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00:00The most crucial moments in the trading day. This is Bloomberg Markets the close with Caroline Hyde Romaine Bostick and Taylor Ray. And is GBM in New York 7:00 p.m. in London and we we're live from Remax well Tyco to physically that markets close and Caroline Hyde ISE Romaine Bostick. I'm Taylor Riggs and the negative news keeps on coming. From ad spending to crumbling new home sales signs of a slowing economy are adding up remain on the tech stocks that are taking a hit and Taylor Riggs digs into the eco data. We've got you covered. Snaps sell off shares plummeting. As much as 40 percent of the social media company cuts its revenue and profit forecasts just one month after making them. We'll delve into deterioration. Plus while the cat that got the cream Taylor's CAC maybe Petco reports better than expected first quarter net sales despite a choppy retail market. Going to speak with CEO run Coughlin about how they are fighting inflationary pressures and pushing earnings. All that so much more coming up this hour. And just to reiterate that breaking news that Mark Crumpton brought us the New York City subway shooter is in custody after surrendering to police. So says NBC of course this being Andrew Abdullah. The NYPD announcing his name the suspect in Sunday's fatal New York City shooting a fourth of a Goldman Sachs group employee remain. All right. We are going to keep an eye of course on that story. But we do want to pivot back to markets of course. We count you down to the closing bells here on Bloomberg Television. And you think about where we were 24 hours a day here in this market. A lot of optimism primarily on the back of some of the commentary that we got out of Jamie Diamond and J.P. Morgan. And why wouldn't you believe that optimism. The largest U.S. bank says things aren't that bad. There are some clouds but you know the consumer is resilient. And then of course last night we get SNAP a very small company only like the 10th largest social media company out there. But there is a larger macroeconomic issue here. And that of course has to do with ad spending. And if SNAP is seen something with some of its advertisers pulling back then of course that means a lot of other companies could potentially be seeing the same thing. You're seeing SNAP shares down 42 percent here on the day. But you take a look at Google Amazon Roku. You take a look some of the pure play eye advertising companies like a trade desk or WPP Omnicom all moving lower here on the day as concerns about those macro economic conditions now continue back into the forefront. It didn't help matters that we got home sales data that was abysmal. Don't front run didn't help. Don't forget matters heart that we got Richmond Fed data that was abysmal. It didn't hurt matters that we helped matters that we got services PMI. That was not abysmal. But if you go out and live up to expectations you might step into your toes. No I know. I just would. Things like feel so different this quarterly earnings season than previous is when you miss the street is really unhappy and investors are really unhappy. So it's really the forecast the lower forward guidance of all the big reactions that we see with these companies. I mean a 40 percent drop is unbelievable. But think about Best Buy. That actually still was pretty ugly but not as ugly as people have been. Not as ugly as people though. If you looked at some of the data on Best Buy with regards to the individual units it was still a little like really. But you know look the end of the day it's not just a snap right. It's an Abercrombie and Fitch that's down 20 30 percent. It's though of course the big sell off again last week with the big retailers. And we get Nordstrom tonight. We get Macy's later this week here. What are we going to hear out of them. Is the consumer is resilient. There's a lot of people want us to believe we will find out four or five. You know I did buy shoes the other day. You bought me shoes. I bought. No I bought from either. But until I find new shoes for yourself. Yeah. Oh boy. So I do. I'm doing my part. Oh he did also buy all of us pay strips. That's terrible. Oh no. So I do a two year old turn. How do we make that transition. Let's try it. OK. We've talked a lot about the economic data right. Remain that you listed off. We headed to your auction today actually pretty good. What is so interesting even as we're thinking about some of the technicals in this market a big rally that we've had in yields down and yet buyers still really stepping in which I think is is interesting when we think about yields going higher with the Federal Reserve on the move. And yet you've got a strong demand for a two year bond auction. So again this is the path of the last year intraday basis. Yields are falling. Carolyn we talked about sort of where we are with the new home sales are mentioned. Some of the weak economic data new home sales are down about 17 percent or so in April. Supply though did increase from April from March. But it is a skew that the luxury homes are doing pretty well. But it is a mortgage rate about 5 percent. I think that really has a lot of people concerned about the average to maybe the low end borrower. Again a tale of two cities a tale of inequality that's been shown in the housing market. This being shown perhaps by what we're hearing from some of the bank CEOs. Taylor let's take it out to Christina Hooper Invesco chief global market strategist. Christina how are you reading these tea leaves. We have relative optimism coming from Brian Moynihan and from Jamie Diamond. But then you have the data in terms of the homes. You have what Snapshot is talking about in terms of advertising. And we are seeing also Abercrombie and Fitch just inventory levels that are painful. Well Caroline first of all let me start by saying I believe it's her birthday today. Is that. Yes it is. Well happy birthday. It is a pleasure to be with you on your birthday Christine. So my favorite. So. So let's make sense of this. In my opinion what we are seeing is a slowdown not a recession. So certainly some metrics are relatively positive but the Fed is achieving what it wants to do which is tightening financial conditions slowing down frothy areas like housing. And that's exactly what's happening. So all this suggests that some of the gloom and doom we're seeing right now could ultimately prove to be positive because the Fed won't have to tighten as much as the market expects right now. That's true. I am curious so when you talk about the Fed's job and there I guess aim to tamp down inflation here in the communication right now is basically 50 basis points in some sort of series or another year. Do you think it's possible do you think it's realistically possible that maybe we could anticipate the Fed maybe ratcheting down that a little bit going back to 25 basis points and maybe taking a little bit more of a wait and see. Well I think the Fed will want to be full steam ahead in the shorter term. I think we're going to get another 50 basis point hike maybe two. But then I think the Fed is going to assess where the economy is. I believe them when they say they're going to be data dependent. And so that suggests that getting as we get closer to the end of this year you know that the end of the third quarter and certainly into the fourth quarter that the Fed eases up. And while it continues its tightening cycle it is more mild than what many anticipate will be the case as of today. Christine we've talked a lot about the big rate of change and spread widening. Is that giving you signals of an equity bottom given how wide and how quickly. Spreads have widened. Well certainly that's one sign of hope. But the reality is this environment of volatility and continued sell offs and attempts at rallies could continue for the next several months. I would expect that we see a challenging environment until we really see the Fed change its stance whether through talk which may be less likely these days or through actions when we get to 25 basis points and more communication about the path going forward. So so to me yes there are some encouraging signs right now but I don't think we're there yet. Christina with inflation still very elevated not coming down any as swiftly as the Fed hopes. Where are you advising to put your money. Is cash in any way. KING Is it trash where she be allocating to. Well I think we need to be very well diversified. So we want to have enough exposure to cash and actually start to dollar cost average. And at this point because again I think we're going to we could see some more losses. We're going to be bumping up and down probably for the next few months. Can some can you know some selloffs are very likely in my opinion. So I think we should start to deploy that cash. Well of course we also need to have a diversified portfolio that includes inflation hedging strategies areas like commodities. But we have to recognize that you know the horse in many respects has left the barn. Hopefully this is a reminder though to investors as they plan for the long term to be well diversified and have those allocations for the long term even if we don't see another spike in inflation for for some time to come we always want to be prepared for events like this. All right Christine I'm going to have to leave it there. Always wonderful to catch up with you. Christina Hooper there of Invesco helping kick off today's show our focus here on the markets. But we do want to focus back on a very horrific story a deadly shooting on a New York City subway train on Sunday. The police were searching for a man wanted in connection with that name Andrew Abdullah. We reported a little bit earlier that the shooter was in custody. We now have a correction. The shooter is not in custody. And according to NBC News the shooter has failed to show up for surrender again. That's according to NBC News. Based on what we know right now he is still at large. Bloomberg reporter Laura Not Nami ISE is joining us right now to talk us through this year. Laura what do we know right now about where this man is. I think we don't know anything that we can report with confidence about his location other than his identity as a suspect. He's apparently 25 year old man named Andrew Abdullah to the New York City Police Department commissioner Key John Sewell officially named as the suspect in the fatal shooting. In a tweet today. And just to be clear Laura so they're still searching for this man. They know who he is. Why was he expected to surrender. I can't say that with any certainty. But local news affiliate of NBC reported a short while ago that he was expected to turn himself in to the New York City Police Department. They've now issued a correction I believe. All right. Our thanks there to Laura in the Miss. And once again this involves of course that tragic shooting of Daniel and Rick as he was an employee of Goldman Sachs riding a subway train here in New York City on Sunday. According to police a man shot him at point blank range on that subway train. They say the man they want in connection with that is Andrew Abdulla. Based on what we know right now he is still at large. We'll keep you up to date here on that story. We'll be back in a moment. This is Bloomberg. Let's talk about a company a retail company that's managed to buck the trend and actually continue to grow on the bottom line she has a Petco actually been fluctuating over all but the pet retailer reporting better than expected first quarter sales and earnings. Company also maintaining its full year guidance pieces say Ron Coughlin's with us is the CEO of Petco. Well to tell us how you're managing to weather the inflationary hit that seems to be upending the bottom lines of so many big retailers right now Ron. Yeah we have a great category. Our category is actually according to Nielsen the strongest category of the 30th category is that they track. And against that we've been executing. We like our model with the NZ ecosystem and we like our advantages from a digital fulfillment standpoint. And our team is executing. And so we're winning in the marketplace. How much confidence do you have Ron right now that you can kind of I guess maintain what you have right now with regards to pricing with regards to availability for your customers. Or do you think that you may have to make some adjustments down the road given some of the shifts if you will in macroeconomic conditions. Yeah so we're all having to be agile in this environment. It's been a rapid change in the market environment but that's why we you know we consider ourselves operators. We're good at adjusting and executing at the same time. I consider PET a staple. There's been lots of conversation about staples. You know pet food is just like a eggs or milk. And I'm sure you feel that way for you Enzi there that you know you will be cutting back on it now uses food or Mr. MCAS as well. So it's like a staple. And by the way grooming and vet is pretty similar. We had double digit growth on grooming in vet. So we have a lot of tailwinds mid category standpoint. Again we're winning share where we're focused and run. The only sort of issue is that Staples as we're learning from Wal-Mart and Target are inherently lower margin businesses. What percent of your input costs. Are you able to pass on to the consumer. Yeah so we've been successful at passing on to to the market but at the same time we're making sure we're providing value. But I will say what's different about us is we're not seeing any of that down trading. Actually it's the exact opposite. We're seeing a continuation of the migration to higher end kibble and to higher end fresh frozen foods. So actually our premium super premium foods are growing faster than our lower end firms are ready. Fashion brand is growing double digits. So we're not seeing that down trade again. The pet industry is very different from that dynamic that that's been a timeless truism of the migration towards higher end food which is great for pets and great for our business. What I want to go back to something you just mentioned about a deterioration in the market environment. And I think of what Evan Spiegel system saying of SNAP. He's saying the macro environment has deteriorated further and faster than we anticipated. Are you thinking that maybe this isn't the time to market so much to advertise so much. Is it a time we get something becoming more aware of of being lean or what you can. Absolutely. That's what great operators do. We get leaner where we can. But you also choose where you're going to continue to invest. So we're going to continue to invest on building out our vet network. We now have two hundred on vets going to continue to invest to drive new customer acquisition and share of wallet. And that's why we had 14000 new customers last quarter. You know when I go back to October I think I was probably with you guys right around that window September October we saw inflation coming and we launched cost initiatives to make sure we could get ahead of this so that we didn't have to cut back on the muscle driving our business. And I think that's where we sit right now with regards to sort of building out that that that network run. Does that mean an existing Petco Petco locations or you're talking about new physical locations that will be added to the mix. Yeah. Our strategy is a throughput of existing footprint. So what we do is we come in we put in a vet hospital. We'd put in a just food for dogs fresh food pantry and we'd put in a ready shop and shop readies our fashion supplies brand. And not only do we see the revenue that we like on the vet but we get a four to five point lift in our center store sales. So what's unique about our model is we do 70 70 of these a year and it's really a step in repeat growth driver for us. And not many retailers have that. It also helps diversify us towards services which obviously is nice to have in a world where you co-exist with the Amazons and the Wal-Mart's in the world. All right Ron I'm gonna have to leave it there. Always wonderful to catch up with Iran. Ron Kaufman there is the CEO of Petco. All right. Coming up we'll of course have to talk about snapped those shares plunging today well below the IPO price really dragging down the broader tech and ad space with it. We're going to get more details and not just the why but more importantly what's ahead. This is Bloomberg. Here take a look at shares of SNAP plunging today and dipping below now that initial public offering price. This is after the social media company cut its revenue and that bottom line forecast. Joining us now is Ali Moore Robbie Morningstar Research a senior equity analyst to discuss SNAP of course after lowering his price target. I am curious what the big surprise was here. It feels like coming after a lot of these other social media companies that we were sensing a slowdown. Was this bigger than expected. Yes it was a little bit bigger than expected and that's mainly because surely with macro economic headwinds out there we expect reduced reduction in ad budgets and ad spending. But in terms of actually how they may impact companies such as SNAP where you're more direct response types of campaigns have actually grown very nicely during the pandemic when of course at that time a lot of our budgets were slashed. This was this was pretty surprising. We actually thought that direct spending would actually offset any weakness that we would see in the brand brand or broad based advertising spending. So yes it was pretty surprising. Yeah. I mean the fact that this deterioration has happened in a month since they came with their earnings that surprise to the upside the fact that they have so been battered and so amazed by the deterioration that they felt they had to inform the market. What is the read across. Do you think. How much is it. Is it consumer goods companies that just aren't willing to spend on marketing at the moment. And does it have a ripple effect across other names. Well across. I think it likely applies to a lot of sectors. A lot of verticals as you know ad spending is very cyclical and as we see basically economic growth slowdown and or recession remains to be seen. But that's certainly going to negatively impact ad spending. Now what I must make clear though is that there is certainly a difference between ads and the impact on traditional ad spending and the impact on digital ad spending. The latter of which we think is going to be impacted much much less I think as companies continue to transition onto digital ad spending which is actually which comes actually at a lower cost. Should just keep that in mind. But yes I think it probably applies to a variety of verticals radio sectors. I'm sure as I know we're kind of in kind of the first major stage of where we get to kind of get to see how digital ad spending holds up and I guess a potentially down economic environment here. I mean is there any sort of parallel you can draw that maybe investors can sort of look at and say OK this can provide us some guidance as to just how much it may fall. Sure. What. What I would look at is basically pretty much what we experienced for the pandemic and not that not just actually how much the impact would be or as you said how much it may fall. But also you know what parts of digital ad spending could actually not be impacted as much. So the way I look at it the way we look at it is we divide at digital ad spending into two categories. One is more broad based brand advertising and the other one is more direct response. Where the advertisers wants to want to see that are why. As soon as possible. So we think during a downturn and or a slowdown in economic growth more advertisers are going to or advertisers are going to shift more towards that direct response. So you could see an increase in direct response possibly partially offset the the big slash in in broad based advertising. Great to have some time with you. Thank you for breaking it all down for us. The nuances. Ravi when a savvy such senior equity analyst began so much more to snap the read across plunges 42 percent. It's a pretty bad. This is Bloomberg Markets the closest I have to 30 year in New York. Let's get you caught up on what's happening in the commodity space on this Tuesday afternoon settlement of nine mixed group futures. Coming in pretty much flat on the day similar to what we saw yesterday. We're at 1 0 9. Ninety five basically call it 110. That's where we ended about yesterday. Here is weeks end up in a little bit of a holding pattern as a lot of people continue to keep an eye on the U.S. response there to the energy crisis coming out of the war in Ukraine and how they're going to respond to Russia. They are still unresolved. They are not unresolved is the boot boost that we've been seeing in gold futures as of late. Here up for I believe what's now the six day in the past seven here. Back right around 1870 1871 here as you get the weaker dollar and now more concerns about macro economic conditions as people seek a little bit of a haven bid. Nickel prices moving lower here on the day. In fact we've seen a lot of destruction right now going in the base metals space a complete flip flop from what we saw yesterday. And lumber futures actually managed to inch into the green here at the close. But nevertheless the damage has done. Lumber futures actually were down including today down eight of the past 10 days. You're looking at six sixty. Remember we're well over a thousand bucks went a little less than a year ago. A lot of questions right now about the housing market and more importantly about the man for the lumber to build those houses. Let's talk about that housing market. Caroline Hyde think was interesting when we talked about the new home sales this morning. Follow falling. We heard earlier this week from the NAHB and some of their latest surveys are showing there's actually better time to remodel than to buy because a lot of homeowners are feeling priced out of the market. We've talked a lot about mortgage rates. Now the luxury market might be doing well but if you can't afford to buy then what do you do when that leads a lot of people to question could you rent instead of buy. How are we thinking about all of these affordability issues. It's certainly a complex topic one we're gonna try to dive into. Yeah let's do all of that because rent prices continuing to rise really across the country. In fact certain areas absolutely on fire particularly we think of Austin Texas and Oklahoma City. John Ziegler is with US Foreign Policy a company that gives insight into the current state of the apartment rental prices. You aim to bring technology to make the process of renting that much smoother. But right here right now John when you're looking at the numbers how fierce is inflation when you're looking to rent a new place a new one to bed. Yeah I think right now we're really seeing sort of the perfect storm. We're coming out of a period where we had significant liquidity in the market and very healthy consumer combined with a prohibition on on evictions which drove up even more demand and settled down any supply. And with that you saw real red price increases. Now on top of that you have the eviction moratoriums going away. You have the liquidity in the market starting to trail off and all at the same time we've got inflation and costs of energy and all these things that are significantly increasing just the cost of living and really starting to impact impact the ability to pay even the current rates on rental properties let alone let alone mortgages. We're looking at national average rent prices right now on the screen and the big changes that we've seen year over year 25 26 27 percent across the board John. That's at the national level. Break it down for us. On a regional and state by state level are there some areas that are maybe doing a little bit better than others. Sure. And there are you know I think that the Sunbelt states are are having the greatest appreciation as well as sort of your major urban areas said in New York cities and other places that are always going to have demand. I think the other thing to point out in these numbers and when I was back here last February that was up year over year 21 percent. We're now at twenty seven percent. So it hasn't really abated in the growth. The primary growth is really in the top end of the market that we started looking at. Calling your class B and class C properties on average across the U.S. we're looking at more like an 8 percent increase year over year but still substantial particularly for someone that is not able to you know really increase their cash flow. So but we're seeing primarily in the Sunbelt where most of that pressure has been. And then in the top of the market especially what's the generational break down. A generational breakdown in terms of who's being pushed out of the market and not yet we're seeing. Yeah. So we're seeing you know really sort of you're older Gen Xs and then and then younger gen. These are the ones that are starting to have more more issues like ISE as we say being priced out of the market. One thing that we're seeing is searches for rental properties right now especially in areas like you mentioned it like Austin Texas or New York City Miami Beach. We're starting to see a lot more searches for lower priced lower priced properties as they're unable to afford the higher priced properties. And so you really see some of these demographics being pushed out of the market or more importantly shifting down into the market. John it's interesting of course a couple of years ago was when suddenly the world changed. People wanted to exit the city. People were given hugely discounted rents and suddenly that's whipsawed back. Are we likely to see people still wanting to come and live in cities. And is this the right sizing that should be expected. Is this more of a of an effect of how much rents fell previously or was this like a new paradigm shift or just how expensive cities become. Yeah. I mean you know the drop in rent prices was very consolidated into the cities and specific ones in particular. And those are really all bounced back. And I think the drop was really because of the lockdown. It wasn't because people didn't want to live in cities as much. I think that year we're probably hopefully going to see a leveling off of of rate increases. You know we're thinking maybe an August timeframe but I don't know if it's going to be a reset as more of a re leveling. We're we're going to sort of find a new new equilibrium. So I think there's always going to be demand to live in cities. There's also going to be increased demand to rent you know for a couple of reasons. One is the work from anywhere sort of world that we live in now encourages flexibility. And people may not want to be tied down with a home at the same time as well. You know the higher the higher interest rates people are just not able or wanting to put down that amount of money to get into a home especially knowing that they may want to move in a year or two from then. All right. Yeah well a lot of ructions going on right now in the housing market whether you're a renter or a buyer or maybe just stuck in between is a lot of folks seem to be these days. John really appreciate catching up with you. John Ziegler or their rent path CEO giving us a look there at the rental market. Still ahead we're gonna take a look at the retail market the retailer market to be specific and well Abercrombie and Fitch to be specific. We were talking about this yesterday. I didn't know they were still around. Katie is a big fan right. Anyway their shares Shery Ahn big up. True. Their shares actually plunging today here on the back of well what else. Inflationary pressures. We're going to break it down. Coming up next in our Stock of the Hour this is Bloomberg. All right time now for our top calls. A look at some of the big movers on the backup analysts recommendations. First up roadblocks cut the neutral from overweight. This over in Atlantic equities with the price target halved to 30 bucks a share. The analyst saying user engagement softening on the gaming platform amid a weakening in app downloads. Road shares down eleven percent on the day. Next snowflake actually upgraded today to buy this over at Rosenblatt. Ahead of the company's earnings the analyst says Snowflake should meet or exceed revenue growth estimates given momentum in the enterprise. Digital transformation nevertheless shares a snowflake down about 8 percent on the day. And finally got to take a look at SNAP. At least six sell side analysts cutting their price targets after yesterday's surprise forecast revision. Bank of America lowering its target to 30 from 50. It says that new guidance well it's going to be an overhang for some of its peers including Google Metta and Pinterest. SAP shares of course having its worst day on record at 12 ninety five well below that seventeen dollar IPO price. And those still are some of our top calls and more of those sell side remain. Coming up for us here in about 45 minutes or so. In the meantime it's interesting when we think about the health of the economy the health of the consumer. Bank of America CEO Brian Moynihan saying that the U.S. consumer is in good shape even in the face of some of those rising recessionary concerns. He spoke earlier with our very own Lisa Abramowicz and Tom Keene in Davos. Take a listen. The account balances a consumer pre pandemic to now are multiples bigger. So a person had to 3000 average collect a balance in accounts now has never been about 40 hundred. If you wanted two thousand what about 40 hundred is now almost 4000 bucks. The person had two to five thousand but about thirty five hundred on average. It now has thirteen thousand dollars. So just step back and think about it. Grew 5 percent. The month of April for March. So what you're seeing is consumers have more money in our accounts. The idea that they spent the pandemic money that came in January March last year just not true. Now the second question is they pay down their credit card balances for 100 billion. We were down to 70 of its backup 80 lots of Barak passes. The third point is are they spending. And that's what's interesting in the first two weeks of May. The consumer spent 10 percent more than they did last May. That's over top of the payments that went out to pay taxes. So the consumer spending. And people say well it's inflation or eight percent more transactions. So why doesn't it just I just don't want to interrupt because we're extends to 45 minutes. This is the real Moynihan guys. This is the bank nerd giving us the operational stuff. This actually goes to the heart of one of the economic questions of the moment. Right. Because everyone's talking recession here and stagflation. We were speaking with Bob Prince of Bridgewater. What you're saying does not scream of stagflation a recession. So that's this. That's why I said this. We were talking earlier. This will make the jobs the Fed's job harder and easy. Hard hard. Easy in that. You have consumers in good shape. You're not over leveraged. Home values went up. But frankly the LTV in our portfolios in the 50s. So to give you sense. So you know that the prices went up and people in borrowed out and stuff. So that's the good news. The bad news is what's going to slow him down. So if you look at TSA travel Sunday it was over top of 19 by 10 percent. That's a number of people went through the airport slow them down. So what's good slowing down. Nothing right now. Again a kind of optimistic Banksy. This time the Bank of America CEO Brian Moynihan speaking in Davos as we know with Lisa Abramowicz sentiment Tom Keene. Let's dig into the health of the consumer right now because it's a kind of different picture perhaps coming from other parts of the market. Stock of the hour is up. Economy and Fitch having its worst day ever. This is largely because of its costs. High freight material costs combined with what they say may be a consumer that might pull back going forward. Let's look at all of this with our own Abigail Doolittle with ISE look the apt. Are they painting a healthy picture of the consumer right now. Well it's pretty interesting because yes in some ways they are. They beat on sales by more than 2 percent. So but it's a familiar story to Target and Wal-Mart where they also beat on sales. But then it's the rising costs that the companies can't manage. So they posted a net loss of sixteen point five million dollars vs. what was expected to be a small gain. And relative to net income of forty two million dollars last year inventory search. Is this familiar story now. Inventory surging that of course can eat into cash flow and forced discounting. Not surprisingly they have cut the outlook for margin operate operating margins but they've also cut their outlook for sales. And this has to do with the idea that they think that even though the consumer has been strong that inflation is going to finally eat into the consumer. Yeah I mean look we'll talk about inventory. Remember a couple months ago couple of quarters ago we saw these inventories rising at least in some of the economic data. And everyone said well that was a good thing because of this all the retailers kind of stockpiling so they can meet this demand. It looks like now we're hearing a lot more about these retailers potentially being on the hook for some inventory and for something like an Abercrombie where clothing is very seasonal and cyclical for that matter with certain styles. You sort of wonder what the outcome of this is. And this isn't the only company you've heard this from. Yeah it could be a real problem for a company like Abercrombie because then the other thing that you have with apparel retailers is making sure that their fashion. Right. So if the inventory that they have in three months six months isn't popular they could have a real issue where they have to discount it even more. You know the CEO there Fran Horowitz she's been with the company since 2014. She started off as the head of Hollister. So that's important. She understands their brand. And then she was also the head of marketing. She's saying they're going to do anything that they can to managers. But the thing is how much further can this inflation surge go. Because we've been talking about it here for more than a year as to whether or not it was going to hit companies. It didn't seem to. And now all the sudden it's hard to believe it's going to be one quarter and done. We're gonna have a big show on inventories remain. You're going to finally get to do pop quizzes on life versus FIFO. First about last level three and actually inventories in the way these balance sheet looks is going to look a lot different depending on what you're counting method you used. Can't wait. That's coming up. Does this mean we get a lot of sales coming down down the pipe. You know and within a few months I can get some discounted running of each. That's the big data into those jeans. But I'm sure gonna get back on this juice cleanses remain tight now to fit into my right. Your belt. Very own Abigail Doolittle. Really appreciate it. Of course on all things Abercrombie Fitch and inventories and faithful. Coming up Turkish lira plunging into some of the weakest levels that we haven't seen since late of last year. Geopolitics inflation rates all adding to this pressure. That conversation is next in our emerging action. This is Bloomberg. We think about the massive story that is dollar strength there maybe is more likely the story is Turkish lira weakness. That of course is what the next chart shows us as we continue to think about the unorthodox monetary policy of rising inflation that we see both here in the US and Turkey globally. But then of course the policies in Turkey that say that when there's rising inflation maybe we cut interest rates from their central bank. I think we want to continue. Romain a lot of this conversation when we think about the impact of course on some of these rate differentials and a weakening Turkish lira. OK. This is my line now. So let's continue this conversation in our emerging actually conversation with Bloomberg Shery Ahn co-anchor of Bloomberg Daybreak Asian. We joke here about the lira really is no joke. Mean we've seen this weakness before here. It doesn't really seem to find any real path higher at least not for any sort of sustained period of time. I mean it's almost a joke in the sense that we continue to talk about this and we continue to see the unorthodox monetary policy the Taylor was talking about and still no change. We're talking about the worst performer among emerging markets. So when you talk about real rate differentials take a look at this chart on the Bloomberg and it shows is the world's lowest rate ever. If you account for prices we're talking about negative 56 percent at the moment with inflation. That was 70 percent annually already for the month of April. So yeah I mean given what you're seeing in the macro environment not surprising. We continue to see this pressure on the lira. We have that sort of relative period of stability for the currency in the past few months. We had backdoor interventions. We had the same bank accounts to help savers from lira weakness. But that's really not holding up especially when you add the fact that you also had president in Oregon pushing back against a lot of different things. So the other thought about just trying like traditional monetary policy. I don't think we have seen that so far but I think the previous governor before he was replaced was trying to increase rates. Then they went and reversed course. But right now you have geopolitical tensions as well with President Reagan pushing back on Sweden and Finland's bid to join NATO. And then you have just the lira continuing to plunge. Talk to us about the broader macro backdrop as well because I'm looking at the Turkish lira obviously under pressure. Interesting me after yesterday's strength the Chinese remind me is in yuan is under pressure too today. And I thought we were thinking it was all about stimulus and this was going to be buoyant for the currency that did not last. I mean we've been talking about yes yuan rally Chinese assets rally but they were really not maintained even after those thirty three specific measures including twenty one billion dollars of those tax rebates for businesses. We have not seen the yuan strength continue. We saw the CSI. Three hundred in fact becoming the worst performer across Asia. It also did not help that we didn't get any clarity on the US lifting those tariffs on China. We were talking to the U.S. Trade Representative Catherine Tai last night. She was pretty noncommittal. Take a listen. With respect to the terrorists our approach as with everything in this relationship is to be strategic. We have to keep our eye on the ball in terms of how to effectively realign the U.S. China trade and economic relationship. So we couldn't really get any clarity on the timeframe on whether or not there would lift those tariffs and traders just focused on the virus outbreaks. Any clarity on the inflationary front when it comes from New Zealand and a central bank on the move. Yeah I mean they are. And now on this aggressive monetary tightening path because inflation has been pretty strong. Actually the New Zealand economy has done really well from the pandemic. I mean they were pretty much insulated because they had such a that it's such a successful job in really containing the outbreak of Covid-19 during the pandemic right now. Economists expecting a 50 basis point hike to 2 percent in the Q rating thought they've already tighten the by the hundred and twenty five basis points since October of 2021. The issue here of course is you have borrowing rates for households going up perhaps a little bit more constrained when it comes to for the ability. But at the same time that will help cool the housing markets which has been really. Property prices have been surging not only in New Zealand but really elsewhere as well. So we will watch that decision tonight. All right. Shery Ahn of course you can catch her tonight as co-anchor of Bloomberg Daybreak Asia. Don't miss that. Meanwhile we are counting down to the closing bells here in the United States of America and S & P 500 right now. Caroline. Not far off the lows of the day retesting that thirty nine on level. Is the market imploding. No. That's what Blackman says. Oh later. Inflation is out of control. Inflation expectations and getting out of control and markets are imploding. I we're on radio control. OK. Interesting. Nonsense. You shouldn't. We're going to we're going to tell it straight. We're not going to start to try and get all that click bait. But it is interesting that we once again on the brink of a bear market. You look quick. Yeah. Well I mean look I mean well you know I feel like we've been in a bear market now for months. I mean just no one wanted to admit it. But in all seriousness you talk about how much weakness we're seeing in the individual names as well as the individual sectors. That tells you all you need to know. You can sort of look for a 20 percent on the aggregate level. It doesn't matter. Everything below underneath the hood is just basically shot upon market. Certainly giving you some signals today with the flight to quality even to when a five year yield down 12 15 basis points or so one of the day a sort of classic return to that safe haven. Look again one of the best performing in the G10 currencies today up nine tenths percent versus the U.S. dollar. It's the greenback. Come down to the clothes Bloomberg's comprehensive cross. Platform coverage ahead of the US market starts right now. Things got under the close just 60 minutes left in the trading session. Caroline Hyde. Romaine Bostick Taylor Riggs. I'm joined now by CAC Carol Massar Tim Steadman. We are going cross audiences. We will do TV radio YouTube to dissect what is this market imploding. Well according to you you know it's a wacky market right. We're all over the place. A lot of volatility. And I think we're trying to search for a bottom here. But let's I'm not sure for there in terms of underperformance. Check out those are how homebuilder stocks because they're down about three point seven percent today. We know the reasons why. New home sales plunging lowest since the start of the pandemic down in April by the most in nine years. You've got higher prices a steep climb in mortgage rates home ownership increasingly getting tougher for many many Americans. That group by the way over down about 35 percent for the year so far. It's hard to look beyond what we heard from SNAP yesterday because that's just having implications far and wide today. I want to take a look at the Global Social Media ETF. It's down eight point seven percent and includes companies like metal platforms Twitter Pinterest and more. Hitting a 52 week low today as social media and digital advertising companies take a hit as a result of SNAP cutting its revenue and profit forecasts. Meanwhile we have a look over all the implications that has for the NASDAQ more broadly for overall tech stocks because you're right it does ring foreign. True. The Nasdaq off by more than 3 percent. We see really what it means for advertising spend. What it means for the other platforms were down three hundred fifty two points in the NASDAQ. We're off by forty one point two point three percent on the Russell 2000. Small caps take a hit. We've got the Dow Jones once again off cyclicals outperforming still underwater by 5 10 percent on the Dow Jones Industrial Average and the S & P 500 off by one point four percent as we speak. Take a look at some of the individual sectors as we always do to sort of understand the internals of this market doesn't really look good. In fact it looks pretty defensive. Remain with utilities and staples. Of course the clear outperform or real estate's up there in the green which again sort of interesting given what we've got at the new home sales data this morning. And yet yields are falling. So maybe in some ways that makes sense. I think of course notable as well. It's all technology all communication down at the bottom off two to five percent. Yeah. And at the end of the day though I want to go back to those sort of the discretionary story. Right. We always talk about discretionary names from the perspective of consumer discretionary spending. We also tend to forget though of course that that corporations have discretionary spending as well. And when they pull back when they need to pull back they focus on some of those discretionary budgets. And a lot of that includes marketing budgets. That's a big part of the reason why people are so rattled by SNAP a stock that nobody would ever think was a economic bellwether. Most people wouldn't pay attention to it outside of sort of that niche social media space. But there is some concern that you're seeing a pullback with the snap shares down 43 percent here on the day and the reverberations for Google down 10 percent Pinterest down 10. Trade desk a pure play effectively our digital ad platform. If you're looking to be in that space that's down 20 percent a year on the day you WPP Omnicom you name them they're all down. And that's the fear here. And then you dovetail that with what we heard yesterday out of Jamie Diamond who seemed a little bit more confident about what he's seeing. We heard from Brian Moynihan over Bank of America today out in Davos and he seems to be relatively encouraged. So I guess the question is what do you believe here. And if you believe the best is still to come or the worst is still to come that's a big part of the reason why you're seeing this market flip flop back and forth every other day. Well activist investor and man who'd like to spark of late. Blackman taking to Twitter a tweet storm as we're just to tweet about it. Oh. Inflation is out of control. Oh that's what he says. Inflation expectations are getting out of control. Markets are imploding which is what my load he was at the start of this. Sounds like you've got the memo. Confident. Okay. The Fed well this was posted today two hours ago three months ago to exactly two hours ago. You've got to get on Twitter right now. Shery Ahn. All right. Here. It's big. Yeah. Is it. I mean have a fix. The free speech. All right. Let Caroline speak. I'm going to speak up. It is her birthday after all. Yeah it is her birthday. The floor is yours. Well to this point is what remains been sort of discussing is this push in this poll of like why we take Bloomberg take it very seriously not to sensationalize market moves not to bring out the cellos unless they're worthy. But this is a man who seems to be going for click bait at this moment about things being out of control when we've got still a Brian Moynihan and a Jamie Diamond saying look perhaps as some rose tinted glasses to all of this. Maybe there is this out of control though. Does this out of control. No. I don't know. I mean if you look at the housing data that we got today that was disappointing. So people are pulling back on on housing. So that market certainly seems to be slowing. That's what's supposed to happen. What was that. The Fed wanted this to how exactly. And look at Abercrombie and Fitch for example. Today it's down double digits in inventories. They're arising when inventories they're rising. Doesn't that mean that they're going to have to put those items on sale and then you start to see deflationary pressure. So it could be some sort of indication that perhaps inflation is coming under control. Well here's the I think this is the debate right. Does the Fed get it right. It's really hard when they're raising rates at this point or do we get to an environment. We still have high prices and lower growth this whole concern that you see playing out. Certainly I think in the financial markets and that's the concerns over stagflation. And actually we heard about that from Davos World Economic Forum our surveillance team catching up with the CO CIO Bridgewater Associates. We're talking about Bob Prince. Here's what he had to say about stagflation. We're on the cusp of it the way we look at stagflation is in terms of how it affects markets and the way it affects markets is if the inflation rate is higher than discounted and the growth rate is lower than discounted. And we're in a situation right now where there's a very low inflation rate discounted therefore it's easier easy to be above that. And we've got a high growth rate discounted. Therefore it's easy to be below that. So relative to what's discounted we could very easily be into this very quickly. Yeah. I mean that is certainly got to be the fear by prints there. Cosi I over Bridgewater. Right. Do we get to that stagflation area environment or does somehow miraculously the Fed figure out how to do that soft landing. I mean most would say that's probably unlikely. Well I see you Bill Ackman and I raise you another Michael Barr of course posting another cryptic tweet Caroline just a few hours ago saying as I said about 2008 it's like watching a plane crash. It hurts. It's not fun. And I'm not smiling. So at least some of the big investors out there are certainly seeing something going on within these equity markets. And we've been hearing about CEOs there own concerns that issues that negativity in the market. But when does this ripple into the consumer concerns. When we see that perhaps your for I 1 K glaring backing you and you then starting to pull back on your spending. You're starting to not go on that holiday. And I look at Norwegian cruise lines and I like to think someone like a son. OK. So it's not my birthday but can I speak. So look I mean this has been going on for a while. And I mean like everyone is all of a sudden you know sort of the great soul time and sort of you know making their predictions right now. But this has been a slow moving sort of train wreck right. If you will a plane crash whatever phrase are very very you. This isn't really the implosion. This is slow. Wait is because it's slow moving wouldn't you say. But wouldn't you say the economy fell off a cliff during a pandemic. Oh doing the unprecedented amount of you know crazy amounts of stimulus. Right. That reported and then we saw this increased Clinton bounce back was fast very different from the financial crisis right. Where the recovery back was kind of slow and painful. But as Gina Martin Adams said to us earlier it was predictable even though it was slow and painful it was predictable. This is not predictable. I think it is. I mean you talk about the snapback that we had coming out of that pandemic there. I mean you saw the supply demand balance as you feed the demand equation but you don't actually build out the supply equation. And this is where you get us 8 percent inflation growth here for the last few months here we've gone full. Twelve months now we've been running the head of the Fed's target and we're still at 1 percent Carol. 1 percent. Okay. I mean it doesn't matter. I mean look for multimillionaires like you. I know it doesn't matter what for real. You know Salt of the Earth people like myself actually rode the subway today. Believe it or not. RTS you and I have so much today. Faith our producers like you guys got around it. OK so you don't have the floor anymore. It's still Carolyn has a temper. He was riding the subway to go and get us and make it a good day. During this time. All right. We will be back in less than an hour's time. We're gonna continue our cross platform coverage. You're going to get you down to the closing bell on this Tuesday. A little heated Tuesday on radio TV and YouTube will get you down. Fiery. All right. We continue our market coverage here on Bloomberg Television as we countdown to the close. I'm pleased to say. Joining us right now in person is Mike Anthopoulos director of fixed income and portfolio manager over at Richard Bernstein Advisors just about fifteen point seven billion dollars in assets under management. Mike great to see you here. Let's start off with the big inflation question. Look we've been running hot now for really a year if you want to be honest about it here. And obviously about 8 percent or so over the last what 2 3 months I believe here. Do you believe that for the most part we peaked with regards to inflation. I mean it's possible that we've peaked. I think people spend a little bit too much time thinking about peak. To be honest with you I mean listen if you're 8 percent inflation and then you go down to 6 percent and stay at 6 percent for the next two years. Yeah. You peaked. But does that really matter if you've been if you stay at 6 percent for the next two years. And so I think there's way too much being made out of pique versus non peak at the end of the day. We're probably within a new secular regime of higher than average inflation and that's going to last over the next 1 3 5 7 10 years. Yeah I mean you mentioned supply chain bottlenecks just a few minutes ago but it's much more than that. This dates all the way back to the global financial crisis in Q1 and Q2 and all the monetary and fiscal stimulus that you had around Covid. It's very similar to the 1960s and all the stimulus that you had around the Vietnam War exacerbated by the energy embargoes. The oil embargo is the 1970s and that's essentially what's happening now. Meanwhile a Federal Reserve tries to grapple with in many ways a supply side issue but still has to contain demand and has to hit the housing market the stock market whenever the asset bubble. Some people see will the Federal Reserve go too hard too fast. Well they managed to do it in a in a very communicative way that we did get some sort of soft landing or soft landing is going to be hard. You know they don't have a. Vendor's success rate with a soft landing. But what I do think is that the economy can likely handle higher rates than than most people expect including the Fed for that matter. You know there's a very real possibility that the Fed gets a two and a half or two and three quarters and then realizes that they need to go to three and a half or higher in order to rein in demand rein in consumption and bring down inflation. And if that's the case then they're not going to tip the economy into recession because implied by that is that the economy can handle these higher rates. And that makes a lot of sense if you think about it. There's virtually no variable rate mortgages any more cash on corporate balance sheets are incredibly high. Leverage has come down a lot on the corporate space. Consumer balance sheets are healthy. And so as you hike the impact the transmission mechanism to the real economy maybe isn't what what what it once was prior to let's say the global financial crisis. And so I don't know if we need to have you know a hard landing per say and the recessionary you know the recession if it were to happen maybe not in 2022 but maybe sometime later in twenty three or twenty twenty four. But a lot of what we're seeing today I think is is a little bit premature. Are you seeing more cash conservation lower debt ratios. What is that telling you. Well I think what happened during the pandemic was because there was so much uncertainty. Corporates issued a tremendous amount of debt with very very low fixed rate coupons. And they didn't have anything to do with that cash at that time. They needed to build a buffer. And so what they did is they issued debt for cash on the balance sheet. Well you're actually seeing if you look at the data is that corporate are putting that cash to work in cap ex just recently over the last quarter. And that's pretty new and no one's talking about that. That could give the economy a little bit more of a lifeline. And so yes there's a lot of cash on balance sheets. It's still very very high. But you're starting to see that. How does that happen. I mean in fairness when our chief equity strategist here you know Martin Adams actually been banging the drum for a while. And I was just in disbelief when she said it as it was. You said it. But she's been right much more than I've ever been. Right. But I am curious do you think that that get that spread that that is spread out that that is broad at least among the companies that matter. I think not yet. But you know you're at the beginning stages and only about a quarter to into this right now. What you're going to see is anytime there's market volatility anytime there's uncertainty around what the Fed's going to do and you have a tightening of financial conditions that could also put cap ex plans on hold. But the question becomes if this becomes you know a flush out for now and you get a little bit of stability then you could see the broadening out. And so I think it could become a a back after 20 three story one of the most read stories on the terminal today. It was interesting about what the credit market has been saying and the credit pain that the spreads widening. But maybe this starts to harbor and tell us that we're going to see an end to the stocks dropping. Do you agree with credit cites research on that respect. Yes. You know credit is actually I would argue has been very well behaved. The reason why spreads are widening is because of the volatility in markets. What do you want as a credit investor. Well you want the certainty of earning your coupon and ultimate payment of principal. And any uncertainty surrounding those outcomes is going to cause spreads so wide. And what do we have. What we have with the VIX what do you have with the MOVE index. You have measures of uncertainty. And so therefore spreads are going to widen. But the fundamentals look very solid. Interest coverage is at all time highs. Leverage is collapsing. You know the default rate is virtually zero and spreads have widened. But you know certainly not suggesting any sort of recession for the most part. There are some pockets of the market maybe. But for the most part they're pretty healthy. Is this going to be a coupon clipping type of year or do you expect to see some price appreciation as well from this point on. I think you could see some price appreciation depending on again what happens on the volatility side. Know most of the pain felt in fixed income has really been because of interest rate risk. Not as much because of spreads and credit risk. And so if you get an environment where rates sort of settle where they are now or even slowly go higher towards three or three and a quarter percent then you can see spread widening. I think you could clip coupons. I think you could see some price appreciation but it really comes down to that volatility. As always great to have him in the house. Mike on top of ISE director of fixed income and hopefully a manager Richard Benson advises. Let's just talk a little bit about credit a little bit more in deed bonds because the U.S. is confirming a waiver on the Russia bottom payments. The debt will end on May 25th. So as of tomorrow we'll see an end to the waiver on Russian bond payments. So of course all of this about whether or not they'll be paid in rubles in U.S. dollars. But U.S. Treasury Department is issuing this notice on the Russian bond payment as we expect of course many a person bracing for whether or not this means some sort of technical default or not. We will continue to keep an eye on Russian bond payments and indeed global role. Let's talk a little bit about the closing bell that's almost upon us. Let's get to the DAX chief strategist for Ned Davis research. Plus SNAP plunging below its IPO price following its guidance. We'll discuss the broader fallout. But jazz pianist under then on why he's keeping his market up before making on the shares. We continue the conversation on today's triple. Take. We were going to be digging into this retail earnings but really talking about inventories as well we're looking at warehouse leases were getting windy under the skin of what the retail market is trying to tell us. All that and so much more coming up this spring. This is the countdown to the close about 42 minutes off to go on this Tuesday afternoon a trading day where we're seeing a huge flip in sentiment from what we saw yesterday that cyclical trade that dominated yesterday's rally nowhere to be found today. The S & P 500 yesterday was testing 4000 to the upside. Now at one point on the day it was below thirty nine hundred. Keep an eye on that space down about a percent on the day off the lows of the day. But nevertheless the buying action the price action that we've seen today still remains rather tepid. The Dow Jones transports down about 2 percent on the day. And the homebuilders really taking it on the chin down about 3 percent here on the day after we got that whole new home sales data down sixteen point six percent on a month over month basis. Worth's number that we've seen on a month over month basis going back I believe to 2013. Keep an eye on that space and keep an eye on the VIX which believe it or not is not all that elevated. Were camped out right around twenty nine thirty here which a lot of people say is well below what you would need to see for some degree of capitulation. The flip of the board you take a look at some of the individual movers. Alphabet shares down about 6 percent here on the day. This is largely on the back of that down forecasts given by SNAP concerns about some softness in the ad spending space airlines. One reason why you're seeing the Dow transports lower on the day is because those airline stocks United and American both down about 8 percent on the day. And if you're looking for a bright spot well you could find it out there. Albemarle big maker of lithium. Lithium higher on the day as is auto zone higher by 5 percent on the day. Time now for our Options Inside segment as we do every day at this time with Abigail Doolittle and Abigail. A lot of talk out there right now about a Fed put their faith put out there. I thought the fifth was dead. Well last week the whisper rumor came back that maybe because things are getting so bad the Fed was going to step back in. But I have not heard the Fed confirm that in any way whatsoever let alone Rosen of Oppenheimer. Thanks for joining us. You of course are on the trading desk and on trading desks. Everything is talked about. So I hear that you and some of your colleagues are talking about what level on the 10 year and what level on the S & P 500 could potentially trigger a Fed rate. Trigger a Fed. What I would say. Hi Abigail great to be back. So few things here. You know you clearly have the growth weakness which is just a complete reversal of the magnitude of regarding the demand pull forward we had during 2021 which effectively technology earnings doubled in those two years. So we're seeing that reversal. You're seeing these very harsh declines and there's no floor right now in single names. On the contrary a lot of chatter you know not ISE in particular but many people are discussing is the S & P thirty five hundred o level. But maybe the Fed would like to see the stock market direct itself on its own and can it slow down its rate rise efforts. We're hoping to see that with the yield potential near-term time preceding the dollar start to come in that peaked out against all the currencies. So we're playing it right now that maybe there's some sort of I guess you can say recession being priced in a lot of bankruptcy concerns being priced in very quickly. If you have to raise money right now you're being sold very quickly and exposures are taken down but you have sent the market bearish. Positioning is still up. It's still long right now. Yeah that's pretty interesting. And something else that I know you are wanting to point out is the idea that even though this selling in recent days and weeks feels relatively orderly beneath the surface it's not. And also making that interesting and maybe a bit of a conundrum here. On a macro level volatility is subdued. This VIX is still below 30 but individual stock vol is starting to spike. Exactly so we are seeing that because of what we just discussed the Fed put. Are people believing the index can be more subdued but then you're seeing moves like SNAP where it's down almost 50 percent in one day. So on the selenium level we're seeing a lot of opportunities in the options where you can take advantage of that specifically into earnings players given all these tale moves coming into a into different directions. So it really takes a lot of mix a lot of sense here to look at options especially if you have a single name exposures long and short because there's a lot of good ways to get rid of those tails. But on the index level we are seeing the VIX more subdued because we're seeing this daily volatility become the norm ahead. And I know that you like gold talking about a nice trade and remain with found some bright spots on the day. But one bright spot on the year interestingly enough gold and the miners it's amazing. They're up more than 1 percent which usually when sound great. But in this environment it does how it goes about how you play gold. So right now we do feel that there's nowhere really to hide. But Ken gold and gold miners at least to give you the positive exposure of stocks. We're seeing great ways to play it specifically in the options. You can get along a good amount exposure through in the money calls or call spreads. And we like it you know one to two months out. We do think they bottomed out on this recent selling. A lot of people do think it was actually related to the Luna debacle where they were selling reserves of gold bitcoin and several assets where the markets can handle the pressure. And we do feel that we're seeing bottoming there. We do like upside in GDP X in Jihye Lee ETF. Yep. And we're continuing to stick with TLT. That's a good way to hedge any short bond exposure if that's the 20 year bond ETF is the upside. Great stuff. Alan Rosen of Oppenheimer. Thanks for joining us for Options Insight today and remain. Back to you. All right. Thanks there to Abigail Doolittle. We do want to turn back to that tragic shooting on Sunday an unprovoked shooting according to the NYPD of Danielle and Rekos a Goldman Sachs employee who was killed while riding a New York City subway train. The man wanted in connection with that has been apprehended. He has now surrendered to the NYPD. This according to both The New York Times as well as the Associated Press. That man there on your screen is now in custody for the killing of Danielle Enriquez. This is Bloomberg. The most crucial moments in the trading day. This is Bloomberg Markets the close with Caroline Hyde Romaine Bostick Taylor Riggs. It's the kind of you down to the clothes just 27 minutes ago. Yeah. Gotta catch up here Taylor and see what's happening here in the markets. Randy Satya Nadella. Just in time. So much going on. Twenty seven minutes left to go. Let's take a look at some of the individual sector levels remain. It's getting a little bit more green than it was about 30 minutes ago but still a pretty defensive tilt to this. Utilities staples real estate of course that makes sense with bond yields falling today. But down at the bottom remained. It's pretty unbelievable. It's technology again at the bottom of the screen. Yeah you're seeing the big tech names. And obviously a lot of this really comes off of snaps warning that they gave last night at the J.P. Morgan conference. A lot of concern right now about ad spending and really how it holds up. That's actually dragging down believe it or not a company like Amazon which of course has pushed pretty heavily into that ad spending space here. You're seeing those shares down three and a half percent as our Google shares Pinterest and everything else that seems to touch into that world. Here we we're going to get some more earnings later tonight. And it should give us a maybe a little bit more insight into certain pockets of the economy including from into it. But we're also going to get two big retailers here. Nordstrom obviously big department store chain. Those shares down about 4 percent. We've kind of known their problems in the past but they've actually had a couple quarters where it seemed like they're we're seeing kind of a resurgence not just in growth with regards to consumer spending but really in managing some of those inventory levels. MANJOO Some of those costs they've seen to see what they have to see after the Bell and Urban Outfitters a whole different story year for Urban Outfitters. But I think the read through there we got Abercrombie and Fitch. Maybe that plays into this remains to be seen. But investors right now kind of moving towards the exit until they get some clarity. Just retail. Yeah. And an unbelievable amount of pain being felt across the industry. And also I want to go back to the social media industry group because actually I mean this has been a long time coming. Yes. We see the pain trade today in particular surrounding SNAP and the knock on effect that has on the matters on the alphabets and the other key stocks that are associated with advertising spending. But look how far we've fallen from the heady heights of pandemic time when we were thinking about what are the stay at home trades were the darlings that are doing the best when we all well can't go out connect CAC go back to the office. And of course a lot of that money was put into social media stocks. This is a social media index that pulling back followers and how far how fast we fall and what back basically to where we were pre pandemic levels on this particular index. Now this index also includes the likes of. Yes the smaller players like Pinterest but also the global players Tencent. We know the pain trade in China has been going on for months now. Taylor but notable about the advertising concerns right here today when we think about sort of those broader themes Caroline that you laid out. And then of course the individual companies like SNAP of course continuing to make big headlines today and really all about the broader tech sector as well. We're going to have that conversation with Andrew Boon managing director and research analyst at GMP Securities. Maintaining a market outperform rating on SAP and of course lowering that price target to forty five down from fifty dollars a share. Maybe walk us through the optimism that you still see. So I think SNAP is a must buy ad platform for marketers. Remember that they reached 75 percent of 18 to 34 year olds in 20 countries across the world. That means that if you a consumer brand and you're trying to build just awareness or product for new launch. If you're just trying to build just a consistent consumer base basically have to reach younger consumers via a platform like Snapchat. I think in the work that we've done across linear TV you basically have seen the reach and frequency decline once and exponentially but significantly for linear television. And so you have to be on platforms like SNAP. This is without considering the longer term opportunity across. They are what's happening in terms of their camera kit which is right. Extending lenses to other retailers as well as other OEMs like Tom allows SNAP to really extend lenses and be in a great position to benefit from air in the future. Certainly so. There is so still concern not just for SNAP but really with a lot of the companies in the same space that at the end of the day are effectively advertising plays for better or for worse at least for as far as their primary revenue sources. And we know that in the past at least with traditional advertising many non digital advertising it was always incredibly cyclical. And you know I remember at the start of my career you could almost sort of read the economic tea leaves by the pullback in the more formal ad spending space. Does the digital ad spending space still have that I guess cyclicality that we would see with the old traditional advertising. Well relating this to snap snap for the last year has been the majority of spend is direct response focus. That means that it's more arm based. So certainly for the other you know we think it's probably 30 to 40 percent that is brand spent that's on the platform that's more likely to get pulled. If you think about pulling a linear TV budget that's usually planned out months in advance. So if a brand is looking to cut expenses now digital is frequently a place that they go to be spent. And so that is certainly susceptible to the cyclicality that you just mentioned. The macro headwinds though we surprised by the fact that this comes just a month after earnings to actually engagement being higher than many had anticipated the swiftness at which the macro economy has changed for them. Did that tell you we've got a two. I think it's really interesting to think about just monthly comps going back to 21. If you go back a year ago and on March 12th the U.S. government began their final and third round of stimulus payments. Right. And so a lot of those payments hit in March and April. And so if you start thing about May. And really what should have been easier comes from Covid e commerce consumer spend perspective. We were surprised to just say hey look it's an easier conquer back to 21 and now you're really having a step down in terms of consumer spending. But as I will say and I think you brought up kind of Urban Outfitters in the last kind of segment you did. Look Abercrombie Fitch just lowered same store sales as Bi-Lo and same store sales Wrocław and same store sales. You're seeing just a step back in terms of consumer spend across apparel across commerce more broadly. And I think that is impacting advertising platforms such as SNAP. It's curious though so interesting with some of the CEOs of major companies like the eBay continue to say that the consumer is is healthy and it really does feel like a push pull given that sort of push pull back drop. And of course what you're hearing from the companies and the CEOs themselves how we snap positioned relative to some of the competitors. I think SNAP continues to execute perfectly well like we were just going through the product launch is that they've completed over the last quarter. One of things they've launched is pixels or their lenses. And so if you think about again more robust durable ad spend that's ROIC based spend. And so now what you're able to do is you're able to measure the the actual effectiveness of a snap lens campaign view the pixel. And so I think snack continues to innovate. There are very few other companies where if you wanted to try on which you is shown to have higher conversion as well as lower of returns which means the sale is more profitable retailers again. You really just have to have you have to have snap in your budget. There just aren't many other places to do this type of that. Andrew great to catch up with you. Thank you so much for your insights. Little things snap under boon of J. And P. Securities. Meanwhile we turn our attention to another key focus for many consumers out there in the mine which has been of course the shortage in formula. And we know that the United States the White House been taking steps to try and alleviate that shipping it in from Europe at great swiftness. But we're now seeing the Federal Trade Commission opening on more longer term inquiry into the infant formula shortage saying that they're gonna be looking for information about how the industry has evolved in terms of mergers in terms of federal regulations in terms of contracts and why this might be of course hindering low income women in particular and children how that's contributed to the problem. We'll break that all down in a moment. This is Freddie Mac. 60 minutes of this market closes an earlier it was a lot uglier. We saw the main tech indices up by about 3 percent. We pull off all those we're still down by 2 percent. We see a particular retail take a hit once again as we have the likes of Abercrombie and Fitch worrying about inventory levels about their own cost inflation. Actually the sell off has been worldwide. Europe was lower. Asia was lower. And we see a bid for Haven the yen. Gold getting a little bit of a green today. Let's have a look at all of this with exiled his chief U.S. structures for Ned Davis research. And what is really interesting is what's happening in terms of these earnings and worries looking forward. How are you on a sentiment basis. Is this as bad as it gets. Well I think when you look at earnings the aggregate estimates really have not fallen much at all especially when you consider the fact that you know last year was such a great year shirt comps were tough and profit margins soared to record highs and with the increased cost pressures with higher higher inflation. I think that that earnings could roll over a little bit more from here. You know what would not be too unexpected. And we start to see some earnings revisions down but not nearly to the degree that that could be happening over the next couple of months. All right. We're just getting warmed up here with Atlas also tied for one second. A chief strategist for Ned Davis Research. Ed is gonna stick with us as we count down to these closing bells which is just a little less than 15 minutes away. We'll talk about the turnaround in this market. We should point out we're well off the lows of the day for all of the major indices. The Dow right now is actually punched into the green is higher by about two to three tenths of a percent. The S & P only down about six tenths of a percent in the Nasdaq composite and NASDAQ 100 which are down 3 percent on the day now only down to just to go across asset. Caroline I think the interesting theme of the day has been yields lowering consistently lower despite the rebound a little bit within the equity markets. A two year yield still down 14 basis points on the day. This is a haven trade. Still we're seeing the VIX tick up a little bit more saying go get that bid. Clearly some nerves some angst still in the market this morning that. It's kind of under the clothes and Caroline Hyde and Taylor Riggs ISE Romaine Bostick. We're bouncing off our lows team. Let's have a look at how we've managed to claw back a lot of those losses in the S & P 500 now. We're still under pressure to give you that. The NASDAQ is still off by about two percentage points. Still seeing the Russell 2000 basically in lock step with that big tech trade for the S & P 500 trying to push up a higher up and down only about five tenths of a percent. And really the cyclicals once again managing to get some sort of a bid. We're up three tenths of a percent on the down. Yeah three tenths of a percent here on the Dow. But look I mean a lot of the damage is done and you can see the shift in sentiment here. The transports still lower here. That's on the back of a big decline that we're seeing in a lot of those airline names. You're also seeing the homebuilders taken on the chin down about 2 percent as a group on the back of course of what was just really just some awful new home sales data. We're going gonna get some additional home sales data a little bit later this week. So keep an eye on that space. The bank stocks which rallied yesterday are still lower here on the day. The only thing is that the only thing but one of the few thing that's still higher here are a lot of the consumer staples in fact as a group. They're up about one point six percent. But pretty much everything in there from the Kellogg's of the world to the Kroger's JM Smucker's all getting bid here is a lot of people. I'll make a bet here that at least the necessities will continue. Let's do the necessities with that. Chris Oldham chief U.S. strategist for Ned Davis Research. We were talking sort of in the last segment about sentiment. How were you thinking about big rallies in the middle of sort of these bigger bear markets and how you started to fill out a bottom when it happens. So when you get these big declines like we had we'll call it a waterfall decline. That's what technical analysts like to use. It's a good description of persistent selling over several weeks. They tend to last about 40 to 45 calendar days. We're past that now in terms of the percent decline. It's about 25 percent on the Dow. So not to that degree although we have hit that on the Nasdaq. And once you get to those levels there does tend to be a pretty good rally more than the short covering type of rally rallies we've seen intermittently here. And that rally tends to last about three weeks or so and then the market tends to retest. So we're going through the process now trying to stabilize in stage a little bit more of a sustainable rally. We'll have to see how it goes from here. In terms of rolling out that rally is successful but that's the phase where the market is right now. And that's the technicals at play with the fundamental picture and Romaine Bostick. Good question. Always. In terms of earnings and in terms of revisions lower and in terms of light it's not news that we got today that wasn't from an earnings statement a month ago when we could have been told or given the full about how badly the macro economy economic picture was. Instead it takes a month later and things are deteriorated so hard so fast that we get this update. Are you likely to hear more of this in earnings guidance that the macro economy is changing at a really fast pace. Yeah I think it is the key question because if you look at the multiple compression using trailing or forward P E for the S & P 500 we've done about the kind of work you tend to do during a cyclical bear market. The difference is that if you go into a bear market that overlap trough of recession there's obviously the earnings revisions along with it. Whereas if you have a bear market without a recession and about half of them are like that you don't get much earnings revisions from here. So. So I think there is some downside risks to earnings expectations. The question is is it a wholesale revision down like you typically get during a recession or is this just that analysts were anchoring to last year as good earnings. A little bit too much. I am sure. So I mean when we look at multiples now and there are a lot of people that say OK well we've come back down we're still relatively elevated compared to sort of longer term averages not just what we've seen say over the last two to five years here. And there have been a lot of people now pontificating that we may need to sort of see a break below some of those long term averages to really bring people back into the market. Do you think that's necessary. Not necessarily. I think that there's a lot of things that go into valuations. We try to pick a bottom with valuations that really are sentiment indicators. So this really gets down to how bearish are investors how nervous are they about the economy. So we can look at a whole host of things remain including valuations. But if you look at say the American Association of Individual Investors weekly survey that's showing lots of optimism and pessimism excuse me and other other data points are showing that as well. So I think we have gotten fairly pessimistic not as pessimistic as we got say in shabby worry around the Russian invasion of Ukraine. Not as pessimistic obviously as we were in March or 2020 but we have gotten a decent amount of pessimism in here. So I'm just a little hesitant to try to use a blunt instrument like a P E ratio to check to call a bottom. I would say we've done a lot of multiple compression enough to start thinking about it assuming that the University of Michigan sentiment data a little bit later this week is already suffering the lowest we've seen since 2011. We're in conversation right now with Ed Kissel over a net. Davis research is sticking with us as we count down to these closing bell. Just five minutes to go back to Ed in a second but over to Taylor at the board for our Stock of the Hour. Another big sentiment reader we're going to get remain continue and talk about some of the retailers. Nordstrom of course a little bit more of a U.S. focus here. Certainly will give us a gauge of the rate of the U.S. consumer. And then of course all the inventories on the balance sheet by strategists had a great noting that retailers are actually holding 20 percent more inventory than they were according to a three year average ignored some of course one that we're going to be looking at as we think about sort of the health of the consumer. And of course the health of balance sheets. If you changed the board as I'd love to bring you back into this conversation I'm taking a look at a chart here of credit spreads. I think it was interesting not talking about the level of spreads but the rate of change the magnitude and how quickly we saw spread widening. Some are saying that that does signal sort of a bottom within the equities. How are you thinking about the rate of change of the spread widening. Two credit spreads are to the point where I'd like to see them start to reverse. That's going to tell me that the markets can do can do some sort of bottoming. It's a challenge to try to catch a falling knife when you talk about risk assets and to throw credit spreads in there so that the fact that they have they have blown out a little bit tells you that there is some pessimism throughout the financial markets. And so I'd like to see them stabilize and rollover. That would that would give you Haidi Lun of a better sign that equities can sustain a little bit of a sustainable rally rather than a dead cat bounce. Looking for the cross asset signals I guess we love it. Chief U.S. strategist for Ned Davis Research. Stay well. Meanwhile we look at a market that is counting off by about a percentage point in times the S & P 500. This of course is a time again where we're worrying about retail earnings. We're seeing the impact of perhaps companies putting back on some of their spending. Taylor and this is there is nervousness. There's a search for safety today. I hate to bring it to you. Could these companies just be repeating what they're hearing from other companies. I feel like Wal-Mart came out and was highlighting all of these fearing an echo chamber. Well I don't I mean B of A says that the market's OK that the consumer is healthy. And then you have everyone else sort of just echoing exactly what we heard from what they're the CEOs. They know exactly what's going on with their business. But I do wonder how much of this is a self-fulfilling prophecy. Yeah. Well I actually think that's a good final Ignacio. Echoing it. But I do think that we are at that kind of stage where if you keep talking about a recession well you know what. That's our recession. And you get a recession. But you know look. But also maybe that's good too. There also is the idea here that if everyone's prepared for the worst then maybe it sort of makes it that when we get there it won't be as prologue. You know what I mean. Anyway we're not going to prolong this any longer. We are cutting it down to the closing bells here on Bloomberg. Full market coverage as always. As we take you to the bell and beyond. Beyond the Bell Bloomberg's comprehensive cross platform coverage of the U.S. market clues starts right now. And right now we are two minutes away from the end of the trading day. Romaine Bostick Taylor Riggs and the birthday girl Caroline Hyde gotten you down to the closing bell here. They'll take us beyond the bell. It's our global simulcast. Carol Massar came back and Tim Scientific is here as well. We'll welcome our audiences across Bloomberg Television Radio and YouTube of the past are the crucial moments of the day. Another wild market come off that big game that we saw yesterday and that's pretty much been on done for the most part that we all are off the lows of the day Carol. You know we just had really watch over the O'Neill Global Advisors. He talks about the technicals looks at the macro aspects of the market as well. But technically he says he's not you know he's a little bit nervous here at this point. And he says investors should stay cautious. But what he is concerned about is that it's been orderly at this point. But he says typically the run the bear a bull market ultimately ends in some really disorderly moves in the marketplace and that we're just not there yet. He is concerned though he did say there's a distinct chance that we're already in a recession. He pointed to housing starting to soften and he thinks that consumer spending is going to continue to soften because of inflation and housing prices. He said we could still see a soft landing but it would be hard to do. It's an impossible tightrope to be walking and a lot of people wanting to see the Federal Reserve have to start to talk about taking the foot off of the hiking gas before we really see a what as this market. That's going to be a while. Yeah he actually thinks the Fed's going to be done with tightening by the end of the year and that maybe it's a case that was at the end of 2023 2024 that we're going to see the Fed cutting back on rates. Well we're going to get a lot of sort of further updates on this inflationary picture core. P.S. of course one that we're going to be looking at. I think the interesting debate remained was not if we're at peak inflation but at what level to be set allowed. And even if that's a six handle says it make anyone feel good. Yeah and that's a Michael McKee plus he's talking about a little bit earlier here on Bloomberg Television. Forget the closing bells here in New York. I mean the good news here we can start with the Dow Jones Industrial Average which at one point was actually down about one point six percent on the day. It's actually going to finish in the green up about a tenth of a percent or so 51 points. We'll give you the points here on this day as you get some perspective here. Meanwhile the S & P 500 is going to finish lower. It's down about eight tenths of a percent but it could have been a lot worse there. The Nasdaq composite though didn't fare as well here. It dropped it gained about one point seven percent yesterday or so. It's actually down two point three percent here on the day. So giving back all of those gains from yesterday and a lot of that is because of those big cap tech names that all seem to take a look lower here because of that warning that we got out of SNAP as far as that cyclical trade. Not much happening there at the Russell 2000 Carol. Lower on the day now about one and a half percent. All right. So volatile day certainly in the equity trade here but definitely finishing off its lows of the session. The VIX also volatile today. We saw it up as much as two point six down about half a point finishing the day just up about one point. So big swings in that as well as investors try to figure out Taylor really which way to go. Carol I really like that you talked about the big swings. You certainly see that you've the gainers that are up 2 percent and the losers that are down 6 percent. This just really shows you sort of the wide range the dispersion that we're in. Let's start with some of those gainers for a radio audience as we every do do every day sort of the second sectors underneath the S & P. It feels a little defensive Carol. It's food and beverage. It's utilities is household products. It's food and staples. It really is sort of those classic defensive staple sectors as are up again anywhere from one and a quarter to 2 percent. I bring you down to the bottom unfortunately. The retailing index and now that we're looking forward to Nordstrom's and then of course some of the semiconductors media I'm looking at you snap. And then of course some of these auto components as well that are up anywhere from really Carol here about 4 to 6 percent on the day. All right. Good to know. Let me get to some of the gainers in today's session soon. We talked about it yesterday after the closing bell when it reported its earnings. That stock up about five point six percent. Top of the Nasdaq 100 projected revenue profit topped analysts estimates perhaps not just a pandemic play although Alix Steel concern that the company could see a potential slowdown. So just something to keep in mind. This was a name. Another name though I want to get to. That was top of the Nasdaq 100 top in the S & P 500. We're talking about O'Reilly Automotive. That stock was up about 5 percent. The company's CFO Jeremy Fletcher bought over 500000 shares. So we've been seeing some insider buying and some of the names and that included. O'REILLY And then I want to get to Frontline Limited. That stock was also up in today's session up about six point six percent. Small market cap about a billion dollars. It's up about 32 percent so far. It's a Morici a Marine shipping company owns large crude carriers. And this company out today reporting first quarter net income that beat estimates. So investors moving into that named tip. Well we've got to talk about SNAP. The company closing forty three percent lower. That's right 43 percent. This is its biggest one day drop on record. Look at that. Closing at twelve dollars and 79 cents not just a 52 week low but also its lowest since April of 20 20 and below its IPO price. It comes after the company cut its revenue and profit forecasts beneath the. Oh and of its previous guidance we've talked about this throughout the day the company blaming macro economic issues labor disruptions the supply chain and of course this changes that Apple made to its operating system. We also saw shares of other social media companies take a hit. Shares of Pinterest having a terrible day too. And then Facebook metal platforms as the parent company they're falling seven point six percent as a result of those snap earnings. Abercrombie and Fitch is another one that I wanted to hit shares following falling twenty eight point seven percent on the day. This is actually its worst day ever lowest since November 16th of 2020. This is after the company reported a loss for its latest quarter and lowered its annual outlook. Freight. Raw material costs. Yeah. Back when you used to work there. When you're a college you know you were like when the guys who stood outside. That was your shirt. I spraying people at Cologne. What's what's changed there. I mean is this all just about inventory. Is this more about style trends. I think it's about well it's a it's about a few things. I mean a lot of it has to do with just rising costs that the company didn't foresee the same issues that the Target and Wal-Mart talked about and did have supply chain disruptions as a result of factory shutdowns and then higher freight costs. And it's a question that I have to romaine is why didn't investors see this coming and why is this all catching companies off guard. Because we know that energy costs have gone up. We know that supply chain stores have been there. But it seems like day after day over the last week or so as we've heard from these retailers we're still seeing lots of surprises. And I suppose it's interesting as to how much they're not deciding to pass it on to the consumer I suppose in that respect. And that's you'd expect that from a target and from a from a Wal-Mart. But would you expect it from the high end shot makers. I don't know. I mean I'm looking at sort of the paint picture you paint whether it be advertising spend pulling back. Whether it's some worry about a consumer which is worried about housing. We're seeing that risk aversion in the market play out in the affects market. I go cross asset for you for a moment. In the bid to Haven's Japanese yen strengthening by 8 10 percent against the U.S. dollar a move into the Swiss franc as well. These two typical haven trades they see in the foreign currency market. We're seeing the Canadian dollar the loonie dipping a little bit. So a weakening in the Canadian dollar as we see oil actually pull back a little bit. This is we see that once again the U.S. government trying to dip into its strategic reserves tried to alleviate some of this inflation pressure we see in terms of gas prices elsewhere. We see natural gas still pushing higher. We see iron ore on the up a little bit. So mixed picture coming in terms of commodities weighing. What you did see was again a bid for gold. That being another key haven of choice on the day. And I'm looking at what was well bid for the havens in terms of global bonds. Taylor we've seen money moving into Greek debt into the Norwegian debt into U.K. gilts as well. There really was a such a haven today. Yeah you certainly see that search for Haven. I'm going to keep this quicksand of the we've quarterly results coming out on the front end of the curve really is all where the action was really strong to your yield. As we get a drop here of about 11 to 13 basis points on the twos and fives you guys we go to Nordstrom's. Take a look at this. The board is authorizing a new 500 million dollar buyback program. First quarter net sales up 19 percent. The estimate was for 9 percent. And they're now looking at a full year Ebert margin a five point eight to six point two. That is raising the previous guidance. So Carol again more of a domestically focused company. But when you think about the huge pressure coming into this off the backs of a Wal-Mart or a Target or an Abercrombie you name it certainly at least here painting a different picture. Well this is where you have to think about what this retailer is. Who are their customers. Right. This tends to be to some extent a higher end customer. Let's ask Romaine if he's been shopping there. But it's interesting. I also think when you have a buyback investors you know note that in particular but that sales number that first quarter net sales up almost 19 percent versus an estimate of up nine point three percent. Man. That is just blockbuster Remy. Yeah this looks it looks like a pretty good report. I'm just kind of digging through their release and looking at some of the inventory numbers there. And ending inventory did rise about 24 percent in the quarter from the same period in fiscal 20 21. So I don't know if that ends up being good or bad. It does talk a little bit about a pull forward here. But when you get a read on consumer spending and I think it's interesting too because when we heard from Macy's in the previous quarter we're going in for Macy's later this week. It seemed like the department stores were holding up better than some of these sort of I guess a single brand store is if you will like an Abercrombie and Fitch or whatnot here. I'm not exactly sure why but there does seem to be a trend here. And well you see the shares there on your screen and they say that they're committed to driving additional merchandise margin improvement increasing supply chain productivity and they want to be delivering incremental profitability. This is a company that's seeing the supply chain chart snarls coming been able to adapt to it. But as you say interesting these sort of ball belling the consumer as well because you have Nordstrom the higher end the more luxury spend. But also you have no strong rock the off price offering. And this is a real area of focus for many a company saying that Macy's and the like as to how you manage to offer price at a time when we all were worrying about inflation. Yes. Eric Nordstrom calling out Nordstrom. Barack specifically in a statement saying that the Nordstrom Rack including their scaled digital platform and strong store fleet position to us to capitalize on demand from customers who shopped for long awaited occasions and refresh their closets. So that pent up demand to actually get out there go to those events and get those new clothes. After two years of staying in everyone's got formal events and you have you know that people are going to you. Taylor I see you in inventory and I raised you one holding inventories up twenty three point seven percent compared with the same period in fiscal 20. This is versus an increase of only about eighteen point seven percent in sales. One quarter of that change in inventory levels versus 20 21 due to a pull forward of the anniversary sale receipts which means that three quarters is not interesting. And I just want to point out to me before we leave here I mean we're getting Urban Outfitters earnings as well. And that's kind of the complete opposite story. I mean they miss we don't need to go through all the numbers. Obviously that's on an apples to apples comparison. But I do think well what you can see with the strength of the Nordstrom and a Macy's versus some of these other names maybe that becomes a retail retailer story going forward here for the next few months or quarters. Yeah. Shares of Nordstrom up about 14 percent. Still the after hours Urban Outfitters down about 5 percent. So we're definitely seeing a tale of two different retailers here in the after hours. What do you shop Carol. Well I like T.J. Maxx so I like to hunt for the bargain. Are you shocked. I am actually yes. You know about rental. What about rent. Don't judge a book by its cover. Exactly. Exactly. All right. We got to run guys. That's going to do it for our cross platform coverage radio TV and you and you wish Carol. Carl Caroline Hyde happy Caroline Connan. Happy birthday. Happy birthday. Oh you don't you don't know the song. Carol ISE. All right. All right. Happy birthday to Caroline Hyde. We will see you again. Same time same place tomorrow everybody. They come and wrap the cake in a minute. Meanwhile coming up as U.S. retail earnings continue to roll out we are going to be breaking down the consumer spending habits the priorities the sustainability as well. How does that feature in all of this. Jim Duffy sports lifestyle brands analyst at Staples gonna be joining us. Mike. The total number of losses on the market after yesterday's gains we ricochet back but actually we follows without my eight tenths of a cent not looking too pretty in the S & P but it was off by more than 2 percent. At one point the NASDAQ was off 1 to 3 percent. We closed down the day two point three percent. Really worries about the economy worries about some not economic data. The Richmond Fed coming out with its manufacturing data looking pretty woeful. We of course have a tell on advertising spend. The desire for businesses to want to invest in their marketing maybe being dialed back snap to forty three percent. Yes. It's not the biggest social media company out that by market capitalization but it does have perhaps a little bit more of a bellwether effect where we're seeing advertising spend. Go for the other key payers. Such a knock on effect for web metal traded today where Google traded today. What are the some of the other social media platforms. Are we going to see a pulling back in the willingness of businesses to spend in this environment when we also have a putting back of people wanting to buy houses. That's a show that new home sales numbers coming in for April. Absolutely. Taking the market by complete surprise before we fall hard 16 percent on a year on year basis for the month of April. And this of course being as mortgage rates continue to spike high. That's in the blue line here. So I'll be getting of course a buying strike. Also import more expensive to borrow. This really is feeding into pretty dark clouds that many are feeling for this U.S. economy. But for many JP Jamie Diamond's J.P. Morgan and of course the likes of Brian Moynihan over Bank of America saying that the consumer is still strong. Taylor indeed Caroline Hyde thing about the strength of the consumer that sort of picture that lower bond yields continue to tell us when we're thinking about does that actually mean really lower growth on the horizon. What is the economic picture telling us while we're talking about that. Liz McCormick of course who's joining us as she always does when we're thinking about a flight to safety or if it's something a little bit more technical. Let's talk first about sort of what you're hearing about move lower. Is that classic flight to safety or is that something a little bit more indicative of lower growth lower inflation. Well I think it's a combination of both right. When the stock market's doing so bad when you have found that bonds aren't dead as far as working as a flight to safety hedge. But I think there is concern like Caroline was saying these numbers were pretty brutal today. The economic numbers. So there there I feel like there's this kind of growing by modal camp of people who are increasingly saying oh you know we're getting closer to recession and the Fed's going to push us into a recession. So that's helping bring buyers in and yields fall. But you do have a decent amount of people saying well we don't know. We have to see the May CPI which may not be you know so much lower than the April figure or maybe about the same. And the Fed you know they're just can't afford to stop. If they don't see inflation come down. So I think the jury's still out. But you definitely are seeing people say let me at least get some insurance if things don't go well or kind of the saying is the Fed breaks something you know and yields go down. But so is it Mark primarily just looking for that insurance or do you think people really are making a bet that maybe we did see the peak in yields. Well I think there is a certain amount of longer term investors who are saying which makes a lot of sense. You know my two cents to me that you know hey you know we're humble here. We don't know for exactly hit the exact peak. You know we saw the 10 year go to three point two. But it's time to scale in like that. I'm going to be happy later if I have some bonds with almost 3 percent or above 3 percent coupon. So I have that fixed payment is pretty good. And that's not so bad because it's just like it's very hard when stocks are falling to say buy. Right because it just looks ugly. Same thing when bonds are falling but yields are going up that it's really the time when investors want to say and let me add some to my portfolio it's going to help me later on. But I think maybe some are that fall. Some are saying we reached the peak but some are saying we're close enough. That I think is a good time to pick some up. Well who are the buyers. How many are coming from outside the US at the moment. Well we haven't seen the outside of the US buyers come in too much. You know we've had some data. Some colleagues of mine have done some good stories about how the foreign demand hasn't been that great. The hedging costs have gone up with the rise in rates and the currency. The dollar is strong. But we're seeing more the domestic players like we had BlackRock and T Rowe Price and some of the big name U.S. investors we all know saying hey listen we're kind of nipping at the the market a little bit here. We're buying. So I think it's the scent. Not that there's no foreign demand at all. Of course there is. But I think we're getting a lot of sense that there's more that kind of the domestic macro funds kind of thing. Really appreciate it as always. Love having you here on this program to go across. That's it with us Liz McCormick Bloomberg's chief correspondent for global macro markets. Now keeping you up to date news from around the world. Here is the first word with Mark Crumpton Taylor. Thank you. An emergency order has been issued to aid in the transport of baby. The formula to the United States. Meanwhile a Federal Trade Commission opened an inquiry today into the infant formula shortage asking for information about how industry mergers federal regulations and contracts to help feed low income women and children may have contributed to the problem. The agency which enforces consumer protection and antitrust laws said it will accept public comments and submissions through June 24th. Andrew Abdulla the 25 year old man won and in connection with a New York City subway shooting is now in police custody. Abdullah surrendered to police this afternoon following a manhunt. Police say Abdullah shot and killed 48 year old Daniel and Rick as a Goldman Sachs employee on the Q train Sunday in an unprovoked attack. President Biden and Indian Prime Minister Narendra Modi held a bilateral meeting in Tokyo today on the sidelines of the quad summit of Indo-Pacific leaders with Prime Minister Modi sitting nearby. President Biden said quote This is more than just a European issue. He is referring to the conflict in Ukraine. It's a political issue the president said at a meeting of leaders from India Japan Australia and the United States as that meeting got under way. He also discussed the ongoing effects of Russia's brutal and unjustified invasion of Ukraine and the effect it has on the entire global world order and the US India to continue consulting closely on how to mitigate these negative effects. Mr Biden also said quote We're navigating a dark hour in our shared history. Global news 24 hours a day on air and not Bloomberg Quicktake powered by more than twenty seven hundred journalists and analysts in over 120 countries. I'm Mark Crumpton. This is Bloomberg. So we've got the pictures of inflation spiking. We've got U.S. retail earnings continue to roll out thick and fast. And meanwhile amid all of this steep fall releasing a really great new report on how consumers are trying to prioritize amid their purchasing decisions particularly when it comes to whether you sacrifice a price point for a sustainability focus. Joining us now to talk about what is quite the landscape for retailers right now Jim Duffy's sports lifestyle brands analyst over at Steve. Well it's great to have your voice Jim when we get such a story picture being painted some companies managing to weather these sorts of headwinds the Nordstrom's of this world. We see of course a more painful picture being talked about by other retailers like Abercrombie and Fitch on the day. Meanwhile you're looking at how a consumer is looking at spending wisely at this moment. Is this quite a difficult time to be navigating these lands as a retailer. Well it is and thank you for having me on to talk about this today. I know it's a dynamic case. We appreciate the time. We published some consumer research today. It's our second annual Stifel Sustainable Lifestyle Brands survey. What we found in this survey was that consumers are indeed showing indications of stress from starvation. We asked consumers to rank their top three priorities for purchasing between lifestyle brands and what we saw was sustainability. Home health flat year to year at 31 percent. Most categories were down in priority. The only two categories up were good value and price price showing the greatest increase year to year up seven percentage points to 52 percent. There also is sort of a big difference geographically speaking. Jim maybe can give us some insight there. Sure. Well I'd rather take it a different dimension which is to speak about it between income brackets. Right. Inflation a regression 3 DAX having the most impact on lower income consumers. Many of the brands that I fall served to higher income consumers and we believe demand still holding up better there. We heard from Wal-Mart of course a couple of weeks ago and Wal-Mart's saying is that with inflation in food categories consumers are of course prioritizing food and that's shifting dollars away from other categories. Interesting. So that ever makes them more important for some of the brands to really stand out. Who are the brands in your opinion that are doing a good job of meeting and delivering on those consumer expectations. Yeah absolutely. So a couple of the brands which we think are growing quite nicely through this little lemon is one again serving at higher income consumer. On running is another which just reported a phenomenal quarter. Well that's a brand with a lot of momentum. And of course growth certainly helps manage shoot inflation. Some of the brands more challenge for those catering to lower income consumers and selling through channels like Target and Wal-Mart. We just cut numbers on both Heinz brands and Contour brands last week each of whom have big exposure to Wal-Mart. Jim going more broadly outside of course the key focus that you're doing in terms of this new index but also how these companies are looking to talk about this mission. Of course a lot of them are trying to access individuals tell their story from a sustainability perspective using social media. And we just heard from SNAP today about the worrying about advertising spend coming from key brands when we have these headwinds inflation and worries about the consumer. Is that something you're thinking about in the world of the Brad Stone Covid. Well it is. And you make a great point. A lot of these brands who are sustainability thought leaders want to get the message out there to consumers. It is social media of course a key vehicle for them to do so. It's a delicate messaging strategy. They don't want to slip into a cadence way. It appears that they're greenwashing. And so they need to be deliberate and calculated about how they communicate that message. But our research definitively shows that it is important to consumers 80 percent of consumers view brand sustainability practices. Important 31 percent. Very important. Consumers are willing generally willing to pay a premium for brands and offer a leading sustainability practices. And so there's a lot of nuance in the messaging. Sun is. Jim Duffy you bring your messaging of the new index. You're looking at. We thank you. Sports and lifestyle brands analyst over at Stifel. Thank you for having me. Cross Meanwhile of course away from the world of business from the moment. We are indeed remain awaiting an NYPD news conference after the suspect today. NYSE the New York City subway shooting. We understand has been surrounded. We understand Mayor Eric Adams is going to be speaking with some key executives right. Yeah we're learning that from Bloomberg News here that he will sit down with several executives I guess to talk about not just this shooting I'm sure but of course about some of the crime issues issues that of course that he ran on a plus pager platform as mayor when he ran for mayor saying that he would get crime under control and that this was going to sort of be a hallmark for getting people back into the office and really getting tourists back and really couldn't bring in the city up without some horrific incidents including the shooting in Sunset Park Brooklyn which was nonfatal but injured several people. And now of course the fatal shooting of Daniel Enriquez the Goldman Sachs employee in a seemingly unprovoked attack over the weekend. And just when you think about the lifeblood of the city sort of returned to office the big push to getting people back. And you wonder how people responded if this changes behavior at all. Caroline Hyde just speaking to the head of the Port Authority for New York and of course New Jersey yesterday talking about how we've changed our minds transport. We've been doing going about our business in a different way. And that has will impact on our roads our infrastructure and indeed spending. We're going to be digging much more into triple take in a minute. That's it for the close bring back.

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Bloomberg Markets: The Close (5/24/2022)

Caroline Hyde, Romaine Bostick & Taylor Riggs bring you the latest news and analysis leading up to the final minutes and seconds before the closing bell on Wall Street and tackles Snap's profit warning, rising rent prices and brand sustainability. Guests Today: Kristina Hooper of Invesco, Ron Coughlin of Petco, Ali Mogharabi of Morningstar Research, Jon Siglar of RentPath, Mike Contopoulos of Richard Bernstein Advisors, Andrew Boone of JMP Securities, Ed Clissold of Ned Davis Research, Jim Duffy of Stifel. (Source: Bloomberg)

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