon that if you did want to jump ship it could prove to be very costly. On the other hand is this the move that would necessarily increase your loyalty to the firm. Perhaps some people in their chairs and seats right now could very well assume that the big compensation that they're getting could well be funny money. They could apply a discount to the compensation they're getting rated at 70 80 60 cents on the dollar and assume that will be the case going forward and then assess their opportunities if they were to leave the bank. And we should point out I mean this isn't exactly rare. I mean we've seen other banks do this other companies do this or for that matter when they've had a top talent leave and they basically say look you know you leave you lose. There is a distinction. What we've seen in the boss is when you leave to a rival your deferred bid gets taken away money that is not vested yet. When does it get taken over. When you get going to direct rival pretty much always different forms of applied different standards to what is considered a rival. And in Goldman's cases suddenly turning up the dial on that front. But what they also seem to be doing in at least two instances here they're going off to be that has already vested and been DAX. They're looking to confiscate that stock. That is rare because previously they would have only been used in cases of misconduct or malfeasance here. It's being wielded against two executives who are taking up another job. What happens with the place they run to. Do you start to factor in when you're going to jump ship that wherever you're going to has to make up for any of these sorts of losses that you might incur. And when you're having these negotiations then if you already know that your firm is going to apply a hard line when you leave the place you have to factor that into the negotiations. When Greg Lemke the head of investment bank and Goldman Sachs goes to a firm backed by Michael Dell that's part of the negotiations when. When Eric cleaned the head of asset management goes to Tiger Global One how does doom. That is a part of the conversations the normally only talk about the deferred b never talk about the possibility of losing your invested B but it does show you that you have to find someone who willing to write you that ticket and not everyone will be able to find a benefactor like that which is why it could work out to the benefit of Goldman Sachs. It can instill the fear of God in its executives that it is not going to be easy to defect. All right. Our big take today is Goldman won in its bonuses battery not a charge on the reporter on that giving us an update. Of course we are going to turn our attention back to what's going on with the situation in Ukraine. So many developments coming fast and furious. We're going to get a firsthand account here from the Ukrainian foreign minister Dmitri Coulibaly. He's going to be joining the big program in just a minute for an exclusive interview right here on Bloomberg as we wait on that interview to take place. Course we do have our eyes here on the market right around the lows of the day once again with the S & P down one point six percent. And you take a look at live export now it is 30 handle now nowhere near sort of the blow outs of a 40 level that catches your attention. But this has been sort of a slow creeping risk higher. Caroline that these equity markets today aren't responding to further Fed speak as well. Now we know Mary Daly isn't voting member at the moment but she's still talking about the inflationary pressures to high price pressures have begun to spread. And really it's time to scale back some of that stimulus this is bringing back. This is the countdown to the close. A little less than 20 minutes to go here in the trading day. We talked yesterday guys about that record drop that we saw of course saw in stocks here. I should point out that record. It's just we were close at correction levels on the S & P 500 yesterday removing a little bit deeper into that down one point seven percent right now on the S & P. And a lot of this is being dragged down by those big cap tech stocks. You bring big cap tech stocks. Caroline it's so interesting that that has been one of the big losers. As we know all year long we're thinking about the rotation back into value. Is sort of energy the place to be. I was taking a look at some of the individual sectors Caroline within the S & P that tech sector you're down 16 17 percent from that January 3rd high. Yeah. Look after the couple of days we've seen with really the Nasdaq your losing bad underperformance there. And the blue line is where the Nasdaq has been heading lower. Is this a case of the inflation read across that we get the Ukraine tensions that that feeds into in terms of commodities where that means overall you feel you don't want to be long growth stocks at the moment but you also don't want to be long cyclicals either. In the short term energy really the only place to be hiding out in equities. But overall we're also hearing again the Federal Reserve the reaction function that fed Mary Daley really talking about the fact that inflation price pressures have begun to spread. This is why the consumer is worried about Russia and Ukraine. Yeah it'll be interesting. I mean you talk about energy being the place to hide out but you wonder how long that that lasts here on this day. We should point out one of the few places that we actually did see a little bit more bright spot was in the health care sector. That's broken down just a little bit here. I was to get a little bit closer to the clothes. You had seen names like Abby which is at a record high here on this day. IBEX and Dickinson Stryker and Boston Scientific all higher on the day. Those consumer discretionary names though remain lower here are primarily being dragged down of course by Amazon Tesla Home Depot Starbucks McDonald's all lower here and remain just think. Yesterday the volatile small swings we saw in Macy's stock how it was up about 9 percent. After Ivan was so pleased with the earnings they seemed to really beat the street. But then they start to talk about inflation the fact that that's going to be sticking around. And started to factor that in is the headwind. Yeah. And I don't think anyone could dismiss that. I mean I think for a while it was like oh they'll be fine. They can sort of absorb some other costs. They can't absorb they can tick up prices on a few items here and there. But there's a lot of concern about just how resilient the consumer is going to be asked. Taylor Well it's interesting. We've done a lot of notes here on the two year break even Caroline. Would you continue to point out is that a record. But if you look at fives tens and 30s they're taking up but they're nowhere near some of the levels that we've had previously. So some commentary and strategists are saying maybe long term inflation is more anchored than maybe the two year remain and maybe consumers can absorb it in the short term. I mean it remains to be seen. And you know let's not forget you know we're heading into a Fed meeting three weeks from today or a Fed decision ISE through some today. And a lot of people of course have their eyes on that and what the response is going to be from monetary policymakers here and for that matter abroad as well over at the ECB. Let's get some more market analysis right now and bring in front of the show Sherri Paul. Private wealth adviser and senior portfolio manager for Morgan Stanley Private Wealth Management live in the studio. Sherry always wonderful to have you. All right. Well it's a day unfortunate not a wonderful day. Stocks once again on the back foot. A lot of people concerned about what's going on with geopolitics. But this selloff sort of started long before. This is about investors really being concerned about what is it. Economic growth is evaluations. What. I think it's both. I mean I think that there's a lot that investors can can choose to worry about and that they should justifiably be worried about. So we've got geo geopolitical pressures. We've got we're just coming through the earnings cycle. We've got a Fed meeting that's coming up. And I think all of those things sort of weigh in. I think what's surprising is how if you really take all of those separately how resilient this market is. Because typically any one of those subjects would be a six to seven percent price jump in the market. So it's a bit surprising. OK. Glass half full here. What about the inflation debate to the moment. Where do you stand on how much it will impact the consumer. Well I think right now you said it best. Early in the opening which is we're sort of experiencing this transitory inflation with a structural inflation. Right. So structurally we're inflating. It's you know by design the Fed this is this has been their goal. They've been trying to reflate this economy frankly over the last 20 years through three massive moments that were unexpected traumatic events that affected the economy. And so there's a structural part of this with the transitory I think sort of evaporates. And that's why at Morgan Stanley we sort of see we see inflation sort of subsiding sort of organically in some way by the second half of the year just in time for the Fed. You know this rate hiking cycle that's feels very obviously inevitable suddenly does March 16th by March etched in everyone's mind. Meanwhile Sherry Paul is going be sticking with us private wealth advisors senior portfolio manager for Morgan Stanley Private Wealth Management Course. We're talking about inflation. Well a lot of that is to do with the tension at the border Russia Ukraine. Our chief Washington correspondent Annmarie Horden stands by with a key voice on that tension. I want to welcome our Bloomberg Television Radio and YouTube audiences and his global simulcast as Ukraine tensions escalate. President Biden expanded sanctions against Russia with new penalties heading the Nord Stream to Pipeline and its corporate officers. Joining me now in an exclusive interview is Dimitri Labor Ukraine's foreign minister. Dimitri foreign minister thank you so much for your time today joining Bloomberg. My pleasure. Let's start with those fresh sanctions you've been pushing for more for the West to up the volume. Have they done it. This is. Is this enough. Well they did the first wave which is welcome and helpful but it sends it sends a strong message to Putin. But it still doesn't stop him. So it means we need more sanctions. We need the second wave. And then probably the third way until he'd keep it gets clear to him that he shouldn't make any step further. But Nord Stream to specifically that this is quite significant. It's a big move. And we welcomed this decision by the German government. The United States contributed to this to this result. But you know Ukraine has been calling for. Was calling to it to put the North Stream 2 on hold for years. No one was listening to us. If we if these sanctions had been imposed earlier perhaps we wouldn't be having this situation today. You tweeted at 3:00 o'clock 320 in the morning. Here is economy and cronies hit more hit hard hit. Now talking about Putin for you what would be enough. For me it's clear when the Russian soldiers withdraw. This is this is this will be enough in terms of the Western sanctions. Well again I mean there is there is an elaborate toolkit of sanctions prepared by the United States Britain Canada European Union and they impose them wave after one wave after another. I know that some severe financial sanctions are still in the pocket and we believe they have to be imposed in order to stop Putin. And of course the nuclear option that everyone is talking about this is a disconnection from Swift. Exactly. I know there are some doubts but this is a difficult situation. And a situation like this can not be fixed without making the difficult decisions. Do you think they should go as hard as swift but the blowback will hurt their own economies. Is this something you discussed with foreign leaders. Do you think they're ever going to be prepared to take those repercussions on their own economies themselves. A war between Russia and Ukraine will inflict much more damage on world politics and world economy. Because what is at stake now is the existence of the world order as we know it. Russia doesn't only attack Ukraine. Russia is a permanent member of the United Nations Security Council who bear a special responsibility for maintenance of peace and security. It attacks another country. If they succeed. It will be a message to everyone that rules do not work anymore and the world will be thrown in chaos. So it's better to pay now to declare that and to prevent it from happening. But this is the fourth time President Putin recognizing done. Yes. And what is the fourth time since the breakup of the Soviet Union. He has single handedly unilaterally redrawn that map. Sanctions 2014 the poisoning of Sir Jane Julius Grapel. They haven't worked have they. No. They did help a lot in 2014 when the economic sanctions were slammed against Russia. That helped to stabilize the situation on the frontline in eastern Ukraine. And President Putin realized that his actions come at a cost which he didn't want to bear. But you're absolutely right. Again if the world had reacted to Russia's previous aggressions against Georgia in Moldova in other parts of the world in a more resolved way we wouldn't have been we wouldn't be sitting here now because it's impunity that feeds Russia. And this is why he finally has to pay for what he's doing. What about your own economy. A third of Russian gas flows through those flows were capped at a pretty minimum this past year. Are you worried that at some point the Kremlin will cut off those those flows that your government gets. Billions of dollars of transit fees in Ukraine has always been a reliable transit country for Russian gas to Europe for political reasons. Russia decided to bypass Ukraine and this is how Nord Stream to Nord Stream 1 were bought. But there is a conviction in Europe that Ukraine must remain the country of a transit for gas. So yes we make money on it but Russia makes even more money on selling gas to the European to the European markets. And they still are. Even if not Shery Ahn doesn't ever come to come to light. I want to move to the diplomacy that you sent a letter to Kiev yesterday saying we should cut off diplomatic ties that Ukraine cut diplomatic ties from Russia. Will that happen. Well this issue is now under consideration by the president. We have this instrument in our kind of diplomatic toolkit. I firmly believe that we should have done it in 2014 when Russia annexed Ukrainian Crimea and invaded Donbas. This wasn't done. I didn't know what else to have. What else has to happen for the country to break up diplomatic ties with the aggressor. This doesn't mean though that we will shut down our consular presence because we want our consoles to stay in Russia and to continue providing services to our citizens. But yesterday standing next to Secretary Blinken you said plan A utilize every tool of diplomacy. Plan B fight for every inch of land. If you cut off those diplomatic ties does this mean you're now at plan B. No. Because cutting diplomatic ties does not mean that you cut off communication entirely. It's just a different mode of maintaining the line of contact and talking with each other. It's a diplomatic gesture a diplomatic decision but it doesn't mean that we will not be able to speak with each other. Ukraine for the past few weeks has been trying to play down a full scale invasion. But now we have a state of emergency in the country. What's changed. The assessment the movement of Russian forces closer to the border the more their movement inside of the occupied territories closer to the front line. And of course the decision of President Putin to recognize so-called Donetsk and Lugansk republics as in. Countries was a game changer not only for Ukraine but for global politics as such. I also want to ask you about cyber. That's something that happened today. Again more cyber attacks. Your on Foreign Ministry's Web site was hacked. This has been going on for years. Banks the metro power. In your discussions with Western leaders you talk about tit for tat with Putin in sanctions. Do they ever talk about potentially hitting Russia with cyber. No I think you know cyber attack is like nuclear weapon. No one wants. No one wants to too has happened to you in the past week. Yeah that's what Russia did to us. But we we did not receive any proposal about cheating. Russia was cyber to retaliate. Ukraine. And this is not what we are looking for. But we tried to build our own cybersecurity. And we are working closely with the United States and also with the European Union to make our own systems stronger. When President Putin recognized Crimea as a separate state 24 hours later he annexed it. Do you expect a similar scenario with Don Gaskin land. Not within the next 24 hours but you do expect that at some point in the near future. Certainly not certain at certain point. The problem with President Putin is that he lives in his own world. He doesn't have checks and balances. He doesn't have free media civil society that politicians that will be putting pressure on him or advising him. He may wake up in the morning and decide to do that. But we there is little that we will be able to do to him to convince him not to do it. But as the logic evolves we see that he pursues military goals rather than political goals. And he needs Donetsk and Lugansk as battlefields not as in not as an integral part of Russia at least at this point. I want to end on something happening in United States that's getting a lot of attention domestically which is that former President Trump as well some other Republicans are actually praising President Putin v visa v this conflict. The words were he's savvy and a genius. What's your response. Well it's it's good that the United States are not neighbors of Russia otherwise none. Not no one in the United States would have such such an opinion about President Putin. Dimitri. Claire Barr thank you so much for your time and wish you well on your trip back to Kiev. Thank you. Thank you. Back to you guys in the studio. All right. Great interview there are that with Annmarie Horden and of course the Ukraine foreign minister is still with us Sherry Ball. Private wealth adviser and senior portfolio manager for Morgan Stanley Private Wealth Management and Sherry. I just want to get your reaction here to the interview and really some of the broader market concerns about Russia Ukraine. I mean there are a lot of people that look at the economy over there and they say how connected is it really to U.S. markets. And the reality is it has very little connection to S & P 500 companies other than this issue of inflation and how rising energy prices and costs will sort of thread their way through the economic recovery at a global scale. And I think that that's the primary thing. The second thing then for investors to the United States to do would really to be to unpack this S & P 500 resist viewing this as one market and package it until 11 different stock markets because the sectors are reacting very differently to the news. We've got a bull market in energy. We've got a bear market in technology. And so I think when you're customizing portfolios you want to be very very surgical and practical about where you're investing. Right. And solidify the value rotation that we've been waiting for. I think so. You know we were waiting a long time for value rotation. So yes it sure does. I think the one thing that we're not saying though is you should be rotating on a stock. What we are saying is you should be rotating your stock portfolio so more oriented towards value and financials and healthcare and defensive value out of the cyclical trade at this point. And actually how can you rotate out of stocks when bonds are falling too at the moment aspects. Well if you were going to go cross asset are there any areas that are attractive. Right. Yeah great question because I think is were shocked. Investors in January is both the bond market and the stock market went negative at the same time. And so those core those traditional non correlations that would cushion a portfolio left the market. So rotating into commodities rates long short funds private equity other things that will give you that kind of negative correlation to cushion a portfolio that also gives you that good inflation hedge and then pursuing more income through dividend oriented strategies in the value space. And so as we of course have this eye on Ukraine a lot of people still have their eyes on the Fed which is gonna have a big decision in about three weeks time. We're actually hearing from San Francisco Fed President Bill Daley right now who's speaking at an event and she talks about the geopolitical risk says despite that they're still ready for liftoff. Yeah I mean I think that that makes sense. What's interesting about the Fed is I feel like they've raised their words but they haven't actually raised rates yet. We're still in QE. We're doing QE. Yeah. So they've raised Dani Burger ISE. And you know they may end up actually wakes up. Everybody has a calendar. It's so true. I love that. Like what. Why are we selling QE. I know. Look it's hard it's hard to understand but it is where we are. Right. So we have to kind of face the reality and invest in climate that we're in. I think this idea of raising words that we may raise rates we might raise rates and cut our words we might actually I think that you're going to see that fluidity throughout the cycle with the Fed but by no means we should not pay attention to the fact that we are in a structural inflationary phase. But I liked what Tito was saying before that perhaps the longer time break evens the fact that maybe the market thinks that inflation will pull down. Is that a belief in the Federal Reserve will manage to get it under control these six rate hikes to be price and will work. Well you know it's funny. I think the Fed is wondering is it really our job to tame inflation. Is that really in the job description. Technically and I know that's been sort of now in the market up for debate. They're going to have to thread a needle here. You know it's a big piece of yarn. It's it's a narrow needle. And the possibility of them not moving forward right now feels very slim at Morgan Stanley. We think we get five rate hikes by the end of the year. Now we're looking at at rate hikes next year. I think most of the financial firms on the street see that pool. Such a joy. Private wealth adviser senior portfolio manager for Morgan Stanley Private Wealth Management. We always wish we had more time with her. All right. Heading closer to the closing bell is here. Romaine Bostick. Caroline Hyde. Taylor Riggs. Full market coverage right here on Bloomberg. As we take you to the bell and beyond beyond the bell Bloomberg's comprehensive cross platform coverage of the U.S. market closed starts right now. And we are now two minutes away from the end of the trading day. Romaine Bostick Caroline Hyde. Taylor Riggs. Gotten you down to that closing bell. Here to help take us Beyond the Bell it's our global simulcast partners Carol Massar and Critical Gupta in for Tim Centerville. We welcome in our audiences across Bloomberg Television Radio and YouTube looking at S & P 500 at 40 to 24 right now around the lows of the day down almost 2 percent. And Carol the NASDAQ indices down about two point six percent right now. Yes staying low here with just a few minutes left in the trading session. But looking at some of the outperformance energy your best performing sector. But even that room it remain has been bouncing around. Up one point eight percent at a time unchanged at its lows and still holding on to about a 1 percent gain Kristie. But at the end of the day Carol it's a waiting story right. If you don't have tech on your side you do not have the S & P 500 on your side. And right now your biggest weight contributors your biggest weight on the S & P Five. Hundred are those big tech names at the end of the day and the breadth so we talk about that is lacking on the higher side and just doubling down on the low side. They're only 64 stocks higher on the S & P 500 right now. I think Shery Ahn had a good point. We just spoke here to our radio audience Sherri Paul Allen. Maybe we've been doing it wrong. Maybe instead of the rotation out of equities into bonds it is the rotation within equities. Is this finally the solidification or remain of the value trade energy Robinson. Where's the rotation. What do you mean. Energy is up 18 percent year to date technology. Well 17 percent year. She got Taylor Riggs that it was supposed to go into bond yields are up. Occidental Petroleum. Jason Kelly. ISE. Are we any nice really going up right now. Yeah. That's where you go. Well I've been stock by the way. My my betting on quality that soybeans and then gold. Right now I'm prepared for the nuts now. All right. Let's bring a little bit of levity here. Of course we are talking about another down day here for the markets here a four day slide now that we're looking at as markets all pretty much in correction territory. The Dow Jones Industrial Average down about hundred fifty nine points. You're going to finish the day down about one point four percent. The Nasdaq composite down about two point six percent or 344 points the S & P 500. And I think this is interesting here. We're talking about a day where it's down seventy nine points or about one point eight percent here. And we talk about this idea of 90 percent down days. Now we kind of just avoided that. About 88 percent of the stocks in the S & P 500 are finishing lower here on the day. But this is a pretty big draw down that we're seeing on a lot of these names. Energy that is your saving grace up 1 percent. The Russell 2000. Taylor is going to finish the day down by about one point eight percent here. If you're looking for rotation into small cap cyclicals dealer you better keep looking. Yeah. Well take a look at this chart and try not to make this a habit. We did it yesterday. We're going to do it again. It is that draw down in this red really highlights it remain. Yesterday we were at 10 present. Today we're now down from some of the highs that we had on January 3rd 12 percent. Again the last time that happened was March 20 20. So Caroline this really highlights the significance of this. Meanwhile we do get the idiosyncratic news of individual companies. How strong are they. What consumer growth. And we continue to see an eBay front and center right now as they see a fourth quarter adjusted earnings per share from continuing operations actually beating expectations net revenue coming back in line with expectations two point six one billion dollars. The gross merchandise volume twenty point seventy three billion about half of that nine point seven million of that coming from the United States. But seeing that international gross volume of some eleven billion they see less active buyers than had been expected 147 million versus a market one to see one hundred fifty five million. The question though is how many of these are outsized spenders are more lucrative purchases are buying your luxury handbags and going into and FTSE and even the likes of crypto as well. This is a space that eBay wants to get into but overall they are seeing a beat in the adjusted earnings per share. We really want to double down as to how much they're going to have these tough comps from within Covid crisis and how much they manage to show growth coming out of it as well as we will start to hopefully get out and spending in real life. Yeah and it'll be interesting to see. I mean we talk about some of the resiliency that we've seen with regards to consumer spending. And look so far the data that we've gotten have proved that out. But we're starting to see a lot more data from private companies. I'll start to talk about this idea that yes there are worries out there. There are worries here about the potential of consumers to continue spending particularly on lower incomes consumers who don't have the sort of that tailwind of fiscal stimulus and even some of the higher a wealth of consumers that idea as well. They bought everything they need. I mean how many more home renovations how many more cars can you really buy. You know Romain you asked me what else I had for you. Look at this chart. Let me say I'm going to sock it to you right now on a year to date. Well this is just today. Energy only gets CAC. Yeah. In the green it's up 1 percent on the day. Everything else on the day. This is sort of a second dive deeper into some of the S & P 500 sectors. Lower and lower lower at the bottom of the screen. The auto sector you're off 6 percent on the day. The retailing sector we've talked a lot about T.J. Max Lowe's Home Depot. Those inflationary pressures that's off three percent. You talk about the rotation. I mean I was teasing you a little bit earlier but you talk on a year to day basis. Energy is up 21 percent. Right. What it does nothing else is in the green right now. The next closest you're going to get our financials banks which I was told was supposed to be doing well and this builds higher down 2 percent. And of course you got those discretionary names the tech names 15 16 17 percent. I'm glad you took us there because I was looking at the year to date performance at. You're very welcome to. But consumer discretionary you know communication services information technology they're so beaten down at some point. Do you look at these names and say OK this is an oversold situation and we're going to see opportunity. Is this a buying opportunity. There's lots of money certainly sitting on the sidelines to be oversold. And videos down 30 percent. Tesla down 30 percent. eBay which you were just talking about Caroline that's down 27 percent as of the close. You know it's fascinating when we talk about. The energy sector was just a couple of months ago when you saw energy leading the gains in the S & P 500 it was your classic reopening trade right. And that transformed into your inflation head which has then transformed into potentially geopolitical risk. What's interesting to me is the energy kind of seems like it's no longer that reopening trade that risk trade. It's almost a defensive plate now. Lululemon is down 37 percent from those November. Not all. And there are people not buying tights anymore. I just I think it calls them tights anymore. But it's not as like a property cause maybe they're buying them on eBay. Oh not really a question. Let's get to eBay numbers because I mean I'm not sure if you want second hand tights but you suddenly perhaps want collectibles. Perhaps you want luxury items. eBay coming out with numbers that overall did beat. We're seeing that adjusted earnings per share. Forward looking guidance though perhaps slightly shy of expectations. Pinup girls with us senior U.S. retail analyst somebody like intelligence to dig into the numbers. I mean overall it looked as though the fourth quarter did come in line with expectations but push us forward past you know as we start to exit Covid lockdowns whether or not eBay can still sustain this sort of growth and the pivot that they've been making. Yes absolutely. I thought the fourth quarter actually was pretty good except for the active buyers numbers and here's what we're going to see what they see on the call. They were down 9 percent down a little more than expected. But really the key here is how did the high value buyers do. And that's what we're looking for when they speak on the call. Aside from bad guidance was a little light but we think that's a function of tougher comparisons. We're encouraged by the share repurchase authorization and the increase in dividend. Overall we do think that eBay has room to grow and take take rates higher with its promoted listings and payments integration now complete. You mentioned buyback ibu eBay boosting its share buyback authorization by an additional 4 billion dollars. Are putting that money to work. I mean are they putting money to work in the right places. Putnam at this point. I think so. I mean buying back their shares which trade much more than other tech retailers and also they're spending money on acquiring companies that can help them authenticate products on their platform. So we saw them do it in sneakers. We saw them do it in 3D technology. We also saw them you know authenticating watches. So there's a lot happening where they're investing to really get the customer to be comfortable in buying some of these aspirational luxury items on eBay and to really compete with other resale clapper. I'm always curious about eBay because it's it's massive yet it's still a laggard in so many ways of course to kind of the granddaddy of e-commerce out there. We talk about Amazon and some of the and some of the others. And I actually think we lost our point on there who has given us some great insights over at Bloomberg Intelligence. We should point out eBay shares are down about 10 percent. And the question guys that I was going to really get to hear is the idea of competitiveness here as particularly in that e-commerce space. We know that Amazon and of course now Wal-Mart has sort of muscled their way. You know there aren't a lot of other options. At least people don't view these other companies as other options out there. And you wonder how that plays to a company like you. Yeah but also the real rules of this world. It's interesting that they have been going into this luxury area the authentication area in the collectibles area as well. This is a stock though that actually has come down significantly from its high as you pointed out from its October peak. Like many of the tech stocks it's down some 30 percent but not a single sell on this stock. And you're seeing analysts 11 buys 18 holes on a single cell. I wonder how much been priced in and why we're seeing this pull down of some 10 percent after all. Well that's a good thing about. Preston Caroline Hyde that name because what is it. It's already down 17 18 percent leading into this report. Then add on that 10 percent. All right. So eBay we're definitely seeing that under pressure. Let me just get to some of the gainers in today's session with gamers to the center. I actually found some let's hopefully Lowe's was up 6 percent up about a quarter of a percent. So just holding on to it sales beat raising its full year forecast overstock. Did you check out this one. Because this was a big out performer. It was up about 23 percent at its close today. Real reason why ISE making a strategic investment in T 0. And if you saw that that's the broker dealer in which Overstock holds an 80 percent stake with the CEO on a little bit later on Bloomberg Technology. Tune in. That's going to be an interesting conversation right in terms of their holdings. And listen Ken since we could all use a beer right now let's say this one held on to a game. Yes. Most hilariously drink seltzer. Who dances Carol. Is that all you drink. No I'm a side ago but that's by the by. All right. Most in Coors up about four point six percent top of the S & P 500 fourth quarter net sales beating estimates. Chris. What do you got. Yeah well there was no shortage of decliners when you looked at the market today. A lot of red on the screen. I think we're going to look at some proxies here. I'll start with Apple closing down two and a half percent. I really want to use this as that proxy for big tech as we talked about the energy outperforms at the end of the day. It really is a waiting game. If you don't have big tech on your side you are not going to see the S & P 500 rally unless you have a bigger rally in those value stocks or Apple down two and a half percent. Like you said a proxy for big tech. The other one I want to point out Carol you mentioned lows. You mentioned Overstock. We also got T.J. Max's parent company out today closing down 4 percent. They actually had some good numbers come out. But the problem here was at least some of those margin expenses some low shipping costs the freight costs. Well they were going to stick around. They were so worried about that outlook. They actually aren't even providing a year and EPA view. And that really shook investors. And I'm just gonna quickly end here with Madonna down six point four percent. They all reported earnings tomorrow of course a classic pandemic trade coming to an end. And let's talk about a classic trade. This currency a risk off trade. If you're looking at GM and global macro movers we are seeing a significant inflationary push. When you look at commodities until the commodity index at a seven year high we're seeing backwardation team. I know that's a word that Taylor loves reflecting basically record deliveries one year ahead. We're seeing the highest premium being priced in at near their highest premium on record deliveries at the moment in commodities a year ahead because we're seeing money move into commodities WTI crude up of 45 cents percent. We see that in related to the risk of tone in the affects market money moving into the Swiss franc for example as you see such a haven and yields. Well rising across the board Taylor. Carol yields rising bond price lower. That summarizes the action of today. All right that's going to do it for our cross platform coverage are market closed coverage here on radio TV and YouTube. Guys catch us again. Same time same place tomorrow. All right. And to all of our audience out there on Bloomberg Television Radio and YouTube we are in a global simulcast here talking about two years into this pandemic. And some countries including here in the U.S. are starting to fully reopen and drop mask mandates. I'm joined right now by Dr. Anthony Fauci and balance of power anchor David Westin. David over to you. Thank you so much. And Dr. Roger thank you for joining us. Let me pick up on exactly what the old man was talking about. People around the world opening up. We have great Great Britain saying we want to live with Covid. But here in New York City we have the mayor saying he can't wait to do away with mask mandates with vaccine mandates. What is the risk. We're moving too quickly away from masks and vaccine mandates. Well if you look at the current guidelines of the CDC where they're basing their guidelines on cases alone as you probably have heard they will be essentially updating and modifying the metrics for their guidelines. In other words not just relying on cases but relying on severity of disease particularly hospitalizations as well as hospital capacities in a given location such as at the county level. If you look at that right now pulling back on mask is a bit risky. However if you look at the curve how sharply it's coming down on a daily basis by a certain percentage each day. In both cases and hospitalizations we are clearly heading in the right direction. The real question that we're all going to pay attention to is that when you pull back on mitigations like masking requirements be they in indoor places workplaces or the schools. What is going to be the reaction of the virus to that. Is it going to continue to go down. Is it going to plateau as opposed to keep going down or is it going to rebound. It is somewhat risky but I believe if we keep going in the right direction with the cases going down then there will be an epidemiological justification for doing that. But it's just right now just that that transition zone with a prediction of pulling back might actually be the right thing given the next iteration of what the CDC will be recommending based on the new metrics which I think will make the country look on that map of guidelines look like there's less of a risk in certain areas than was previously thought according to the prior metrics. So Dr. Fouchier staying with the CDC guidelines my understanding is the CDC now is changing their recommendation about the time between the first and second shot. The vaccine up to eight weeks a penalty because of some concerns about my card. ISE. My question to you is other data that actually indicate you get a better response more effective immune response also by prolonging the time between the first two shots David did. David there is a balance to that because if you get the first shot and you wait longer for the second shot you have a risk of not being vaccinated to the full primary component for an additional few weeks. That's a small risk but a risk if you wait a bit longer and you're in that younger age group where you actually have a risk a young man for example between twelve and 39 years old has a small risk of myocardial. Is that you make even less of a risk when you push out the second dose. But knowing that from prior experience for example in England you may get a better initial response if you give the immune system a couple of more weeks or so to mature in its response. So it's a balance. On the one hand it could make it a bit better. On the other hand it can give you vulnerability in those first few weeks following your first dose. So I don't think it's going to be a substantial difference in efficacy by any means. But the CDC made that recommendation because they wanted to make the risk of a very low adverse event i.e. myocardial is even lower by extending the time that doctor found you. There's a lot of talk of course about preventing getting Covid. There's also the other side of this which is for those folks that do actually get Covid the treatments out there that are available. There was a lot of talk when that Pfizer pill was introduced packs love it that this could potentially be a game changer. Those are the exact words that we heard from the president of the United States where a few weeks into this now how are we doing with regards to a availability of that. Hill and B the effectiveness of it in treating Covid. Well we're gonna have a lot more available as the months go by right now. Obviously it's somewhat limited. There's enough out there certainly to get the people who would need them at the high risk. Remember if you look at the data the data show very clearly that if you are within a high risk group and you get infected it prevents by about eighty nine percent the likelihood that you will progress for the need for hospitalization and ultimately dying. That doesn't mean that everyone who gets infected particularly when you're dealing with Ahmed Cron when it looks like in general the risk of hospitalization and death on a case by case basis is less so. A we have a limited amount but enough to go around for. People will likely need it. And as the months go by we're going to have even more. There'll be a lot more help in doses. How confident are you that that more is also going to be effective against additional variants out there. Well you know if you look at the variance and how they actually evade immunity from the vaccine and evade immunity from the monoclonal antibodies it's much more difficult from what we've seen so far. For those variants to evade the effect of a direct anti viral it could happen. We've seen the evolution of drug resistance but given the fact that that anybody excuse me that at any viral drug acts at a part of the replication cycle that's really a different story than that binding site where the virus binds to the cell. And sometimes when the virus mutates the antibody is no longer effective or is the antibodies that are induced by a vaccine. So I think there's less of a chance of that happening. But we know from experience for example with anti flu antivirals that the more you use them particularly if you use them over a prolonged period of time you can get the evolution of resistance which is the reason why we don't want to stop just what the antivirals we have. They're going to be very very useful as you say in some respects a game changer. But we want to continue to both discover and develop additional ones so that you have a large armamentarium available for the people who need them because they're at a greater risk of progression. And so Dr. Falchuk when we talk about I guess what other options are out there what other options are available of with regards to whether it's vaccinations or other sort of preventative measures here. We're going mask off now at least in many cities here. We're now starting to see even some of the vaccine mandates start to be dropped here. So what protection I guess do we have. Do we can we count on. Well one of the things that I think is an important message to get is that particularly when you look in the era of AMA Akron that that third boost that we're talking about is really something that makes a dramatic difference in reconstituting the waning immunity. You know the good news is that we have vaccines that are highly highly effective and quite safe. But the reality is that the protection over time wanes. We see that particularly in a situation where the protection to begin with with Armstrong is not as good as example against Delta. And it does Wayne which is the reason why we tell the people who've been vaccinated to please when your time comes up to get that booster shot we tell the unvaccinated to please get vaccinated. The data are so clear when you look at hospitalizations and deaths. The curve of the people who've been hospitalized who are unvaccinated the people who are vaccinated and the people who are vaccinated and boosted that the overwhelming percentage of the people who are in hospitalized I see units die are among the unvaccinated. So we have a very effective tool. So if you combine vaccination and as you said the availability of good antivirals such as packs elevate among others it's not the only one newer monoclonal antibodies that we will continue to develop and the wide wide availability of tests particularly at home. Fifteen minute tests I think we are in a much much better position right now to deal not only with the ability to pull back on mitigations but also in case we get which we very well might. So it's a big caveat. Another very so very very much better prepared right now than we were example a year or so ago. Doctor you said the data is there for that third shot the booster shot in addition to the two. What about for a fourth shot. There's a lot of talk about that. Do we have data that indicates whether that's effective particular for the elderly or the more vulnerable. And how much more effective is it to add the fourth shot. Well when you have waning immunity you look now for example four to five months following the third shot of an M are in a hospital. Protection still remains high at around 78 percent. But it waned a bit because remember it was up there at around 90 plus percent. So it's down still at a pretty high level. So that's the reason you've heard me and others say for the regular person you really don't need right now a fourth boost except if you have a severe degree of immuno compromised such as transplant patients and patients who are on chemotherapy for cancer. That's for the people in one category for the people who have no underlying conditions. We have to keep an eye out on that 78 percent. That's good. That's it. Four to five months. So one a month by month basis. The CDC is following whether that durability of protection against hospitalization stays steady at around the 70s or if it keeps coming back down. If it comes back down at some point you'll have to make a decision. Do you want to give a fourth dose to the most vulnerable. And obviously those would be the elderly those who have underlying conditions those who are at a greater risk to get a serious outcome. So really what we're doing David is we're monitoring we're monitoring it on a month by month basis. The documentary I would like to turn to is slightly personal issue and that's Dr. Paul Farmer. I know that he was a very close friend of yours. I knew him reasonably well spent time with him. It does strike me that we have lost a towering figure in the health care system in particular public health circles doesn't reflect from around what his death means and what we could learn from what he did during his time here on Earth that could inform both this pandemic and other things coming up down the road. Well Paul as you're right was a very dear friend of me and my family. My wife and my and my children. He's truly a once in a lifetime person for so many reasons. I think people maybe not fully appreciate the total breadth of why he was such a great man. First of all his passion for equity. He personally not only was an advocate for people in the lower and middle income countries such as Haiti where he spent a lot of time in Rwanda and other low and middle income countries. The passion to make equity for health care was extraordinary. But not only was he an advocate for it he lived it. He went to Haiti and lived there. He has a home in Haiti. He goes out into the wild as it were to visit patients in their own home. He was totally beloved by people in Haiti. The same holds true in Rwanda. That's one part of it. Equity a compassionate physician. But look at the things he did. He built a first class medical school hospital in Haiti. First class. No one said everyone said it could not possibly be done that you could do that in a place like Haiti. He trained Haitian nurses and Haitian physicians so that they could be self-sufficient on their own. He just recently built and is the chancellor of an Institute for Global Health Equity in a rural part of Rwanda. When you think of that that's totally amazing. And then superimposed upon that a person who had such love for humanity everybody who came into contact with him absolutely loved him. Truly an extraordinary man an irreplaceable loss to the world to global health and to the. And to the idea and the passion that we should all have for equity. It's just I mean it took me a few days to just even be able to talk about it. It was so painful to realize that we no longer have Paul Farmer among us. And we're sorry for your loss. Frankly we're sorry for the loss of all of us. And Dr. Paul Farmer thank you so much. The doctor at the factory is chief medical adviser to President Biden as well as the director of the National Institute of Allergy and Infectious Diseases at the National Institutes of Health. Back to you. All right we're going to wrap up our coverage here of Bob Bloomberg Markets closing. Guys I want to bring into this conversation here because we just heard from Dr. Phil Gee. And I mean we're coming up on the two year anniversary here of this pandemic. He says it was declared here in the United States. And look you go from city to city. Masks are being mass mandates are being rescinded. Vaccine mandates are even being rescinded. They want us all to get back out there and participate in this economy. I mean I still have a two year old and a four year old who aren't yet vaccinated and they can't get. Yeah I want to know about when that is going to be Pan. We want to make sure that it's the most safest eye opening is possible. But there are still parents that worried about school closures about what they can really do the limitations that still when there are a whole community who have yet to receive that vaccine. And we broaden this out to some of the structural changes that underwent that the economy underwent. Covid really forced the economy consumers to face. We talked about the structural changes in consumer habits whether that was more grocery store shopping member that was more shopping online. We fold that into the inflationary effects that we've all seen the supply chain disruptions. And that will be a big topic of discussion as we dive into that. Yeah we're going to do that in the triple take. I mean we kind of talked about supply chain yesterday here. Caroline was course looking at chip space and but this is obviously most much broader from that. Of course we spent some time out at the port of L.A.. I mean a lot of this sort of predated the pandemic and it was really the pandemic that sort of exacerbated it. Now the question is sort of where do we go from here. And it just takes an issue. But also the inflation that ran and how much are consumers willing to come to new to purchase at the higher end. How much are we going to start to see people pushing back against these price increases. All right. Well you know we got some earnings out of TJX which actually had done great during the pandemic year but now they're making some warnings here. Natalie Cutler of BDO is going to be joining us. Great data. And Marshall Cohen chief industry adviser for the market research company the NPD Group. Don't go anywhere. This is Bloomberg.

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The Close Full Show (2/23/2022)

Caroline Hyde, Romaine Bostick & Taylor Riggs bring you the latest news and analysis leading up to the final minutes and seconds before the closing bell on Wall Street and tackles the latest on Ukraine, the impact on commodities and the state of the pandemic Guests Today: Megan Horneman of Verdence Capital Advisors, Carlos Abrams-Rivera of Heinz, Jamie Iselin of Neuberger Berman, Lale Akoner of BNY Mellon Investment Management, Ukraine Foreign Minister Dmytro Kulebra, Dr. Anthony Fauci of NIAID (Source: Bloomberg)

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