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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. It is 2:00 p.m. in New York and it is 7:00 p.m. in London. We are live from remotes will tight quarters. This is when the markets close and Caroline Hyde. I'm Romaine Bostick. And I'm Katie Greifeld in for Taylor Riggs. And she miss. Stocks rebounding global inflows this week after the longest losing streak in over two decades. We weigh the mixed eco data. We remain on the stocks to watch to give it a crypto take. We've got you covered. And that's as U.S. consumer sentiment deteriorated further in late May to a fresh decade. Low inflation it's hurting. We check in with the CEOs and the customers confidence like Rosy. Are you raising all day this weekend. We discuss. Plus it's a box office bounce back. IMAX delivering its biggest May opening ever as summer blockbusters hit the screens. We'll pick up the popcorn. Sweet for the IMAX CEO which Richard go Gelfand. So much more coming up. How you take on your Apollo or Rosetta IMAX theater to see Top Gun this week. Exactly what the perfect day weekend looks like. I think you should be up to that anyway. Well the market is up to that at least right now. Something to celebrate here. Three straight days of gains right now for the major indices here and now pushing the S & P and the Nasdaq to their best week going back to late March here. In fact the Dow Jones Industrial Average right now on pace right now for its best week going back to November of 2020. And a lot of that really does have to do with some of this I guess economic tea leaves out there. And whether it's economic data itself or some of the earnings that we got out that does seem to show that yes consumers are still spending. There's a lot of strength out there a lot of demand out there still some clouds. I want to talk about some of those clouds particularly when it comes to energy prices and maybe how that might put a crimp on some of the holiday plans at least when it comes to driving and clouds over crypto too. Yeah it's interesting. You have really a broadly risk on day but if you look at bitcoin truly the tried and looked at it asked today what's it. Let me tell you what it's doing. It's down three and a half percent. It's below twenty nine thousand dollars a coin. Wow. That's big. Yeah that's big. Is that a buy the dip opportunity. What's it in all seriousness. What's the flaw here. Because I keep hearing this idea. Eight thousand there. It's a couple hundred thousand. OK. Well Scott Martin out with Sandy. I mean there's this idea here that this has held its own for the most part. We haven't completely crash. Is this the floor. It's a good question. I mean it's not yet below the levels that we got to just a few weeks ago. It's still holding in that range. So we'll see. It seems to have stabilized but we're inching lower. People shorting certain indices sent an ETF katis that trades like all the time. Right. So those people who there was going to be no red lights this sit at their desk with their rosy. They're always waiting for the fund to commence. Funds dropped suddenly warning about some of the volatility and the memorial weekend for crypto. Meanwhile it's been a bit of a messy week for markets. Full stop. Here's some of the Bloomberg top voices that we've been seeing. We've had a very significant correction or embarking on is that is that bounce back. About base for rally election from the Fox and finding a little bit of stability here. It doesn't mean that the economy is out of the woods. We could see quite a bit more downside in equity. We're closing in on somewhere near a near term bottom here. But I think we are set up here for a rally. There's a lot of things that we can still look to do in markets. In the long run. It's going to create some unbelievable opportunities down the road opportunities emerging recoup the losses once earnings start coming down and we'd be buyers of this market. What you get is a summertime bounce in July this summer it's going to get more interesting. Let's think a little bit harder about whether it was a messy week whether this is the bottom. Malcolm Etheridge is with CIC Wealth Executive Vice President Malcolm so it's great to have some time with you. What are you thinking about sentiment right now on whether these are sort of dead cat bounce is or buying the dip with commitment. Yeah it's it's very easy to say that the last week has sort of given us this reprieve reprieve and folks have what seems like a bit of a short term memory. But I would cautiously warn people not to get too caught up in the good news of this week simply because I'm concerned that the Federal Reserve is already sort of tipping its hand where we had a Fed governor come out this weekend and take a less hawkish stance than we had been hearing you know through the course of this year so far. And that's a little bit concerning simply because we still aren't there as far as getting inflation back in line which has frankly been the main culprit of all of this consternation. Let's use that word that we've been seeing in the markets over the last couple of months. Well notwithstanding I mean Jay Powell has made it clear that 50 another 50 basis point is pretty much in the cards for that June meeting and probably the meeting after that. So even with some of the dovish commentary here there is a sense that the Fed is going to move towards whatever of that sort of mythical neutral rate is Malcolm. I am curious about inflationary pressures and this sort of sense here. And I think what you're referring to that some of the commentary that we heard out of Rafael Bostic this idea that maybe some of those inflationary pressures might be able to abate on their own without a more aggressive Fed. Do you think that's possible. I don't. I think that the Fed actually needs to get even more aggressive than they have foretold with that 50 basis point foreshadowing that you're talking about. I think it's a mistake to tell us that 50 basis points is about as much as they expect taking that 75 off the table or even maybe 100 basis points. Taking that off the table I think has gotten a little bit too far out over its skis. Right. Inflation is still in the 80s. We're talking about an inflation in the inflationary environment where Wal-Mart and Target are coming out and announcing like dismal earnings that are very concerning for anybody who's concerned about Main Street's response to the inflation. And so I just feel like the Fed could be helping us a little bit more and saying we're going to be even more aggressive here. We hear you. We understand that you're hurting. Six dollar gas in California is definitely a problem and doing a little bit more about that rather than saying you know job well done. I think we can rest on our laurels here and let you have added that. That to me would be a huge mistake here. Well Malcolm Stick sticking with Wal-Mart and Target. We're finally at the tail end of earnings season. Then we have kind of mixed front on the retail picture. Obviously you have your Wal-Mart you have your targets but then you have Nordstrom's you have Macy's. And I'm just wondering how you wrapped together everything that we've learned really in the past few weeks and what the message is going forward about that consumer. This week has actually made me start to wonder if you recall in 2020. Back in March of 2020 when the market hit its low and then we bounced off of it we started hearing and using the phrase the K shaped recovery referring to folks you know who could stay home and who who were awake hourly wage earners versus salaried wage earners. We started talking about that K in the recovery. And I'm starting to wonder if we're also looking at a K shaped recession where now you have hourly wage earners who typically tend to spend a little bit more of the dollars as they come into their hands versus your salary. White collar workers like you're talking about who can afford to go and shop at a place like Nordstrom those higher end shopping places or when we look at Gap's earnings where they broke out that banana republic they're higher in Brand was the only one that wasn't in negative territory as far as sales were concerned for them for the past quarter. That's starting to make me concerned that we're looking at two different recessions. I mean excuse me two different inflations. And that's what is a bit concerning when you look at again the likes of a Wal-Mart of a Target of a gap and so forth. Once again inequality and something that the Federal Reserve has promised to keep an eye on and see how they react to it though Malcolm from your perspective your reaction function now. I mean what to do with your money staying invested being in cash. What's the best prospect for you. So if I'm a person who is in a position where I need to put money to work right here. Right. Maybe you're a person who rolled over some money from a former retirement account or maybe you sold a house and you're sitting on a lot of cash and you need to put it to work. I would be looking for high quality companies in any sector but especially those tech names that are going to lead the market in either direction that it ultimately goes near term. I'd be looking for high quality companies in that space that if already announced plans to return capital to shareholders whether it's through dividends or share buybacks or some sort of imminent activity or something like that. I want to be invested in high quality companies not those speculative names that have led us for the last couple of years but the ones that are showing me that they're committed to putting money back into the hands of their shareholders in the near term. All right Malcolm always all wonderful to catch up with you. Have a great weekend. Malcolm Etheridge there. I'll see ISE. Well helping kick off today's program and we're going to talk a lot today about the consumer. Consumer spending well it did rise in the most recent month though. The savings rate was well not quite what it needed to be. We're going to break it all down and what it means going forward for a lot of the retailers out there. Plus we're going to talk about Rosie Caroline's favorite topic of course J.C. Champagne man you know Dani Burger and now the owner of a great Rosie brand going to be stopping by the show in just a minute to talk about what he's drinking this Memorial Day weekend. Crazy. And Rosie Daisy. Yes. You've got everything. And here's one for you too. You feel the need for speed. Well Top Gun is back. Tom Cruise apparently has an age one bit since his movie was first made. This is coming back to the screen. And now a big question here about whether people are going back to the theater. The CEO of IMAX also going to be stopping by. All that more coming up in a second. This is Bloomberg. Are U.S. inflation adjusted consumer spending rising in April by the most in three months indicating maybe that households have been holding up in the face of persistent price pressures by dipping into their savings. For more let's bring in Anna Wong Bloomberg Economics chief U.S. economist. And Anna. I do want to start off with that savings rate here rather than the spending rate because there's so much focus on the spending. But to see that draw down and savings I guess in the short term that's good because I guess it suggest people are putting that cash to use here. But over the long term does that cause you some degree of worry. Well first of all the seeming weight rate is a flow concept. So it's just telling you that for this past month that consumers are saving less. But keep in mind that they still have the stock of excess savings and this saving rates drawdown does not tell you how much stock higher stock of savings they have in the background. So it's all going back to the balance sheet health of a U.S. household. Is very strong and we think it's still very strong and there's still a lot of runway for them to ramp up on borrowing. So household balance sheets still strong consumers still spending on that last point that consumers have been so resilient. I'm curious whether that's actually bad news for the Fed because kind of the goal of monetary policy is to cool demand. And it looks like that actually hasn't happened yet. Right. Exactly. And because of that because at the end of the day the balance sheet is very strong not only with US households but also U.S. corporates. So despite all these gloom and doom talk at the end of the day both investment and consumer spending is going to be resilient. You're going to see one day a one month of data. That's week one month of data that's maybe very strong. But what this tells you is that the underlying momentum is still very strong. And yet the Fed will have to do a lot more in order to cool inflation. And I think the current market pricing of Fed policy is premature and weave into it. Therefore the University of Michigan sentiment data that came in was and that being the May monthly data rather than the April 4 the spending. At what point are we going to see sentiment so hit by where inflation is out that we get more of a buyers strike. You know that you miss sentiment measure has been very noisy measure of that recession. If you are using it to predict recession you're going to get a lot of recessions and other factors. Aside from inflation sentiment is driving the plunges. You know such as political affiliation that has been well. So I would not I think at the current circumstances I would not read too much into the Michigan sentiment measure. And a really great to speak with you. Thank you for weaving all those narratives together for us unfolding in the Fed on a wall. Bloomberg Economics chief U.S. economist. Meanwhile of course coming up we're going to be talking chips mobile technology shares up of the analysts that you see strength in the semiconductor company and across the market. Just look at the gene for it. This is. All right let's get right to our top calls and look at some of the big movers on the back of analyst recommendations. First up we're taking a look at Macy's upgraded to equal weight today all the way from under way over at Morgan Stanley with the twenty two dollar target. And the analyst says unlike many of its peers the retailer's full year guidance appears appropriately conservative. That's interesting. Macy's shares up about 2 percent here on the day. Next up get downgraded to underweight over a J.P. Morgan the price target. Take him down to nine bucks with the analysts saying those weak sales that we saw at Old Navy as well as at the Gap branded stores that's going to pressure profits while gross margins remain under duress caps. Nevertheless higher on the day by about 3 percent. And finally let's take a look at Ulta Beauty. This is the big mover today getting an upgrade today to buy from hold at a 475 target over a Jeffries with the analysts talking about their earnings report saying it gave the signal we've been waiting for. Everyone's buying makeup and other personal products. Ulta Beauty having a phenomenal day up 10 percent on the day. And those are some of our top calls Caroline. They are. And some of the consumer sentiment gauges when it comes to earnings being dialed in on. And let's look at another key stock of the Dow because we're talking about well what really the picture is in semiconductors. Mobile technology earnings showed that tech companies can still grow even if the economy is cooling and the semiconductor stocks are on their way to the best week in over two months. Makes Abigail Doolittle has the breakdown. Nice couple of days rally for this company. Yeah for sure. And it's interesting because for Marvell for me when I think about chips I think about Intel EMC and video. I don't really think about Marvell but it's number 13 in the stocks. It's a 50 billion market cap. They put up a very good quarter uneventful clean consistent growth. The thing that's interesting about them most of their business is networking and storage. So Enterprise Dell in fact is one of their biggest clients as is Microsoft. So the same strength that Dell has seen because of their return to work. So as Ma Bell so Marvell and the idea now is that all the demand issues that we were talking about at least for certain companies in this chip space don't necessarily to be as dire as maybe some folks thought just a few weeks ago. What about the supply issues. Does this not affect Marvell at all. They're able to get everything they need. You know that's a great question. Remain because that was not in any of the commentary that I read about. The most of the analysts are saying that they think that this company is pretty well positioned in terms of if they can continue the growth trajectory that they do have. And what analysts like about this stock in particular as an investment is the valuation because it's relatively cheap to its peers. So it's not that's because no one thinks about it. So I well I when I first was thinking that I was almost thinking about the old company Marvel. So but it is you know a really significant company here. And again seen as sort of a safe place to hang out among the chips. And it's not just Marvell that is relatively cheap at this point. It feels like it's the whole yet. It's pretty interesting because in videos at 44 times. But. What would you guess that that was their venture. It's actually twenty three times super cheap. And then I mean this is not Chip. This is when I think about valuation for technology right now Netflix at 16 times. Like who knew that it was possible. The last time I looked at Netflix prior to falling it was like 100 times so. Yeah. How low might you face it then. All right. Abigail Doolittle taking a look at our stock at the hour of Focus on Marvell. All the chip stocks though are rallying here on the day. We're going to switch gears from that now and actually go overseas for a second. To the U.K. and U.K. inflation. It's right now sitting at a four decade high of nine percent. This is the Bank of England anticipates a sharp contraction in growth. Now the prime minister over there Boris Johnson is still confident in his words and the future of the economy in particular in the energy sector. He actually sat down with our very own Kitty Donaldson while en route to Darlington for an exclusive interview. Take a listen to what he had to say. To tackle inflation in the medium term try to deal with the medium term you've got to you've got to deal with supply side issues. And so we need the energy companies to be putting some more into hydrocarbons but we also need the whole country to be investing in more low carbon energy. Yesterday's announcement acts as an incentive to buy gas and oil does offer to produce gas as well I think. I think that's the we we're going to need some kids who do. But I do think we can turn our backs entirely on hydrocarbons. And the UK actually has a flourishing sector in the northeast of Scotland. It's very important. We've got to keep that keep that going. I think one of the lessons of the current spike is we should we can't afford to be totally dependent on Putin's hydrocarbons but at the same time we've got to accelerate our drive for low carbon energy. So if you look at the British energy security strategy 50 gigawatts of of wind by 2030 25 gigawatts of nuclear by 2050. These are big big increases in low carbon energy. And what they offer is a big platform for investment from overseas. Well I find it the last in the last few weeks is a real appetite from international investors to put money in it. Long term infrastructure projects in the UK politically in the in the green energy sector. An exclusive interview with the UK prime minister Boris Johnson aboard a train no less. Yeah. Have you ever heard Boris Johnson on the train. No not a train. I interviewed him while in a and I think he's at a fish manufacturer of fish. Money had a higher net on a hair net. And he likes to do these sorts of interviews. He does. Okay. It looks good. You've made it. Catch up with them later as you go into like a mixer tonight or something. Well definitely. Covid a party over in the UK in that respect. So mixers are upon us. Meanwhile S & P 500 how it's mixing up. It's still very just robust rally on the day I was actually looking at the fix. It's down several points. Stays on track for a third day of falling almost out of twenty five handle. Pretty remarkable when you think about the risk off month. We've had an awful happy music today but it's been kind of contact me about rebalancing. Is that what it is. Well sad to say. I mean this is basically. Yeah right. I mean Tuesday doesn't really count because I know it's gonna be here. So maybe this is everybody getting them while they're getting a good and look. Talk about this month here. I was looking at some of the monthly returns here. Really. It was about energy. It was about materials. That's pretty much what did well all the sort of gains we've seen over the last week or so here attacking some of the cyclical. If you look at the ETF flows every single sector has seen outflows or nine out of 10. But sector ETF. They've lost eleven billion dollars. I was watching this ETF show. Yeah it's so good right. It's OK every day. Just on a Monday everyone is saying. All right we'll be back in a moment. This is Bloomberg. This is Bloomberg Markets the Globe that after 230 on this Friday afternoon thank goodness. Let's get you caught up on what's happening in the commodity space settlement now of nine ex crude futures 114. Fifty five on your screen. Official settlement is going to be at 115 0 7. So a modest increase on the day. And that's going to be another gain on a weekly basis. Five straight weeks of gains right now for WTI crude here. So we talk about inflationary pressures and they're certainly still persistent. You see that in the gasoline market where you're looking at three ninety nine. And change right now on gasoline futures higher here on the day and on the week. And of course at the pump you're paying on average about four dollars and 60 cents a gallon here if you're going out driving on the holiday weekend here in the United States. Overseas there's been a lot of optimism about the potential rebound in base metals. After we get that commentary out of China a little bit earlier nickel prices are up about 4 percent here on the day and that should give it a gain on the week as well. Copper also moving higher and wheat prices which were down the last three days showing a decent gain today up about a percent. But the damage is done. That's still going to be a loss on a weekly basis up about 1 percent Caroline Connan. So maybe a little bit of the heat coming out of the wheat market. But overall inflationary pressures feel bound and ahead of what is of course a holiday long weekend here in the United States. We wanted to talk to a CEO about what he's seeing in terms of demand in terms of celebratory attitude in terms of inflation prices pressures affect Rosie. It's the first black owned Rosie from Central Page and a best and is with us again to talk about. Well how are you weathering the push polls and people wanting to spend up for your sort of product. It feels like a more luxurious item. I mean listen we are definitely seeing sales increases back up 32 percent over last year which tells us that consumers are really engaged with the brand and willing to trade up for us as a more luxury premium Rosie. That being said we're working everything we can on our end to continue to mitigate these inflationary pressures that we're also seeing across the board. We'll talk a little bit about some of those pressures particularly on getting your product out the door here. Obviously we know the big component that goes into your products of course are the grapes. But then there's got to be a packaging and other issues that you also have to deal with as well. Yeah for sure. We're seeing a 9 percent increase in the cost of grapes and a 30 percent increase in the cost of dry goods. You now attack on fuel surcharges that we're seeing added on to the 5 X amount that we were charging for free two years ago. And it's simply at the point now we can no longer absorb those costs. You have to now pass them on to consumers. So even though the euro is losing value of the dollar is getting stronger against the euro. It's not enough to mitigate those costs. We're at the point now where we have to pass those along to consumers. What magnitude are you raising prices by when you pass on those costs. So we're taking a 5 percent price increase which will only net out or equates to about one dollar increase on the shelf to consumers. Is that any other supply chain RTX that you are navigating. What we talk about gloss costing more you can of course have the labor costs that's currently underway in the south of France I'm sure to a large extent today where along some of the things you're trying to balance the more surprising headwinds from a global perspective. Yes. What we're seeing right now is the glass shortage is becoming more and more an issue. There is a number of plants in Ukraine because the Ukraine Ukrainians are taking to the front to defend themselves against Russia. There's a work stoppage a work shortage in the glass manufacturing business. So that's causing a tremendous amount of delays and increased pricing in their particular area. Let's talk a little bit done a here about the marketing efforts here obviously. I mean you've been involved in the wine and spirits business now for quite some time long before you started this brand. And I know it could be a very complicated business getting a name out there and in front of people's faces here. How do you do that with a product like yours. Is it just what going to the bars and restaurants and convincing them to do it. Or is there something more direct with the glasses going straight to the consumer. Well you know this business launches a DTC business initially because we were all in relation to Mr. Pandemic. That being said we believe that rosé is the new champagne. You think about another topic that people want to celebrate with roses now. So for us everything we do is rosy involved in every aspect of the consumer's life or they'll be sporting events food festivals family gatherings etc. That obsession. Can I just say I just set the follow up on that because that's a pretty bold statement there for a lot of chefs. Chip Andre because of my and my life will probably push back on that. But in all seriousness though I mean what's been the transition. What why do you think that Rosie has been so embrace maybe maybe at the expense of something like champagne. Well listen it's it's a celebratory drink. It makes you feel good. Just the idea the thought of Rosa puts you in a great mind. Space makes me happy. And I think that's a lot of what's been the draw with the do category in general. And we personify that. We are bringing the lifestyle substantial pay to south of France the Mediterranean to your doorstep to your glass so to speak which the fat Rosie. I have to admit from the months of probably October until right now I don't often think about room. I think about remain constantly thinking about Rosie. If you are trying to be you know the new champagne. Do you have to go after those winter months those sort of cold months that maybe people aren't necessarily thinking about Rosie. Sure. That's been our marketing strategy from the beginning. We believe Rosie is a year round drink. It's not seasonal. Unfortunately summer is thin as the official kickoff of Rosie's season as 60 percent of the sales are done from May to September. That's not a trend we can break overnight that we're working diligently to show that Rosie can be consumed in the winter months when the ski slopes on Christmas time give Thanksgiving meals Halloween etc.. How about the breakdown of age groups of women versus men. Like how. How do you decide who is the perfect purchaser. How do you ensure that it feels completely inclusive of everyone all age groups or purchasing power. Because I know you've all been taught of the parents power of about 20 dollars. The same one you're looking at. A whispering angel is about the same sort of price point. And I'm assuming your biggest competition. How do you how do you ensure that your getting out to a new demographic all the time. Yeah it's motorcycle of play. I think you know for so long was about demographics in the rosy category. It was about women. It's about plus 35 years of age. If you live in the northeast we're breaking those stereotypes. We're participating in events and sports events and being present in communities that traditionally were not spoken to by the group as a category. And we feel put that reason is now we're growing so fast because we are seeing hey Rosie is fun Rosie is celebration. Rosie is not a demographic. It's about how you feel. Do you like food wine travel. Extensively. That's. Just real quickly here that I am curious as to why or maybe let me rephrase it. Are we going to see more black winemakers and black owners of spirit brands are coming up the pipeline or is this it. Are you. No not necessarily. Niet. In fact I'm probably number four in terms of size in business. I think you will begin to see more because the barriers are coming down in terms of entry into the industry. The hard part will be expansion and growth. That's where it really gets tricky because unfortunately we minorities do not control those vehicles in which to grow brand. So it would be incumbent upon distributors and larger supplier companies to backbeat smaller brands to really see them grow. All right Don I always wonderful to catch up with you especially ahead of course of a Memorial Day weekend here in the United States. I think a lot of us will be drinking rosé and maybe some champagne to don a burst. And look at the rose set. Founder and CEO there live from Miami. Still ahead how we're going to talk about some of those inflationary pressures that Donna was referencing. A lot of consumers are feeling the pinch right now in the developed markets. But what's going on in the emerging markets are emerging action segment is up ahead. This is Bloomberg. All right. Inflation high. And what the rates curve steepening EM equities are. Well to tell you what the struggle is they had been struggling. Get a little bit of a bounce today. Let's bring into this conversation our emergency action segment as we do every day at this time graph putting her ahead of emerging markets equity strategy at Bloomberg Intelligence. Joining us right now. And we look at emerging markets. You see inflation rates as some of these nations that are even worse than what you see here in the United States. You have a dollar that was what something up like 9 10 percent year over year. And you have a lot of other sort of macroeconomic factors that I think would make markets maybe a little bit of a dicey bet right now. Is that it's case. That's a great question. Right. Inflation going up rates backing up dollar strengthening should be a perfect storm. Something where your markets. But that's such a urban legend. We actually think that this is a good time for emerging markets actually. Data proves that if you go back the last couple of cycles then the rate hikes the dollar was strengthening. Commodities the strengthening emerging markets actually do quite well. Those segments the emerging markets that have strengthened commodities. Think of Latin America ASEAN that do extremely well during such cycles but also markets such as India and China which are commodity dependent. But what I do have different reasons. China even quite negative on kind of becoming a little more neutral ish. But in India we think that there's lot of structural tailwind that's going to mask a lot of challenges that this environment and just came back to that chart. If you couldn't quite read it the blue line was India and sort of the outperformance cleared a see but all of it sort of dropping back as the Fed rate hikes have indeed gone off or indeed the viewpoint of where the Fed is going up and the red line that we have the emerging markets more generally. I mean and we do like to be a bit monolithic about the emerging markets don't we. So be specific for us. Is it about India. Is it about which particular countries. Are you overweight. Yes. No that is a great question. So the 26 different countries typically with 26 different macroeconomic trajectories and all of that of course there is a lot of correlation and this kind of environment. But having said that the three areas that we like a lot India which is our top overweight both tactically and strategically we think there is a very very strong top down policy followed through very strong geopolitical alignment with the West as an export market. Self companies that are great bottom of stories in addition to India. We like Oxiana like the valuations that are undemanding that are good commodity complex. And investors are just about beginning to look. There there's no crowding unlike India and in Latin America which has been a great set of markets mainly Brazil and Mexico so far this year. There's a lot of catch up to do the very commodity heavy and right sourcing and near shoring is going to help Mexico quite a bit. So we are very optimistic on these three markets. We haven't talked about China yet. How do you feel about China and Chinese tech specifically. So going back a couple of years than we were first negative on China and Chinese tech Chinese tech was the biggest part of China. Even today China is roughly 30 percent of emerging markets index. We feel a bit better about China. China is mainly a top down driven market. So while analysts estimates are going down there's a lot of negativity on earnings. There's only a 54 percent correlation between what earnings estimates say what's this what price actions do. And we've kind of tracked that over the last several years. What do you feel good about. Is the top down noise around policy policies support potentially coming in price action in some of the largest heavyweight Chinese tech names. There's a little more realism. Real estate and financials which have been two big headwinds are kind of being a little bit. So we are feeling broadly a little bit less worse in China. Now we're not really going and piling into Chinese stock at this point in time but we are kind of watching it closely and definitely not as negative as we've heard before. Really great to have you in. Thank you so much. Ground for Tom Keene. Of course I'm bring back. He's pretty big intelligence. Interesting man. And if you read the story some reports out that top guy Maverick actually wasn't getting the Chinese investment that many had thought it would be with the likes of Tencent on its findings. There was two American pro American movie about the military. Right OK with Tom Cruise the lead actor. Hey ho. Funnily enough that and when we meet in the alignment lab and look and dig into how much American appetite there is to watch this movie we're going to discuss it in a minute to see this movie like five decades ago almost thirty six years ago. And that's. Thank you. Bring back. The film Top Gun Maverick opens on more than 750 IMAX screens and over 70 countries and territories this weekend and expected to be one of the highlights the summer box office season. Joining us now to discuss it and how many times have already gone to see it the CEO of IMAX. Richard Gelfand. It's great to have some time with you Richard. And I am interested by the sheer scale and sheer amount of countries is being rolled out into. We were just hearing about some reporting talking about certain financing of of this particular movie didn't come from China. What do you think about the appetite to watch it. It's going to be like in China for example. Oh well the movie hasn't yet been either admitted or denied in China. So that's that's a moot question at the moment. But I think the appetite worldwide is going to be huge. And it's not just speculation. We have data from the Tuesday through Thursday premiers and early screenings. And I think this will clearly be the biggest Tom Cruise opening throughout his career. I think in the US it has a chance to pass one hundred million dollars for the first time in his career. I think globally it has a good chance to pass two hundred million dollars. And for IMAX it's been in a number of countries we've already opened. I'm one of the biggest openings we've had for the early screenings. So we have data from a lot of countries but in four countries including the United States IMAX has been over 20 percent of the box office on less than 1 percent of the screens. So this is a sure bet. And you also look at the Rotten Tomatoes score. It's 97 right. Films that have these results. Yeah. And those kinds of numbers. Yeah. You don't have to wait till the end of the weekend you know. Yeah. I mean Richard there's been a lot of buzz for this and of course it's a remake of a movie that was probably one of the biggest hits of my childhood. Sadly to say I'm old enough to remember this movie when it first came out. I am curious about some of the other films here and getting folks back into the theaters particularly into IMAX theaters here. I mean when you sort of look at what's playing out there right now at the major theaters including IMAX it's like Top Gun and that's it. And I'm curious as to whether we're going to see a broader pipeline of movies coming down the pipe or whether those model the business model going forward is going to be the top guns and the Marvel movies and the drastic parts of the world going forward. And that's pretty much it. Well IMAX has is a single screen company so we can only play one movie at a time. And that's our model. And our model is blockbusters. And the other part of your question the movie business is back. I mean Spider-Man did over a billion dollars. Batman did 800 million. Dr. Strange is already at 800 million dollars. And after. And after Top Gun comes out. Jurassic World is is. Yeah. Tracking is as high as Top Gun was this far out. So I mean people are back. It's one of the few sectors that hasn't been recognized. But I think what this movie will do will bring a whole different demographic back. The other movies have brought millennials and younger people that now the rest will open up. Richard I'm curious what are your thoughts on how the overall box office might fare versus pre pandemic levels. Do you think we're on track to get back there or surpass it or do you think there's still more want to chop there. Well again I have to answer in two ways. IMAX is an exhibitor and we show blockbuster films in the fourth quarter of last year. Our box office was better than it was in 2019 which was our best year ever. If you look in our 50 year plus history if you look at the slate going forward for the kinds of movies we do like you know I think it's going to be as good as any year we've seen from here through the end of the year in terms of exhibitors which have a very different business model. You know but not that I don't care. They're my partners. I do care. And I think mostly because the first quarter started slowly for them it'll probably awful a little bit from the highs of 2019. But it's so dynamic the business. And so the media has focused a lot on what theaters are losing. Like for example two streaming titles. But there's been a lot of chatter recently about streaming companies giving theatrical windows to their content. So there are so many moving pieces. I think it's too early to talk about that issue for them. But for us there are more and more blockbusters. That's what we do. You know I couldn't feel better about the rest of the year. What about also the inflation and then the opportunity cost that your customer is not having to think about in any amount that spending on groceries and then having to treat themselves to an IMAX ticket. And how is that faring in the US visa being the rest of the world a huge global footprint. So if you look historically the whole industry has been pretty inflation resistant. And in fact a typical IBEX ticket in New York City over the years at Lincoln Square has been about twenty dollars. I'm for Top Gun. The first few days they charge 30 dollars an IMAX sold out. And when you know our typical indexing is around 10 percent for a blockbuster and we did 20 percent you know for these opening few days. So you know to answer your question I think empirically moviegoing is fairly inexpensive. You know it's certainly a lot less than a concert or a sporting event a restaurant. And history has shown us that especially in a recessionary environment. Yeah it's an affordable way to go. And I would think it would be the same this time. All right Rich are going to have to leave it there. Great to catch up with you Richard. Golf on their CEO of IMAX speaking with us of course as a big movie that everyone's talking about Top Gun opening of course around the nation and in some parts of the world here. The big question that we didn't get to ask him is are you a popcorn person or can you both. My not Bono. So what about ice cream. You're just a glam fully will. And I will never say no to starbursts. I actually keep a bag in my car. Which is it. Oh that's interesting. Ever in there just a song. We need to get a ride home with Katy tonight. So Starbucks for everyone. No horse and carriage. Well yeah. And the market's doing well too. Forty one. Thirty five. That's basically a high on the day right now. Off or near a high of the day. Excuse me. For the S & P 500 up 2 percent on the day trading up volume way off a cliff though. Well it's let me down. Hey let's bring back. Coverage ahead of the U.S. market starts right now as it has gotten under the close just 60 minutes left in your trading session in your trading week Caroline Hyde Romaine Bostick Katie Greifeld in the House and Taylor Riggs joined now by Carol Massar and Tim Stanek. We go across all variants of course TV radio YouTube with the sound of New York helicopters whirring ahead as people get ready for the memorial weekend and rather more luxurious. Wait and see. I'm looking at volumes down 21. Along the way I travel the way on the way I travel ether but definitely better. But there's some heady heights being hit and stocks. But not any volume yet. No. Right. That's a really good point. I mean but it is interesting to see some buying ahead of this long holiday weekend. The other thing that I find as a stand out. I'm thinking about some of the weekly performances and those bank stocks. Man they've been on a tear this week. They're up about eight and a half percent for the week. Overall member is just on Monday that Jamie Dimon J.P. Morgan Chase talked about. These storm clouds over the U.S. economy may be dissipating. DAX day alone. We saw big stocks up 4 percent but the rally has continued him throughout the week. One area where we're kind of seeing something different happening is crypto. Over the last couple of days we have seen Bitcoin and stocks actually move Deena decouple the way they're moving in different directions. And it hasn't been happening over the last few months. So there has relative been a relatively strong correlation except for the last couple of days. Bitcoin today down to three point three percent. Yeah. And then FTSE not getting any love either. It would seem nuts. Well try and be on the glass half full kind of side of it when you're looking at stocks in the moment. Crypto on the downside. Tech stocks on the upside as we currently see really outperforming today 2.8 percent to the good three hundred thirty three points on the upside. Meanwhile S & P 500 up almost 2 percent. That's 80 points higher. Every industry group in the green you're looking at the Russell 2000 up two point four percent. So once again big caps in the small side really in the outperformance of choice. Dow Jones up just one and a quarter percent. And if you look at the sector level it looks like everything is just rallying. Altogether you have all eleven sectors higher right now. Tech out in front leading the charge. Three percent rally there. And again every sector is rallying. But if you look at the downside what's underperforming it's all your defensive sort of sectors. You have consumer staples utilities some of the loggers today. Yeah. Well so 95 percent of the stocks in the S & P 500 are higher on the day. The biggest mover is Ulta Beauty second biggest as Autodesk the software company. I did report those first quarter this fiscal first quarter numbers and they were good. And they also came out with I guess slightly better than feared forecasts here. That's underpinning those shares up about 9 percent on the day. And Tesla actually having a pretty phenomenal week. Remember what was it on Tuesday. They were down around six hundred twenty bucks a share. And everyone was saying this thing was about to spiral completely out of control. Give me back some of those losses here. I think it's up something like 13 or 14 percent now on a weekly basis 7 percent here on the day though still at 755. Well off all those thousand dollar plus prints that we were seeing just a few months ago not to the downside. They are a few things as Katie likes to look at. The downside only Petrovic did report revenue of the fiscal fourth quarter. We talked about this yesterday here. It's down again for a second day. Meanwhile Albemarle higher by about 6 percent. In fact a lot of the materials names are moving higher here not only on the day the week but also on the month album actually one of the biggest movers in the S & P 500 so far in May. Meanwhile though let's look at how we are on the up up up when it comes overall to that helicopter. Yes. That's why I was thinking about and you take that to are you on parsonage lying down in the Hamptons and he just dropped you off in your backyard. You know how about the Hamptons. Maybe you're using a helicopter. How about that. If only I was hopping on that helipad. Give me an invite. Meanwhile I'll tell you what's hot on the hill about it this week is finally some inflows into stocks. Overall we fund after. Was it 10 straight. Well we saw finally some sort of inflows off the 10 weeks and we've finally seen some sort of positive movement in the benchmarks for the first time in eight weeks. And that was after the longest losing streak for the benchmarks in the U.S. since 2001 more than 20 years. So finally we do see this turnaround and it's been six months. But the question is is it rebalancing. Does it stick. Right. Well we're talking about helicopters a lots of helicopter money no more. Certainly by the Federal Reserve. Right. As they continue to raise rates and the balance sheet rolling that off. Keep in mind we're two weeks away from the next Fed meeting. And in thinking about what comes next Mohamed El-Erian he's a Bloomberg opinion columnist. He talked about the Fed being in a very tricky situation. He said it's kind of like being between a rock and a hard place. Check it out. I think the Fed is going to have to decide between two policy mistakes. Hit the brakes too hard and risk a recession or tap the brakes and a stop go pattern including polls in September will be an example of that and risk having inflation well into 2023. And of course that's Mohamed El-Erian Bloomberg opinion columnist talking to our team earlier on Bloomberg TV is also an adviser to Allianz and Gramercy. But I mean you know you look at the data points out romaine and consumer spending continues to stay strong. We heard from a lot of retailers this week but they're dipping increasingly into savings. And you wonder how long that can continue. I was really pointing looking at that savings picture and I don't know. I mean maybe there are better people that are economists than me who sort of say OK you shouldn't pay too much attention to that as it doesn't necessarily feed through in the exact same way. But when you look at that uptick in savings that uptake in credit card spend you wonder how much longer then does this resiliency that we keep talking about how much longer does that last. At some point you max it out. Right. Arguably the Fed maybe doesn't want to see that resiliency again. Sorry to jump ahead of you Tim. But you think about sort of. I do it all. But if you think about what the Fed is trying to do they're trying to cool that demand. And the fact that the consumer is still spending money especially in the face of all this inflation that we're seeing. Maybe it's not the best thing at least from the Fed's perspective. Yeah I agree with that. And I think one thing we also have to keep in mind is is there any idea that energy prices will actually come down in the near future. Because if we do indeed see a hot summer around the world. Go ahead. Well I mean have you looked at like home prices. Have you looked at home prices. Yeah. Going into Memorial Day weekend. Yeah. They're not coming down. Yeah. But it's not it's not as easily tamping down travel. And of course the flight helicopter. I haven't you know if you have to ask you can't afford it. That's what they say. Well our parents say that they all do right. Yeah. But but but but if we do not see energy prices come down then I'm concerned that you know we're going to continue to see inflation and it's hitting the consumers at the lower end of the. Well just remember we did actually get that data that sort of four week rolling data that shows gasoline demand and that that's actually down here. So it does seem that you are starting to see this in the gap. Yeah that people are making that. Did you see for fertilizer prices have also just plummeted because of demand destruction there. So we're seeing some pullback there too. But you know there are certain staples here too. I was just thinking I wish I had a lawn to put out fertilizer. So let me get right out a helicopter. Carol's got a yard. Katie's got like a stable of like Clydesdales or something. Yeah. I'll see you on the subway on the way. I'm just taking the dollar by like this. I mean take a city bike. Actually though Tokyo I've got a train ticket extraordinarily expensive. And there are like inflation pressures. Rocks are everywhere. And the question is is how you support the consumer in this time. When does the government step in. We've seen it was a really interesting story the week. The fact that the UK most in fact affected by stagflation has been taxing a windfall tax on its energy companies to be able to pay to subsidise the energy costs of its users. So I mean watch out capitalism to a certain extent in certain countries. Yeah. That's a really good point. We have to think about this globally. All right folks we're gonna be back in less than an hour's time going to wrap up the trading day and the trading week and the trading month right. Yeah. No we got another day and is the reason I'll keep you couldn't hear yourself. I know I know. I know. So washing away. May I know. Exactly. All right. We'll be back with our Beyond the Bell right here on radio TV and YouTube. And our markets coverage continues here on Bloomberg Television as we countdown to the closing bells here on this Friday afternoon. Pleased to say Dennis the Bush or founder president and chief market strategist of 22 V Research is joining us right now. And Dennis I mean all the talk right now is really not only about the macro economic conditions and how the Fed reacts to it but more importantly how the market is interpreting this. Because when you look at what we saw I guess last week in the week before where everyone seemed to be selling anything that wasn't tied down and now today and yesterday everyone's pretty much buying anything that they can get their hands on. It seems like there's some conflicting signals as to where we stand. Yeah I mean there's clearly some conflicting signals. I think one thing that has happened over the last week that's important for investors to internalize is bond volatility has come down and bond volatility is coming down. Ten year yields are coming off. The high inflation expectations probably most importantly are moving lower because the market is starting to discount that economic growth is going to slow over the next six months fairly significantly because it has to. The Fed needs a two to respect supply side constraints particularly on the labor and rent front. And so people are starting to internalize that. And when bond volatility comes down. Stock volatility should come down with it. I mean look go back a week ago or just over a week ago. You know the VIX at 30 expected for six months. That was implying 2 percent daily moves. So if you get a little relief and when I say relief it's unfortunate it has to come with slower economic data. That's the only way you're going to get a little inflation lower when you get a little relief on the volatility side. It makes it a little bit more attractive for investors to think about putting risk on because the odds of staying at you know two plus percent daily moves for six months go down. So the risk on that we've seen this week the money finally some inflows get talked different on sectoral industry groups. ETF says Katie has followed expertise on that. But so many inflows into just the global indices this week. Is that a blip or are we already starting to see the calmness of the bond volatility. I think that's probably a bit of a blip. I mean I think some institutional investors can who have been on the sidelines can put a little bit more risk on. I don't think there is a case to be made for retail investors and inflows to come in in any aggressive fashion because on the one hand I could give you a case for bond volatility be lower because economic growth is clearly slow. But the next question is going to be rightfully are we going to slow into a recession. You know and we're going to have to argue about that for six months before we try or maybe even longer. So on the one hand it's wonderful that it appears that the Fed doesn't need to tighten financial conditions. More could change but that's what it appears like as growth appears like it's going to slow and the next question will be recession or not. And it'll still be a volatile backdrop just maybe not as intense as it was. So I find it hard to believe that you see significant inflows if we're going to be worried about a recession for six to eight months. Does I'm glad you brought up financial conditions because that's where I want to go. Because as you've seen this drop in inflation expectations that you've highlighted maybe that's the reason why we've seen risk assets rebound this week. Maybe that's the reason why we're seeing financial conditions. They've actually is they're actually read on tightening when they actually had been tightening quite a bit after that Fed decision. What does this mean for the Fed. I mean if we continue to see this risk rebound financial conditions continue to ease. I mean does the Fed have to be more hawkish. It doesn't have to be. I think it's really data dependent. And I think that's the shift we're making. So you bring up a very important point. If the data doesn't slow financial conditions we'll need to tighten more. If the data slows significantly and inflation comes down and you don't need any more tightening of financial conditions. Right. The mechanism through which the Fed is impacting the economy is through the financial conditions channel. So it just comes back to that point. I would say that the Fed doesn't have to do anything. Assuming I mean I'm sorry shooting economic growth slows. So here's what I'm worried about in the near term. Just as an example we've seen a nice little rally. We could be at forty two hundred by early next week and then we're gonna run into a payroll report a CPI print the next week. The Fed meeting on June 16th. And the Fed you know it might appear if that data is still pretty hot that we might need for financial conditions tightening again. So yes better. Yeah. You know we're not the all clear here at all. Well look a little bit further than say past June. As we get into what will be then the next earnings season here we've gotten through this one more or less than we've heard from a lot of companies that have been very reticent about providing either providing forecasts or trying to raise those forecasts here. A little bit of caution here. But overall the numbers weren't awful the way that some people thought they were going to be this quarter. Do you think we're going to start to see more softness in those corporate earnings as we get into the next couple of reporting seasons. Yes. And it's required unfortunately you know unfortunately margins are too high which means companies have been able to pass along costs which means inflation is too high. So if inflation is going to come down by definition companies are going to have less pricing power and margins should come under pressure. So I think it's pretty much in the bag if the Fed is going to be close to accomplishing its goal that earnings are going to come down. It's just a matter of one. How much. And 2 if we avoid a recession and if we move down into like say the 2 15 to 16 range this year on earnings which you say would finish up around there and we avoid a. Should the market is a buy right. Because you can reasonably assume that we're going to accelerate out of there. But there's still a chance that we have to have earnings come down significantly more than that. There's a chance that we have a recession. And again that's the fun thing we get to all argue about for the next six to eight months while we look to you for the arguments because it was last year that you will vote to the best U.S. portfolio strategist and institution investor survey. So we get that is to be Shery Ahn as much as we can. We thank you. Found a president chief market strategist for 22 V Research. Have a great memorial weekend. Stay. Well meanwhile coming up. We are counting down to the closing bells. A it's going to be this global market strategist J.P. Morgan Asset Management. Plus we go global in today's triple take chatting. Then latest concerns but actually emerging markets and Russia's debt the outlook overall where investors are putting their money. And it's been a big week for the markets. We'll wrap it all up and look at what's ahead. Wall Street week 6 p.m. Eastern Time. All that so much more coming up this spring back. This is the countdown to the close about 43 minutes left here in the trading day and the week penultimate day of the trading month with the S & P 500 at 41 42 a 2 percent here on the day setting up for actually what's going to be probably its best week. Going back to November of 2020 in fact we're coming off seven straight weeks of losses here including that dip in brief dip I should point out in the bear market territory. Folks are buying into that dip. More than ninety five percent of the stocks in the S & P 500 are higher here on a daily basis. The Russell 2000 also getting into it this week up two point four percent here on the day and now headed for its best week. Going back to March of 20 21. So that's cyclical trade getting a little bit of love. And we continue to see that downdraft in yields. Remember the two year yield three weeks ago dropped by about 15 basis points. It was down basically unchanged last week. This week it's down another 10 basis points to forty seven. And change is where we stand right now as we wait for the setup into that Fed meeting in a couple of weeks. You pull up of the board. Take a look at some of the individual movers. And the reassertion of some of the big tech names has to be a story here. Two thousand to eighty two on Amazon right now up 3 percent on the day we should point out in about a week's time. That stock is going to split. It will split twenty for one. So that will take the share price down to like 115 or so here. But change the valuation at all. But in theory it's supposed to attract more retail investors into that. That'll be a big event next week. And video of 5 percent today. It was up 5 percent yesterday and 5 percent on Wednesday setting up for a pretty strong week here. And we were talking a lot about Ulta Beauty in the last hour. A lot of the other stocks in that sort of cosmetics space are moving higher including FDA LAUDER Cody and a few of the other names. A tick tick. Keep an eye on Dollar General here. The stock rallied 13 percent yesterday. It's adding to those gains today. It's up 21 percent this week. That's going to be the biggest weekly advance for Dollar General since it went public back in 2009. Third biggest gainer in the S & P 500 this week. And as we round out the week let's bring Abigail Doolittle into this conversation as we do every day at this time for our Options Insight segment. And there's been a lot of talk here about whether there's been enough capitulation out there to think that we saw a bottom here in the stock market. Yeah it certainly is a question. Everybody's been asking for that capitulation not just me S & P 500 but the VIX also. Are we going to get some tourists back. About 40 and we simply have not had that. Do we have a bottom in place. Let's find out. Christine Hot from her CEO Tribeca Trade Group. Happy Friday to you. Ahead of a long holiday weekend here in the U.S. and you know everybody has been wanting capitulation over the last couple of weeks. And yet here we have this best wait that remain was talking about since November of 2020. So it seems as though we at least have some sort of near-term rally in place. Do you think that we need an absolute panic capitulation bottom and then the rally after it to have a real bottom. I have a girl. Well I mean I think we saw it in a number of things. I know you know a lot of investors traders wanted to see something bigger you know in terms of kind of an all clear sign. But sometimes it just doesn't work that way in markets. Right. And I think that we got several hints along the way. Maybe it wasn't a one day event but we certainly saw a lot of breasts thrust to the downside. You know I was on the show. I think it was a few weeks ago. And I was talking about how we really saw some of the worst breath of this year. And that was two particular days earlier this month. So I think that was something because we've seen that similarly on other you know particular times where we've seen capitulation. And then you've also seen you know single stocks on earnings. We saw Wal-Mart we saw SNAP we saw Target. You know I mean those were huge downside moves. So it may not have occurred all at once but we definitely I think saw it in a couple of different areas of the market. Yeah that's a really interesting point in those single stocks because that's selling that we saw in the likes of targeting some of those other retailers. Really pretty incredible and certainly probably didn't feel like capitulation outside of the fact that there wasn't that snapback rally that sometimes happens on true bottoms and then you know relative to options from a macro standpoint. What are you thinking relative to the VIX back below 20. Well I mean I think that we could we're you know we're moving in the direction of the lower 20s where we've seen that before this year. So that'll be something to watch. I mean I think also just watching you know going back to overall breadth which we saw get better last week while the indices were still going down. I think that'll be a good tell as well. You know and that's something that we're going to want to watch besides the VIX. But just watch for for for something that changes as we're moving up. And I think that'll be a signal if it if it if and when it happens. And you know so much talk right now about the whole idea that value is going to be the big trade going forward over grow. I guess if the rally gets strong enough it would probably go back to growth your lithium space that really has been on fire for a lack of better way to play it up up up and away. How does that fit in. And talk to us about your trade. Yeah. You know it's one of those areas that kind of fits in the middle between between value and growth because some of these names they're not valued at very high and their earnings have been spectacular. And names like S. QM L L T H M is another one as well as Albert morally was just huge earnings. So I think you know while the overall group L I T is the ETF in this space is still in a downtrend. I like playing you know if you're going to take a shot at a name in a downtrend I think options is a great way to do it. And I like the July 78 calls which cost about 240 and that gets you back to run the 200 day moving average in the whole group ETF. Great stuff. Christian from Hertz Tribeca Trade Group CEO over there. Hope you have a wonderful long weekend into all of our viewers as well. From your No. So where are we on the growth vs. value trade at the moment investors perception of value stocks kind of changing. We're getting some mixed messages to whether you still buy this. Remember the value trade has really outperformed versus growth so far this year. But we started to hear from Credit Suisse and Bank of America remain some doubt about with bond yields potentially peaking the economies are rolling over right. Well they should still be buying that. Yeah I mean look I mean we kind of saw that sort of reassert itself a little bit earlier. The signal today in fact values like one of the worst performing factors out there today. But look I mean you kind of knew that people were going to look at some of these valuations if you will and basically say OK enough's enough. I mean OK maybe you throw out a snowflake but do you want to throw out an Amazon or an apple in this type of environment. That's what I've been wondering. I mean it feels like some of these single stock reactions that we've seen have been so extreme. But to tie back to value it's interesting that it has almost this safe haven bent to it. When you think about the reason it's doing poorly it's because bond yields have peaked and bonds are actually acting as that haven again. Yeah. Yeah. But we should point out I mean in fairness I think the value trade overall is still kind of leading on a year to year basis. A lot of that of course has to do with the run up we see in a lot of energy materials. So if you strip them out you get nothing. But hey you take it where you can get it right. Have to crunch those numbers. What's the correlation with crypto. You know that is such a great question. Give me 10 minutes. I'll get back to you. Oh back to the age old. Is it good for the environment. It's been ages since we had that one. Let's bring back. The most crucial moments in the trading day. This is Bloomberg Markets the close with Caroline Hyde Romaine Bostick and Taylor Ray. That's in 27 minutes ago we counted down the end of the week. Yeah the end of the weekend the penultimate day of the trading month. Did you know that. By the way I heard there's one day left of May on Tuesday but in any case related true big if true. We'll report back next week. But in any case we're looking at a big broad rally when it comes to the sector level. And if you look at the breakdown you can see just how risk on this day as you have infotech consumer discretionary up there at the top at the bottom it's the more defensive sectors. I'm thinking staples you two utilities but still up by quite a healthy margin. Yeah quite a healthy margin here. But we talk about tech. It's also still energy is still out front here. I just want you to take a look at Exxon Mobile for a second. I want to make sure I get this. This is a seven day winning streak right now. Earlier today this actually hit well not with a 52 week high but basically the highest level that it's been since 2014. So it's really been very persistent stock here until you move higher that we've seen in these energy stocks on the back of oil prices as well as some of the refined products that continues. And it's a big part of the reason why you're seeing any sort of gains in this market on a year to date basis here. Electronic Arts actually moving into the red. I put this up because I thought this was a great story. It was in the green today setting it up for what was going to be its 13th straight day of gains. It would be as long as Lou's winning streak on record here. Nevertheless it's still up like 20 plus percent over the course of that. And a lot of that has to do of course with all the sort of relentless emanate speculation around this company right now. Anyway though everyone my narrative because it's actually in the red right now. Next week we do get some more earnings believe in our earnings season isn't over. Salesforce moving higher here up about a percent. Those shares have actually really been under pressure down about 20 percent since it last reported earnings. And GameStop having a phenomenal week up something like 26 27 percent this week. No real news but they do report earnings next week or as Taylor would point out results because there is no easy. Nevertheless we'll hear from Ryan go. And maybe we did hear from last time as to what the strategy is and whether this company is on the path to a turnaround. I mean stocks doing OK. Yeah I mean coins not so much. Any coin. Not so much. Let's have a look at what's happening in the world of crypto because I mean it's actually been a real pain trade this week as we've seen a real back on in terms of animal spirits risk on sentiment in the stock market. The same cannot be said for what is the most important crypto currency out that bitcoin off by some 5 percent basically let's call it over the last five trading days. Why this decoupling suddenly. Because before it be tech stocks moved in tandem with crypto and now tech stock goes up and bitcoin actually stays very much mired in its sort of twenty eight thousand dollar range. Perfect person to be discussing it with us. David Payne who covers digital currency. So bring back. So talk to us about this decoupling David and about what is happening. Sure. So we haven't quite seen the decoupling between crypto and the stock market for quite a while. Earlier this year with the very high correlation between tech stocks and crypto currencies. But this is a very interesting territory we're entering right now because you know like Bitcoin and other currencies you theorem and I'll turn like coins. They're all like falling falling falling dust key supporting levels and and breaking away from the stock market. I'm curious about this sort of decoupling because let's talk about the coupling to begin with. Right. I mean this is sort of there was a pretty strong correlation between what we're seeing in the crypto space what we we're seeing in equity markets then when the equity markets started to fall. That's tends to split. Do we know the reason why. Was there a sort of a reason. Yeah. I think part of the reason is that we've seen the terror like which is the U.S. dollar pact to stable coin. We see the implosion of that really really big like a multibillion dollar project to explode implode and kind of like exploded. You know really bad way. It did. Everything is not a matter of days. So like that kind of like a may you know made the media investors second guessing the market you know like lost confidence in a lot of these crypto currencies in the market. And David you brought up all coins and I want to go back there because Bitcoin is not having a great week. But if you look at some of the old coins and a theory and in particular they're doing even more badly. What's going on there. Yeah I think one interesting trend among these alt coins is the theorem because the reason why we have to single it out is because in the past you theorem and bitcoin as the two largest the cryptocurrency is by market CAC. They've been kind of like moving in a really similar direction by now. We're seeing if you're moving further down and even further down than other coins. And so one of the reasons actually is that technical glitch that's one potential reason behind the very sharp unusually sharp decline. So we ISE though as of yesterday the core developers of the network was we're investigating exactly what was the reason behind that glitch. And we're seeing more developments from that network. And this is is this to do with the movement of theorem from proof of what. Proof of stake and this being really important actually. Galvanising a lot of buying sentiment around crypto for the start of 2020 too. Exactly. So that's that's the reason like you know there is there is there has been a lot of excitement around this very very historic operate for the network. A lot of people are kind of hoping to get out of the crypto winter for these exciting news which will happen in the second half of the year. But at the same time any kind of like bump you're right you know kind of like glitch or kind of like a setback would make this like already nervous investors even more paranoid about the network's development for the rest of the year. All right David great to catch up with you. David Penn who covers digital currencies for us here at Bloomberg. Keeping an eye on that space at the seventh straight week of declines year for Bitcoin and some of the other major coins here. Coming up we are gonna continue to countdown to the closing bells of the U.S. equity market. Mira Panda global market strategist over at J.P. Morgan Asset Management going to be joining us in just a second. Forty one. Forty four and change on the S & P 500. That's not far off the highs of the day. And the NASDAQ indices right now up 3 percent on the day. This is. We have 17 minutes until this market closes on the day on the weekend as we head into a long weekend we are seeing a risk on volumes and light. They're down about 10 percent or so from their usual. We are still seeing at almost 3 percent gain on the Nasdaq big tech as well. So too did the small caps up two and a half percent. Bloomberg Commodities Edge DAX though still showing that inflation pressure oil getting a little bit more of a bid as well. Some of the metals bouncing back after been worrying a lot about the Chinese economy. I'm looking also at the VIX now down two points. Twenty five handle is where we are. What do we think of that for future volatility. May repayments have to describe it. Or global market strategist at JP Morgan Asset Management Mirror happy almost when we can. Thank you for rolling into the Friday with us and tell us about. Well the volatility in the markets and whether would damping down a little bit or was this long weekend volume like. You know it's nice to see this bounce in the markets after seven straight weeks of the sell off. So it's nice to have a bit of this reprieve here. Do I think we're done from here. I'm not so sure just given the fact that nothing fundamentally changed this week. We did get some Fed minutes that reaffirmed that the Fed will be fighting inflation aggressively. At the same time we got some positive news on inflation is warning that things are moving in the right direction. But I think we're going to see a string of good data as it relates to more consistent disinflation. And we're going to need to see a more meaningful Fed give it before I think we can see a durable rise in markets. Nonetheless I think going forward we're going to see a bit more of a NIKKEI of positive and negative as opposed to just we've seen more recently because this is really a story of repricing to us not recession. Well well yeah. And that's a good point here. And I think it's one that needs to be made more. I am curious Mary though how you wonder with regards to the economic data here how you square some of the conflicting data that we're getting here that seems to show strength in some of the areas like consumer spending. But then you have things like consumer confidence which continue to sort of slide lower and a job market that while still strong certainly seems to be losing. I guess some of the thrusters that it had before. Last year we only got good news. There was earnings or growth. It was a string of good news. And this year we actually have to get a bit of bad news in order to get the good news. And what I mean by that is we need to get some bad news in terms of cooling housing cooling earnings lower consumer demand in order to get that good use of less inflation. So I don't necessarily think some of the things that we're hearing from various earnings reports and some of the data we're seeing is a bad sign because we have come from such a strong starting point. You know we started off on a boil. We're headed towards a simmer. But I think the important part is that we're we're still cooking in this environment. All right. We're just getting started here. And cooking with Mira Panda global market strategist at JP Morgan Asset Management. She's sticking with us as the countdown to the closing bell is on this Friday afternoon ahead of what's going to be a holiday shortened week here in the U.S. 41 47 and change on the S & P 500 Caroline Hyde. Do you have any comments. I heard one comment. Yes. I'm going to jump in. It's also a good day for junk bonds in particular. Really a big lift there after what's been again a pretty risk off May. What are you cooking. I'm going to grill right in my living room. Let's let's say four main scenarios. Say where we're from. Where am I supposed to go. Basically back. This is gone on to the close of Caroline Hyde Tom Romaine Bostick. And I'm Katie Greifeld. Taylor Riggs is off tonight and she misses a week of where we've been trending higher trading higher up six point three percent overall on the S & P 500 is up two point two percent today. Now Williams off by about 20 percent. But still we still hold on to those gains that have been so hard won. Plate up six and a half percent over the course of the week on the NASDAQ and up just 6 percent on the Dow Jones Industrial Average. Basically we moved in lockstep. Tuesday was the blip. The rest of the time has been powering high Romaine Bostick. And a lot of this of course this week was led by a lot of those discretionary names. Of course a bit of a bright spot with some of the retailers. It really did surprise to the upside. The second on your screen there the S & P 500 Consumer Discretionary Index of 3 percent here on the day on to finish the week higher by roughly 9 percent. Barring any major turnaround here in the last few minutes transports higher on the day up about 7 percent on the week. And a similar story for the Philadelphia Semiconductor Index of 4 percent today and about 8 percent here on a weekly basis. Still with us Europe and IT global market strategist at J.P. Morgan Asset Management. Up in this countdown to the closing bell such a little less than 10 minutes away and a mirror. I do want to get into this idea here that of what you just said a few minutes ago about the idea that this is a lot more of a repricing event going on in this market right now. It's a repricing event occurring at roughly is basically the end of the month for more or less given the holiday shortened week. I am curious as to whether you think there is at least some degree of investor sentiment whether it's on the institutional side or the retail side to look at some of these valuations and buy that dip and do so persistently. Absolutely. I mean you also point out the fact that it is the end of the month so you see some degree of month and rebalancing. We've also seen this turnaround in retail flows coming back to the markets. And I think that investors do see an environment where we've seen a massive valuation reset that we're if we're not heading into a recession then these are actually pretty reasonable levels to come in at levels that we've been waiting for for quite some time. And we've already seen this massive drawdown. If we don't see it accompanied by a recession which again we don't think we will then it feels a little bit like we've experienced a lot of pain. And remember a lot of this pain was driven by the fact yields have moved a lot higher. So we've been forced to experience a repricing from November to just a couple of weeks ago. You clearly know what the Fed was exactly going to do. And now that we have a much greater degree of consensus around what the Fed's going to do for the rest of the year and actors downside risks to them actually easing a little bit in terms of direction and less aggressive. That's a positive mirror if you will sort of thinking this is not going to be a recession. We'll get some sort of soft landing. People are putting that money back to what. Where's the money coming from. Is this cash that people had on the sidelines the so-called dry powder that we've been talking about. Is that coming back to the system or is this a rotation out of bonds into stocks. What are you saying. I think it's a mix. You have seen a lot of cash on the sidelines. I think people are putting that back to work. But I think that people also tactically making tweaks within their portfolios into different areas. I mean we certainly want to remain relatively balanced between value and growth given the different cases for each yield value. Valuations are still favorable in an environment of higher inflation and higher growth. That has clearly been an area that's outperformed. But this growth reset is important because we're going to need growth in the back half of the year. But really interestingly as well we're finally seeing for the first time in three years essentially that bonds are looking more attractive. So we're seeing a bit of more balanced areas. The bond market looks more attractive. And also because of the perceived risks in the economy people want to make sure they have that portfolio balance which has actually been working in the last couple of weeks. So I don't care. So for some of the I guess more short term traders opportunistic traders here there's this idea here that so many people have sort of shorten their duration whether it's in the bond market it went in equities. Is there any evidence that people are willing to sort of extend that duration. I think is the right time to consider that and I think that certainly investors are considering that when we think about the reset in growth and what we're going to need going forward from some of the growth your areas the market in the portfolio and the fact that rising rates really damaged areas of the markets. I'm highlighting municipals in particular in the beginning of this year as rates rose. But now that we're seeing a bit more stabilization and we're seeing different headwinds on the horizon it's a good time to kind of consider having a little bit more balance. Still the case to get that income and fixed income market from shorter duration and not take on that interest rate risk. But at the same time as we've seen the 10 year old modestly more recently that does create some opportunity for protection. But of course it's not a June 1st yet. So we could still see some rate rise ahead as that balance sheet rollback begins. Yeah. A big day coming up on June 1st in conversation with neuro panda global market strategist at J.P. Morgan Asset Management. Back to mirror in just one second. But over to Katie who is at the board with our Stock of the Hour. Well I mean you've talked about Ulta Beauty a few times already today but I do want to highlight it is the top performer in the S & P 500 today of course a reported yesterday. It boosted its full year guidance. People are still buying makeup big time. You saw Ulta shares close up almost 12 percent. Also having a very good day. Junk bonds. Take a look at each y g. This is Black Rock's high yield ETF has actually risen every single day this week having the best week since April 20 20. And near this is where I want to bring you back in. Because when you're thinking about asset allocation you have HD H1 G outperforming the S & P 500 so far this year when you think about your portfolios. Where do junk fall. Bonds fall. When we think about income that's an area where we have seen some degree of opportunity because what we have seen is that spreads have widened out providing a bit more opportunity for income. But at the same time wide net appropriately can take into account that yes there are more risks than January 1st in the economy. So spreads should be wider but they're certainly not pricing in a recession. So it is a good opportunity to pick up a little bit of carry as we're looking for income in our portfolios. Let's go global because that's exactly what you all. We've had many calls city I'm thinking saying look we see more opportunity in emerging markets in x us. Do you see that as well. I think it's very much dependent on timeframe. Right now we want to be a little bit more cautious as it relates to Europe. Perhaps the recession on the horizon in Europe. Again not our base case in the US but there is certainly some some deterioration on the consumer side overseas. And as China continues to be in lockdown there's some spillover effects in various areas of the emerging market. But I think China's an interesting test case where you know the news couldn't get worse over there. But we actually could potentially see an emerges from lock down and some potential good news out of China. Valuations have massively reset. They want to be the largest economy in the world. We're going to continue to invest in those strategic bets. So that's an area that could potentially be interesting if you have a long hold time and are willing to be patient as that economy continues to grow. Mira it's great to have you. Thank you for being with us. Your patience as we head towards the weekend. Have a wonderful long weekend. Matt Miller global market strategist at J.P. Morgan Asset Management. Meanwhile I mean Katie there is a conviction to be buying but just not that much volume. Not so much volume which makes you know me at least a little nervous about where we're gonna be sitting on Tuesday. It is a long weekend. You haven't heard on this program already. Three day weekend. Coming up on the excited Memorial Day a serious day for some a day off for others. At the end of the day though you talk about where this market is. And guess what guys. We're at the highs and new ISE of the day right now as we get ready to countdown to the closing bell is just about two minutes away. Full market coverage as always on Bloomberg as we take it to the bell. NBA. 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 Caroline Hyde CAC. I filled in for Taylor Riggs. We're counting down to the closing bell. And here to help take us Beyond the Bell it's our global simulcast with Carol Massar a.m. Steinbeck. We welcome our audiences across Bloomberg Television Bloomberg Radio and on YouTube as we pass a pretty interesting week here Carol. We'll talk about coming into this week. We have seven straight weekly losses. A lot of people that thought that was going to extend. We had a big rally on Monday. Things kind of got tripped up on Tuesday. Radio was off to the races last three days. Yeah. And I mean talk about off to the races. Check out that retail sector this week up about eight and a half percent. I was looking at the S & P 500. Six of the top names out of 10 are retail names. Dollar Tree up about 29 percent. So we've seen investors pour a lot of money into this space had a lot of news when it comes to retailers. I just had to look twice to make sure that this data was right because it is pretty remarkable to see after seven weeks of consecutive losses that all three major indices are higher over the last five days by more than 6 percent. I mean it really is notable the sudden whipsaw. And even though look every time that we saw consumer discretionary waning power on higher you then had the gap sort of numbers coming out yesterday just puncturing another hole in west sentiment as you had the University of Michigan sentiment looking lousy. But it feels as though this is what makes the market of course that power's high even as though we are worried about in some way how much consumers coming to look through inflation. Absolutely. And you're talking about worry. Obviously consumers are worried. But if you look at the VIX for example I mean just falling off a cliff again it is almost a three day week. I think one of the interesting stories to this week is kind of the what happened in the bond market. And you know Taylor we're here to kind of break all that down. But some of those guys tepid behavior that you're seeing there. The idea here that maybe people did look at yields and say they peaked for maybe they are waiting for the big balance sheet run off. This starts June 1st or for some next Fed meeting. Who knows. Maybe when she comes back she can also say that Munis are having a great they're having a great time apparently. Maybe that's why she took off. All right. Here's your closing numbers here on the day. The Dow Jones Industrial Average gonna to finish the day higher by about one point eight percent. It's higher by about 6 percent on a weekly basis. The S & P 500 moving higher on the day in fact closing about around the highs of the day at 41 58 and change here up 2.5 percent here on the day and up about 7 percent on the week. The Nasdaq composite higher by about three point three percent on the day at six point eight percent on the week. And let's take a look at the Russell 2000 because we did see a pretty interesting embrace of some of those small and mid-cap names. It's going to finish the day higher by about two point seven percent and more than 6 percent on the week Carol. I hate to be a bummer here guys but we're up about what six point six percent in the S & P 500 for the week overall. If you go back to and then we had a bunch of selling. We know that. Right. We've been talking about that. Go back to the week of March 18th. We were also up 6 percent on the S & P 500. I guess my point is this is a market that continues to try and find what the bottom is and we can have and can continue. Many market guess telling us expect more swings here when it comes to trading. That is a worrisome size and scope. But I'm going to go right and back into optimist land because I have a lot of green virus to show you. You have a very broad rally today up top. You have auto and components. Think Tesla. Big day for Tesla. Yes. Of Semi some of the chip makers up there as well. If you look at the bottom what isn't doing as well it's food and beverage. It's telecom not as robust of a gain but definitely still green on this day Carol. All right. You know you put a cat ad on Twitter. Is it a happy cat this week. It's a it's always it's always a relapse. I know it is always a relaxed cat. All right. Let's get to some of the gainers. There were so many to choose from revision. We just talked about it with Ed Ludlow who covers the West Coast for us here at Bloomberg. This name up almost 9 percent at its highs finishing the day up just shy of a 6 percent gain reshuffling some of its senior executives one in particular that used to work at Tesla was at revision. But he is departing. That's his manufacturing chief. The company's saying it's about some of the growing pains. So a little bit of a reorg. There are Ulta Beauty. We've talked about it remain mentioned it earlier. We talked about it last night when it reported its results topping the S & P 500. This name pretty much ending at a time of the day up more than 12 percent. This is interesting. The company jumping as it raised its sales and profit forecasts talked about robust consumer spending on its products. So again that's one that's a standout. And then I want to mention far fetch you know up almost 27 percent here and this remain. I find interesting is the company cut its even a margin forecast for the full year. You get a bunch of analysts cutting the price target on it but maintaining their ratings. And they're all saying oh you know we're focusing on the longer term. So anyway up about this before you move onto the decliners I just want to point out with regards to the gainers today like 90 excuse me. Let me just gets right. Ninety six percent of the S & P 500 was higher on the day. And that was that broad based about just looking through the data here. That's the second broadest rally that we've had so far this year. I think we had a rally back in February where we had something like ninety seven. Percent of the names were higher here. Not 98 percent of the names were higher. What do you think of superlatives. Well I mean I'm putting them together here. Tim wanted to take it away and I'll come up with another super. Okay. Well here here here here's some here's some more context about the bread. The Dow all 30 stocks in the Dow were higher today. They're only 19 stocks lower out of the more than 500 in the S & P 500 484 were higher on the day and only 19 were declines were decliners today. Workday is one of the few companies that did finish lower on the day down five point six percent. The software company reporting adjusted first quarter earnings that missed expectations. At least five firms cut the price target there though stifle did raise its price target. Big lots also. Down more than 12 percent. The company reported net sales for the first quarter that missed the average analyst estimate the company's not providing EPS guidance at this point. Here's something interesting. Inventory for the first quarter was up 49 percent year over year. Estimates were for nine hundred ninety six point one million. Inventories reported at one point three four billion dollars. American Eagle Outfitters finished the day down by six point seven percent. The company finished lower after the clothing retailer cut its operating income guidance for the year. And here at least five firms cut their price targets on American Eagle Outfitters. I promise I would interrupt you at the end. I do want to point out here going back to the volume issue here. I mean this is actually the lowest volume day that we've had across all of the tapes here going back to April 19th here. So I'll get you some sense too of I guess how much is that. Is that rebalancing. Is that because it's a holiday. As a rule it would seem and the superlatives coming thick and fast. I'm meanwhile looking at cross asset to see what's been on again off again and really what was on the downside. And it has been ever since we took off in terms of risk sentiment is the US dollar once again low of us is it's G10 pairs. The US dollar index fell by three tenths of a percent. We're seeing money go into it. The more quantity related currency pairs. Canadian dollar pushes on Australian dollar. The retail sales looking good in Australia. So strengthening eight tenths of a percent. And the Kiwi a standing ovation for the New Zealand leader over here in the United States over I think one of the key universities and Kiwi dollar currently up nine tenths of a percent. Let's have a look at commodity spectrum because I mean another weekly gain for oil. We are seeing global supply already continued to be a concern. Brent crude up one hundred nineteen head of your driving weekend. I'm looking at also WTI crude on the upside. Natural gas prices back a little bit. But overall commodities is where we're going to focus for next week on the EU summit. You got an OPEC meeting. You got so much to be thinking about from a quantity perspective. Not to mention the food inflation that we get the United Nations weighing in on at the end of the week. And I'm looking at sovereign bonds are very mixed picture today. Money coming out of the Australian debt. But we're seeing money basically sort of go back into sovereign bonds in Europe. And if we look at treasuries specifically it's a good thing Taylor Riggs in here because it was a really boring day. The bond market did close early at 2 p.m. But look at the screen there. I mean you can see the two year yield completely on each on the day. And if you go down the yield curve there. I mean these moves are tiny less than 2 basis points across the curve. Just you know a pretty boring day. It's interesting though to see that two year yield completely unchanged. That's where your Fed expectations are priced. Maybe we finally reached equilibrium partly not so well. How do we make sense of. All right. There's a story in the Bloomberg buyer. John Chang talks about Citi team downgrading U.S. stocks have recession risk and joining the likes of BlackRock and Morgan Stanley. You're all worried. And then you had stock fencing the biggest inflows in 10 weeks. Dip buyers return. We know that cash led the inflows overall but now those 20 billion and global stocks ended in the week ending men May 24. So you like. Yeah I mean I mean look I mean for every you know strategist no doubt that says OK we we need to still hit a bottom there. Just as many strategist notes to say you know buy into this dip and that we could be moving higher. I think the end result Carol frankly is not a lot of people know there is this is kind of one of those there's money flowing like that to me. I love to see the flows. Right. That's actual buying. Yeah they're flowing. And how much of that money is also still kind of sitting on the proverbial sidelines as well. You know I mean I guess it's whose money is flowing. That's maybe the question. Yeah. Is it retail. Is it institutional. That's a key question. I think it's interesting that some of the correlations we used to have broken down. I mean to me said it again and again the crypto trade that's still trading lower there hasn't been a buying that. It's finally moving in its own idiosyncratic way because we're worried more about some of the peculiarities to do with theory upgrades and the like. But for as our forthcoming has emerged I believe this keeps getting to or whatever whichever way. In delayed. And this is like why there's not much risk on sentiment there. But overall we will be interested to see how the retail investors be seeing this. Tom Keene. I did ask Michael Sunshine over a gray scale about that and he he said that it's too early for us to move to make any conclusions about any sort of decoupling from risk assets when it comes to crypto. It's only been a couple of days. Well I mean it has only been a couple days. But to see the Nasdaq 100 finished so strongly up on the week Bitcoin get no love at all. I don't know. It's just interesting to see that correlation really come apart this week. All right. We get jobs next week really. Efforts of Fed speakers. Remember Jay Powell is also about you know. Right sizing growth right now. So we have to think about what really growth should be in this environment. And that's what we're trying to figure out. All right. The helicopters here we've got to run. Have a great holiday. You tasting wine now. What about you guys. We're talking. We did talk. We didn't actually get bottles and person like Linda ISE. You got to work on that with the producers. We are talking beer. We have a beer guys coming up. You are talking. We're talking beer. And one of them beer is just bad soda. Have a good safe weekend everybody. Happy holidays. And we will see you on Tuesday. Well Mark Marcus coverage coming up right here right now as we let the big talk flow on radio on TV we're talking about investors perception of value stocks how they're changing. Chris Cain is here for a a Friday up in the bottle. Let's bring back. Best weekly rally since November 20 20. Default it. Meanwhile we see the S & P 500 up about 6 percent on the week. We're up two and a half percent on the day but volumes were muted. People are already out there looking forward to the Memorial Weekend alone. We can see the Nasdaq up three and a third percent. We're seeing the Russell 2000 also gain two point seven percent risk on nature to this market today even as we still see muted investor. Well consumer sentiment about the data not looking so strong there but we did see consumer spending pickup dipping into their savings. Overall this means that maybe the off again on again picture consumer discretionary is becoming a more positive one. Remember last week we're all wringing our hands about what Wal-Mart what Target meant. But then this week we get a little bit better mood music from the likes of Macy's the likes of Nordstrom the likes of a little more luxury side and even the dollar trees and some of the more lower priced goods getting a good tick up. So we overall see that as your best performing industry group on the weak woman 9 percent. So best week for consumer discretionary going back to about March. What's not getting any love. And we wonder why the decoupling we keep discussing discussing it. And I'm 25 percent of course since over the course of the year. But crypto just meandering and around 28000. This is big tech has been doing particularly well over the course of the week. So we have an ongoing discussion as to why crypto aren't getting any love. Yeah a big question here. You talk about kind of the broader market too and sort of what sort of played into the moves that we saw earlier this week here. You have to look at the factors. And it is time now for a Factor Friday where we look at those factors. Chris Cain equity strategist for Bloomberg Intelligence is the one who always stops by to explain it all to us. And Chris let's just start off here. What were the main things here that you saw moving the market. Yeah I mean I mean I wouldn't call The Factor moves this week large. I mean a lot of them were basically big round trips and they ended the week you know relatively unchanged. So a good example of that will be low vol which worked really well meaning of the week in and towards the end of the week as the market rally to kind of give back all of its gains ending flat. Other than that I mean the factors that have worked continue to work. So value profitability momentum. They were all about 2 percent. So those continue to go continue to work again. But you know moderate moves in growth continues to not work. Down again about 1 percent. You know again muted moves but basically continuation of broadly what we've seen over the last several months. And let me think about what we've seen over the last several months. I mean we've lived through this incredible valuation rerating. When you look at how far we've come where are we in that process. Yeah. Katie so the you know the rerating in valuations has been extreme. It's been very fast you know much faster than history which is really interesting. So just looking at a trailing 12 month P basis we basically went from a valuation high of call it 32 times on April 20 21 all the way to about 16 and a half times currently. So that took about a year to rewrite that much. To put it in comparison with the dot.com bubble we went from basically the same levels about 32 times to 16 times. At that time it took three years basically fall 1999 to fall 20 2002. So it's been much quicker this time. I'm not saying that but the bottom Zen but certainly we've rerated and really worked off any excess says that could have been a continuing in the market from the last couple of years. Chris this week we've talked with Jon all those about growth traps and value traps. And let's talk about value and how you've just said again sort of leading the charge to a large extent. But we also see Bank of America Credit Suisse that throwing a little bit of doubt about whether we can continue these sorts of returns. Yeah I mean we continue to be positive on value like I've said many times. And Matthew is a long runway to go as far as valuations to get even towards averages. But the the behavior of value is really interesting in the sense that it's changing and it's changing its stripes at least according to the minds of investors. So you know it's. It's it's being treated as a relative safe haven over the last year and a half. That is completely opposite of what we've seen from 2010 to 2020. So since 2021 which is basically when the big value rally started we separated the weeks into up weeks and down weeks for the S & P 500 and basically longs for value was flat during up weeks but up an average of one point four percent during down week. So almost all of values gains have come during the down weeks. Another way to look at this is you can look at the rolling correlation between long short value factor in the S & P 500. That typically is positive has been positive for the vast majority of the last 15 years. You can think about that as the market goes up. Value stocks relatively outperform and vice versa. That has gone very negative. We have the negative the most negative correlation reading we've seen in 50 years. And a lot of that is driven by the market. The broad market going down in value still going up. So it's really decoupling. And it's really an interesting an interesting thing. Decoupling all over the place. We thank you. Chris came. Have a wonderful weekend. Equity strategist for Bernie Mac Intelligence. Meanwhile let's keep you up to date with news from around the world. Here's the first word Mark Crumpton. Caroline thank you very much. Police in Texas initially did not try to break down the classroom door where 19 children were killed because they believe the gunman was barricaded alone and that no one was at risk. Tim McCraw is the director of the Texas Department of Public Safety for the benefit of hindsight. One sitting now. Of course it was the right decision was a wrong decision. There's no no excuse for that. But again I wasn't there. But I'm just telling you from what we know that we believe there should have been an entry to that as soon as you can. There is an active shooter. The rules change. Director McCraw says the shooter got into the school through an exterior door that had been propped open by a teacher and had fired more than 100 rounds during the attack. Senate Democrats say they were more optimistic about a compromise with Republicans on gun control legislation in response to the massacre in Texas. Lawmakers say they plan to continue negotiations by telephone during their 10 day recess. On Sunday President Biden will travel to all day Texas to honor the victims of the mass school shooting. Texas Governor Greg Abbott reportedly has dropped plans to address the National Rifle Association's annual meeting in person today. He'll deliver a taped message to the NRA instead. The Dallas Morning News is also reporting that Texas is Lt. Gov. Dan Patrick. Its second most powerful elected official is canceling his speech to the NRA. Colombians headed to the polls Sunday. Presidential front runner Gustavo Petro a onetime guerrilla and later Bogota mayor has tapped especially younger voters yearning for radical change. His main contender is Federico Gutierrez a conservative popular with older Colombians who defends the nation's free market model. Colombia has long been one of the most stable economies in Latin America but the rise in poverty during the pandemic has increased voter dissatisfaction. Former President Trump's lawsuit challenging New York's authority to investigate his sprawling real estate business has been dismissed by a federal judge. The decision is a victory for New York Attorney General Letitia James who argued Mr. Trump filed this suit as a desperate delay tactic after a state court judge repeatedly ruled the investigation was proper. Local news 24 hours a day on air and on Bloomberg Quicktake powered by more than twenty seven hundred journalists and analysts in over 120 countries. I'm Mark Crumpton. This is Bloomberg. All right the growth in U.S. wages has been of course one of the big bright spots of the most recent cycle. It's also been a big contributor to a lot of the inflationary pressures out there. Now we're actually starting to see potentially a little bit of a slowdown in some of that wage growth. And this is now investors look to get another read on the labor force next week next Friday a week from today with that big jobs report. Joining us right now to talk us through this is Bloomberg's Rich Miller joining us today from Washington. And Rich. Let's start off with some of the wage numbers here because they've been strong. But at the same time we've heard from a lot of economists as well as market strategists and say maybe they've been a bit a little a little bit too strong and need to come down a bit. Are they. Right. Right. Well the wages are basically going about five and a half percent a year. And to be consistent with the Fed's 2 percent charge. You need to get them down to say three and a half to 4 percent a year. So it's encouraging from the Fed's point of view that if we're seeing some topping out. But you know if you're an American worker we're seeing you know paying more for gas paying more for eggs at the at the grocery store. It's not so encouraging to see them topping out a little bit. But as you say we'll see some more numbers on a week from today basically when we get the jobs numbers. And economists generally are looking for some easing from that 5.5 percent. I just said talked about to about 5.2 percent on the average hourly earnings. Which can you dissect it out a little bit for us as to whether the low income brackets are seeing the biggest wage gains but those at the top. Where is this inflation really coming. Well it's the low income I have seen some incredible wage gains. I mean some of the leisure and hospitality have been up like as close to 19 percent believe it or not. But that's now that's that's where you're starting to see it at because frankly some of the small businesses they can't keep paying these higher and higher wages because because they just can't. They have small narrow profit margins and they really feel they can't pass it on to their their their customers. So that's where you're going to see some slowing down. Probably most pronounced is in the lower income folks and more skilled workers. So rich broadening out from just wage growth. Let's talk about the unemployment rate because expectations are that it's going to actually fall further to three and a half percent from a three point six percent at the prior read. And it was interesting to hear Paul speak at that Wall Street Journal last week saying that the natural rate of unemployment it's probably closer to 5 percent. Seems like a far cry from where we are now. I mean what does that trajectory look like over the next few months over the next year when it comes to that unemployment rate. Well the Fed for its part has seemed is sort of expecting the unemployment rate to hang out about where it is now. A fair number of economists though are predicting that it's going to fall. Not all the way down towards 3 but towards 3. And they just feel that the you know looking at the job openings numbers you know there's there's about 2 job openings for every unemployed person. They're just saying you know the mathematics point to the fact that the unemployment's going to keep going down. But the Fed for its part C sees it sees the unemployment rate sort of starting to hang you know steady out around the levels that we've seen over the last couple of months. I am sure Rich I mean we've we've had a lot of anecdotal evidence a lot of stories on the Bloomberg over the past couple of weeks about some companies that have either either laid off people or at least frozen hiring. There's been a lot of talk about what's been going on with some of these private companies and them tightening their belts. How long does something like that take to trickle in to the actual official data. Oh jeez. That's a tough one remain. So far at least the most up to date data we have from the government is the weekly unemployment claims. They've ticked up a bit but they're still incredibly low. These are the people filing for unemployment. So you're not really seeing what this anecdotal stuff especially in the tech companies that's not showing up. You also got to take into account that that's what they're planning on doing. It's not always necessarily what they've done already. So yeah good point. All right. Richard and I have to leave it there. Always wonderful to catch up with you. Have a great weekend. Bloomberg You too. Yeah. Bloomberg's Rich Miller down in Washington just died doing some phenomenal reporting for us here at Bloomberg for the last decade or so probably longer than that. That wraps up our coverage here for Bloomberg Markets Clothes. But guess what Katie. There's another show after this. Did they tell you that they. I did hear about that. Looking at my watch. I'm so excited. You were looking at your wife. Yeah I'm saying we've got to get it. Your fancy stuff. What does that mean. Actually my heart. Or how many beers doesn't exist. And then she was gone. Well I think it's coming up next. We're going to actually focus. We're gonna go global for this triple. Take a little bit on emerging markets. Hope all the concerns about Russia's debt and everything else right. Yeah. Few other countries. Sri Lanka is a lot more than a handful sadly. Countries that are now either barreling toward some sort of default or taking in one. The question is is what investors are thinking about. How are they going to support it and maybe what the opportunity is to make money. And that's such a great question. Where are the opportunities. Because arguably there in the fullness of time we'll now know that there probably were some. What do they look like. Yeah a big question now. That's coming up in a bit. You don't wanna go to. Triple take coming up. This is Bloomberg.

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Bloomberg Markets: The Close (5/27/2022)

Caroline Hyde, Romaine Bostick & Katie Greifeld bring you the latest news and analysis leading up to the final minutes and seconds before the closing bell on Wall Street and tackles consumer spending, Bitcoin's crypto dominance and looking ahead to the jobs report Guests Today: Malcolm Ethridge of CIC Wealth, Donae Burston of Le Fête du Rosé, Richard Gelfond of IMAX, Dennis DeBusschere of 22V Research, Meera Pandit of JPMorgan Asset Management. (Source: Bloomberg)

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