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00:00Volatility recession. Those words taking over the market conversation. Meanwhile stocks up yields down. I'm pretty goofed up. Bloomberg Markets starts right now. And in just the last couple of minutes you've already seen stocks reverse some of their gains. They were actually up. You had tech really lead the S & P 500 in positive territory despite futures suggesting a one and a half percent drop. And take a look at this now. We're down half a percent again but put that into the context. Volatility is actually not that much dare I say it. Something to keep an eye though on is also the VIX. You are looking at the VIX handle at a 30. It did cross into thirty one. Remember this is important. The post-war norm after the Russian invasion into Ukraine has been a volatility gauge of about 30. To drop below 30 suggests some sustainable runs when it comes to a rally. But anyway keep your eye on that because that might suggest when the turnaround or when the bottom actually is in. And of course we have talk about the bond market. The bond market is actually catching a bit treasuries attractive once again. Is this the safe haven bed at work. You're seeing the two year 10 year yield excuse me to eighty three down to five basis points. And when you see yields lower you see the dollar follow that dollar strength we've been talking about not there today actually weakening by almost 1 percent. Joining me now our experts on the equity space and the effects space Bloomberg's Christopher Kane and Eric Nelson Wells Fargo macro strategist. Chris let's start with you here because I feel like the equity sell off is definitely grabbing a lot of headlines. I have to ask what is the signal that will show that it's time to buy. Yes we've been looking at that as far as you know when the bottom is going to be in when is there some evidence of capitulation. So short answer we're getting close. We don't think we're there right yet. So a couple of statistics some for technical perspective. So when you look at the RSI 14 day RSI is currently around 36 for the S & P 500. When you see bottoms it typically bottoms are lower than that. So that would imply that we have a little bit further to go. When you look at things like how many stocks in the index are down over 20 percent from their highs. That stays at 43 percent right now. Typically for bottoms you see that B over 50. We saw it over 50 in 2011 2015 2018. So we're not there yet. And finally when you look at the percentage of stocks over the 50 day moving average that's still actually about 17 percent. A lot of those defensive stocks like those vault value stocks that typically goes down to about 5 percent at bottom. So we're getting there but we haven't seen that broad based washout. It does seem very dramatic but you know it's kind of concentrated in specific parts of the market. You know it's interesting that we're talking about that because it did always feel like indiscriminate selling. Eric Nelson let me bring you in here and bring you from the currency perspective because it's not just the stock market. The selling off of the Bloomberg dollar index was rallying. I believe it's almost a 20 year high. When you looked back and then you see some weakness today what is going on. Well Craig I think that the word indiscriminate selling certainly describes the price action today in terms of the dollar being sold against essentially everything. What stands out to me over the past day or two is suddenly you have investors challenging or questioning this narrative of US growth outperformance and resilience. Yesterday we heard from some really important retail names concerns over sort of over inventory over to over hiring. These things really bringing that dollar supremacy into question. Now in the short term maybe the dollar's a little bit overboard and we can see a pullback here. But in our view this sort of macro environment we're really seeing is as a rotation away from goods and towards services. And so some underperformance from some of these names makes perfect sense and does not really challenge our armed sort of medium term view of US growth resilience and outperformance. So we were inclined at this point to continue to buy U.S. dollars on dips especially against some of those currencies where central banks aren't keeping up. So certainly the British pound is one we're targeting and even maybe the euro as we get a little bit higher here in some of these currencies against the dollar. You know it's really a shame when we talk about the dollar and the macro sphere here because one of the big pieces of perhaps a stock market action in the past two years I don't want to just say right now has been the dollar has been the currency picture. How attractive is it for foreign investors. That actually is my chart of the day. But Chris I want to come to you on that and ask how much of the bid right now or selling I should say is driven by the strength or weakness that you're seeing in the greenback. I think a lot of it's driven. I mean I'm not a currency expert but certainly the rally in the dollar over the last couple of months is indicative of a risk off situation. Certainly in the equity markets. We've seen that you know and I think it is indicative of the sentiment. You know right now people want safety. I mean you seem to see that in the factors right. That's what I typically focus on. And you see you know low volatility stocks just crushing high volatility stocks over the last couple of months. Same with value crushing their expensive counterparts over the last couple of months ago. I think a sentiment driven and you know you definitely see that in the greenback. And Eric doesn't work the other way too. Do you start to see in theory and then the last two years do you start to see capital flows perhaps go to the dollar in order to access the stock market when it comes to funds abroad. Well I think I'm sort of worried about the opposite happening. We look back to the late 1990s and early 2000s. You saw substantial outflows from US equities that had been bid up massively by foreign investors. And that may have played a role in some of the dollar weakness we saw in the early 2000s. So it's a tail risk scenario. It's not something I'm really thinking about as a base case. But if we do see substantial outflows out of US tech U.S. stocks more generally into maybe European value UK value that could be something that's that challenges are dollar bullish narrative over the next six months or so. So the dollar bullish narrative technically speaking you are starting to head up against levels that we're seeing in March 2020 levels seen in 2016 before that. How much stronger does the dollar get from here. But what's really interesting is you look at the positioning in euro and frankly a lot of these G10 pairs it's not stretched too to the point where I'm worried about a positioning based reversal. You look back to 2015 and euro and everyone was very short. Euro didn't even dollar. Yen is a great example where positioning is is stretched but it's not an extreme or all time highs. So levels like frankly parity on euro dollar by the end of the year. To me is is a very realistic proposition. And once we see some of this wash washout in dollar yen positioning we could see a renewed trend higher in that pair toward 135 140 by the end of the year. Well Christopher Cain and Eric Nelson of Bloomberg Intelligence and Wells Fargo respectively we thank you both so much for your time at a crucial time for the markets as we speak. We are seeing the S & P 500 down about half a percent as we speak that we also are getting some headlines here a Bloomberg scoop actually. Apple executives previewing its upcoming mixed reality has that to the company's board last week. That of course is according to people familiar with the matter. We're going to get more on that subject. But for now actually let's get more on that subject right now at Ludlow joins us from San Francisco. Ed walk us through the developments that we hear on the Apple matter. Yes. Look Apple has been working on an augmented virtual reality headset for a number of years. Sources tell us in a Bloomberg scoop by Marc Scoop Dog. And you guys know very well that the board which meets four times a year was shown the latest version of this headset at that meeting. And we care because it's a pretty good sign that it's in the advanced stages. This is an area Apple has tried to use augmented virtual reality to boost its hardware. Business hardware frankly makes up 80 percent of sales. A lot of that dominated by the iPhone of course. And it's looking to the future about how it can grow the top line through hardware and different types of hardware that would also boost services revenue as well. And Ed as we speak Apple shares down about one point nine percent. Let's see if we get that a little bit of a tailwind. Another thing getting a tailwind though is Twitter. You are seeing Twitter shares spike here up almost 1 percent. This coming after the Twitter musket deal is proceeding as expected. That according to executives telling staff. Tell us what we know on that matter. Right. So we understand according to sources that there is a Twitter all hands going on right now and executives are standing virtually and in person in front of Twitter's staff saying quote that there is no such thing as a deal on hold. You remember Elon Musk tweeted several days ago that his bids to buy Twitter was quote temporarily on hold because he had concerns about the proportion of users on the platform that were bots and he was not satisfied with the language in a regulatory filing by Twitter. That's less than five percent of the platform was made up of bots and that he wanted more data more evidence to assuage his fears. But what we're hearing is that right now as we speak Kristie that is what employees are being told by Twitter executives that the deal as far as they're concerned is proceeding as planned. Fifty four dollars 20 cents a share. It is not being renegotiated is what we're hearing from Twitter executives inside that meeting. And no such thing as a deal on hold. Yeah well the saga continues now as we see that Twitter shares they are still spiking. Thirty seven dollar handle still a far cry away from the 54 20 that Elon Musk is offering. Nevertheless we will keep you posted. Ed Ludlow thank you as always joining us from San Francisco. Time now for Bloomberg's first war news with Mark Crumpton Mark Christie. Thank you. At the White House today President Biden back Finland and Sweden's bids to join NATO in the face of opposition from Turkey. Mr. Biden met with Finnish President Sali Minister and Swedish Prime Minister Magdalena Anderson a day after the Nordic countries applied to become members of the defence alliance. This is about the future. It's about a revived NATO that has the tools and resources the clarity and conviction to defend our shared values and lead the world. And Turkish President Recep Erdogan has blocked the two countries formal NATO applications from moving forward claiming they support Kurdish militias. The United States has identified its first case this year the so-called monkeypox virus adding to a growing number of confirmed and suspected infections in the U.S.. Portugal and Spain. The Massachusetts Health Department reported the case of an adult male who had recently traveled to Canada where some monkeypox infections have been identified. Monkeypox is a rare but potentially serious viral illness. Senate Democrats want President Biden to go big with student loan forgiveness. Senate Majority Leader Chuck Schumer and Senators Elizabeth Warren and Rafael Warnock met with the president at the White House. They want fifty thousand dollars in student loan relief. That's five times what the president has indicated he would support. Global news 24 hours a day on air and on Bloomberg Quicktake powered by more than twenty seven hundred journalists and analysts in over 120 countries. I Mark Crumpton. This is Bloomberg. This is Bloomberg Markets. I'm Priti Gupta. President Biden offering his strong support for Finland and Sweden's bids to join NATO. New members joining NATO is not a threat to any nation. It never has been. NATO's purpose is to defend against aggression. That's its purpose to defend in the face of aggression. Data has not grown weaker or more divided. It has grown stronger more united with Finland and Sweden's decision to request membership in NATO. It will be enhanced for all time. The president's comments come in the face of opposition from Turkey. Joining us now to discuss this Bloomberg opinion columnist Bobby Ghosh here on set with me. An absolute pleasure to say I'm a big fan of your columns. Let's start with the Turkey story here because when you think of NATO becoming kind of this Western alliance Turkey isn't the first name that comes to mind. What is the crux of Turkey's issue here. Well Turkey's issue with Europe in general with Metro in particular has always been over Kurdish separatists. There are different shades of Kurdish separatists some of whom Turkey and indeed the United States categorize as terrorist groups. And some of these activists live and work in Nordic countries including Sweden and to a lesser extent Finland. And what Turkey is saying is that it wants its concerns to be taken more seriously by these countries. It wants these countries to act against this kind of activism to crack down again against it and possibly to expel people that it regards as terrorists from living in places like Stockholm and Helsinki. You know it it's fascinating what happens because just for context for our audience here is that Sweden is actually a refugee grounds for a hundred thousand Kurds. And that's really kind of the basis for why Turkey is saying there are nesting ground for terrorist organizations. Geopolitics very much at play here. But I have to ask about the Finland of it all. Where does Finland fall. Well there is also a population of refugees in Finland not as large as in Sweden in Sweden. In addition to that large number there are several members of the Swedish parliament who are of Turkish origin and Turkey tars them all with the same brush. Finland has a much smaller number. But I think what Turkey is doing here is opportunistically using this moment to try and force its agenda onto NATO. You know we've known for weeks that these countries were going to apply and for weeks Turkey had the opportunity to see where its objections lay. But President Erdogan chose not to do that. He's choosing to do that at the eleventh hour which really smacks of opportunism here. He's trying to make this work to his advantage. It really becomes a tough situation. Bobby stick with us. I want to bring in another guest to join us here. Tina Oliver Luck led Diana. I'm sorry I'm butchering that name but don't worry. She's fantastic. Foreign policy research fellow at Center for European Policy Studies. Tina thank you as always. She is joining us of course on the phone but we appreciate it. Nevertheless I have to pose this question to you. We've heard about the qualms that Turkey has with the Swedish and Finnish Finland membership into NATO. What is their response and why are they perhaps not as willing to concede on some of the requests that Turkey is making. Sure many thanks for having me. So basically I will just only risen ISE of the sticking point of the previous speaker in just E-Trade that Turkey's been really opportunistic here. However I mean we can already see that Sweden in the feeling they're open to negotiations and in fact we could already observe their statements. That's again iteration that they're not friends with terrorism that they don't support this organization that Turkey perceives as being a top security treaty at the top security treaty that they print for itself. And so they they see quite a quite open for the. For the negotiations. And again having in Ankara accounts that Turkey is pushing its own agenda. I can see that you know veto powers simply Turkey can be pretty much resolved. And this is just a matter of negotiations. However what I would probably bring into discussion is the duration factor. What Turkey was actually doing is trying to you know play a balancing act between NATO Ukraine and Russia at the same time. And this is a difficult game because if we look at how Turkey was framing foreign policy with supporting Ukraine since the start of the war it closed trades you know limiting Russian vessels to transit. LEXI was actively involved in mediation and in fact hostage to high level talks between Russia and Ukraine in March. However at the same time Turkey was abstaining from imposing sanctions from Russia and it also abstained from voting on Russia's suspension from the Council of Europe. So these again eateries that were Turkey opposing NATO expansion now also tick the box off its you know trial an attempt shortly to normalize situations with Russia. Florentino when we talk about these geopolitics we have to include China into the conversation. In fact the issues between the United States and China seem to be kind of this overhang in terms of the legacy perhaps of the trade war the previous tensions as an overhang of the response in the war in Ukraine. How does Sweden and Finland work with China here. I will indeed show Sweden and in Finland as a starting point their Democratic states right. What we're talking about Turkey Russia and China on the other hand these are autocracies that always keep you know helping tend to each other. The other thing is the dependence on China to the economy relations which is you know not something to be ignored. And also VW Russia and Turkey we can already see that Turkey is also dependent on the Russian natural gas. And this is why it was very sensitive on making a statement or joining you know NATO expansion agenda. So the China factor is definitely not to be dismissed from a from the discussion. However again this term unity between the NATO and strong unity within their need. Decision making will make once more the point clear that NATO will spend with the Democratic state. And it should not be it should not be basically any autocratic state. Neither Russia nor China to decide or to oppose the sovereign state to make their own decisions. They are their own choices for the future. So NATO expansion will make this point clear once more that he'll stick with us. I want to introduce some comments here that we heard earlier from Greg Valliere the chief U.S. policy strategist at ADF investment addressing the China issue. It wasn't what he had to say. I do think that China has to worry if they tried to follow what Russia did. They would face enormous world sanctions. They would not succeed militarily. And so I think that would be a signal that has already been well received by Beijing. So Bobby most turn to you here. You heard of the China issue now with square come full circle and square the China story with the Turkey story here because it kind of seems like the United States has a lot of balls in the air right now. Well yes it does. And for China the US the Biden administration for four months and months now has been saying that if it wants to be more and more attention to Asia we've been hearing about this pivot to Asia for three different presidencies now. But Europe still keeps getting in the way. Russia gets in the way. The Middle East gets in the way. It is the ability to keep all these balls in the air that defines a superpower. You know there's the old cliche about a superpower whether it's whether a country can walk and chew gum at the same time. I've always argued that a superpower should be able to walk chew gum and hammer tune at the same time. And that is the kind of situation that Biden faces now. He has to deal with China yesterday with Russia and he has to deal with a much smaller power of Turkey that has the ability in this peculiar structure of NATO where all 30 members. Each has a veto power. A country like Turkey can punch way above its weight. It's a challenge for American diplomacy. But you know what. It's the challenge that the United States has faced for 70 some years should be able to do so again. Tina 30 seconds. Let me give you the last word here. What do we watch for in these next tensions. Well what we are we are basically even EDT video from the Turkey will thing which I don't think will happen. Still we can already witness these security guarantees from the U.S. and the UK to NATO member states to Finland and Sweden. These basically keep having putting into account. It means that even if the formal expression can fail in the nearest future they will still enjoy the benefits. And this would only cause Turkey would like being called into the political isolation from the allies. Well Tina Oliver Diana and Bobby Ghosh of Bloomberg opinion I want to thank you both so much. And as we head to break a headline crossing the Bloomberg Terminal the U.S. Senate clearing 40 billion dollars of Ukraine aid package now headed for Biden's signature. More coming up next. This is Bloomberg. This is Bloomberg Markets. I'm creating Google now something to caught my I ask is finding it difficult to keep up with inflation. What happened to the inflation hedge trade. It used to be so simple. Essentially you sell bonds you buy bitcoin. How does it all work. Or even buy tech for example more insulated and or enable an able I should say to weather some of the inflation to weather some of the supply chain challenges. But if you actually look at performance it doesn't quite work that way. Check this out. This is a chart of the major financial indexes. S & P 500 treasuries commodities and bitcoin down here in red. You can see asset inflation hedge. The only thing not really outperformed here was commodities as purple line appear in a courtroom pretty well. Here's the problem though. What happens when you start to have scarcity in those commodities. Food inflation and those commodity contracts become so volatile that you actually see open interest couple collapse. That's going to be the major issue especially when it comes to whether or not bitcoin the S & P 500 treasuries or even commodities are the correct inflation hedge. Of course we are going to break all of this down for you in the next couple of hours in the next couple of months. Stick with us. This is Bloomberg. UN General welcome to Bloomberg Markets. And I'm pretty good but let's dive in on the price action here and get a quick check of those market because it has been a volatile session as it has been a volatile week month even a year. We can start with this terminal chart or not. It's down four tenths of one percent. When you look at the S & P 500 remember it is a risk off tone. We were down as much as one and a half percent in futures trading. So to see this kind of volatility to pair those losses and then to come back down is really something to watch. Which brings me to the VIX here. You are looking at a book with a 30 handle. This is significant as we talk about that post-war norm of volatility. Is this the kind of volatility we should expect for the remainder of this year. Of course. We're going to ask our guests on that in just a few minutes. Stick with me on the bond story though because that's really where a lot of the action is as well. If you're pulling out of stocks are you popping into bonds. At least that seems to be the trade at play today with the yield down and with the yield down. The dollar weaker as well. Now following the interest rate story as opposed to the Haven story John. And critic of course we've continued to track what's happening with technology stocks. A reminder that the Nasdaq had already moved into bear territory earlier this year. And we have seen investors today willing to buy certain technology names. But then you've got that key Dow drag in the form of Cisco with the worries out of China on their business. And it's taking a number of networking equipments along for the ride lower today whether it's Broadcom Juniper CNS. So we're just reminded constantly right now. But the challenges for companies as they continue to share their outlets pretty. Earlier the Citadel CEO Ken Griffin weighed in on the markets off and about the state of public markets speaking at the Bloomberg Intelligence Market Structure Conference. Take a listen. It is the single most efficient competitive market in the world hands down. We should think about how do we have far more companies be public companies where their success is enjoyed by American investors. Saving for retirement or otherwise and everything that we keep piling onto the list of obligations and responsibilities for public company. Discourages that from happy. We've seen thousands of fewer companies in our public markets today than twenty five years ago. And that's really I hate to say it but shame on Washington for for really forcing so many investment opportunities outside of the line of sight of the American investing public. Citadel CEO Ken Griffin earlier with Bloomberg Francine Lacqua. He also said while a recession is inevitable he doesn't see it happening in the next 12 months. Let's get some more insight on the matter with Joseph Davies Vanguard's global chief economist and global head of Vanguard's Investment Strategy Group. And obviously right now Joseph. That is what investors are trying to figure out. It's interesting hearing Ken Griffin talk about the value being public but those growth stocks and many companies that went public these last couple of years are really challenged right now. And again thanks for having me. I think you know we're we're seeing market volatility that's clearly unfortunate and unpleasant unpleasant but it's certainly not a surprise. At least it shouldn't come as one. I mean we entered the year which is a lofty valuations particularly in the growth in technology space. And we had you know unsustainable zero interest rates. So obviously you know our view was that at some point we were going to see this sort of correction. We didn't know the time. But certainly that is upon us. Joseph I have to ask you about the volatility sure but the economic cycle here if you look historically a normal recession is supposed to come every three or five months. The last two decades have been the exception to that. Do we return to a new regime or I should say the old regime of a recession every three to five years. I think it's possible although still less likely in that part of the reason why we used to have you know decades ago much more a greater incidence of recessions because the more manufactured more manufacturing based economy high inventory swings now with a service based economy. Recession is still clearly likely and possible and we will have them in the future. But I don't think a three to five year should be some sort of golden rule. All right. And just to broaden things out Joseph I want to go back to something Christie said a couple of minutes ago that stock bond cary relation which has flipped back to negative it was it was positive for much of this year. When you see something like that is that sending a message to you by how the bond market is interpreting how aggressive the Fed is. Or is it just some garden variety risk off mentality. How would you interpret that. I think it's a little bit of both. I mean clearly we're seeing a flight to quality but ultimately bond correlations stock bond correlations turn positive only generally when inflation is rising and rising faster than expected. That was clearly the first part of this year. We are still waiting the crest. We I think it will come but will still remain elevated. But the fact is if we start to see a cresting in inflation the Federal Reserve is bias for action. Thankfully after after after over an extended period of two easy policy. So I think we will see a more return at least closer to zero correlation between stocks and bonds. Joseph I want to ask you about perhaps another important asset we've covered commodities we covered stocks and covered bonds. Let's talk about currencies here. The dollar the strength that you're seeing in the dollar is extreme or technically you're pushing up against levels last seen March 20 20 and before that in 2016. If you cross before that you have to go back 20 years to see that kind of dollar strength. Is that what we're in for here. I think I'm hard pressed to see continued gains. I think it really depends upon how much further the Federal Reserve action gets priced into the bond market. I think right now most at least buy by met by my best judgment. Most of the bond market repricing is complete. We've long had a view that the Fed Reserve was likely going to take rates rates of roughly 3 percent at the high point in this cycle. That looks to be the general consensus now. So I think for the see further dollar strength and no further action in the bond market you would need to see additional repricing and more aggressive Fed policy. If we would see that we would need to see wage growth continue to accelerate. And just bringing it back to equities as well. Joseph as we were saying earlier as we were wondering this week you know would you see that official bear correction for the S & P 500. The Nasdaq had already gotten there and the early targets of investors during this downdraft had been those companies with sky high valuations. What is your assessment of growth stocks after this selling pressure we have already seen at this point. Well again and again we're trying to look out over the next three to five years when we do that. That that valuation normalization as I'll call it again completely extended from you know fair market levels even for a high growing technology companies most of that is unraveled. Unfortunately it has not been fully completed. And so there could be some additional volatility in the months and perhaps next one or two years. But that gap that we thought would close between more value based companies and growth based companies that gap is is has clearly narrowed in performance although both have been negative this year. It has been much more significant for the growth oriented stocks. Joseph what's interesting to me about the stock market here whether it's tech or whether some of these retailers is the level of punishment investors seem to be giving them take target earnings for example. Sure there were some declines in profits but was it worth or doesn't justify a 25 percent decline in a single day. Do you think the reaction to some of these developments are too extreme. I think we're starting to approach it. I mean much much sense it's an inverse of where we were a year ago when it's almost bad news was good news and clearly good news was great news. And I think we're we're unraveling some of that. Part of that is just the tightening of financial conditions. Part of that is being engineered by the Federal Reserve. I think much of that was you know if we have consumer price inflation we clearly had asset price inflation a year ago. And so you know the healthy the healthy mix is somewhere in between. But markets show that we can kind of swing the pendulum will swing into the more aggressive reaction of financial markets anything negative. I think towards it. We go towards the end of the year we should see it a little bit more still the more normal activity. If our forecast is right. All right. And I would imagine if you are expecting that recessionary risk to be something we're watching closely we should also be watching Joseph for more companies talking about possible changes to their earnings outlook right now. It has been such a busy week on that front whether it's retail or I was just alluding to what Cisco had to tell us about just given these global macro implications right now. You know what I'll share with you. I'm particularly looking at two things. Of all the indicators in the world one is in terms of the earnings. I think we do have to account for the fact that we were always going to see a rotation from the good side spending. Durable goods autos you know those sort of things in Covid sort of you know strange world to more service based spending. We saw that in Target yesterday. The other one though is two lines. And do they cross or not. What I mean by that is wage growth is high but it's being more than offset by high inflation. If inflation can come down slightly yet wage growth remain robust then we will see a continued recovery. The recession will go back down to zero. But that's a big if. And those two lines and whether they cross or not is really the key for the next six to twelve months. Joseph Davis of Vanguard we thank you as always for joining us on Bloomberg Markets. I want to mention one stock moving this hour. That of course is Twitter. This coming after Twitter. Executives tell employees that the 44 billion dollar deal to sell the company to you on Musk is moving forward as planned that it won't renegotiate the agreed upon price. Bloomberg reporting that Twitter's top lawyer and head of set at an all hands staff meeting that there is no such thing as a deal being on hold. Executives pushing back on claims from Musk over the past week that he is passing the deal while he learns more about the number of bots and spam accounts on the social media service. As we follow that story of course we will bring it to you. Twitter shares up one point seven percent. Coming up after a surprising forecast Canada Goose jumps to its biggest gain in six months. We'll discuss what it means for the demand for high end good. That conversation next. This is Bloomberg. This is Bloomberg Markets I'm John opened with critique Gupta and Canada Goose jumped to its biggest intraday gain since November and trading today after forecasting total revenue for 2023 the beat analyst estimates. Despite the inflation concerns we keep talking about. Joining us now being a Bloomberg reporter Paige Ellis and Paige at least after a long cold Canadian winter. I'm happy that we can finally leave. The park is at home but business is pretty good it seems for Canada Goose. And these numbers coming in a week where we've seen a lot of weak retail stories. Right we've seen a deluge of stories of retailers with crimped margins retailers posting warnings for the upcoming year. Canada Goose a different tale altogether. We're seeing demand for their high end products remain really robust. It's it's a signal that you know affluent consumers are still willing to spend on luxury goods despite the inflationary pressures that they're experiencing you know at the pump or at the grocery store. And it wasn't just a forecast of increased sales and profit for the upcoming year which beat Wall Street expectations. As I noted their margins also a big part of the story today. They're expecting margins in the high 60s and they recently saw their margins grow. They said this is partly because of increased pricing as you might expect that. They also noted on the conference call Johnny found this really fascinating that they have a very unique manufacturing network. So eighty four percent of their products are produced in Canada 14 percent in Europe. And they say that has quote insulated the company from the supply chain problems and production problems that have plagued their peers. Page For years Canada Goose has been trying to grow its sales outside of the cold weather season how the non Parker sales are working out. Right. So they don't just want to be a cold season company. They also want to be relevant during the shoulder seasons maybe even the summer seasons. They've been making a big push into light down products. What we learned on the conference call today is that Canada gooses non parka sales grew 70 percent last year versus the year prior. They say this is really robust growth compared to what they've seen previously. They've also recently launched Shoot. So they're trying to make a big push into these other categories. Now whether or not we're going to see you know a Canada goose bikini line. Never say never. But that's perhaps a bridge too far for a company like this. Paige Ellis of CNN Bloomberg thank you as always for joining us insightful on Canada Goose. I never would've thought. Let's let's pivot a little bit here. With the war in Ukraine and lockdowns in China hammering growth and raising inflation the global economy is taking a big hit to say the least and it may only get worse from here. It's all in today's Big Take. Joining us now from Panama City is Tom Erlich a Bloomberg Economics who co-wrote the story. Tom thank you for joining us. What does a world without the globalization of the last say 20 years actually look like. So Kristie China lockdowns Ukraine war. These are taking a big toll on growth in 2022. We've just cut our global growth forecast all the way from four point eight percent at the start of the year down to three point one percent. The global economy is going to be one point six trillion dollars poorer than if Russia had stayed within its own borders and China had stayed Covid free. And of course inflation is going to be moving higher as well. The forward looking question and that's the one we take on in this big take is. Well what is a world which is fractured along geopolitical political fault lines look like we run some models and it's really not pretty. Less trade less productivity growth. As a consequence the world is poorer than it would be if globalization stayed on track and potentially with persistently higher prices. It it is pretty remarkable to think about the economic consequences of our reversal Tom of globalization. We were just having a conversation about a company like Canada Goose which has had big inroads in China. I wonder what all of this would mean to for these companies that have bet on global growth. Yeah. That's right. And of course there are powerful arguments against D globalization. Canada Goose and its China sales is one example. Another vivid example of course is a company like Apple with its production in Mashed in the East Asian supply chain. So corporate interests are clearly lobbying against globalization. But if those interests don't win. If the geopolitical fault lines between China and the US between democratic and non-democratic countries do continue to split apart. Well for companies like Canada Goose for companies in the electronics sector this is a much more challenging environment. It potentially breaks up their supply chains. It also means they find it harder to tap global markets for their sales. Really helpful context and a fascinating read. Thank you so much Tom. Bloomberg's Tom Erlich joining us. This is Bloomberg. What we're seeing in the markets is a rotation from growth stocks with earnings very far in the future toward stocks that are much more value stocks earnings here in the present. And this reflects the fact that real rates for the first time in a very long time are likely to go positive in 2023. That was that. It was Ken Griffin speaking to us earlier at the Bloomberg Intelligence Structured Markets Conference. Griffin also said he's reaching a tipping point with Chicago the home to his business as the city wrestles with rising crime. Let's bring in boomers Kathleen Dougherty who spoke to him on the sidelines of the conference. Catherine thank you for joining us as always. Walk us through what led to this tipping point. So Griffin has been very vocal about his frustrations with Chicago and the rising rate of crime just over the weekend. He was showing me a video of some teens that were throwing things at cars and this was right outside of city adults offices on Dearborn Street. So this isn't necessarily a new phenomenon that he is frustrated with where things have headed and where they continue to go. But it really does seem that this is the breaking point for them and that decisions real decisions will be made. There was some clarification to that. A formal. Are we moving or are we not. Has not been announced but just bringing it to today. This is really significant I think point in history for the firms and for Griffin who is a big figure in the city of Chicago. No doubt and Catherine obviously Citadel a firm that has brought a lot of financial muscle to Chicago. And just based on the reporting you're doing as well in terms of where they are looking there's already operations in New York and growth there in Florida as well. That's correct. So there's hundreds of employees in Chicago. There's also hundreds in New York. They have a very large presence. Specifically there is an office on Park Avenue. They're looking at new space have taken some space down in Florida. As you've referenced. So a move is not impossible. Firms do this all the time. And it would just mean that there would be a vacancy left for the city of Chicago. So that's really the big question mark here is what does that actually look like. And will the impact be as big as some are estimating bloomers. Catherine Dougherty we thank you as always for bringing us this Bloomberg scoop. Always a pleasure. Let's get a quick check on the markets here. The S & P 500 down about two tenths of one percent. You are also seeing some green on the screen though when you look at the Nasdaq and the Russell 2000 both well the Russell 2000 up at 1 percent. The Nasdaq up three tenths of 1 percent. Remember this volatility picture to see that kind of momentum in really the largest and smallest parts of the market the Nasdaq and the Russell is interesting. Plus of course the Toronto exchange as well. Also up one percent. Makes you wonder exactly what kind of market play is really driving the markets as opposed to a reaction from yesterday's price action for John Irwin in Toronto. I'm pretty Gupta in New York. This is Bloomberg.

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Bloomberg Markets: Americas Full Show (05/19/2022)

US stocks pared losses as traders weighed prospects for growth against a backdrop of rising prices eroding earnings and tightening monetary policy. "Bloomberg Markets" hosted by Kriti Gupta and Jon Erlichman speak with Joseph Davis, Vanguard’s Global Chief Economist and Global Head of Vanguard’s Investment Strategy Group and Erik Nelson, Wells Fargo Macro Strategist. (Source: Bloomberg)

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