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00:00♪ THIS IS BLOOMBERG. ♪ > > THE MOST CRUCIAL MOMENTS IN THE TRADING DAY. THIS IS "BLOOMBERG MARKETS: THE CLOSE." WITH ROMAINE BOSTICK, CAROLINE HYDE, AND TAYLOR RIGGS. ♪ TIM: 2:00 P.M. -- ROMAINE: 2:00 P.M. IN NEW YORK. I'M ROMAINE BOSTICK. TAYLOR: I'M TAYLOR RIGGS. KATIE: I'M KATIE GREIFELD IN FOR CAROLINE HYDE. ROMAINE: FROM ENCOURAGED THE DISCOURAGED IN A SPAN OF 24 HOURS -- TECH EARNINGS AND STOCKS GIVING UP GROUND, BUT THERE'S A SILVER LINING IN CONSUMER SPENDING. ALL MAJOR CREDIT CARD PLATFORMS, SUGGESTING SOME DEGREE OF ECONOMIC STRENGTH. WE WILL CHECK IN WITH THE CFO OF A VISA TO SEE WHAT THE FUTURE HOLDS. WITH INFLATION AT A 40 YEAR HIGH, WE WILL SPEAK TO THE COFOUNDER OF A MAJOR FOOD GROUP ABOUT WHETHER SKYROCKETING FOOD PRICES ARE HAVING AN IMPACT ON THE WORLD OF LUXURY DINING. ALL OF THAT AND MORE, COMING UP THIS HOUR. LET'S CHECK ON THE MARKETS. FINAL DAY OF APRIL HERE. WE STARTED OFF THE MONTH WITH A MARKET THAT LOOKED LIKE IT WAS DUSTING ITSELF OFF AFTER MOVING INTO CORRECTION MODE. NOW WE ARE BACK INTO A BEAR MARKET, ON THE NASDAQ AND THE NASDAQ 100, KICKING OFF WHAT IS NOT GOING TO BE THE WORST START TO A YEAR INTO DECADES HERE. A LOT OF THAT REALLY GOES BACK TO THE MACRO BACKDROP, TO THE FUNDAMENTAL BACKDROP. I GUESS TO SOME DEGREE, TO THE YIELD BACKDROP AS WELL. TAYLOR: I WAS LOOKING AT THE SUPERLATIVES. THE FOURTH WEEKLY DECLINE IN THE S & P AMTEK, LOOKING AT THE LOWEST LEVELS WE HAVE NOT SEEN SINCE MARCH OR DECEMBER HERE OF 2020. SOME SIGNIFICANT WEEKLY AND MONTHLY DECLINES AS WELL. KATIE: LOOKS LIKE IT'S GOING TO BE A BRUTAL AND -- END TO A BRUTAL MONTH. THERE WAS NOWHERE TO HIDE THIS MONTH. TAYLOR: LET'S TALK ABOUT THE CROSS ASSET CLASS WITH THE YIELD BACKDROP. IN THE LAST YEAR, UP 250 BASIS POINTS ON THE TWO-YEAR YIELD. THAT IS PRETTY INCREDIBLE. ROMAINE: SURPRISED THAT HAS NOT SHOWN UP IN MY SAVINGS ACCOUNT. KATIE: WE WILL TALK ABOUT THAT. YOU ARE STILL OUT ABOUT 270 HERE ON THE TWO-YEAR YIELD. YOU ARE GETTING SOME BIG CLIMBS ON THE WEEK, AND HERE ON THE MONTH. YOU ARE NOW LOOKING AT THE LONGEST STREAK OF OUR FOR TWO-YEAR YIELDS, FOR NINE STRAIGHT MONTHS. THAT IS WHAT WE CALL RELENTLESS. YOU TALKED ABOUT THE ECONOMIC BACKDROP. ONE THING WE HAVE BEEN ACTUALLY REALLY FOCUSED ON TODAY HAS BEEN THE EMPLOYMENT COST INDEX, RIGHT ? IT CAME OUT OF NOWHERE. IT'S NOT SOMETHING WE TYPICALLY TRACK ON A QUARTERLY BASIS. BUT IN THIS QUARTER -- AND TODAY REALLY PRESENTED A GOOD OPPORTUNITY TO LOOK AT IT -- THE NUMBER THAT STOOD OUT TO ME WAS THE NUMBER. THE FASTEST SINCE 1984. ROMAINE: IT LOOKS A LITTLE BIT BETTER, BUT I WAS LIKE, NOT REALLY, THE MORE YOU DIG INTO IT UNDER THE HOOD, THE MORE IT SEEMS LIKE THIS IS THE NON-TRANSITORY ELEMENT OF INFLATION. IT IS GOOD IF YOU ARE A WORKER, THE QUESTION IS, WHEN DOES IT BECOME A BREAKING POINT? [OVERLAPPING VOICES] KATHY JOINS US FROM MORGAN STANLEY TO GIVE US MORE INSIGHT INTO THIS MARKET. THE OTHER THING I THOUGHT WAS INTERESTING, LOOKING AT THE MONTHLY PERFORMANCE OF THE MARKET HERE, WAS A LOT OF THE DEFENSIVE AREAS OF THE MARKET, THE PLACES WHERE PEOPLE WOULD NORMALLY GO TO HIDE OUT DIDN'T NECESSARILY SEEM TO BE PLACES THAT OFFERED MUCH OF A PRICE RETURN THIS MONTH EITHER. > > I AGREE, I THINK WE HAVE SEEN THE DEFENSIVE AREA OF THE MARKET, THE PLACE THAT WE DO LIKE TO GO AND PUT SOME MONEY IN, IT'S BEEN OVERBOUGHT AT THIS POINT. IT IS EXPENSIVE, THE OPPORTUNITY IS NOT THERE ANYMORE. IT'S GOTTEN AHEAD A LITTLE BIT AS WELL. THE IDEA OF THERE'S NOWHERE TO HIDE IS COMPLETELY ACCURATE AND VERY CHALLENGING TO WORK THROUGH A MARKET LIKE THIS. THERE HAVE BEEN SO MANY THINGS THAT HAVE HAPPENED. IN MY CAREER, I'VE NEVER SEEN SO MANY DIFFERENT ELEMENTS COLLIDE AT ONCE WHERE WE -- AT ONCE TO CREATE WHERE WE ARE RIGHT NOW, THE SUPPLY CHAIN, COVID, INTEREST RATE HIKES, INFLATION, THE UKRAINE WAR, THERE ARE SO MANY THINGS HAPPENING, THAT WE REALLY HAVE TO BE THOUGHTFUL ABOUT WHERE WE ARE GOING WITH OUR CLIENTS, GOING FORWARD IN THE NEXT THREE TO SIX MONTHS. TAYLOR: WHAT DO YOU DO ON SIGNIFICANT PULLBACKS THAT WE HAVE ON A DAILY, ON A WEEKLY BASIS? HOW DO YOU START TO DETERMINE WHEN THERE IS A LITTLE BIT OF A BOTTOMING OUT, THAT CAN PROVIDE A BETTER ENTRY POINT FOR THOSE LONGER-TERM INVESTORS? > > QUICK QUESTION, TAYLOR, I WISH I HAD THE ANSWER TO THAT. WHAT WE HAVE TO DO IS LOOK BACK AT THE HISTORY AND TRY TO FIND SOME RHYME OR REASON TO WHAT IS GOING ON. CERTAINLY, THE FED HAS THEIR HANDS TIED IN THE SENSE OF INFLATION. WE KNOW RATES ARE GOING TO HAVE TO GO UP. FOR EXAMPLE, NEXT WEEK, THERE'S A BIG QUESTION OF HOW MUCH WILL THEY GO? PROBABLY 50 BASIS POINTS. DESPITE ALL THE NEGATIVE NEWS IN THE MARKET, THEY ARE PROBABLY GOING TO HAVE TO GO THERE. WHAT ARE WE DOING WITH CLIENTS' MONEY? FIXED INCOME IS LOOKING MORE ATTRACTIVE, AS THE FIXED-INCOME AREA OF THE MARKET HAS BEEN HIT SO HARD. WE ARE STARTING TO RECONSIDER THE CLIENTS WE HAVE NOT LOOKED AT IN A FEW YEARS. BONDS ARE SIMPLE AND STRAIGHTFORWARD. WE MIGHT POTENTIALLY IN THE FUTURE HAVE TO BE CONCERNED ABOUT INCOME CASH FLOWS AND ALSO TAX RATES. THAT IS ONE. GROWTH IS THE BIGGEST PLACE -- EQUITY IS THE BIGGEST GROWTH AREA OVER LONG PERIODS OF TIME. THE BABY BOOMERS ARE A LITTLE BIT NERVOUS ABOUT, WHERE DO WE GO, WHAT DO WE DO? I WOULD SAY LONGEVITY IS THERE. WE HAVE TO THINK ABOUT LONGEVITY. WE DO INDEED HAVE THE EQUITY MARKET [INDISCERNIBLE] -- IN THE NEXT THREE TO SIX MONTHS START AVERAGING IN. TAYLOR: YOU'RE DEFINITELY SPEAKING TAYLOR -- KATIE: YOU'RE DEFINITELY SPEAKING TAYLOR'S LANGUAGE. BUT I WANT TO TALK ABOUT THE EQUITY MARKETS. WE ARE AT THE END OF THE BIGGEST WE CAN EARNINGS SEASON -- WEEK IN EARNINGS SEASON. AMAZON COMES TO MIND. WHAT IS YOUR READ OF THE REPORTING SEASON SO FAR? WHAT IS IT SAY ABOUT WHERE WE COULD BE HEADED IN THE NEXT FEW MONTHS? > > I THINK, AGAIN, FORWARD-LOOKING, NOBODY REALLY CARES AS MUCH AS, WHAT HAVE YOU DONE FOR ME THE YEAR BEFORE? IT IS, WHAT HAVE YOU DONE FOR ME LATELY AND WHERE CAN WE GO WITH THIS? MY READ IS THAT WE STILL HAVE A LITTLE BIT OF VOLATILITY TO COME. THERE HAVE TO BE SOME NORMALIZING IN THE MARKET IN THE COMPANIES HAVE TO FIGURE OUT WHETHER THEY ARE GOING TO ABSORB SOME OF THE PRICE INCREASES OR THE COST OF BORROWING OR IF THEY ARE GOING TO PUT THAT ON THE CONSUMER -- AND THAT IS GOING TO BE THE BALANCING ACT. I DO THINK THERE'S GOING TO BE AN ADJUSTMENT PERIOD, BUT EVENTUALLY THE QUALITY GROWTH COMPANIES, THAT ARE NOT AS OVERPRICED AS SOME OF THEIR PEERS, ARE THE PLACES THAT WE WANT TO BE INVESTING OUR CLIENTS' MONEY. ROMAINE: ALWAYS WONDERFUL TO CATCH UP WITH YOU, KATHY E., MORGAN STANLEY PRIVATE WEALTH MANAGING DIRECTOR. WE HAVE MORE COMING UP, INCLUDING THE OUTLOOK FOR CONSUMER SPENDING. WE WILL HEAR FROM THE VISA CFO, JOINING THE SHOW AND JUST A MOMENT. ALSO THE COFOUNDER OF MAJOR FOOD GROUP. THEY'VE GOT A MAJOR SET UP AT FORMULA ONE. WE WILL TALK ABOUT THAT AND INFLATION. AMAZON SPENT A TON OF MONEY, TRYING TO KEEP UP WITH ALL OF THE DEMAND DURING THE COVID PANDEMIC, WELL, THOSE COSTS ARE COMING BACK TO BITE THEM -- THE WORST SHARES IN QUITE SOME TIME HERE WOULD ALL THAT AND MORE, COMING UP IN A BIT. THIS IS BLOOMBERG. TAYLOR: U.S. EMPLOYMENT COSTS JUMPED BY THE MOST ON RECORD AT THE START OF THE YEAR, ADDING ADDITIONAL CONCERNS ABOUT MORE PERSISTENT INFLATION. LET'S BRING IN OUR VERY OWN BLOOMBERG'S MOLLY F., WE WERE TALKING ABOUT THIS 15 MINUTES AGO, SOME OF THE BIGGEST YEAR-OVER-YEARS AS WELL SINCE THE 1980'S. IS THIS SOME OF THE PERSISTENCE WE HAVE BEEN TALKING ABOUT? > > THAT'S EXACTLY IT. YOU TALK ABOUT THE COMPANIES ALL DAY LONG HOW THEY ARE ALL TRYING TO RAISE WAGES AND GET TALENT BECAUSE IT IS SO DIFFICULT RIGHT NOW. WE ARE RELEASING IT COMING THROUGH IN THE DATA TODAY. THE THIRD STRAIGHT INCREASE ON A QUARTER OVER QUARTER BASIS OF AT LEAST 1%. THAT IS A BIG STRETCH IN THIS INDEX. WE HAVEN'T SEEN THAT BEFORE. ROMAINE: THERE'S CONCERN NOW THAT THIS COULD LEAD TO SOME COMPANIES PARING BACK. THERE'S A LOT OF TALK ABOUT THE AMAZON EARNINGS WE GOT LAST NIGHT. MAYBE THEY OVER HIRED TOO MUCH. BASED ON THIS ONE PARTICULAR DATA POINT, ONE QUARTER HERE, IS THERE AN IDEA THIS COULD CAUSE A REVERSAL IN THE GAINS WE HAVE SEEN IN THE LABOR MARKET? > > IT IS MORE POINTING TO WHAT TAYLOR WAS JUST SAYING, THERE IS SUCH A DEMAND FOR LABOR AND OUTSTRIPPING OF SUPPLY, COMPANIES DEFINITELY ARE STILL LOOKING TO HIRE. WE ARE EXPECTING A GOOD REPORT FOR JOBS NEXT WEEK FOR THE APRIL JOBS REPORT. BUT IT'S REALLY THAT CONCERN, ONE COMPANIES ARE RAISING PAY FOR THEIR WORKERS, THEY NEED TO RAISE PRICES TO OFFSET THAT. THAT'S WHAT THE CONCERN IS, THE SELF-FULFILLING LOOP. KATIE: WE KNOW THE LABOR MARKET IS TIGHT. WE HAVE BEEN HEARING ABOUT THIS WORK FOR TELIK FOR MONTH. WE SAW THIS INDEX JUMP BY THE MOST ON RECORD. HOW MUCH HIGHER COULD GO FROM HERE? > > WE STILL DO HAVE QUITE A FEW JOBS TO RECOVER, FROM THE DIP INITIALLY IN MARCH OF 2020. LEISURE AND HOSPITALITY ALONE, LOOK AT ALL THE JOB OPENINGS. IT IS A LITTLE UNDER 2 MILLION OPENINGS IN THAT INDUSTRY. THERE'S STILL DEFINITELY A WAYS TO GO. THAT'S REALLY WHAT IS COMP LOCATED -- IS COMPLICATED AS WE LOOK AT THIS EARNINGS SEASON AND COMPANIES ARE SEEING HOW FAR THEY CAN PUSH IT WITH THESE PRICE INCREASES BEFORE SOME OF THE DEMAND IS GOING TO START TAKING A HIT. ROMAINE: MOLLY SMITH, HELPING US BREAK DOWN AND INFUSING -- BREAK DOWN SOME CONFUSING DATA PYRAMID LOOK AT THE CREDIT CARD COMPANIES. THEY HAVE BEEN DOING WELL. PEOPLE ARE SWIPING THE CARDS BACK AND FORTH BUT THERE'S ALSO CONCERNS, THE CFO OF THE ROMAINE: A COUPLE DAYS AGO, THESE ARE EARNINGS CAME OUT AND THEY WERE VERY GOOD, IT SHOWED PEOPLE ARE STILL SPENDING BUT SOME ANALYSTS HAVE SOME CONFIRMS. CUTTING THE PRICE TARGET FOR A VISA. SOME OF THIS IS A MACRO CHALLENGES OUT THERE, INCLUDING FOR THE POTENTIAL OF THE RECESSION IN EUROPE NEXT YEAR. JOINING US NOW TO TALK A LITTLE BIT MORE ABOUT THIS IS THE CFO OF THESE ARE RIGHT NOW, -- THE CFO OF VISA RIGHT NOW, VASANT PRABHU. I LOOK AT THE DATA THAT CAME OUT OF YOUR COMPANY AND YOUR COMPETITORS, IT ALL SEEMS TO SUGGEST THE SAME THING, PEOPLE ARE SPENDING AT LEVELS ARE MUCH HIGHER THAN WHAT THEY WERE DOING MAYBE A YEAR OR SO AGO. BUT THEN PEOPLE LOOK AT THE MACRO ECONOMIC BACKDROP AND SAY, HOW LONG CAN THIS LAST? IS THIS JUST RICH PEOPLE WHO HAVE THE CASH TO BE ABLE TO SPEND DOING THIS? WHAT HAPPENS TO THE FOLKS WHO ARE AT THE LOWER END OF THE INCOME SPECTRUM? > > AS YOU SAW, SPENDING HAS BEEN VERY STABLE GLOBALLY FOR THE LAST FOUR QUARTERS. WOULD LIKE TO LOOK AT NUMBERS INDEX AT 2019 -- IN 2019, PRE-COVID. IT'S BEEN VERY STABLE. WE HAVE LOOKED AT LOW INCOME PEOPLE, AFFLUENT PEOPLE, AFFLUENCE CARD OWNERS -- SPENDING HAS BEEN QUITE STRONG AT ALL LEVELS OF INCOME. WE FIND THE CARDHOLDERS SPENDING ON DISCRETIONARY ITEMS LIKE TRAVEL, RESTAURANTS, ENTERTAINMENT. IN EUROPE, AND THE U.K., WE SAW 36% GROWTH YEAR-OVER-YEAR. THERE IS NO EVIDENCE AT THIS POINT IN ANY OF OUR NUMBERS AT THEIR IS ANY -- THAT THERE IS ANY PULLBACK OR ANY LOSS OF CONFIDENCE OR ANY SLOW DOWN IN ANY GENERAL PART OF THE ECONOMY, HIGH INCOME, LOW INCOME, ACROSS CATEGORIES, VERY STABLE, SO FAR SO THAT. TAYLOR: WHAT IS INTERESTING IS WE HAVE BEEN TALKING A LOT ABOUT ON THIS PROGRAM ABOUT THE SAME DOLLARS BUT JUST SHIFTING THE WAY THAT WE ARE SPENDING IT FROM GOODS NOW BACK INTO SERVICES -- ARE YOU SEEING THOSE TRENDS? ARE WE STILL EQUALLY BUYING LOTS OF EVERYTHING? > > YES. THAT IS VERY MUCH THE CASE. HISTORICALLY, PRE-PANDEMIC, IN OUR SPEND, SERVICES WERE A HIGHER PART OF THE MIX THAN PRODUCT AND GOODS. A THES PANDEMIC HAPPENS, -- AS THE PANDEMIC HAPPENS, SERVICES DIPPED AND GOODS BECAME A BIGGER COMPONENT. IN THE LAST QUARTER, WE HAVE SEEN SERVICES COME BACK. THERE'S NO QUESTION THERE HAS BEEN SOME SHIFT BACK TO SERVICES. IT'S PROBABLY GOING TO GO BACK TO WHERE IT WAS. THEN DISCRETIONARY SPENDING. TRAVEL, RESTAURANTS, ENTERTAINMENT HAS BEEN COMING BACK IN A BIG WAY. TRAVEL BEING ONE OF THE BIGGEST CATEGORIES FOR US, RELATED TO DOMESTIC AND CROSS-BORDER. IT'S BEEN A MASSIVE RECOVERY IN THE LAST FEW MONTHS. THE WORLD IS OPENING UP. MASSIVE PENT-UP DEMAND FOR TRAVEL. TRAVEL HAS COME BACK IN A VERY BIG WAY. TAYLOR: YOU BEAT EXPECTATIONS ACROSS THE BOARD. BUT YOU DID SEE ANALYSTS FLAGGED THAT IT LOOKS LIKE YOU WEST DEBIT WAS -- U.S. DEBIT WAS SLOWING DOWN. IS THERE ANY READTHROUGH ON THAT, THE STATE OF THE U.S. CONSUMER, BEYOND WHAT YOU HAVE WALKED THROUGH? > > IF YOU LOOK AT THE NUMBERS, WE INDEXED ABOUT 53% LAST YEAR AND THE SECOND QUARTER, 2019 IN THE SECOND QUARTER, 54% THE FIRST THREE WEEKS OF APRIL. YOU REALLY CANNOT COMPARE TO LAST YEAR. BECAUSE THERE WAS A HUGE AMOUNT OF STIMULUS SPENDING GOING ON, CHECKS WERE GOING OUT IN APRIL. SO WE LIKE TO LOOK AT THE INDEX PRE-COVID. IT IS EASIER TO INTERPRET. THERE IS NO EVIDENCE WHATSOEVER OF A SLOWDOWN IN CREDIT. CREDIT IS GOING MUCH FASTER THAN IT WAS PRE-PANDEMIC. THERE'S BEEN A MASSIVE AMOUNT OF DIGITIZATION OF CASH. MORE PEOPLE USING DIGITAL FORMS OF PAYMENT. EVERYTHING GLOBALLY. DEBIT IS THE BIGGEST BENEFICIARY OF THAT. THE FIRST DEVICE PEOPLE USE TO START USING DIGITAL FORMS OF PAYMENT IS USING THEIR DEBIT CREDENTIAL -- SO SO FAR DEBIT HAS BEEN VERY RESILIENT, EVEN IF CREDIT HAS COME BACK, EVEN AS THE WORLD HAS NORMALIZED. ROMAINE: LET'S TALK ABOUT THE STRUCTURE OF SOME OF YOUR BUSINESS, BEYOND WHAT PEOPLE ARE SPENDING OVERALL. THERE'S BEEN A LOT OF DISCUSSION ABOUT THE FEES RETAILERS HAVE TO PAY, EVERY TIME SOMEONE LIKE ME GOES AND BUYS SOMETHING. WE KNOW THERE'S BEEN A LOT OF PUSHBACK BY A COALITION OF RETAILERS, EITHER CUTTING THE FEES OR ELIMINATING THEM ALTOGETHER. WE KNOW THERE'S BEEN A LOT OF DISCUSSION IN CONGRESS KNOW ABOUT THE ANTITRUST APPLICATIONS OF THIS. ARE YOU IN NEGOTIATION RIGHT NOW WITH ANY OF THE MAJOR RETAIL GROUPS ABOUT REDUCING OR ELIMINATING THE FEES? > > WHO HAVE REGULAR DISCUSSIONS WITH VARIOUS MERCHANTS. WE JUST FINISHED EXTENDING OUR AGREEMENT WITH AMAZON RECENTLY. IT HAPPENS ALL THE TIME. IT'S IMPORTANT TO NOTE THAT WE TAKE A VERY SMALL SLIVER OF IT, A BIG PORTION OF IT IS INTERCHANGE THAT GOES TO OUR ISSUING BANKS, ANOTHER PORTION OF IT GOES TO THE ACQUIRER, THE ACQUIRING BANK THAT THE MERCHANT HAS -- SO THE VISA COMPONENT IS A SMALL FEE. THIS IS SOMETHING THAT IS DONE AS LITTLE AS WE CAN ACROSS MERCHANT CATEGORIES AND WE WILL CONTINUE TO TALK TO PEOPLE ABOUT IT. ROMAINE: HAVE ANY OF THE MAJOR REGULATORS IN THE U.S. CONTACTED YOU IN A FORMAL MANNER ABOUT THIS AT ALL? > > WE ALWAYS HAVE CONTACTS WITH REGULATORS, VARIOUS GOVERNMENTAL ENTITIES, WE HAVE QUESTIONS AND WE RESPOND TO THEM, WE ARE IN COMPLIANCE WITH ALL THE LAWS AND REGULATIONS. THAT IS AN ONGOING CONVERSATION THAT WILL BE EVOLVING. WE HAVE IT IN THE U.S. AND AROUND THE WORLD. TAYLOR: CAN WE TALK ABOUT HOW YOU ARE THINKING ABOUT THE ECONOMY AROUND THE WORLD AS WELL? EUROPEAN CENTRAL BANKERS HAVE BEEN HINTING AT A RECESSION -- PERHAPS HERE IN THE U.S. ARE YOU SEEING A SLOWDOWN IN THE EUROPEAN AND GLOBAL CONSUMER? > > AT THIS POINT, NO SIGNS OF SLOW DOWN. AS YOU LOOK AROUND THE WORLD, THINGS ARE REMARKABLY STABLE. THE BEST WAY TO LOOK AT IT IS TO COMPARE THAT -- COMPARE THE TRENDS TO WHERE THEY WERE PRE-COVID. YOU HAVE STIMULUS PAYMENTS, ETC. YOU NEED TO LOOK PAST THE NOISE AND LOOK AT, WHERE ARE WE AND WHERE HAVE WE BEEN FOR THE LAST THREE TO FOUR QUARTERS? RELATIVE TO WHERE THINGS WERE PRE-COVID. IT'S BEEN SURPRISINGLY STABLE. VERY STABLE. REALLY NOT INDICATIONS YET THAT THERE IS ANY SLOWDOWN OR PULLBACK IN THE U.S. OR EUROPE, MOST PARTS OF THE WORLD. THE ONLY PLACES WHERE WE SEE IMPACTS IS WHERE GOVERNMENTS IMPOSE COVID RESTRICTIONS, AND THAT IS ONLY IN SOME PARTS OF ASIA, A FEW COUNTRIES IN ASIA. SPENDING HAS BEEN VERY STRONG AND STABLE FOR QUITE A WHILE AND OPEN COUNTRIES. ROMAINE: REALLY APPRECIATE YOU TAKING TIME TO CATCH UP WITH US, THE CFO OF VISA, VASANT PRABHU. SHARES HIGHER ON THE WEEK AFTER THE EARNINGS A FEW DAYS AGO. WE ARE SETTING UP FOR A DOWN DAY AND A DOWN WEEK, AND OF COURSE A DOWN MONTH. TAYLOR: LET ME BRING YOU SOME SUPERLATIVES. KATIE, LOOKING AT THE WEEKLY DECLINE ON THE S & P AND TECH -- SOME OF THE LOWEST NUMBERS SINCE 2020. I'M LOOKING AT THE BIGGEST DECLINE ON THE S & P SINCE MARCH OF 2020 ON A MONTHLY BASIS. TECHNOLOGY, HAVING ITS BIGGEST MONTHLY LOSS SINCE OCTOBER OF 2008 -- THAT IS A BIG NUMBER. KATIE: ALONG WITH IT, LET'S BRING IN BITCOIN. IT IS DOWN BELOW $39,000 PER COIN. YOU HAVE NOT SEEN A BREAK ABOVE $50,000 ALL YEAR. ROMAINE: I THINK THIS IS GOING TO BE A PART OF THE STORY, TOO. THE SELLOFF IN STOCKS AND BONDS, WHERE IS THE MONEY GOING? YOU ARE NOT SEEING THAT SHOW UP IN CRYPTO. IT'S FAIRLY MODEST GAINS YOU SAW AND COMMODITIES. WHERE IS IT GOING? TAYLOR: 10 TO 12 PERCENT OF HIS PORTFOLIO'S CACHED -- THEY HAVE THE ABILITY TO BE MORE DEFENSIVE. THE CASH IS ACTUALLY [OVERLAPPING VOICES] IT IS ALL RELATIVE. JIMMY CHANG WAS TELLING US THAT. THERE'S A LOT OF DYNAMICS IN THESE MARKETS. MARK: TEXAS GOVERNOR GREG ABBOTT'S ORDER CRACKDOWN IS GENERATING FRESH BACKLASH. MEXICO'S ECONOMY MINISTER SAYS A NEW RAIL LINE TO THE U.S. WILL GO THROUGH NEW MEXICO, INSTEAD OF THE LONE STAR STATE. MEXICO IS ANGRY ABOUT THE CHAOS AT THE BORDER CAUSED BY GOVERNOR ABBOTT'S SURPRISE ORDER A FEW WEEKS AGO FORCING COMMERCIAL TRUCKS COMING FROM MEXICO TO UNDERGO ADDITIONAL INSPECTIONS. WHILE TEXAS OFFICIALS DID NOT UNCOVER ANY CONTRABAND OR UNDOCUMENTED MIGRANTS, THEY CREATED HOURS LONG DELAYS THAT LEFT FRESH PRODUCE TO ROT AND CAUSED HAVOC WITH SUPPLY CHAINS. PRESIDENT BIDEN AND MEXICO'S PRESIDENT ARE HOLDING A VIRTUAL MEETING TODAY, DISCUSSING EFFORTS TO STEM THE FLOW OF MIGRANTS TO THE SOUTHERN U.S. BORDER. AHEAD OF THE PLANS TO LET TITLE 42 EXPIRE. THE LAW ALLOWED MIGRANTS TO BE EXPELLED WITHOUT HEARING ASYLUM CLAIMS. MR. BIDEN IS ALSO HOPING MEXICO WILL JOIN IN IMPOSING PENALTIES ON RUSSIA FOR ITS INVASION OF UKRAINE. IN TEHRAN, THOUSANDS OF PALESTINIANS EXPRESSED SUPPORT FOR PALESTINE TODAY. THE ANNUAL MARCH HAS BEEN SUSPENDED FOR TWO YEARS, DUE TO THE CORONAVIRUS PANDEMIC. DEMONSTRATORS CHANTED "DEATH TO ISRAEL" AND "DEATH TO AMERICA." COMMON STATEMENTS SINCE THE ISLAMIC REVOLUTION. THEY SET FIRE TO AMERICAN, ISRAELI, AND BRITISH FLAGS. BLOOMBERG HAS LEARNED ONE OF THE OWNERS OF THE LOS ANGELES DODGERS BASEBALL TEAM BEAT UP COMPETITION FROM RIVAL CONSORTIUMS, INCLUDING BUSINESSMEN. THE SALE IS ONE OF THE MOST CLOSELY WATCHED AND POLITICALLY CHARGED DEALS IN THE SPORTS WORLD. A LEAK TWIST EMERGED ON FRIDAY WHEN A BRITISH BILLIONAIRE MADE A LATE FOR .2 5 BILLION POUND BID FOR THE WEST LONDON CLUB. GLOBAL NEWS, 24 HOURS A DAY, ON AIR AND ON QUICKTAKE BY BLOOMBERG, POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN MORE THAN 120 COUNTRIES. I'M MARK CRUMPTON. THIS IS BLOOMBERG. ♪ ROMAINE: A LITTLE AFTER 2:30 HERE IN NEW YORK, LET'S GET YOU CAUGHT UP ON WHAT IS HAPPENING IN THE COMMODITIES SPACE -- NYMEX DOWN ON THE DAY. WE ARE SETTING UP NOW FOR WHAT IS GOING TO BE A FIFTH STRAIGHT MONTH OF GAINS. WE WERE DOWN AS LOW AS 92, 93 DOLLARS A BARREL AT ONE POINT. NOW IT IS 109, 110 DOLLARS, NOT GETTING MUCH RELIEF OUT THERE AT ALL. DIESEL FUEL RIGHT NOW THAT YOU ARE TAKING A LOOK AT, SORRY, FUTURES AT ONE POINT HERE WERE AT A RECORD HIGH ON THE DAY HERE, DOWN SLIGHTLY HERE. THAT MIGHT BE THE WRONG TICKER. BUT BEAR WITH ME HERE. THE FUTURES ARE THE HIGHEST WE HAVE SEEN. THE STORY IS MOVING TO REFINED PRODUCTS AND HOW LONG THE INFLATIONARY PRESSURES IN THAT AREA PERSIST. WITH REGARDS TO GREEN, A LOT OF THE FOOD CROPS -- GRAIN, A LOT OF THE FOOD CROPS ARE DOWN. ON A MONTHLY BASIS, THEY ARE HIGHER. YOU DON'T WANT TO LOOK AT WHAT THEY LOOK LIKE ON THE ONE YEAR BASIS -- THEY ARE THROUGH THE ROOF. [LAUGHTER] TAYLOR: I WAS GOING TO SAY THAT. MAY BE A DAY LOOKS OK, BUT HE WEEK, MONTH, A YEAR DOES NOT LOOK OK. WE HAVE BEEN TALKING ABOUT THE PRICE OF FINE DINING, ANY DINING FOR THAT MATTER -- IT IS GETTING VERY EXPENSIVE. RESTAURANT MENU PRICES INCREASING THE HIGHEST RATE, GOING BACK 40 YEARS. THIS IS ACCORDING TO RECENT FEDERAL DATA. THE INDUSTRY HAS BEEN GRAPPLING WITH HIGHER COMMODITY COSTS AND OF COURSE STRUGGLING SUPPLY CHAINS. JOINING US FROM MIAMI BEACH IS A MAJOR FOOD GROUP COFOUNDER. GREAT TO HAVE YOU, JEFF. HOW ARE YOU THINKING ABOUT THE MASSIVE FOOD INFLATION, HOW ARE YOU SORT OF GRAPPLING WITH ALL OF THESE RISING INPUT COSTS FOR YOUR BUSINESS? > > WELL, FIRST OF ALL, THANK YOU FOR HAVING ME. GREAT TO BE WITH YOU GUYS. I THINK IT IS -- I THINK IT'S BEEN AN INCREDIBLE INCREASE. INFLATION IS REAL. I THINK PEOPLE HAVE TO BE UNDERSTANDING OF MENU PRICE INCREASES THAT ARE HAPPENING ACROSS THE BOARD, WHETHER IT IS IN FINE DINING, OR WHETHER IT IS IN MORE CASUAL STYLE DINING. PRICES ARE GOING UP IN LEVELS THAT WE HAVE NEVER SEEN BEFORE -- WHETHER IT IS CHICKEN, BEEF, ANY SORT OF PROTEIN THROUGH THE ROOF, EVEN THE MORE BASIC COMMODITIES, AS YOU MENTIONED, HAVE GONE TO LEVELS WE HAVE NEVER SEEN IN MORE THAN A DECADE. SO, I THINK EVERYONE JUST MAKES TO REALLY UNDERSTAND -- WE RESPOND BY TRYING TO RAISE PRICES, IN A RESPONSIBLE WAY. WE ARE DOING OUR BEST TO KEEP THEM AS THEY ARE. BUT AT THE END OF THE DAY, WE HAVE TO REACT TO THE MARKET. I THINK YOU ARE SEEING THAT ACROSS MOST BIG RESTAURANT GROUPS. FINE DINING RESTAURANT GROUPS LIKE OURS OR EVEN LARGER CHAINS. KATIE: LET'S TALK ABOUT NEXT WEEKEND WHAT YOU HAVE PLANNED. FOUR -- FORMULA ONE IS COMING TO MIAMI. HOW IS IT GOING? ARE PEOPLE BUYING THE $30,000 TABLES? > > THEY ARE. WHICH IS FANTASTIC. SO WE ARE THROWING WHAT SHOULD BE THE MOST INCREDIBLE DINNER PARTY RIGHT ON THE SAND, ON THE BEACH, IN MIAMI. VERY PRIVATE, INTIMATE. 200 PEOPLE ONLY. EVERY NIGHT, THURSDAY, FRIDAY, SATURDAY, SUNDAY, IT'S GOING TO BE THE ULTIMATE CARBONE DINNER PARTY EXPERIENCE. MY PARTNER IS GOING TO BE PERSONALLY COOKING IT. THROUGHOUT THE NIGHT, THERE WILL BE INCREDIBLE ACTIVATIONS, PERFORMANCES, EACH NIGHT WE WILL END WITH AN HOUR-LONG CONCERT BY LOCAL PERFORMANCES. ROMAINE: YEAH, LIKE WHO? > > WE ARE NOT SAYING IT YET. WE ARE KEEPING IT A SURPRISE. ROMAINE: THE RUMOR MILL HAS BEEN BUZZING ALREADY, SHALL I THROW OUT SOME NAMES? IS DRAKE COMING? > > I CAN'T SAY. [LAUGHTER] I DON'T KNOW. ROMAINE: ALL RIGHT. SUFFICE TO SAY, I'M SURE IT WILL BE SOMETHING DEFINITELY WILL WANT TO SEE -- WHEN WE SAW THIS STORY ON THE BLOOMBERG TERMINAL A FEW DAYS AGO, ABOUT CARBONE BEACH, I'M WONDERING, IS THIS GOING TO BE THE FUTURE FOR A LOT OF DINING OUT? SORT OF MORE OF THESE EXCLUSIVE, HIGH-END EVENTS? COSTLY, OBVIOUSLY, FOR THE PEOPLE ATTENDING, BUT I WOULD ASSUME IT IS GOING TO BE PROFITABLE FOR RESTAURANTEURS USED TO THEIR RAZOR THIN MARGINS. > > I THINK IN GENERAL, PEOPLE WANT INCREDIBLE EXPERIENCES. WE WANT TO MAKE MEMORIES. -- THEY WANT TO MAKE MEMORIES. THEY WANT TO DO THINGS THAT ARE UNIQUE. I THINK THAT YOU SEE IT AS AN EVOLUTION. CARBONE, THE RESTAURANT, IS TRULY A UNIQUE EXPERIENCE. THAT'S WHY IT'S BECOME WHAT IT'S BECOME. I THINK THE EVOLUTION INTO CARBONE BEACH IS THE OPPORTUNITY TO BUILD SOMETHING TRULY INCREDIBLE -- YOU KNOW? WE ARE LITERALLY BUILDING AN ENTIRE BUILDING ESSENTIALLY ON THE SAND. THAT WILL TURN INTO THE MOST KIND OF -- A VERY, VERY LUXURIOUS CLUB ENVIRONMENT, FROM WHERE THE MINUTE YOU WALK IN THE DOOR, YOU ARE BEING COVERED IN CARBONE SPECIALTIES, ALONGSIDE THE GREATEST CHAMPAGNE, THE CAVIARS, DRINKS -- IT WILL REALLY BE LIKE ATTENDING WHAT WE WOULD THINK WOULD BE KIND OF THE QUICK, ESSENTIAL, OVER-THE-TOP DINNER PARTY THAT YOU WOULD NEVER FORGET. WHEN YOU ADD ON TO THAT THE INCREDIBLE FOOD WE ARE GOING TO SERVE AT THE DINNER, THEN SOME OF THE BEST PERFORMERS IN THE WORLD, DOING AN HOUR-LONG CONCERT TO FINISH THE DINNER, I THINK IT IS GOING TO BE ONE OF THE INCREDIBLE NIGHTS. TAYLOR: IT SORT OF BRINGS UP THE BIG QUESTION, IF MIAMI OR VEGAS OR IS MIDTOWN NEW YORK CITY TO? -- IS MIDTOWN NEW YORK CITY DEAD? > > WELL, I DON'T THINK NEW YORK WILL EVER BE DEAD. [LAUGHTER] OFFICE TENDENCY IS NOT WHERE WE WOULD LIKE TO SEE IT. WE ARE VERY FORTUNATE WITH OUR RESTAURANT. THE GRILL, THE LOBSTER CLUB, THEY REGAINED MOMENTUM. BACK TO 2019 LEVELS. SO WE ARE REALLY PROUD OF THAT. WE HAVE WORKED HARD TO MAKE THAT HAPPEN. CERTAINLY, THE EVENTS, THE POOL -- THE EVENTS BUSINESS IS COMING BACK. IT IS NO WAY BACK TO WHERE IT NEEDS TO BE. I THINK MIDTOWN IS STILL STRUGGLING. BUT AT THE END OF THE DAY, NEW YORK'S VERY RESILIENT. NEW YORK WILL COME BACK. I THINK THAT MIDTOWN WILL REGAIN ITS POTENCY, IN TERMS OF THE DENSITY OF PEOPLE OR. -- PEOPLE THERE. FORTUNATELY, WE HAVE GOTTEN BUSINESSES THERE BACK TO WHERE THEY NEED TO BE. SOON ENOUGH, IT WILL COME BACK ACROSS THE BOARD. DEAR -- TO YOUR POINT, HAVING RESTAURANTS ALL OVER NEW YORK CITY, IT IS OBVIOUSLY A STARK CONTRAST TO DOWNTOWN, WHERE THINGS ARE BUSIER THAN EVER. TAYLOR: WE WISH YOU LUCK IN THE MEANTIME IN MIAMI BEACH. REALLY APPRECIATE YOUR TIME HERE. JEFF IS ELASTIC, -- JEFF ZALAZ NICK, MAJOR GROUP FOOD CO-FOUNDER. [OVERLAPPING VOICES] TAYLOR: STILL AHEAD, AMAZON, STILL FAILING TO DELIVER. SHARES TUMBLING TODAY. THE E-COMMERCE COMPANY, SEEING ITS BIGGEST DROP SINCE OCTOBER OF 2011. WE WILL HAVE THE LATEST WITH DAVID KIRKPATRICK, NEXT. THIS IS BLOOMBERG. ♪ ROMAINE: TAYLOR, HERE'S A LOOK AT THE BIG MOVERS ON THE BACK OF ANALYSTS RECOMMENDATIONS -- ROKU OF RATED -- ROKU BEAT ESTIMATES FOR REVENUE. FORWARD SENTIMENTS REFLECT THE SENTIMENT. SHARES HIGHER. LET'S MOVE ON WITH HER SHE'S. RAISING THE PRICE TARGET. -- HERSHEY'S, RAISING THE PRICE TARGET. SHARES BASICALLY UNCHANGED. FINALLY WE'VE GOT TO TALK AMAZON. JP MORGAN, CUTTING THE PRICE TARGET ON AMAZON FOLLOWING THE DISAPPOINTING OUTLOOK. JP MORGAN GOING FROM $4500 TO $4000. AMAZON HAVING ITS WORST DAY SINCE 2006. THOSE ARE YOUR TOPS. TAYLOR: IT GRABS OUR ATTENTION. LET'S STICK WITH AMAZON. DAVID KIRKPATRICK IS HERE TO WALK US THROUGH THIS. I'M CURIOUS IF THIS IS A HERE TO RESET THE MARKET NEEDED, GIVEN THE VALUATIONS HAVE BEEN PERHAPS INDICATING SOME OF THESE INDIVIDUAL COMPANIES NEEDED TO RESET OUR EXPECTATION. > > THANKS, TAYLOR. FOR ONE THING, WALL STREET PUTS ENORMOUS PRESSURE WITH ANALYST EXPECTATIONS ON THESE COMPANIES. MAYBE THE WHOLE REACTION IS UNFAIR, MAKES FOR UNFAIR PREMISES. BASICALLY, AMAZON DID HAVE A DOWN QUARTER. POSSIBLY THE WORST QUARTER THEY HAVE HAD SINCE 2015. BUT YOU'VE GOT TO REMEMBER -- ONE OF THE BIG REASONS THEY LOST MONEY WAS BECAUSE RIVIAN LOST VALUE, WHICH THEY INVESTED IN, THE VALUE OF IT WAS DONE BY $8 BILLION. BUT IN THE PREVIOUS QUARTER IT WAS UP BY $12 BILLION. EASY COME, EASY GO. FORD HAS THE SAME PROBLEM. AMAZON REMAINS A HUGELY PROMISING LONG-TERM COMPANY FOR ALL OF US. ROMAINE: NO DOUBT. I DON'T THINK ANYONE IS SAYING IT'S NOT. I AM CURIOUS ABOUT SOME OF THE BROADER ISSUES COMING OUT OF THIS PANDEMIC. THE IDEA THAT THESE COMPANIES THAT HAVE BENEFITED HANDSOMELY FROM THE PANDEMIC, AMAZON AMONG THEM, THEY SPEND A LOT OF MONEY TO BENEFIT FROM THE PANDEMIC -- NO POST-PANDEMIC, DO YOU NEED ALL THAT CAPACITY, DO YOU NEED ALL THOSE WORKERS, DO YOU NEED ALL THAT STUFF THAT YOU BUILT OUT OVER THE LAST TWO YEARS FOR THE NEXT TWO YEARS FORWARD? > > THAT'S A GREAT QUESTION, AND THE ANSWER IS, THEY PROBABLY HAVE EXCESS CAPACITY, AND THEY ACTUALLY SAID YESTERDAY THAT THERE WERE CASES WHERE THEY REALLY HAD MORE CAPACITY THAN THEY NEEDED. I DON'T THINK THEY HAVE EVER SAID THAT BEFORE. BUT WE HAVE ALSO GONE THROUGH A BIZARRE, UNIQUE TIME, WHERE THE DEGREE TO WHICH THEY BENEFITED, ESPECIALLY IN 2020, WAS JUST PHENOMENAL. THERE STOCKS SOARED. THEY STARTED TO SUPPLY -- THEIR STOCK SOARED. THEY STARTED TO SUPPLY EVERYTHING WE NEEDED. THEY STARTED TO CREATE A BIGGER LOGISTICS CAPABILITY DURING THAT TIME, IN SHORT ORDER. NOW THEY HAVE OVER INFLATED. THAT IS EXPECTED. I DON'T THINK WE SHOULD BE TOO SURPRISED THAT AMAZON IS HAVING TO RESET EXPECTATIONS OF SOMEWHAT. LONG-TERM, THERE ARE ESTIMATES FOR THEIR STOCK TO GO TO $4000 -- YOU JUST MENTIONED THAT FROM $2400 NOW, THIS COMPANY STILL HAS GREAT PROSPECTS. KATIE: FOLLOWING UP ON THAT, SOMETHING HAPPEN THINKING ABOUT TODAY WATCHING THE SHARES DOWN 16% AT THIS MOMENT, WE ARE TALKING ABOUT AMAZON HERE, THE WORLD'S THIRD-LARGEST COMPANY, IS GOING TO MAKE MONEY, IF IT HAD ABOUT QUARTER -- BUT AT WHAT POINT DOES THIS BECOME AN OVERREACTION? > > IT IS HARD TO SAY, IN MY OPINION, GIVEN THAT THESE STOCKS HAVE BEEN REALLY HIGHLY VALUED FOR THE LAST COUPLE OF YEARS IN PARTICULAR. IT PROBABLY IS NOT AN OVERREACTION TO SOME DEGREE. FUNDAMENTALLY RESET OUR EXPECTATIONS FOR THE ENTIRE INTERNET SECTOR. THE STOCK PRICES OF EACH OF THESE COMPANIES REFLECTS THAT TO ONE DEGREE OR ANOTHER. AMAZON DOES NOT NEED AS MUCH OF A RESET AS NETFLIX. BUT IT HAS NOT HAD NEARLY AS BIG A RESET AS NETFLIX. I THINK IT IS A NEW WORLD. WE ARE ALL STILL ADJUSTING TO IT. THIS WORLD OF INCREDIBLY HIGH INFLATION, WITH THE UKRAINE WAR, CREATING UNBELIEVABLE UNCERTAINTY. IT IS A VERY TOUGH TIME TO RUN A COMPANY. LET'S FACE IT. TAYLOR: REALLY APPRECIATE YOUR PERSPECTIVE, DAVID KIRKPATRICK. TALKING ABOUT A BIG RESET HERE IN THESE MARKETS. COMING UP, WE WILL TALK ABOUT THE BIG EVENT THE MARKETS WILL BE WATCHING NEXT WEEK -- IT IS ALL ABOUT THE FED. HOW AGGRESSIVE WILL THEY BE? THE ANSWER TO THAT CONVERSATION HIS NEXT. -- IS NEXT. THIS IS BLOOMBERG. ♪ ROMAINE: WELCOME BACK. WE NOW TURN TO OUR DAILY SEGMENT HIGHLIGHTING THE BEST OF THE BERGEN INTELLIGENCE. WE ARE COUNTING YOU DOWN TO THE CLOSE. THE BIG FED MEETING IS ABOUT FIVE DAYS AWAY. WE WILL LEARN THE BIG DECISION BY JAY POWELL IN THE FED, WHETHER THEY HIKE RATES, HOW HIGH THEY HIKE THEM. WHAT THEY WILL DO WITH THE BALANCE SHEET. LET'S START OFF WITH ANGELO, 50 BASIS POINTS APPEARS TO BE A DONE DEAL. > > IT WILL MOST LIKELY BE 50 BASIS POINTS THEY WILL ANNOUNCE RUNOFF. GOVERNOR BRAINARD TOLD US EVEN IF THEY ANNOUNCE RUNOFF IN MAY, THEY WILL STARTED IN JUNE. WE GOT ALL THE INFORMATION BASICALLY IN THE MARCH MINUTES. WE KIND OF KNOW WHAT WE ARE EXPECTING. EXPECT A PRETTY FORCEFUL AND URGENT TONE FROM CHAIR POWELL IN THE PRESS CONFERENCE -- IN THE PRESS CONFERENCE. TAYLOR: ONE READING THIS WEEK SAID IT MIGHT BE SCARIER IF WE ONLY SEE 25 OR IF YOU SEE 75 -- OR IF YOU SEE 75. IT MIGHT DEPICT THEY ARE MORE WORRIED THAN THEY SHOULD BE. IS THAT WHAT THE MARKET IS LOOKING AT, TO GET A NON-REACTION, SO TO SPEAK? > > THEY ARE LOOKING AT A LITTLE BIT MORE THAN 50 IN THIS MEETING, 50 IN A VERY HAWKISH POWELL COULD LEAD TO A HIKE PRICE INTO THIS YEAR. BUT, LOOK, FOR INSTANCE, LET'S TAKE BULLARD, HE WANTS TO HAVE 3.5% BY THE END OF THE YEAR -- IT IS UP TO 3.6% OF YOUR RENNET WITH THE NEW NUMBERS. THERE'S DEFINITELY A SENSE OF URGENCY. THERE'S A STRING OF 50 BASIS POINT HIKES IN A FORCEFUL FED THAT SAYS THAT BASICALLY WE ARE NOT GOING TO MOVE IN INCREMENTS SMALLER THAN 50 UNTIL INFLATION SLOWS DOWN QUITE A BIT. KATIE: THERE'S A STORY ON THE TERMINAL RIGHT NOW THAT IF YOU LOOK AT THE SOFT MARKET, ACTUALLY, IT IS ON THE CUSP OF PRICING AND 75 BASIS POINTS FOR THE JUNE MEETING. OBVIOUSLY WE HAVE NOT SEEN THAT SINCE ABOUT 1994. SHOULD WE START SEEING FOR THAT? COULD THIS FED < GO > 75 BASIS POINTS? > > THE FED COULD DEFINITELY GO 75 BASIS POINTS. THEY TELEGRAPHED 50 IN MAY. YOU COULD SEE A FIT -- A SITUATION WHERE JIM BULLARD WILL DISSENT THIS MEETING AND INFLATION IS PRICE TO GO DOWN A LITTLE BIT, BUT NOT THAT MUCH. IF THE MARKET IS PRICING IN 8.2% FOR NEXT MONTH'S CPI, 3% LOWER FROM THE YEAR-OVER-YEAR NUMBER WE HAD LAST YEAR, LET'S SAY THAT IS CLOSER TO 8.5% OR EVEN HIGHER -- AND MAYBE THAT WILL BE ENOUGH TO PROMPT THE FED TO HIKE 75 POINTS IN JUNE. ROMAINE: THE MASS STILL CONFUSES ME. YOU LOOK AT TWO-YEAR -- MATH STILL CONFUSES ME. YOU LOOK AT THE TWO-YEAR YIELD THAT IS STILL NEGATIVE. AN INDEX, THAT IF YOU EXTRAPOLATE BACKWARDS OUT OF THAT, WOULD SEEM TO SUGGEST BASELINE INFLATION, ONCE YOU STRIP A TRANSITORY STUFF, SOMEWHERE IN THE 4% RANGE HERE. I DON'T UNDERSTAND HOW GOING 50, 50, WHATEVER THE ONE IS AFTER THAT GETS THEM FED TO A PLACE WHERE THEY ARE EFFECTIVELY MEETING THEIR MANDATES FOR INFLATION BACK DOWN TO 10%. > > THE MARKET IS -- BACK TO 2%. > > IT LOOKS LIKE THE EQUILIBRIUM IS CLOSER TO 3% VERSUS A 2% IT WAS RUNNING OUT FOR A LONG TIME. THE FED NEEDS TO GET UP TO ABOUT 3%, MAYBE 3.5% IN ORDER TO GET THE DEMAND PRESSURES OUT OF THE MARKET AND EVEN THINGS OUT. IF YOU LOOK AT IT, IN THE PAST, THEY ARE WAY BEHIND THE CURVE NOW. HOWEVER IF YOU LOOK AT USING SOME FORWARD METRICS, PERHAPS THEY GET TO A MORE NEUTRAL LEVEL OVER THE NEXT 12 MONTHS OR SO. TAYLOR: REALLY APPRECIATE IT, ANGELO, JOINING US HERE FROM BLOOMBERG INTELLIGENCE. GREAT TEAM OVER THERE. MAKE SURE TO USE THE FUNCTION TV GO ON THE TERMINAL. --TV < GO > ON THE TERMINAL. ROMAINE: CAN WE GET BACK TO THE MARKETS HERE? WE WERE ALL TRACKING THE NASDAQ AS IT WENT HIGHER AND HIGHER, 3%, 4% -- NOW WE ARE WATCHING THE EXACT REVERSAL OF IT TODAY. TAYLOR: LOOKING AT ONE OF THE BIGGEST DECLINES WE HAVE NOT SEEN SINCE, WELL, THREE DAYS AGO, THAT IS THE VOLATILITY THAT'S BEEN WHAT IS SONG THE MARKET. KATIE: IF YOU LOOK AT THE SESSION LOWS FOR STOCKS, SESSION HIGHS FOR THE VIX, IT IS ABOUT 32, ON ITS WAY TO THE 33 HANDLE. IT SPEAKS ABOUT THE MOOD IN THE MARKET. ROMAINE: WE ONLY HAVE NINE STOCKS THAT ARE HIGHER IN THE NASDAQ 100. THE SENTIMENT IS COMPLETELY -- HAS COMPLETELY SHIFTED. WE HAVE GOTTEN THROUGH THE BIG MEGA CAP NAMES NOW. AS WE MOVE INTO THE EARNINGS SEASON, WHAT IS THERE TO REALLY SAVE US RIGHT NOW? WALMART? MACY'S? THE FED? [LAUGHTER] ALL RIGHT. DON'T GO ANYWHERE. > > DOWNTOWN -- COUNTDOWN TO THE CLOSE HEAD OF THE U.S. MARKET CLOSE STARTS RIGHT NOW. ROMAINE: THIS IS THE COUNTDOWN TO THE LOWS. THERE ARE 60 MINUTES LEFT IN THE TRADING DAY, THE WEEK, THE MONTH. ROMAINE BOSTICK, TAYLOR RIGGS, KATIE GREIFELD IN FOR CAROLINE HYDE. WE ARE HERE WITH CAROL MASSAR AND MIKE REGAN. IT'S NICE TO SEE YOU, MIKE AND CAROL. IT'S ALWAYS LOVELY TO SEE YOU BUT NOT A LOVELY DAY IN THE MARKET. THE NASDAQ COMPOSITE IS DOWN 3.5% ON THE DAY. THE S & P 500 DOWN 2.8%. CAROL: IT'S NOT A GOOD DAY TO BE A U.S. EQUITY BUT NOT A BAD DAY TO BE A CHINESE EQUITY THAT TRADES IN THE U.S.. WE ARE SEEING CHINESE COMPANIES IN THE U.S. RALLY AND ANOTHER 5% IN TODAY'S SESSIONS. CHINA IS SAYING THEY WILL DO ANYTHING TO MAKE SURE THAT THE CHINESE ECONOMY HITS ITS GROWTH TARGET. ONCE AGAIN, WE KNOW TECH, THAT HAS BEEN BATTERED OVER THE LAST MONTHS, ALL OF A SUDDEN, CHINESE TOP LEADERS ARE COMING TO SAY -- ROMAINE: I WAS LITERALLY IN THE DRESSING ROOM WITH TIM STENOVEC. > > [LAUGHTER] ROMAINE: MIKE HAS REPLACED HIM. TAYLOR: TIM TAKES PARTIAL DAYS. ROMAINE: MIKE, WHAT IS GOING ON? MIKE: ONE STORY THAT HAS GOTTEN LOST THIS WEEK IS THE CHIPMAKERS. YOU START THE WEEK WITH QUALCOMM HAVING GREAT EARNINGS, SHARES RALLYING. DEMAND LOOKS GREAT IN THE CHIP SECTOR. THEN YOU HAVE INTEL LATE IN THE WAKE -- WEEK SAYING, NOT SO FAST. IT LOOKS LIKE BAD DEMAND FOR PC CHIPS ESPECIALLY. THIS IS AN IMPORTANT STORY GIVEN HOW IMPORTANT THE SEMICONDUCTOR SPACE HAS BEEN TO THE SUPPLY CHAIN WE HAVE SEEN. IT IS A MIXED PICTURE NOW. STRONG DEMAND ON THE MOBILE SIDE, NOT SO MUCH ON THE PC SIDE. TAYLOR: IN THE NEXT 59 MINUTES, STILL LOOKING AT THE FOURTH STRAIGHT WEEK OF SOME WEEKLY DECLINES ON THE S & P. BIG TECH IS LOOKING AT SOME OF THE BIGGEST MONTHLY DECLINES SINCE MARCH OF 2020. TECH HAD THE WORST MONTHLY LOSSES SINCE OCTOBER 2008. KATIE, THAT REALLY PUTS SOME SCOPE INTO THE BROADER MAJOR AVERAGES. KATIE: YEAH, TAYLOR. LOOK AT THE SECTOR LEVEL. EVERY SECTOR IN THE S & P 500 IS UNDERWATER TODAY. CONSUMER DISCRETIONARY, SOME SOCIAL MEDIA NAMES, TECHNOLOGY THERE AS WELL DOWN 3% OR SO. MATERIALS ARE A RELATIVE HAVEN BUT STILL DOWN OVER 1%. ROMAINE: A LOT OF THIS IS NOT THE EFFECT THEY WERE LOOKING FOR. SHARES DOWN 15%. THE WORST DAY WE HAVE SEEN FOR THE COMPANY BACK TO 2006, THE BIGGEST DRAG ON THE NASDAQ 100. THE BIGGEST DRAG ON THE S & P AS WELL. APPLE IS NOT DOING ANY FAVORITES EITHER, THE SECOND-BIGGEST TRACK ON BOTH INDICES. THE SHARE IS DOWN 2.5%. NVIDIA, COMCAST, QUALCOMM, ALL LOWER ON THE DAY. SOME OF THE BIGGEST ATTRACTORS FROM POSITIVITY. IF YOU ARE LOOKING FROM POSITIVITY, HONEYWELL CAME OUT WITH EARNINGS. AIRLINES ARE FLYING MORE. OIL AND GAS COMPANIES ARE INCREASING INVESTMENTS AND THAT'S A BIG IF IT TO HAVE -- TO HONEYWELL, THOSE SHARES HIGHER BY 3% AND ROKU SHARES HIGHER BY 3% ON A REITERATION OF THEIR GUIDANCE GOING FORWARD SUGGESTING THAT MAYBE THE STREAMING SPACE IN CERTAIN POCKETS IS DOING OK. TAYLOR: I WANT TO TALK ABOUT THIS SECTOR. THE NASDAQ 100 DIPPED BELOW 13,000. THIS IS WHAT ANALYSTS ON THE STREETS ARE THINKING FOR THE TWELVE-MONTH FORWARD GUIDANCE. THEY ARE STILL LOOKING. YOU CAN SEE ABOUT A 17,000 LEVEL. SO A BRIGHT FUTURE FROM THE STREET IS PAINTING A DIFFERENT PICTURE THAN WHAT WE ARE GETTING TODAY. MIKE: OBVIOUSLY, THESE MACRO HEADWINDS CAN TAKE OVER THE NARRATIVE IT FROM THE BRIGHT FUTURE. I THINK THAT IT IS REALLY ALL ABOUT THE FED NEXT WEEK AND ANY SIGNAL WE GET FROM THEM ABOUT HOW AGGRESSIVE THEY WILL TAKE RATES AND WHETHER THE GUYS AT DEUTSCHE BANK THAT ARE SAYING 5%, 6% IN THE FED FUND RAISE OUR CRAZY AS SOME PEOPLE THINK THEY ARE. CAROL: IT IS ABOUT THE MACRO STORY AND WHAT THE FED DOES NEXT WEEK. THE MEETING CAME UP ON US VERY QUICKLY. I AM WONDERING ESPECIALLY WITH THE ECONOMICS NEWS WE GOT TODAY HOW THAT ALL PLAYS OUT. I BELIEVE YOU CAUGHT UP WITH LARRY SUMMERS. ROMAINE: I DID. CAROL: DO YOU GO TO BARBECUES TOGETHER? ROMAINE: MAYBE. CAROL: HERE IS WHAT HE HAD TO SAY ABOUT BEING AGGRESSIVE. LARRY: MY CLASS -- GUESS WOULD BE THAT THE FED WILL NEED TO GO FURTHER. I THINK THAT IN ORDER TO REDUCE INFLATION, YOU NEED TO RAISE NEUTRAL -- RAISE REAL INTEREST RATES ABOVE THEIR NEUTRAL LEVEL. IF WE HAVE 3%, 4% INFLATION AND THE NEUTRAL REAL INTEREST RATE IS WHAT THE FED BELIEVES, .5%, YOU WILL HAVE TO BE IN THE 4.5 PERCENT, 5% RANGE TO GET INFLATION MEANINGFULLY DOWN. CAROL: THAT WAS LARRY SUMMERS THE FORMER U.S. TREASURY SECRETARY AND PRESIDENT EMERITUS OF THE HARVARD KENNEDY SCHOOL OF GOVERNMENT. HE HAS BEEN TALKING THIS FOR A WHILE. ROMAINE: HE HAS. THIS WILL AIR ON WALL STREET WEEK LATER TONIGHT. I TALKED TO RANDALL KRASNER THE FORMER FED GOVERNOR. HE ALSO SAID THE FED NEEDS TO BE MORE AGGRESSIVE. I WILL BE INTERVIEWING LATER TONIGHT ABOUT THIS AS WELL. THE SENTIMENT ACROSS THE BOARD IS NOT ONLY IS A 50 BASIS POINT NEED BUT A CONTINUAL 50, 50, OR MAYBE 75 IS IN THE CARDS NOW IF THE FED WANTS TO CATCH UP. KATIE: YOU HEAR THESE BOLD CALLS FOR HOW AGGRESSIVE THE FED NEEDS TO BE BUT IF YOU TALK TO INVESTORS YOU HEAR SKEPTICISM ABOUT OTHER THEY WILL ACTUALLY BE ABLE TO BE THAT AGGRESSIVE THAT THE FED IS ESSENTIALLY LOOKING FOR AND AFTER NOT RAISE RATES AS MUCH AS THEY MIGHT NEED TO. ROMAINE: WHY NOT? KATIE: I DON'T KNOW. I HAVE TALKED TO SOME PEOPLE THAT DON'T WANT TO SACRIFICE THE LABOR MARKET. I KNOW WE KIND OF SHIFTED THE FOCUS ONTO INFLATION. ROMAINE: WHAT IS A PAY RAISE IF YOUR GROCERY BILL GOES UP? CAROL: HOW DO WE SQUARE THIS WITH THE STORY ON BLOOMBERG THAT THE CEOS IN EARNINGS CALLS ARE MENTIONING ECONOMIC SLOWDOWNS A LOT MORE, UP 180% FROM THE PREVIOUS REPORTING SEASON. THIS IS WHAT IS ON EXECUTIVE MINES, ECONOMIC SLOWDOWN, RECESSION. HOW DO YOU SQUARE THAT WITH THE PRESSURE FOR THE FED TO BE MORE AGGRESSIVE? TAYLOR: THAT'S A GREAT QUESTION. I THINK THE RECAP OF THIS QUARTERLY SEASON HAS BEEN THAT CURRENT EARNINGS PERIOD HAS BEEN DECENT BUT THERE HAS BEEN CONCERN ABOUT GUIDANCE FOR AT LEAST THE NEXT QUARTER NOT TO MENTION THE SECOND HALF OF THE YEAR. I THINK THAT IS WHERE A LOT OF UNCERTAINTY COMES IN FOR CEOS. ROMAINE: AMAZON BASICALLY SAYS WE HIRED TOO MANY PEOPLE. TAYLOR: AND TWITTER, AND ROBIN HOOD. ROMAINE: AMAZON, A COMPANY THAT IS PRETTY KNOWN FOR BEING PRETTY GOOD IN TERMS OF MANAGING THEIR BUSINESS MESSED IT UP. WHAT YOU THINK ABOUT OTHER BUSINESSES THAT DO NOT HAVE THOSE SAME KINDS OF EXPERTISE? CAROL: THE FEAR THAT THE FED OVERDOES IT. WE HAVE MORE TO COME WHEN WE TAKE YOU BEYOND THE BELL IN LESS THAN AN HOUR. WE WILL BE BACK ON RADIO, TV, AND YOUTUBE. WE WILL COUNTY DOWN TO THE CLOSE WRAPPING UP TODAY, THE WEEK, AND THE MONTH OF APRIL. ROMAINE: WE COUNTY DOWN TO THE CLOSING BELL HERE ON BLOOMBERG TELEVISION TO CLOSE OUT THE WEEKENDS A MONTH. LET'S BRING IN TERRY JACOBSON MANAGING DIRECTOR AT UBS PRIVATE WEALTH MANAGEMENT TO TALK MORE ABOUT NOT JUST WHERE THE MARKET IS GOING BUT REALLY, A BETTER SENSE OF INVESTOR SENTIMENT. THE IDEA HERE THAT TIMES HAVE CHANGED DRAMATICALLY AND WE ARE ENTERING A MUCH HIGHER RATE ENVIRONMENT. YOU HAVE A MACRO ENVIRONMENT THAT IS CERTAINLY UNCERTAIN AND A GEOPOLITICAL ENVIRONMENT. WHAT ARE YOU HEARING FROM CLIENTS? TERRY: IT'S MORE DIFFICULT ENVIRONMENT IS THEN WE HAVE HAD TO DEAL WITH IN A VERY LONG TIME BETWEEN THE SUPPLY SHOCK, THE HAWKISH FED, INFLATION. I THINK INFLATION IS REALLY THE MOST TROUBLING ISSUE. FOR CLIENTS. THE REACTION IS REALLY THE CONCERN ABOUT NOT KNOWING WHAT THE FED WILL DO. WHAT IS THE BREADTH AND DEPTH OF THEIR INTEREST RATE RISE? WE HAVE TO REMEMBER THAT THIS FED COMMITTEE IN THEIR POLICY CAREER, THIS IS THE FIRST TIME THEY HAVE HAD TO DEAL WITH REAL INFLATION. WE HAVE NOT SEEN INFLATION LIKE THIS IN ABOUT 32 YEARS SINCE 1990 WHEN INFLATION WAS A LITTLE OVER 6%. THE FED, THE WORD THEY RECENTLY USED WAS "EXPEDITIOUSLY." I THINK THAT IS A CLEAR SIGNAL TO THE MARKET THAT THEY WILL RAISE RATES IN MAY AND JUNE AND WE WILL GET MUCH MORE THAN THAT -- Z .25% INCREASES IN PAST RISES. TERRI: GIVEN THE UNCERTAINTY AND CHALLENGES, HOW DOES THE FEDERAL RESERVE CONTINUE TO STAY INVESTED IN THESE MARKETS AND PIVOT WHEN NEEDED? TERRI: THERE ARE A COUPLE IMPORTANT THINGS TO REMEMBER. THE BETTER THING AND INVESTOR HAS ON THEIR SIDE IS TIME. WE CANNOT UNDERESTIMATE THE RESILIENCE OF THE EQUITY MARKET. REMEMBER MARCH OF 2020 WHEN THINGS LOOK VERY DIRE. MARKETS TURNED AT THE END OF MARCH AND WE NEVER LOOKED BACK. I THINK ONCE WE GET CLARITY FROM THE FED IN TERMS OF RATE RISES AND BALANCE SHEET PRODUCTIONS I THINK THE MARKET WILL FOCUS ON FUNDAMENTALS, THE EARNINGS. AND I THINK THE MARKET ONCE WE GET THAT CLARITY WILL START TO MOVE FORWARD AGAIN. KATIE: WHEN YOU THINK WE WILL GET THAT CLARITY? AT NEXT WEEK'S MEETING? OR, WILL WE HAVE TO WAIT SEVERAL MONTHS AND SEE HOW THE ECONOMY CHANGES AND HOW THE FED REACTS? TAYLOR: I THINK IT WILL TAKE --TERRI: I THINK IT WILL TAKE QUITE SOME TIME. WE HAVE A DIFFICULT COUPLE MONTHS AHEAD OF US. WE WANT TO SEE THE INFLATION FOR THE SECOND QUARTER, BUT, WE WILL NOT GET CLARITY CERTAINLY IN MAY. I THINK WE JUST HAVE TO WATCH WHAT THE FED SAYS AND LOOK AT WHAT THE ACTIONS THAT THEY ARE DOING ARE AND JUST BE PATIENT BECAUSE I THINK THAT THE FED WILL FIGHT INFLATION PRETTY AGGRESSIVELY. AND I THINK THEY WILL GIVE CLARITY -- AS MUCH CLARITY TO THE MARKET THAT THEY CAN. THIS IS A FED THAT REALLY WANTS TO BE TRANSPARENT AND I THINK THEY WILL BE GOING FORWARD. ROMAINE: SO FAR I THINK YOU HAVE TO GIVE THEM SOME CREDIT FOR SOME OF THE COMMUNICATIONS THEY HAVE GIVEN US. I AM CURIOUS ABOUT MARKET POSITIONING. IN THIS ENVIRONMENT, AS PEOPLE WAIT TO GET THE CLARITY, WE TALK ABOUT SOME OF THE SELLOFFS WE HAVE SEEN THIS MONTH IN APRIL. THE IDEA THAT IS VERY HARD -- THE IDEA IS IT IS VERY HARD TO SEE WHERE THE MONEY HAS GONE. IT IS NOT NECESSARILY MOVING INTO OTHER ASSET CLASSES THAT WE CAN SEE BASED ON HEADLINE FIGURES AND IT DOES NOT NECESSARILY APPEAR TO BE ROTATING AROUND THE EQUITY MARKET ITSELF. DO YOU THINK MORE PEOPLE ARE MOVING TO CASH RIGHT NOW? TERRI: POSITIONING IS VERY TEPID NOW. WITHOUT THE CLARITY FROM THE FED, IT IS VERY DIFFICULT FOR AN INVESTOR TO MAKE A COMMITMENT. LOOKING FOR MORE TRANSPARENCY, LOOKING FOR CLARITY FROM THE FED, I THINK THEY WILL BE ABLE TO MAKE COMMITMENTS WANTED -- ONCE THEY GET THAT. UNTIL THEN, POSITIONING IS VERY TEPID. TAYLOR: HOW DO YOU THINK ABOUT THE DEFENSIVENESS OF THE MARKET? EITHER WITHIN THE EQUITY MARKET OR LOOKING AT SHORTER DURATION ASSETS IN THE CREDIT SPACE? TERRI: WELL, DEFENSIVE MEANS DIFFERENT THINGS TO DIFFERENT PEOPLE. BUT I THINK WHAT IS IMPORTANT FOR INVESTORS IS TO REALLY UNDERSTAND WHAT YOU OWN AND WHY YOU OWN IT. IN AN UPMARKET IT IS VERY EASY FOR EVEN MARGINAL THINGS TO PERFORM WELL BUT IN DIFFICULT MARKETS LIKE THIS IT IS COMPANIES THAT ARE NOT HIGH-QUALITY COMPANIES THAT REALLY SUFFER. WHAT WE ARE TELLING CLIENTS IS TO FOCUS ON GOOD-QUALITY COMPANIES WITH GOOD CASH FLOW, GOOD MARGINS, AND PRICING POWER. THOSE, WE THINK, WILL CERTAINLY PERFORM BETTER OVER TIME. CERTAINLY IN THESE DIFFICULT ENVIRONMENTS. TAYLOR: WE APPRECIATE YOUR TIME, THOUGHTS, AND PERSPECTIVE, TERRI JACOBSON MANAGING DIRECTOR AT UBS PRIVATE WEALTH MANAGEMENT. NEXT UP THE CEO AND CIO OF LAFFERTY ANGER INVESTMENTS WILL -- LAFFER TANKER INVESTMENTS WILL JOIN US FOR THE CLOSING BELL. AND WE WILL BREAK DOWN QUARTERLY RESULTS IN TODAY'S TRIPLE TAKE LOOKING AT SOME OF THE HIGH PROFITS, FREE CASH FLOWS, MASSIVE STOCK BUYBACKS AND OF COURSE THE IMPACT ON THE ENVIRONMENT. ELLI KASARGOD-STROUD OF MAJORITY ACTION IS SET TO JOIN US. AND WALL STREET WEEK, ROMAINE BOSTICK GETS TO HOSTED, SETTING DOWN WITH SEVERAL KEY VOICES TONIGHT AT 6:00 P.M. EASTERN. ROMAINE: ME AND MY FRIEND LARRY ARE GOING TO TALK. TAYLOR: THIS IS BLOOMBERG. ROMAINE: THIS IS THE COUNTDOWN TO THE CLOSE. LESS THAN 44 MINUTES LEFT IN THE TRADING DAY. THE BIG RALLY WE HAD YESTERDAY OFF OF BIG TECH OR EARNINGS, AMAZON AND APPLE ARE LEADING THE MARKET DOWN, THE S & P 500 DOWN 3% ON THE DAY ERASING ALL THE GAINS FROM YESTERDAY. SIMILAR FOR THE NASDAQ 100, DOWN ALMOST 4% ON A DAILY BASIS SETTING US UP FOR A LOSS ON THE WEEKEND THE MONTH AS WELL AND EXPANDING THE LOSS FOR THE YEAR. THE BLOOMBERG DOLLAR SPOT INDEX SHOWS WEAKNESS BUT IS STILL HIGHER ON A MONTHLY BASIS. YOUR TWO YEAR YIELD DRIFTS HIGHER AROUND 2877 AS WE HEAD TO THE FED MEETING WEDNESDAY. LOOK AT SOME OF THE INDIVIDUAL MOVERS. INTEL EARNINGS ARE DISAPPOINTING AGAIN. PAT CAL CENTER -- PAT GILL ELSINGER SAID PROCESSING TECHNOLOGY COULD HIT A MILESTONE AS SOON AS 2024. ETSY SHARES ARE DOWN. COLGATE-PALMOLIVE DID REPORT EARNINGS TODAY. THEY CUT THEIR FULL-YEAR OUTLOOK AND THEY ARE NOW EXPECTING GROSS MARGINS TO DECLINE AS COST PRESSURES CONTINUE. CHEVRON A MIXED BAG. WE WILL COVER THAT ON TRIPLE TAKE LATER. OVERALL DECENT EARNINGS. SOME ARE STILL CONCERNED ABOUT THE GUIDANCE OF SOME OF THE SPENDING GOING FORWARD. IT'S TIME FOR OUR OPTIONS INSIGHT SEGMENT. TAYLOR, I WILL TOSS IT TO YOU. TAYLOR: STEWART KAISER HEAD OF EQUITY DERIVATIVE RESEARCH AT UBS IS SET TO JOIN US. I'M LOOKING AT NETFLIX. SORT OF ALL OF THESE, PAYPAL, TECH STOCKS ARE OFF 50%, 60%, 70% FOR THE YEAR. HOW DO YOU THINK ABOUT A BIG VOLATILITY, BIG SELLOFFS DROPPING ANOTHER 3% TO 4% AGAIN TODAY ON MAJOR TECH INDICES. WHAT IS THIS SIGNALING TO YOU? STEWART: THERE ARE TWO BIG CHALLENGES FOR TECH COMING INTO EARNINGS SEASON. ONE WAS GOING TO BE A PULL FORWARD OF DEMAND. I THINK THAT IS WHAT CAUGHT NETFLIX UP. THE SECOND WOULD BE COST INFLATION AND THAT SEEMS TO BE WHAT DID AMAZON. YOU HAVE THESE TWO THEMES WERE EVEN IF YOU BEAT ON EARNINGS THOSE TWO WILL BE BIG CHALLENGES . THEY TRIPPED STUFF UP. SECOND IS THE MACRO IMPACT, HIGH INFLATION, HIGH INTEREST RATES AND A TECH BEING A HIGHER DURATION EQUITY THAT IS MORE SENSITIVE TO THAT. SO IT'S A LITTLE BIT OF A TRIPLE THREAT. WE ARE FEELING MUCH BETTER ABOUT THE OUTLOOK FOR TEXT AND IT FEW MONTHS. BUT I THINK EARNINGS HAVE BEEN THE BIGGEST CHALLENGE. TAYLOR: WHEN YOU THINK ABOUT THE CUES, CALL OPTIONS, ASKING ABOUT YOUR TRADE, IS THAT AN EASIER WAY TO DIP YOUR TOES IF YOU DON'T WANT TO GO ALL IN AND BY? --BUY? STUART: WE TALKED YESTERDAY TAYLOR THAT THERE IS A THREE-STEP PROCESS. WE ARE EARLY IN THE PROCESS IN TERMS OF RE-ENGAGING IN TECH EXPOSURE. WE LIKE A RISK MANAGED PASSIVE APPROACH OF EARNING LIKE 10% OF THE MONEY ON JULY CALL OPTIONS ON CUES SO YOU HAVE EXPOSURE IF RATES TURN AND INFLECTION -- INFLATION DECLINES THE WAY WE EXPECTED TO YOU HAVE SOME EXPOSURE. SO THAT MAKES A LOT OF SENSE. TAYLOR: WHAT DO YOU THINK ABOUT PIVOTING TO THE MORE DEFENSIVE NATURE OF THE MARKET. ? WE ARE GOING OLD-SCHOOL. STAPLES ARE STARTING TO LOOK EXPENSIVE GIVING THE MASSIVE INPUT BACK INTO SOME OF THE STAPLES. DOES THAT MAKE SENSE IN THIS INFLATIONARY ENVIRONMENT? STUART: LOOK, I THINK PEOPLE ARE DEFINITELY HIDING IN MORE DEFENSIVE PARTS OF THE MARKET. BOTH UTILITIES AND STAPLES SEEM TO HAVE OUTPERFORMED. WE LIKE HEDGING IN STAPLES PARTICULARLY AROUND EARNINGS. IT GETS INTO THE INFLATION THEME. WHAT ARE -- WHETHER IT IS COMMODITY PRICES OR THE EMPLOYMENT INDEX ACCELERATED, WE THINK THOSE COULD BOTH BE CHALLENGES TO THE CONSUMER AT LARGE AND ALSO TO THE STAPLES CENTER IN PARTICULAR. EARNINGS, VOLATILITY FOR THOSE STOCKS WITH HIGH LAST QUARTER. NEARLY SIX OUT OF 10 STAPLES STOCKS BEAT THEIR OPTIONS FOR IMPLIED MOVES, WHICH IS UNUSUAL FOR THAT PART OF THE MARKET. IT IS AN AREA THAT HAS OUTPERFORMED QUITE A BIT. THEY ARE IN THE CROSSHAIRS RELATED TO THE INFLATION SEEN. WE THINK IT MAKES SENSE TO HEDGE THAT EXPOSURE AND OUTPERFORMANCE AROUND EARNINGS SEASON. KATIE: YIELDS HIGHER IS THE SAME. IT'S BEEN THE SAME FOR THE YEAR. ARE YOU LOOKING AT THAT CONTINUED FOR YIELDS? STUART: LOOK, OUR VIEW IS INFLATION AS PEAKS AND OVER THE NEXT COUPLE MONTHS YOU WILL START SEEING A GRADUAL, BUT THEN AFTER THAT, VERY STEADY DECLINE IN INFLATION AND FROM OUR PERSPECTIVE THIS WILL ALLOW THE FED TO BE A LITTLE LESS HAWKISH IN ITS RHETORIC AND SHOULD GET RATES LOWER AS OF THE YEAR PROGRESSES. THAT MAKES US A LOT MORE POSITIVE ABOUT PARTS OF THE MARKET THAT HAVE BEEN NEGATIVELY IMPACTED, LARGE-CAP TECH BEING PART OF IT. MOST PEOPLE WOULD SAY RATES ARE HIGHER. FOR US IT FEELS FULLY PRICED WITH A LOT OF RATE VOLATILITY. I THINK GETTING THAT VOLATILITY A LITTLE LOWER AND TAKING A SHARPER EDGE OFF THE SAID RHETORIC WOULD BE REALLY WELCOME TO. IF THAT HAPPENS ALONGSIDE A DECLINE IN INFLATION, WE THINK THAT THAT STACKS UP WELL FOR RISK REWARDS TO IMPROVE IN TECH AND OTHER PARTS OF THE MARKET. TAYLOR: STUART KAISER HEAD OF EQUITY DERIVATIVE RESEARCH FOR UBS JOINING US FOR OPTIONS INSIGHT TODAY. THE NASDAQ 100 OFF 3.7 PERCENT, THE WORST MONTHS SINCE OCTOBER 2008. ROMAINE: APPLE SHARES ARE DOWN TODAY. ABOUT 24 HOURS AGO WE WERE TALKING ABOUT APPLES EARNINGS, A RECORD QUARTER AND SHARES WERE HIGHER. THERE WAS MORE FOCUSED ON COST AND THE THOUGHT THAT SOME SUPPLY CHAIN ISSUES AND LOCKDOWNS IN CHINA WERE HAVING A MATERIAL EFFECT. IT DIDN'T SHOW UP IN THE MOST RECENT QUARTER, BUT IT WILL SHOW UP COMING UP NEXT. TAYLOR: COMPANIES ALWAYS WARRANT AND THEN THE NUMBERS ARE SPECTACULAR. ROMAINE: WE ARE TALKING $4 BILLION TO $8 BILLION. KATIE: THE REACTION IS TOTALLY DIFFERENT. ROMAINE: THIS MAKES YOU WONDER ABOUT THE SECOND TIER OF TECH COMPANIES THAT DO NOT NECESSARILY HAVE THE EXPERIENCE IN IMAGINING -- MANAGING TECHNICAL LOGISTICS WILL HAVE IN THIS ENVIRONMENT. TAYLOR: WE ARE LOOKING AT A BIG SELLOFFS FOR THE WEEK, DAY, AND MONTHS. MARK: YOU UP-TO-DATE WITH NEWS FROM AROUND THE WORLD, HERE IS THE FIRST WORD I AM MARK CRUMPTON. CHINA IS STEPPING UP RHETORICAL SUPPORT FOR RUSSIA TO FINE OTHER NATIONS WHO WANT BEIJING TO CONDEMN MOSCOW. BEIJING'S FOREIGN MINISTRY CALLED THE CHINA RUSSIA RELATIONSHIP A NEW MODEL FOR THE WORLD. BEIJING CRITICIZED U.S. COOPERATION WITH NATO. CHINA CLAIMS ITS EXPANSION LED TO RUSSIA'S ATTACK. IN FRANCE, HALF OF THE NUCLEAR REACTORS ARE OFF-LINE FOR MAINTENANCE, KEEPING POWER SUPPLY TYPE. FRANCE IS TRADITIONALLY ONE OF EUROPE'S BIGGEST ENERGY EXPORTERS. FRENCH NUCLEAR OUTPUT IS NOW THE LOWEST IN MORE THAN ONE DECADE KEEPING PRICES HIGH AND POTENTIALLY WORSENING EUROPE'S SUPPLY CRISIS. THE WHITE HOUSE IS REGISTERING -- CONSIDERING FORGIVING AT LEAST $10,000 IN STUDENT LOANS PER BORROWER THROUGH EXECUTIVE ACTION AS PRESIDENT BIDEN SEEKS WAYS TO BOLSTER VOTER ENTHUSIASM OF THE NOVEMBER MIDTERMS. SOME WORRY IT COULD WORSEN THE INFLATION ALREADY WEIGHING HEAVILY ON DEMOCRAT CHANCES OF MAINTAINING CONTROL OF THE HOUSE AND SENATE BUT ANY MOVE MAY NOT GO FAR ENOUGH TO APPEASE PROGRESSIVES AND OTHER ADVOCATES. A LONDON JUDGE SENTENCED TENTHS CHAMPION LAWRENCE BECKER TO 2.5 YEARS IN JAIL AFTER FINDING HIM GUILTY OF DELIBERATELY IGNORING THE TERMS OF HIS BANKRUPTCY AGREEMENT. THE THREE-TIME WIMBLEDON WINNER IS ACCUSED OF DELIBERATELY PUTTING FUNDS OUT OF REACH OF CREDITORS. BECKER DECLARED BANKRUPTCY IN 2017. HE WAS MORE THAN $50 MILLION IN DEBT BLAMING IT ON HIS DIVERSE -- DIVORCE AND "EXPENSIVE LIFESTYLE COMMITMENTS." BLOOMBERGQUINT TAKE POWER BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN OVER 120 COUNTRIES. I'M MARK CRUMPTON. THIS IS BLOOMBERG. > > THE MOST CRUCIAL MOMENTS IN THE TRADING DAYS, BLOOMBERG -- TRADING DAY, BLOOMBERG THE TOES WITH CAROLINE HYDE, ROMAINE BOSTICK, AND TAYLOR RIGGS. ROMAINE: THIS IS THE COUNTDOWN TO THE CLOSE. 27 MINUTES LEFT IN THE TRADING DAY. TAYLOR: WRAPPING UP THE DAY, THE WEEK, AND THE MONTH RED ACROSS THE SCREEN. KATIE: IF YOU LOOK AT THE SECTORS I HAVE A BIG RED CIRCLE. EVERY SECTOR IS DOWN. THAT TINY LITTLE GREEN IS AUTOMOBILES AND COMPONENTS. BUT OTHERWISE IT'S A WASHOUT. CONSUMER DISCRETIONARY IS THE WORST PERFORMING SECTOR. THAT'S ALL AMAZON. ROMAINE: WE TALKED ABOUT BIG TECH EARNINGS THIS WEEK. WE ARE PRETTY MUCH THROUGH. WE GOT IT -- HAVE GOT A COUPLE OTHERS BUT THE HEAVIEST MEMBERS IN THE S & P AND NASDAQ WE HAVE THEM AND YOU SEE THE REACTION. NEXT WEEK WE HAVE OTHER EARNINGS THAT ARE IMPORTANT BUT THEY DO NOT HAVE THE SAME WEIGHT. WE WILL GET UBER, LYFT, STARBUCKS, CLOROX, AND CVS HEALTH. WE SAW HEALTH CARE STOCKS THIS WEEK NOT DO TOO WELL. CONCERNS ABOUT THEIR COST AND HOW PANDEMIC TRENDS HAVE MADE CVS, CLARK'S, AND U DOES CLOROX -- CLOROX AND UBER SO POPULAR MAYBE WEARING OFF. TAYLOR: WE THINK ABOUT SOME OF THE ETF'S TRACKING THESE. ARC A SOURCE HAS BEEN WILL -- ONE ACROSS THE SUITE OF PRODUCTS. TELADOC'S, TESLA, TWITTER, ROBINHOOD HAS BEEN ACROSS THOSE FUNDS WITH BIG EXPOSURE. WE HAVE SEEN A LOT OF THOSE COMPANIES LOOK AT LOSSES. SHARES AT LEAST ARE LOOKING AT LOSSES. I'M LOOKING AT SOME SHORT POSITIONS IN OUR. --ARKK. YOU ARE SEEING MAY BE FURTHER LOSS IN SOME OF THOSE COMPANIES A 21%, 22% SHORT POSITION WITH BIG ARKK ETF'S. I WANT TO TALK MORE WITH OUR SENIOR ETF ANALYST FOR BLOOMBERG INTELLIGENCE. SOME OF THE BIG LOSSES WITH SOME OF THOSE BIG NAMES WITHIN THESE. ERIC: IT IS SAFE TO SAY THE ARKK HAS SUNK. IT'S NOT DEAD YET BUT IT LOOKS LIKE ROCK BOTTOM DOWN 48% YEAR-TO-DATE. LOOK AT THE OTHER BENCHMARKS. THE QS DOWN 17%. THAT'S A LOT. SO, YOU CAN SEE FROM THE CHART, WHAT A RISE AND FALL. THE INDIVIDUAL NAMES HE SPOKE OF, HERE IS WHAT IS BRINGING IT DOWN. TELADOC IS DOWN 63% THIS YEAR. ROKU, 6% WEIGHTING DOWN SIX -- 60%. ZOOM DOWN 64%. COINBASE DOWN 51%. YOU CANNOT HAVE THAT BIG OF A WAITING TO STOCKS DOWN THAT MONTH -- MUCH. EVERY STOCK IT'S IN THE RED LIGHT DOUBLE DIGITS. IT'S BRUTAL. IT IS AS BRUTAL AS IT WAS GREAT IN 2020. TAYLOR: ERIC, IT HAS BEEN BRUTAL. LOOK AT INFLOWS. YEAR TO DATE I SEE OVER $900 MILLION GOING INTO ARK. THAT'S MIND-BOGGLING. WHEN DOES THAT START TO END? WHEN DOES PERFORMANCE GET SO PAINFUL WE SEE OUTFLOWS? ERIC: WE COULD. LOOK AT THE DAILY FLOWS. IN AND OUT, IN AND OUT, IT REMINDS ME OF THE QS OR XLK. THIS REMINDS ME OF MY THREE VS A WHY ISR ABLE TO ACE INFLOWSK AND NOT SEE A LOT OF OUTFLOWS. THAT IS VANGUARD. MORE PEOPLE HAVE GONE CHEAP DATA IN THE FLOOR -- CORE. DATA GIVES THEM TOLERANCE FOR HOT SAUCE ON THE OUTSIDE. I HIGHER -- HIRED KATHY FOR THE SERIOUS STOCKS, I DON'T CARE IF IT IS DOWN. BECAUSE KATHY IS SO STUBBORN IN A GOOD WAY, SHE KEEPS GOING AFTER THESE CERTAIN NAMES. SHE HAS ALMOST CREATED A BETA YOU CAN TRADE AROUND. THE OPTIONS VOLUME. THEN VARIETY. LOOK AT HER TWITTER. SHE HAS 1.8 MILLION FOLLOWERS. THAT DESTROYS ALL THE OTHER ASSET MANAGERS. ROMAINE: HOPEFULLY SHE HAS A SPACE IN ELON MUSK'S NEW WORD OF FREE SPEECH. WHAT IF I JUST WANT TO LEVERAGE AND GO ALL IN ON HER. CAN I DO THAT? ERIC: THE ETF INDUSTRY HAS SOMETHING FOR YOU. THEY ARE SERVING UP A NEW ONE MONDAY WITH A 2X ARK. THIS IS A LEGITIMATE COMPETITOR TO ARK. YOU GET MORE POP. I STILL THINK IT IS CRAZY THEY ARE APPROVING THESE AND NOT A BITCOIN ETF. YOU HAVE SARK AND TARK ISSUED BY THE SAME ISSUER. EVEN THOUGH IT SEEMS REALLY OVER-THE-TOP, IT IS PRETTY GOOD FOR ARK BECAUSE THE MORE VOLUME, THE MORE THIS THING WILL LAST A LONG TERM, AT LEAST AS A TRAINING TOOL EVEN IF IT DOES HAVE ITS DOWN YEARS LIKE NOW. ROMAINE: THE ETF WORLD IS CRAZY, ERIC. KATIE: IT'S FUN. I HEAR THERE IS A SHOW ALL ABOUT IT. ROMAINE: DO YOU HAVE A SHOW? KATIE: ERIC AND I EVERY MONDAY AT 1:00 P.M. WITH MATT MILLER ETF IQ. ROMAINE: COMING UP WE FOCUS ON THE MARKETS AS WE COUNT DOWN TO THE CLOSING BELL ON BLOOMBERG TELEVISION. WE ARE BASICALLY NOT FAR OFF THE LOWS OF THE DAY. WE ARE NOT REALLY GOING ANYWHERE BARRING SOME MAJOR CHANGE IN THE LAST 30 OR 20 SOMETHING MINUTES. NANCY TENGLER WILL BE JOINING US TO HELP US COUNTDOWN TO THE TOES. THIS IS BLOOMBERG. > > THE MOST CRUCIAL MOMENTS IN THE TRADING DAY, BLOOMBERG MARKETS, THE CLOSE WITH CAROLINE HYDE, ROMAINE BOSTICK, AND TAYLOR RIGGS. TAYLOR: COUNTING YOU DOWN TO THE BIG CLOSING BELL, LOOKING AT AN S & P HAVING ITS WORST DAY SINCE OCTOBER 2020. 18 MINUTES UNTIL THE END OF THE DAY, THE WEEK, AND THE MONTHS AND IT IS ONE OF THE WORST STARTS FOR AN S & P WE HAVE HAD IN YEARS. IT IS THE FOURTH WORST START I BELIEVE IN HISTORY. WE WILL DOUBLE CHECK THAT HERE AS WE CONTINUE TO LOOK UP 3% OFF 3.5% ON THE NASDAQ. IT'S A RELENTLESS CLIMB HIGHER TODAY. IT'S NOT A CLASSIC RISK OFF DAY. YIELDS ARE CLIMBING UP NINE BASIS POINTS OR SO ACROSS THE CURVE. LET'S BRING IN NANCY TENGLER THE CIO AND CFO OF LAFFER TENGLER INVESTMENTS. NANCY, THESE BIG VOLATILE DAYS. ARE THESE FURTHER OPPORTUNITIES TO REASSESS AND REENTER THESE MARKETS? NANCY: IT SOUNDS KIND OF SILLY TODAY BUT I THINK SO. THANK YOU FOR ALWAYS HAVING ME ON ON THE MARKET ROUNDED DAYS. I FEEL LIKE I AM A BELLWETHER OF VOLATILITY. IT'S IMPORTANT TO NOTE THAT THE VIX STARTED AFTER WE BEGAN SEEING GOOD EARNINGS EARLIER IN THE MONTH. THIS START -- CREATES MORE SELLING. SO YOU HAVE INVESTORS WILLING TO PAY FOR SHORT-TERM PROTECTION RATHER THAN PAY MUCH LESS FOR LONG-TERM PROTECTION. THAT SELLING SUBSIDES AT SOME POINT. WE ARE A COUPLE WEEKS IN. WE SHOULD BE NEARING A BOTTOM. APRIL IS THE WORST MONTHS DURING MIDTERM ELECTION YEARS. SO WE THINK THIS VOLATILITY WILL SETTLE BUT PROBABLY NOT FOR A FEW WEEKS. ROMAINE: WHAT DO YOU THINK INVESTORS ARE LOOKING AT WHEN THEY ARE TALKING ABOUT WHAT IS THE ENTRY POINT AND WHAT IS THE BOTTOM? ARE THEY LOOKING AT TRADITIONAL P/E RATIOS OR ARE THEY MORE FOCUSED ON MACRO CONDITIONS? WHAT ARE YOU LOOKING AT? NANCY: WELL, I'M LOOKING AT THE LONG-TER EARNINGS POWER OF THE COMPANY. -- THE LONG-TERM EARNINGS POWER OF THE COMPANY. I THINK MANY INVESTORS DRIVEN BY ALGORITHMS ARE JUST REACTING SHORT -- TO SHORT-TERM NEWS. BUT WE HAD GOOD REPORTS THIS WEEK. MICROSOFT IS A GOOD INDICATOR OF WHERE YOU WANT TO BE IN THE MARKET. CLOUD AND CLOUD DATA ACTIVITY IS DID -- DEFLATIONARY, FIRST OF ALL AND A SECOND OF ALL IT IS GROWING AND IT SEEMS IMPERVIOUS TO THE CONSUMER THINGS THAT HIT AMAZON AND APPLE. KATIE: NANCY, I'M CURIOUS. IF WE HAVE A FEW MORE WEEKS TO GO UNTIL THE BOTTOM ARE WAGES GOING TO HAVE TO GET USED TO THESE 2%, 3% DAYS ON THE S & P 500? NANCY: KATIE, I DON'T THINK YOU EVER GET USED TO IT. I HAVE BEEN AT THIS PROGRAM FOR OVER 40 YEARS AND MY STOMACH IS TURNING AS I LOOK AT THE INDICES. BUT I THINK SO. I THINK WE NEED TO SEE A SAID THAT IS -- A FED THAT IS PROVIDING CLEAR DIRECTION. ROMAINE, GREAT INTERVIEW WITH LARRY SUMMERS. HE HAS BEEN VERY GENEROUS TO THE FED. I THINK THEY HAVE TO COME SAY SOMETHING THAT GETS PEOPLE'S ATTENTION. SO FAR WE HAVE HAD A 24 BASIS POINT INCREASE NOTWITHSTANDING THE BALANCE SHEET. WE HAVE TO SEE 50 POINTS. WE HAVE TO SEE COMMITMENT. THEN I THINK INVESTORS WILL START LOOKING FORWARD TO NEXT YEAR. ROMAINE: CONVERSATION WITH THE CEO AND CIO OF LAFFER TENGLER INVESTMENTS. GETTING A CHECK ON THE MARKETS. DOWN THREE POINTS ON THE S & P 500. A DECLINE OF 3% OR MORE. THE WORST DAY SINCE OCTOBER OF 2020. TAYLOR: THE NASDAQ 100 IS OFF 3.9 PERCENT. STICK WITH US. THIS IS BLOOMBERG. WHAT -- > > ROMAINE: THIS IS THE COUNTDOWN TO THE CLOSE. I'M ROMAINE BOSTICK. TAYLOR: I'M TAYLOR RIGGS. KATIE: I'M KATIE GREIFELD. TAYLOR: THE DAY, THE WEEK, AND THE MONTH IS BAD. WE ARE HAVING THE WORST MONTHLY LOSSES ON THE S & P, OFF 12%, MAYBE 9% ON THE MONTH, THE WORST SINCE MARCH OF 2020. ON THE NASDAQ OFF 13% FOR THE MONTH, THE WORST SINCE OCTOBER 2008. ROMAINE: AGGRESSIVENESS HAS TO BE POINTED OUT. A WEEK AGO FRIDAY SOMETHING LIKE 9% WAS IN THE RED. TUESDAY 90 FOR POOR -- 94% OF THE S & P 500 WAS IN THE RED. TODAY 96% OF THE S & P 500 IS IN THE RED. DISCRETIONARY STOCKS DOWN 15%. REAL ESTATE DOWN 4%. AUTOS, BASICALLY JUST TESLA, ONLY LIKE FOUR STOCKS IN THE INDEX, IT HAS STRENGTH BUT NOT ENOUGH TO OVERCOME IT. CATHIE WOOD AND HER FLAGSHIP ETF, NO HIGHS THERE EITHER. WHERE YOU GO? KATIE: CONSUMER STAPLES ARE STILL HANGING ON. TAYLOR: LET'S ASK NANCY TENGLER THE CEO AND CIO OF LAFFER TENGLER INVESTMENTS. THE NASDAQ AND NASDAQ 100 ARE OFF FOR PERCENT TO 4.3% -- 4% TO 4.3% OR SO. EARLIER YOU ARE TALKING ABOUT MICROSOFT, COMPANIES GENERATING MASSIVE FREE CASH FLOW. WHY THE INDISCRIMINATE SELLING? ARE THERE SOME MACRO HEADWINDS AND GOOD COMPANIES ARE BEING TOSSED OUT? NANCY: I THINK SO, TAYLOR. I THINK WHEN YOU GET UNCERTAINTY PEOPLE SO WHAT THEY CAN. WE ARE GOING INTO A WEEKEND. AS YOU POINTED OUT THERE IS NO PLACE TO HIDE UNLESS YOU HAVE 100% OF YOUR PORTFOLIO IN HONEYWELL, WHICH IS HAVING A FABULOUS DAY. SO I THINK YOU HAVE TO LOOK FORWARD AND SAY, WHERE DO I WANT TO BE THE NEXT THREE TO FIVE YEARS? WE HAVE BEEN PREPARING OUR PORTFOLIOS FOR SLOWING. IT REMAINS TO BE SEEN IF THIS WILL TURN INTO A RECESSION BUT IN A SLOWING ENVIRONMENT YOU WANT TO FIND RELIABLE GROWERS. I KNOW IT'S HARD TO BELIEVE BUT TECH HAS THE MOST SALES BEAT ED THE SECOND MOST EARNINGS BEADS THIS QUARTER. THINK ABOUT WHERE THE SECULAR NARRATIVES ARE AND FOLLOW THEM. THEN YOU HAVE TO BE INVESTED IN DIVIDEND PAYING STOCKS AND COMPANIES GROWING THEIR DIVIDENDS. THE INCREASES HAVE BEEN REMARKABLE THIS QUARTER. ROMAINE: I KNOW YOU WERE KIND OF MAKING A JOKE THERE ABOUT HONEYWELL BUT WHEN YOU LOOK AT THE GAINS THAT STOCK HAS SEEN TODAY, WE TALK ABOUT MICROSOFT AND THE CLOUD SPENDING, THEN YOU HAVE A COMPANY LIKE MOHAWK THAT MAKES FLOORING ALSO MOVING HIGHER ON THE DAY, WHEN YOU LOOK AT THOSE STOCKS, IS THAT DEFENSIVENESS WE ARE LOOKING AT? IS THAT THE IDEA THAT THESE ARE INDUSTRIES AND SECTORS THAT HAVE, DARE I SAY, SOME DEGREE OF BEING RECESSION PROOF? NANCY: I THINK THAT IS WHERE YOU WANT TO BE, IN THE AREAS THAT CAN CONTINUE TO GROW IN A SLOWING GROWTH ENVIRONMENT. CENTRAL BANKS HAVE BEEN RAISING RATES FOR OVER A YEAR AROUND THE GLOBE. WE ARE JUST NOW CATCHING UP. YOU ARE ALREADY SEEING GLOBAL SLOWDOWN AFFECTING SOME COMPANIES THAT HAVE MULTINATIONAL EXPOSURE. THAT IS WHAT WAS SO REMARKABLE ABOUT MICROSOFT. WITH THE FOREIGN CURRENCY HEADWINDS AND PULLING OUT OF RUSSIA THE COMPANY WAS STILL ABLE TO BEAT EVERY METRIC. YOU HAVE TO MAKE THE SAME ARGUMENT FOR APPLE. I THINK THAT WAS A STELLAR REPORT AND ONCE INVESTORS HAVE TIME TO DIGEST IT THEY WILL COME BACK AND SAY, OK, I THINK THESE ARE PLACES I WANT TO BE LONG-TERM BECAUSE THE CLOUD, DIGITIZATION ACROSS SECTORS IS INCREDIBLE. UBS DIGITIZED ITS LINEUP PROJECTS. SMALL BUSINESSES CAN NOW SHIP WITHIN TWO MINUTES OF SIGN-UP VERSUS 10 DAYS PREVIOUSLY. THAT PRODUCTIVITY IS WHAT YOU WANT TO BE FOCUSED ON. KATIE: I WANT TO GO MACRO BECAUSE I'VE BEEN WATCHING FINANCIAL CONDITIONS ALL WEEK. YOU ARE FINALLY STARTING TO SEE THEM TIGHTENING BACK TO 2018 LEVELS IF YOU EXCLUDE WHAT HAPPENED IN 2020. I WANT TO KNOW HOW YOU VIEW HOW THE FED IS SEEING THE SELLOFF DAYS BEFORE WHAT IS EXPECTING TO BE THE BIGGEST RATE HIKE SINCE 2000. NANCY: I THINK THE BOND MARKET HAS DONE A LOT OF THE WORK FOR THEM IMPROVING RHETORIC CAN RAISE RATES. IT'S BEEN REMARKABLE. GOOD FOR THEM BECAUSE THEY ARE BEHIND THE CURVE. I THINK THEY ARE PAYING ATTENTION TO THE STOCK MARKET BUT I DON'T THINK THAT NECESSARILY DRIVES THIS FEDS VIEWPOINT. IT WILL AS WE GET CLOSER TO THE MIDTERMS. I HEARD YOU TALKING EARLIER THAT SOME PEOPLE DO NOT THINK WE CAN RAISE AS MUCH AS THE MARKET EXPECTS. THAT MAY BE TRUE BECAUSE WE ARE HIKING INTO AN ENVIRONMENT WHERE PMI'S ARE ROLLING OVER AND THAT MEANS SOON WE WILL GET EARNINGS -- DOWNWARD EARNINGS REVISIONS SO I THINK THE FED HAS TO BE MINDFUL OF ALL OF THAT. THEY WILL PROBABLY START PAYING ATTENTION AFTER THE MAY MEETING. TAYLOR: THE SINGLE BIGGEST DROP ON THE S & P SINCE JUNE OF 2020 BRINGING US TO THE LOWS ON THE EQUITY INDEX THAT WE HAVE NOT HAD SINCE MAY OF 2021, OFF 3.6%. WE ARE OFF 970 POINTS ON THE DOW. WE NOT -- DO NOT DO THE DOW UNLESS WE NEAR FOUR DECIMAL PLACES THERE. NANCY, FINAL QUESTION AS WE DID JUST MOVE. -- DIGEST BIG MOVES. CREDIT SPREADS APPEAR A PURE STAPLE. THE CREDIT MARKET IS NOT SHOWING HUGE FUNDAMENTAL CRACKS. IS IT THAT THE LEADING INDICATOR THAT GIVES YOU SOME REPRIEVE? NANCY: I THINK THAT IS SUPER IMPORTANT, TAYLOR. ON A DAY LIKE TODAY COMPANIES HAVE MORE CASH ON THE BALANCE SHEET THAN THEY HAVE HAD EVER. THEY ARE MAKING AGGRESSIVE CAPITAL ALLOCATION PLANS, ANNOUNCING BIG BUYBACKS, INCREASING DIVIDENDS MATERIALLY. PAYOUT RATIOS ARE STILL AT HISTORIC LOWS. YOU ARE SEEING THE MARKET LOOKING PAST THE SHORT-TERM FOCUS. SOMEWHAT TECHNICAL MOVES ON THE SELLING THE INDICES. I THINK IF YOU WERE RIDING IN THIS ENVIRONMENT OVER THE LAST FEW AND THE NEXT FEW, IN THREE YEARS YOU WILL SEE A VERY HAPPY PORTFOLIO. ROMAINE: WE WISH YOU A WONDERFUL WEEKEND DESPITE THE DOWER DAY. ALWAYS GREAT INSIGHTS OUT OF NANCY TENGLER. WE SEE SELLING INTO THE CLOSE, THE S & P DOWN 3.7%, THE NASDAQ COMPOSITE DOWN 4.2%. THE 100 DOWN FOR 25. A LOT OF SUPERLATIVES. GO BACK TO MID-2020 WHEN WE HAD BIG SELLOFFS. IT WAS THE SECOND WAVE OF COVID, A DIRE ECONOMIC FORECAST OUT OF THE FED. THAT'S NOT WE ARE SEEING TODAY. THIS SEEMS TO JUST BE MORE THAT PEOPLE DON'T KNOW WHAT IS GOING ON AND MAYBE THEY DON'T WANT TO BE EXPOSED UNTIL THEY DO KNOW WHAT IS GOING ON. TAYLOR: CASH ON THE BALANCE SHEET IS STRONGER THAN IT HAS BEEN AND COMPANIES WERE ABLE TO BORROW IT OUT SUCH CHEAP -- IT AT SUCH CHEAP LEVELS BUT THIS HAS BEEN A SENTIMENT DRIVEN MARKET REGARDLESS OF THE FUNDAMENTALS. KATIE: BUT TUESDAY WE WERE UP 2.5%. WE HAVE SEEN VOLUME PICK UP IN THE PAST HOUR. ON THE S & P 500, 7% OVER THE 20 DAY AVERAGE. TAYLOR: THE VIX CURVE IS ONE TO WATCH THIS WEEK. ROMAINE: WE HAVE A LOT TO COVER AND A LOT TO BREAK DOWN AS WE MOVE CLOSER TO THE CLOSING BELL. WE WILL HAVE MARKET COVERAGE WALL-TO-WALL AS WE TAKE YOU TO THE BELL AND BEYOND. > > BEYOND, BLOOMBERG'S COMPREHENSIVE CROSS-PLATFORM COVERAGE OF THE U.S. MARKET CLOSE STARTS RIGHT NOW. ROMAINE: WE ARE TWO MINUTES AWAY FROM THE END OF THE TRADING DAY. ROMAINE BOSTICK, TAYLOR RIGGS, KATIE GREIFELD IN FOR CAROLINE HYDE. WE ARE COUNTING YOU DOWN IN THE LAST TRADING DAY OF APRIL. WE GO TO OUR GLOBAL SIMULCAST WITH CAROL MASSAR AND MIKE REGAN IN FOR TIM STENOVEC. WE WELCOME AUDIENCES ON TELEVISION, RADIO, AND YOUTUBE. WE KNEW WE WERE HEADED TO A DOWN WEEK AND DOWN MONTH BUT LOSSES HAVE DEEPENED CLOSER TO THE CAROL: CLOSING BELL. WE ARE SEEING SELLING ACCELERATE. THE NASDAQ 100 IS OFFICIALLY IN A BEAR MARKET IF YOU COME FROM THE TOP BACK IN NOVEMBER 2021, DOWN 22%. THE VIX HAS A SHOT UP FOUR POINTS ALMOST A 30 FOUR. VOLATILITY IS CONTINUING. OUR LAST GUEST, KATIE NIXON, AT NORTHERN TRUST BANK WAS LIGHT, IT COULD ALWAYS IT WORSE BUT TYPICALLY WE LOOK AT THESE TIMES AS A BUYING OPPORTUNITY. MIKE: ON THE PRINT SIZE WE LIKE THE SIZE AND SCOPE. HOW BAD OF A DAY IS TODAY? I'M LOOKING AT OUR FUNCTION. THIS IS THE WORST DAY FOR THE S & P 500 SINCE JUNE 11, 2020. THE WORSE FOR THE NASDAQ 100 SINCE SEPTEMBER 8, 2020. IT'S A REALLY UGLY DAY. FORGET ABOUT YESTERDAY'S RALLY. WE ARE BACK AT THE LOWS. WHAT A WAY TO GO. TAYLOR: ONE OF THE WORST MONTHS SINCE 2020 ON THE S & P AND THE WORST MONTHS SINCE 2008 LOOKING AT TECHNOLOGY. YET YIELDS ARE CLIMBING 10 BASIS POINTS ACROSS THE CURVE. NO RISK HAVEN FOR BOND MARKETS. KATIE: WHERE IS YOUR > > WE WILL TAKE OUR TIME TO WALK YOU THROUGH EVERYTHING TO HAPPEN TODAY THE DOW JONES INDUSTRIAL AVERAGE WILL BIDDERS THE DAY. ABOUT 2.7% LOWER YOUR THE DAY, BELIEVE IT OR NOT OVERALL THAT IS THE RELATIVE OUTPERFORMER ON THE DAY THE S & P 500 WILL FINISH THE DAY DOWN BY WHAT IT SIX POINTS THEY ARE ONLY 14 SPOTS THAT -- 136 POINTS IN THEIR ONLY 14 SPOTS IN THE INDEX THAT HAD GREEN. IT WILL FINISH DOWN THE MONTH ABOUT 9%, NASDAQ COMPOSITE DOWN BY 37 POINT MORE THAN 4% ON THE DAY AND A MONTH TO DATE DECLINE OF ROUGHLY 13%. THE RUSSELL 2000 WILL FINISH DOWN LOWER 2.8%. > > I'M SO GLAD YOU TOOK US TO A MONTHLY BASIS, PULLING UP THE S & P 500 AND TAKING A LOOK AT THE MEMBERS AT WHAT IS A BEST-PERFORMING STOCK IN THE S & P 500 OVER THE PAST MONTH, TWITTER UP 21%. THE WORST COMMITTEE TO GET US? -- WORST-PERFORMING WHAT YOU THINK IT IS? > > NETFLIX. > > GOOD GUESS. > > WE ARE DIVING TO LEVELS DOWN HERE FOR OUR RADIO OBVIOUS -- AUDIENCE. THE SECTOR WITHERS AND SECTOR LOSERS, THERE IS NOT ONE SECTOR WINNER THAT IS IN THE GREEN. THE BEST PERFORMER THAT IS DOWN 1% ON THE DAY WAS AUTO AND AUTO COMPONENTS THAT COULD BE TESLA, OTHERWISE VERY CONSENT -- DEFENSIVE. CONSUMER DURABLES, THOSE ARE STILL OFF TO .5% AND THERE ARE CONCERNS THAT EVEN INFLATION CAN --2. 5 PERCENT. IT IS LOOKING LIKE EVERYTHING IS OFF TO FOR THE 10%, THE RETAILERS ARE OFF NINE AND A HALF PERCENT, SEMICONDUCTORS, LOOKING AT INTEL, -- SOFTWARE AS WELL, REALLY BIG TECH OFF 4.5%. REALLY STRUGGLING TO LOOK FOR ANYTHING IN THE GREEN. > > CHECK OUT SHARES OF AMAZON FOR OUT LOWS IN THE SESSION 14% THE BIGGEST ONE-DAY DROP SINCE JULY OF 2006. WE HAVE TALKED ABOUT A LOT SUPERLATIVE TODAY THERE IS ONE FOR YOU. WE HAVE BEEN TALKING ABOUT ALL DAY HERE IN BLOOMBERG CONCERNS ABOUT THE OVERSPEND AND OVER HIRING DURING THE PANDEMIC. NOW WE SEE E-COMMERCE SALES SLOW. ANOTHER ONE DOWN IN THE 14%, TOP DECLINER IN THE NASDAQ S & P, THE COMPANY ARE THE TOP END OF ITS FOR YOUR OUTLOOK. SOME OF THE GAINERS, I MENTIONED CHINESE STOCKS THAT WERE TRADING HERE, UP TO 15%, -- 2.5%. THE TECH SECTOR GAINED, MOHAWK INDUSTRIES, CHECK IT OUT THAT ONE WAS ALSO UP A PERCENT AND GIVING SOME UPBEAT -- 8 PERCENT AND MOHAWK GIVING UPBEAT. > > I DO WANT TO GET THE IDEA OF HOW BROAD THIS SELLOFF WAS. WE HAVE 96% OF THE S & P 500 LOWER ON THE DAY. REMEMBER ON TUESDAY WE HAD A SIMILAR SELLOFF OF 94% AND LAST FRIDAY WE HAD ABOUT A SELLOFF OF 97%. THERE HAS BEEN A LOT OF TALK BY STRAY JUST OUT THERE THAT SAY WE NEED TO SEE A STRING OF THESE 90% PLUS DOWN DAYS IN ORDER TO REALLY START WORRYING. THAT WAS THE MESSAGE WE HAD THE ONE DOWN DAY, NOW THE THIS IS NUMBER THREE IN THE SPAN OF SIX TRAINING SESSIONS AND YOU HAVE TO WONDER WHEN YOU START TO WORRY ABOUT THE BREATH OF EAST TYPES OF SELLOFFS -- OF THESE TYPES OF SELLOFFS. > > ARE LIKE TO POINT OUT THE TECHNICAL OUT -- ANALYSIS WILL LOOK AT. WE SET A NEW CLOSING LOW, THE LOWEST SINCE LAST MAY OF 2021, NOW DOWN 14% FROM ITS LAST HIGH, IF THERE IS ONE SORT OF SILVER LINING IN THAT CLOUD, WE DID NOT BREACH THE INTRADAY LOW FROM FEBRUARY. SOMETHING CHART WATCHES HER WATCH VERY CLOSELY, HARD TO TAKE MUCH SOLACE FROM THE TODAY. MUGU CLOUD, WE DO NOT HAVE ENOUGH TIME TO TALK ABOUT THAT. > > I WANT TALK ABOUT THE YIELD SPACE I KNOW WE ARE FOCUSED ON THE EQUITY MARKETS, WE TRY TO DO CROSS ASSET THAT IS KATIE MENTIONED, THE DOLLAR WEAKNESS. IT WAS NOT A BOND HAVEN TYPE OF DAY, FULL FAITH AND CREDIT IF YOU THINK THAT IS THE SAFEST OF THE SAFE HAVEN NOT TODAY EITHER. HERE IN LIES THE PROBLEM, AS YOU SEE THE WEEK YIELDS ARE CLIMBING. WHY DON'T WE TAKE A GUESS THAT HOW MUCH THE TWO YEAR YIELD HAS RISEN THIS YEAR ALONE? > > A MILLION BASIS POINTS? > > 200 BASIS POINTS THIS YEAR ALONE. ONE OF THE BIGGEST INCREASES YOUR TODAY THAT WE HAVE IN RECENT YEARS. YOU GO BACK TO THE 90'S, THAT IS A FEDERAL RESERVE PROBLEM, THE PROBLEM OF THE DISCOUNT RATE OF HOW WE VALUE THE EQUITIES. > > 'S AND ALSO A PROBLEM, I AM LOOKING A 10 YEAR AT 291. IT IS STILL TRYING TO APPROACH ZERO, YOU THINK WOULD BE HIGHER, YOU KNOW BETTER THAN I DO. YOU THINK WOULD BE HIGHER AT THIS POINT. > > EXCEPT ALL THE MOVES HAVE BEEN IN THE INFLATIONARY CONCERN SPACE. IT IS GETTING TRICKY. > > IT IS, I AM SO INTERESTED TO SEE WHAT HAPPENS FOR SO MANY ASSET ALLOCATION PICTURES ONCE YOU DO HAVE ACTUALLY SUSTAINABLY HIGHER POSITIVE REAL YIELDS, WHAT DOES IT MEAN FOR REAL EQUITY ALLOCATION? ALSO WHAT IS THE HAVEN RATE? YOU HAVE TOUCHED ON IT, BECAUSE I DO NOT SEE ANY HAVENS IN THIS MARKET. > > ABSOLUTELY, IT HAS BEEN THE STRUGGLE FOR EVERYONE. HOW DO DEFENSE IN THIS MARKET? ENERGY IS A BEST-PERFORMING SECTOR THIS YEAR. IN A REALLY NASTY MARKET IT IS THE OPPOSITE OF DEFENSIVE STOCKS, THESE BRIBERY -- RISING YIELDS THE DIVIDEND PLAYS ARE NOT AS ATTRACTIVE. > > ENERGY IS KIND OF IN STASIS NOW, THAT TRADE IS OFF WHEN YOU REALLY THINK ABOUT. WHAT IS LEFT? YOU TALK ABOUT HONEYWELL AND MOHAWK BEING UP. AT LEAST ON A WEEKLY AND MONTHLY BASIS, IS THAT WHERE WE GO TO? > > I DON'T KNOW. > > IF YOU WANT TO LOOK AT A SAFE HAVEN WE ARE FINALLY GOING BACK TO THE YEN WE BROKE THROUGH 130 FINALLY OVER HERE. > > WE HAVE TO GET TO THE FED MEETING NEXT WEEK I AM TAKING ABOUT THE WARREN BUFFETT, BERKSHIRE HATHAWAY ANNUAL WEEKEND MEETING. FIRST TIME MEETING IN PERSON SINCE HE PANDEMIC, WHAT HE LOOK AT THIS MARKET, THIS IS A VALUED GUY, AND SAY THIS IS A LOT OF PURE OUT THERE AND IT IS A BUYING OPPORTUNITY. HE IS PUTTING MADE TO WORK IN THIS ENVIRONMENT. GET THROUGH THE FED MEETING, GET TO THE JOBS REPORT NEXT WEEK AND WHAT DOES IT TELL US -- THIS IS A MOMENT WHERE WE ARE GETTING TO A RESET. WE SEE IT WITH NETFLIX AND AMAZON, THE ARE NOT GOING TO BE ACTING LIKE WE WERE THE LAST TWO YEARS, WE SEE IT WITH THE AIRLINES TAKING OFF. > > CERTAINLY, THE POINT OUT WITH SURE, -- BERKSHIRE HATHAWAY, THEY ARE OF A PERCENT OVER THE YEAR. -- 8% ON THE YEAR. I DO NOT KNOW IF YOU CAN JUST BET ON BUFFETT FOR. > > THE LABOR MARKET IS SHORT -- SORT OF THE SHINING STAR OF THE ECONOMY RIGHT NOW. IT IS BECAUSE THE LABOR MARKET HAS HELD UP THE WAY IT HAS. > > I THINK IT IS IMPORTANT TO CHECK IT ON THE VIX AT A TIME LIKE THIS, 12.4% FOR THOSE THAT HATE TO SEE THE VIX QUOTED. > > PLEASE DON'T DO THAT, ROMAIN -- YOU WANT TO SEE HIS EYES WILL. > > IT IS FRIDAY, 10 TO MAKE IT REMAINS EYES ROLL. > > IT IS GOOD TO GO TO GO -- CROSS ASSET EURO WANT TALK ABOUT CHRIS -- CRYPTO AS WELL. SOME OF THE MOVES WE SAW THIS WEEK WHERE IT MOVED ABOVE 42,000, KEPT OUT RIGHT AROUND 38000 AND CHANGE. IT IS DOWN ABOUT THREE TO HALF PERCENT ON A DAILY BASIS. MORE IMPORTANTLY THE CORRELATION WE ARE SEEING IN CRYPTO EARLIER THIS YEAR WITH THE TECH STOCKS OVERALL. I WONDER IF THOSE CORRELATIONS ARE HOLDING UP, AND OBVIOUSLY HOLDING UP TO THE DETRIMENT OF CRYPTO. > > TO THE DETRIMENT OF CRYPTO, DOES NOT A ONE-TO-ONE CORRELATION BUT IT IS PRETTY DARN CLOSE. BITCOIN FALLING OUT TODAY, THE SMALLER COINS FALLING UP YOU MORE YOU LOOK AT EITHER FOR EXAMPLE DOWN 5%, HE LOOKS OUT -- IT LOOKS UGLY. > > READY TO PUT A FORK IN IT? > > WE WILL KEEP GOING ON BLOOMBERG TV, WHAT YOU HAVE A WINE GUY COMING ON YOUR SHOW? SERIOUSLY, OUR SHOW IS LIT. > > WHAT HE THING I AM HERE? > > THIS WILL DO FOR OUR CROSS-PLATFORM COVERAGE BEYOND THE BELL, SEE YOU SAME TIME, SAME PLACE, WE WILL BE ON THE WEST COAST, SOME OF US ON MONDAY. > > WE CONTINUE OUR MARKET COVERAGE ON BLOOMBERG TELEVISION. TAKE A LOOK AT SOME OF THE FACTORS THAT HAVE BEEN SWIRLING AROUND THIS MARKET HERE, WHAT PERFORMED AND WHAT DID NOT. COMING UP IN A MINUTE. THIS IS BLOOMBERG. ♪ > > A SIGNIFICANT SELLOFF TO HEAR TO END THE MONTH OF APRIL, STOCKS TAKING A DOWNED TAKE A LOOK AT THE S & P 500 THIS IS A MONTHLY CHART, I WANT TO SHOW THIS YEAR, THIS IS A CHART THAT IS BASICALLY A STAIR STEP DOWN FROM THE START OF APRIL ALL THE WAY DOWN TO THE END OF APRIL. THERE WAS NEVER, NEVER ANY REAL CONVICTION TO BUY INTO THIS MARKET THROUGHOUT THE MONTH. YOU HAD A COUPLE OF DAYS POPULAR IN THERE THAT IMMEDIATELY WAS MET WITH SEVERE SELLING WITHIN A DAY OR TWO. THAT HAS BEEN THE STORY FOR LAST. MONTH, LAST MONTH AND A HALF. IT WILL BE A BIG QUESTION GOING FORWARD. WE HAVE THE NASDAQ 100 THE BIGGEST TECH STACKS THAT WE LIE ON SO MUCH, ARE DOWN EVEN THE RUSSELL 2000, SOME OF THE CYCLICAL AND REOPENING NAMES MOVING LOWER AS WELL. THE DOW JONES INDUSTRIAL AVERAGE THE RELATIVE OUTPERFORMER COMING MATERIAL NAMES AND TRANSPORT NAMES THAT SHOULD HOLD UP THAT ARE DID NOT HOLD UP AT ALL. IF YOU LOOK FOR SOME OF THAT DOES HOLD UP, IT IS THE CONSUMER STAPLES THE INDEX ON A MONTHLY BASIS HIGHER BY ABOUT 2%, THE THINGS THAT WE NEED TO BUY WHETHER THIS DIAPERS, TISSUES OR WHATNOT THAT WE WILL CONTINUE TO DO THAT. THAT IS THE SET UP HEADING INTO NEXT WEEK'S BIG MEETING WITH THE FED TUESDAY AND WEDNESDAY DOWN IN WASHINGTON DC. NOT ONLY WILL WE GET CLARITY ON THE RATE HIKE, WILL GET CLARITY FROM JAY POWELL ON THE INITIAL CONDITIONS. HERE ARE THE FINANCIAL CONDITIONS BASED ON THE BLOOMBERG INDEX AND THEY HAVE COME DOWN SIGNIFICANTLY HERE. A BIG PART OF THE REASON WHY THE FED, MAY NOT, BELIEVE IT OR NOT HAVE TO MOVE AS SWIFTLY AS SOME PEOPLE THINK THEY DO. THE MARKET NEEDS A COME DOWN, THEY ARE MUCH MORE FOCUSED ON FINANCIAL MARKETS THIS TIMED AROUND AND WERE LAST TIME. IS THIS DRAWDOWN THAT WE ARE SEEING SO FAR IN THE MARKET, WILL BE ENOUGH TO DETER THE FED OR MAYBE HAS THE OPPOSITE EFFECT, AND ACTUALLY ENCOURAGES THEM TO MOVE FORWARD FASTER. > > WHY DON'T WE ASK SOMEONE WHO HAS GREAT ANALYSIS FOR US? WE WANT TO OUR FACTOR FRIDAY, MICHAEL, EQUITY STRATEGIST FOR BLOOMBERG, IT HAS BEEN REALLY INTERESTING, TONS OF VOLATILITY OUT THERE, I'M CURIOUS HOW YOU ARE THINKING ABOUT WHERE INVESTORS HAVE BEEN MOVING AND POSITIONING TO MAYBE HIDE OUT FROM SO THAT VOLATILITY. > > AS REMAINS ADJUST FROM A SECTOR STANDPOINT, STAPLES HAVE BEEN THE ONLY SECTOR UP FOR THE MONTH OF APRIL AND AS THE TRADITIONAL INVESTOR BY. YOU HAVE ENERGY AND CEREALS NOT DOWN AT -- MATERIALS NOT DOWN AS THE REST OF THE MARKET AS WELL AS UTILITIES AND RAIL. FROM A FACTOR PERSPECTIVE WHAT WE HAVE BEEN LOOKING AT AS WELL IS LOW VOLATILITY STOCKS HAVE OUTPERFORMED VERY SHARPLY. THINK ABOUT COMPANIES THAT DO NOT HAVE A LOT OF SWAY EVERY QUARTER. THOSE THAT STOCKS HAVE DONE REALLY WELL ESPECIALLY OVER THE LAST YEAR. > > LOW VOLATILITY, LOW EARNINGS VARIABILITY, NAMES OF NAMES. WHAT SECTORS ARE WE TALKING ABOUT? > > WE ARE LOOKING AT THE RUSSELL 1000 FOR THAT. YOUR THING ABOUT REAL ESTATE, ONE OF THE MOST REPRESENTED SECTORS. THE 5% OF THE COMPANY ACCOUNT OF IS THAT IN THERE. ON THE OTHER END OF THINGS YOU HAVE THINK OF THE SECTORS THAT HAD A LOT OF FALLOUT, TECH, DISCRETIONARY, HEALTH CARE, ALL OF THE GROWTH STUFF HAVE A VERY LOW REPRESENTATION AND A LOWER VERY ABILITY -- VARIABILITY. > > DEAR MAMA THE HALCION DAYS IF YOU MONTH AGO WHERE EVERYONE WAS BETTING ON SMALL-CAP STOCKS? THIS TO BE THE TRADE AS WE CAME OUT THE PANDEMIC AND THE ECONOMY WOULD RESEARCH TO WHATEVER IS SUPPOSED AGO? THIS WAS A BIG BET IN THE BLOOMBERG COME OFF THE ROSE HERE. > > UNFORTUNATELY IT SEEMS TO HAVE GONE THE OTHER WAY. THERE HAS BEEN SOME WORRIES ABOUT FUNDING COSTS. RECEIPT TREASURY YIELDS WIDENING, USUALLY NOT SO GREAT FOR SMALL-CAP COMPANIES, WE START TO SEE OAS BACKUP A LOW BIT AND IS NOT -- IT WOULD BE ANOTHER GOOD TIME FOR SMALL-CAP STOCKS. TRADITIONALLY THEY DO HAVE THAT SPACE HEAVILY AND OFTEN. > > CAN WE PIVOT A LITTLE BIT AND LOOK AT SOME OF THE SMALLER CAP COMPANIES? WE TALKED ABOUT YIELDS RISING, TODAY YOU ARE NOT GETTING THAT SAFE HAVEN OF HIDING OUT IN FULL FAITH AND CREDIT. I AM CURIOUS, YOU COULD ARGUE THE RELATIVE OUTPERFORMANCE OF THE RUSSELL 2000 TO THE BROADER MARKET. IS THAT SOLELY DEPENDENT ON YIELDS RISING? IF YIELDS DO START TO PEAK OUT CAN YOU GET THAT YOU TRADE WITHOUT THE VASTLY HIGHER RATES? > > I THINK YOU CAN. IF YIELDS DO START TO PEAK OUT A LITTLE BIT, EVEN GO SIDEWAYS, YOU COULD SEE A LITTLE BIT OF A LEAF RALLYING. -- RELIEF RALLYING. PEOPLE ARE WORRIED ABOUT THE FUNDING COSTS AND VALUATIONS WE DO THOSE DISCOUNT CASH FLOORS -- FLOWS. > > MICHAEL, I AM CURIOUS, YOU'RE TALKING ABOUT ENERGY, VALUE, I AM TAKING ABOUT FINANCIALS AS WELL. TYPICALLY YOU WOULD EXPECT TO SEE SOME SORT OF AND IF IT FROM THE ENTIRE YIELD THAT WE HAVE BEEN DEALING WITH. NO SUCH LUCK, WHAT IS GOING ON THERE? > > I THINK FINANCIALS IS A PRETTY BIG EARNINGS, IT WAS SUPPOSED TO THE BIGGEST ATTRACTOR TO THE 500 COMING INTO THE EARNINGS SEASON. THAT CERTAINLY SEEMS TO BE TRACKING EXACTLY AS EXPECTED. SIMILARLY AND SMALL CAPS, LAST YEAR WAS SUCH A GREAT YEAR FOR FINANCIALS THAT THERE WAS A WILL SNOW WAY, THAT IT COULD GO UP AGAIN IN 2022. YOU SAW SOME REVENUE METRICS, LOOK AT REVENUES AND SMALL CAPS, THE REVENUES SLOW DOWN FOR 2022 COMPARED TO 2021. I THINK IT IS A EARNINGS OR REVENUE PLAY IN THE SMALL-CAP SPACE IS HURTING FINANCIAL. > > REALLY APPRECIATE IT, MICHAEL CASPER EQUITY STRATEGIST FOR BLOOMBERG INTELLIGENCE. BREAKING DOWN ALL THE NEWS IN TODAY'S BIG SELLOFF. WE WILL CONTINUE WITH THIS AND THINK ABOUT HOW WE PUSH FORWARD TO THE FEDERAL RESERVE ON WEDNESDAY, JOBS DAY ON FRIDAY, A HUGE SORT OF ACCRA WEEK NEXT WEEK AND MAY BE PROVIDING SOME OF THAT UNCERTAINTY THAT WE CONTINUE TO SEE -- MACRO WEEK NEXT WEEK AND PROVIDE SOME OF THE UNCERTAINTY THAT WE CONTINUE TO SEE. > > WE TALK ABOUT SOME OF THE GUESS THAT WE SAT EARLIER ABOUT THE IDEA OF WHEN PEOPLE COME BACK INTO THE MARKET, ARE THEY LOOKING FOR? FUNDAMENTAL, MACRO? IS IT JUST REASSERTING -- REASSURING COMMENTS FROM JAY POWELL? > > I GUESS THAT WILL BE PUT TO THE TEST ON WEDNESDAY. A DEFINITELY A BIG WEEK FOR ALL THE MACROECONOMIC EVENTS. > > DAY WITH US. -- STAY WITH US. THIS IS BLOOMBERG. > > FED RATE DECISION IS IN THE SPOTLIGHT NEXT WEEK AS INVESTORS EXPECTING 50 BASIS POINTS IN TERMS OF RATE HIKES. LET'S GET SOME INSIGHT BLOOMBERG'S CHIEF CORRESPONDENT FROM GLOBAL MACRO MARKETS. I AM CURIOUS OF THE BIGGEST RISK IS THE FED NOT DOING ENOUGH. IF THEY DO NOT HAVE THE GUMPTION TO DO 15 IN THIS MARKET IT GETS WORRIED THAT INFLATION WILL NOT BE TAKEN SERIOUSLY. > > YEAH, I THINK THAT WOULD BE A HUGE SURPRISE AND THE MARKET WOULD REACT ACTIVELY, THAT SOMEHOW LIKE YOU MENTIONED IT IS CLEARLY NOT THE CASE, IF THE FED DID NOT DO 50 THAT WAS FULLY PRICED IN THE MARKET WITH THINK THEY HAVE DROPPED THE BALL AND YOU WILL SEE MORE RISK OF INFLATION TAKE UP. I THINK THERE WILL BE A REAL PROBLEM. THE LARGEST PRICING IN -- THE MARKETS ARE PRICING IN SEVERAL HIKES TO COME AFTER THIS ONE AND IF THEY'D DROPPED THE BALL DID NOT COME UP AS MUCH THIS TIME I THINK THEY'LL BE A PROBLEM. > > THERE IS ALSO THE IDEA OF THE BALANCE SHEET REDUCTION AND ALLEGEDLY WILL GET MORE CLARITY ON THAT OUT OF THIS MEETING, I WONDER HOW MUCH OF THAT IS NOW BEING FACTORED IN, NOT NECESSARILY FOR THE INFLATION DEAFENING AFFECTED YOU HAVE COME OF THE POTENTIALLY MATT -- MARKET DISRUPTION CAN HAVE. IT IS EFFECTIVELY ON THE MARKET ANYMORE. > > RIGHT, JUST LIKE YOU SAID, IT HITS A LOT OF PROBLEMS, NOT ONLY IS IT THE TIGHTENING FACTOR, THE THE QUIDDITY -- LIQUIDITY. THE FED HAS STOPPED BUYING, IF THEY START ROLLING OVER ALL THE STUFF THAT MATURES. THAT IS MORE OF A CONTRACTION AND WE HAVE A GLOBAL CONTRACTION COMING ALL OF THE SALT -- CENTRAL BANKS ARE DOING THE SAME AS A WHIRLWIND OF A HEADWIND COMING. > > I WANT TALK ABOUT THE POSSIBILITY OF 75 BASIS POINTS AS YOU ARE CERTAIN THE SEE SOME PRICING FOR THAT IN JUNE. JAMES RATE THE -- RAISED THE POSSIBILITY EARLY IN NOVEMBER AND HE WAS SHOUTED DOWN, WE ARE IN A BLACKOUT. FOR THE FED RIGHT NOW, IF YOU LOOK ACROSS THE AFFLUENT SEE LINE-UP DO YOU THINK PERHAPS SOME OF THE APPETITE TO MOVE THAT AGGRESSIVELY LATER ON COULD BE SHIFTING? > > I THINK SO, THE MARKET IS PRICING IN A COIN FLIP CHANCE OF A CITY FIVE BASIS POINT IN JUNE, HE PUSHED BACK ON SOME OF HIS COLLEAGUES PUSHBACK, DO NOT NEED THESE EXCESSIVE HIKES, I THINK IT ALL DEPENDS ON HOW INFLATION GOES. LET'S SAY THEY DO 50 AS MOST PEOPLE THINK, WITH INFLATION WE HAVE THAT VERY HIGH COST INDEX TODAY, IS INFLATION NUMBERS KEEPING THAT, I THINK YOU WILL SEE MORE BENEFICIAL JUMP ON AND GIVE A LITTLE OPEN THE DOOR TO 75 BASIS COULD BE A POSSIBILITY. THEY ALL COME OUT PRETTY STRONG, MAYBE NOT JAY POWELL, THAT WE NEED TO GET THE NEUTRAL ATTRACT AND MAYBE ABOVE NEUTRAL. 75 COMING IN? MAYBE THE CHATTER FOR SURE. > > SOME ECONOMIST HAVE BEEN THINKING THAT PART OF THE FINANCIAL TIMING CONDITIONS CAN COME IN THE WAY OF QT AS WELL, A ONE OR 1.1 TRILLION DOLLAR ANNUALIZED RATE OF REDUCTION IN THAT BALANCE SHEET. HIS THAT'S EQUIVALENT TO A 25 OR 50 BASIS POINT HIKE? DO YOU THINK OF ALL OF THAT BALANCE SHEET COULD PROVIDE AN INCENTIVE TO SEEK OUT RATE HIKES? > > THAT HAS BEEN A NEBULOUS THING, HOW MUCH DOES EACH, X BILLIONS OF QT TRANSLATE INTO RATE HIKES? I'VE SEEN A FEW ANALYSTS SAYING THAT THAT KIND OF PAYS WOULD MAYBE BE THREE QUARTER-POINT HIKES. YOU HAVE TO THINK ADDING, IT IS DEAF AND LAY A DOUBLE WHAMMY. THE MARKETS ARE -- IT IS A DOUBLE WHAMMY. IT WOULD ADD EFFECTIVELY A FEW MORE HIKES TO THAT AND THAT IS A LOT. LIKE I MENTIONED, THE LAST TIME THE FED WAS DOING IT IT WAS TOO LOW, NOW THEY HAVE A LOT OF GLOBAL PEERS DURING THE SAME. IT IS A MOBILE CONTRACTION OF THE QUIDDITY GOING ON. > > THIS IS ONLY OUR SECOND ATTEMPT AT QT, ALSO WE TALK ABOUT THE RATE HIKING ENVIRONMENT IS A LOT DIFFERENT WITH WHERE INFLATION IS TODAY RELATIVE TO WHERE WAS IN THE RECENT RATE HIKING CYCLES. WE HAD A COUPLE GUESTS ON THE OVER THE LAST COUPLE OF DAYS HERE ON BLOOMBERG TELEVISION WHO SUGGESTED THEY STILL THINK YIELDS MAY HAVE PEAKED OR BE READY TO PEAK AT 2.9 AND CHANGE AT A 10 YEAR YIELD. > > I DEFINITELY THINK IT IS PLAUSIBLE, IT IS AMAZING THE SCHISM COME YOU HAVE THE CAMP THAT SAYS JUST WHAT YOU SAID, RATES HAVE PEAKED, WE HAVE FOREIGN DEMAND COMING IN, IT WILL TAMP DOWN INFLATION. YOU HAVE THIS OTHER CAMP THAT SAYS, THINGS WILL GET A LOT WORSE, WE COULD SEE 4% ON THE 10 YEAR. DEUTSCHE BANK THAT YOU'VE HAD ON ARE TALKING ABOUT THE FED MIGHT HAVE TO GO ALL THE WAY TO 5% OR 6% ON THE FUNDS RATE. THAT MEANS RAISING ACROSS THE BOARD A LOT HIGHER. I DO THINK THERE IS A BATTLE GOING ON IN THE BOND MARKET JUST WITH THAT QUESTION. HAVE WE PEAKED AROUND -- OR NOT ? > > IF YOU BELIEVE IT IS TO HAVE PERCENT YOU ARE GOOD TO GO IF YOU THINK IS 4% OR 5% WATCH OUT. WE WILL CHECK IN WITH HER NEXT WEEK WHERE THERE IS A LOT OF DRAMA AROUND THE FED MEETING. THAT WRAPS UP OUR COVERAGE NOW. DO NOT GO ANYWHERE WILL CONTINUE TO TALK ABOUT THE SELLOFF AND SEE IF THERE IS OPPORTUNITIES AHEAD. IS THIS A BUYING OPPORTUNITY? > > THE NASDAQ 100 HAS BEEN THE CHEAPEST IT'S BEEN SINCE APRIL 2020, THEY GET TO THE INDICATION OF THE BIG DROP WE HAVE HAD. > > APRIL 2020 P WAS STILL PRETTY ELEVATED, RIGHT?

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Bloomberg Markets: The Close (4/29/2022)

Romaine Bostick, Taylor Riggs & Katie Greifeld 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 selloff, Amazon's disappointing results and Visa's earnings. Guests Today: Kathy Entwistle of Morgan Stanley Private Wealth, Vasant Prabhu of Visa, Jeff Zalaznick of Major Food Group, David Kirkpatrick of Techonomy, Terri Jacobsen of UBS Private Wealth Management, and Nancy Tengler of Laffer Tengler Investments (Source: Bloomberg)

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