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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. 2:00 p.m. in New York 7:00 p.m. in London and we are live from Dubai World headquarters this is pretty bad. Markets are close and Caroline Hyde. I'm Romaine Bostick Taylor Riggs. And while I'm good news is bad news. Stocks decline as the strong U.S. jobs report focuses back on the Fed's aggressive fight on inflation remain on the cross asset correlations Taylor digs deep in the employment composition. Look what you Covid bitcoin bounces back and goes through as best we could gain since March. Why the bout to buying. Will it continue. We'll find out. Plus as the leaders around the world they pay tribute following the shocking killing of Japan's former prime minister Shinzo Abe. We'll take a look at his legacy at Alba nomics and the future of Japan's monetary policy. All that so much more coming up this hour. Yeah a great discussion coming up later of course about Shinzo Abe and some of those economic policies and the legacy that he leaves behind and maybe the legacy that could continue to continue under his successor here. As we turn back to the U.S. markets pretty much a flat day not a whole lot going on here with an S & P 500 that largely remains range bound up in the last two to three weeks here kind of pinging around that thirty seven hundred level to thirty nine hundred level. We should point out the volumes are incredibly light even by the standards of summertime here. But Friday summer here in the United States of America and that's certainly what you get. Most of the activity though that continues to be in the commodities space with a big drawback actually that we're seeing right now in some of the key commodities. So on a weekly basis we're still seeing a little bit of the strength there as crude oil starts to reassert itself. A lot of the activity though Taylor is what we're seeing this week in the Treasury market. You're looking at a two year yield right now up nine and a half basis. I mean we're up like did the drop last week but like 20 something basis points and now it's up twenty something basis. That's the new norm. That's my terminal in the next segment. OK. And if I'm wrong me I want to talk a lot about the jobs day because you're right and sort of focusing on the front end of the yield curve and sort of what it means after the big jobs report that we got this morning. Caroline this is a chart showing the composition of jobs whether it be manufacturing services of course maybe some of the low rent versus the higher end pace of services while just continuing to highlight at least on the top line and at least within some of the industries the robust labor force that is still underway. I think certainly for me top of mind weakness in the household sector. Rick Rieder had pointed that out earlier this morning. So you're starting to sort of get more of the dispersion in that data. It looks strong but underlying there are there's some reports that are telling us a different story. You mentioned Rick Rita. We've got so many other top minds Taylor in business economics and how they reacted to today's jobs report. Just take a listen to a few of them. This was a strong employment report. It is a strong report. This is a solid report but it has one disappointment. The lack of an increase in participation. We need labor force participation to go up. The Fed is going to have to do more. This Fed isn't stopping. Interest rates are still considerably below where they're going to need to be. Today's number just gives them the green light to do that. Seventy five basis point rate hike in July. This Fed is going to do 75 definitely 75 I think is in the cards. Very likely to go 75 basis points at the next meeting. They're going to go there. Seventy five. I think they'll get a 50 done in September probably another 50 in September. Deliveries many High Flyers began between now and September. But then I think those things go they're gonna have to slow down and then perhaps think about slowing down the pace of hikes after that. Let's bring in more expertise on this John Lee a chief economist with Morning Consult. It's a global decision intelligence company. John is an all strong strong strong. Do you see any cracks beneath the surface. There are some cracks beneath the surface particularly when you start looking at the composition of workers. I think we're not seeing the return in the leisure and hospitality workers like we would have expected. A lot of that is because some of the spending patterns have really changed. This reallocation towards goods remains persistent and I think businesses continue to chase that demand. And then the broader thing I think the broader trend over the last let's say six to eight months is just this of persistent decrease in jobs growth on average. Again it's nothing alarming. It's what we would've expected at this stage in the cycle. But if this continues I think we'll continue to see sort of decreased job growth paired with particularly pullbacks driven by higher interest rates and tighter financing conditions. Well we're not quite there yet. John and I'm curious that when you look at I guess the health of the services industry out there right now and the idea that a lot of the job gains were coming in that space is there any room for actual rotation here. That ad spending rotates at that job a jobs creation will rotate with it. There certainly is room. I think that's one of the defining features actually of the U.S. economy as this sort of basic diamond dynamic employment situation where we're able to move workers from one sector to the next. But that takes time. That can be costly. I think the other thing that we're starting to see and I'm sure you've commented on before is just this recent uptick in unemployment insurance claims lost pay and income is up more recently. And so I think the second half of the month was definitely not as strong as the first half. And that's another reason to be concerned going forward. What do you make of the weakness in the household survey. It's the second time that's happened over the course of the pandemic. We had a similar divergence early on. I think one of the things again that we're seeing is you know there's some certain basic differences in how these two surveys are conducted not just differences in who they're serving but the timing of those surveys. So that's part of it. And I would expect going forward actually that we're going to start to see additional convergence particularly as as businesses grow increasingly concerned about the broader macro environment. So maybe we could see further job cuts potentially. Is that what you're singling out. Indeed. What did you make of people's desire to be working in a sleep before find out in the participation rate it was the participation rate is particularly disappointing I think given how strong wages have been and then appeared with the fact that inflation is rising you would expect to see people re-entering the labor force in order to just try to sort of keep ground so to speak. That hasn't happened. We continue to see people pulling back as well. In terms of just actual job applicants we saw that in the made JOLTS report. We're seeing that in a lot of our own data that job applicants are falling. And so there's a sort of a broader narrative out there that in times of uncertainty people are essentially remaining where they are and just trying to weather this storm. When you sort of look at that data and you try to overlay it with some of the other sentiment indicators out there John how do you get an idea that maybe some of the folks out there are waiting for something more than just I guess a higher paycheck or some other sort of financial compensation that there are other sort of structural shifts that we've seen during the pandemic that have altered how people view their jobs and their careers. There's a lot of that. I think it speaks to the issue I brought up at the beginning. We should just say that we've had a structural shift in where workers where people are hiring workers. Some of those skill sets it's easy to retrain people. Other times it takes a little bit more work. And as we think about the future path of the jobs recovery I do think it's important to keep in mind that you know that not everyone knows exactly where these jobs are. We see that a lot in our survey results that people flat out who are not in the labor force. They don't know that there are good jobs out there and they don't know where they should apply. And so that's that's one of the barriers. And I think we will continue to see that divergence between people who are working right now. And they're very attuned to the tightness of the labor market and people who are out of the labor market. And they've essentially lost touch with or don't have access to all the information they need. What do you make of an inverted yield curve and is that a signal that you're still watching. Of course we watch financial conditions. It's been something that's sort of been flashing warning signs for the last few weeks. I would say on the flip side is more console when we closely watch sort of the true economy the underlying economy. So we're closely watching what's going on with consumers with workers on that front. Consumer confidence we've seen it sort of plummet in the last couple of weeks. I think where we are right now is as we look forward it's trying to figure out what's going on with the job insecurity. Are we going to start to see people pull back on spending even with without being laid off. All right John great to catch up with you. John Lear their chief economist with the morning console helping kick off today's show. Of course a look at those unemployment numbers that we got a little bit earlier today. Coming up in the show I want to take a closer look at former Prime Minister Shinzo Abe of Japan and the economic legacy that he leaves behind. And what's next for the world's third largest economy. Plus oil right now headed for a weekly loss after another wild week of trading. We're going to talk about those inflationary pressures and the supply demand balance right now that is out of balance. Well a positive week for Bitcoin and some of the other crypto currencies out there. We're going to talk about what's behind that move. And more importantly will it last. This is Bloomberg. After a big jobs number three seventy thousand you had an equity market that was higher on the day lower on the day. Now mostly on changes you could see there of course the big red. Some of the losers Microsoft Amazon met. But that's been outweighed by the green on my screen here as you can see Tesla Apple Alphabet. And that's sort of where the push for narrative comes in. Right. We were up and down but you have equal weights. Wayne is down on both sides. So mostly unchanged at least for now on the S & P 500. What is not unchanged is the yield curve. I know Romaine was desperate to talk about this 10 minutes ago so we whip up a great chart just for him. We are inverted and this is the two cents by about one to two basis points or so on the day. But while you can see here is actually the fourth straight sort of day here of inversion and that's the longest streak since 20 19. So Caroline it's not really the actual inversion but the duration and of course the magnitude as well that we have our eyes on. And thus far. Magnitude not too huge. But let's dig into what the signal is or is with Taylor. A great setup. And this Ericsson follows us on with the U.S. Bank Wealth Management senior vice president and co head of Public Markets Group. What tell what show is the inverted yield curve giving you at the moment Lisa. Are you more worried about recession or more worried about inflation right now. Well both are obviously things to keep an eye on. Our first focus really is on the price pressures because it is very clear that we have had some elevated numbers. And when we look at various components of what's going on with the inflation what we see is we do see some declines in some indicators. But again the absolute levels are still high. And of course when you have price pressures that can then lead to issues with growth both macro economically and on corporate profits. So that's why really the focus on inflation. But again to your point growth is still an important part of the equation and is also an equal driver in equity market performance. So we are continuing to watch where those numbers can come out as we go through this. This next quarter I'm going to be really interested to see some of the results out of these companies which start next week. SALES you're in the U.S. you know most of the projections. I mean in aggregate I guess we're looking at pretty solid growth for the S & P overall but it's also pretty lopsided. A lot of that growth at least with regard CBS is going to come from a lot of the energy and material names. And you're gonna have banks in some of the tech names really kind of sitting out on the sidelines. Do you think that we'll get maybe a better sense out of these companies out of the executives themselves that maybe the worst is behind them and that we could see something a little bit stronger as we get deeper into the third and fourth quarters. Our base case our main really is that on top of what will probably be somewhat lower numbers than again what we've seen in the last several quarters is that our guidance that we're going to get is going to be more cautious. Corporate executives are just facing a number of headwinds that are very difficult to discern whether it's again where energy is going to head. And that's obviously been high and very volatile along with again conflicting macro economic indicators on again how fast growth may be decelerating. And so really what makes sense in that kind of situation is to be a little bit more cautious with guidance. So we are expecting to see again more sense of what might be the impacts on margins and risks that they're looking for as they move into the second half of the year. How do you think then about equity allocation as we are in the second half of this year. We are overall more cautious on the U.S. equity market and it really is on the back of a number of factors coming together to really provide a more of a headwind for the overall market. If you just start first and foremost and look at policy that really is key on markets minds again because simply to come back the price pressures that we were talking about earlier the Fed is very resolute in continuing to normalize and even potentially move to a restrictive place interest rate policy. So that in and of itself is just a very difficult environment for equities. But then again as we've looked at where inflation is coming out and where growth is headed we're seeing inflation be relatively persistent and we are seeing growth numbers inch down over time. So this is really leading to our more overall cautious outlook on stocks. Therefore what needs to be said during earnings to either ratify home some of the issues about recession and inflation or indeed perhaps alleviate some of your fears. Lisa. Well certainly companies have been very resilient through the last several quarters. More so than I think many people would have expected. And we have had some lowering of the bar for expectations on the earnings front. And so I think if you get companies being somewhat more optimistic in terms of their ability to navigate many of these headwinds may be by somehow managing some of the cost pressures under way maybe being able to show better signs of demand. I think those could be linked to the market. Do you anticipate at all that there could be some sort of form of monetary policy support or fiscal support. Should we head towards a much more significant downturn than what's priced in already. Well certainly the Fed in all of its recent conversations and documentation really has been very strong in saying they're staying on this CAC. I think if we do get some softening data to your point Romain in terms of the ongoing economic data and or we see some unusually unexpected decreases on the price pressure front we could get a softening of that Fed stance. But I think that would be a few quarters out again because they're really waiting again for clear and convincing evidence that that inflation is more on a downward trajectory. All right Lisa Erikson U.S. Bank Wealth Management. Great to catch up with you here. Have a wonderful weekend. A lot more coming up on the show. Seeing a little bit of a rebound in stocks right now. Bitcoin also showing a little bit of strength here on this day. Back around that 22000 level. We're going to discuss some of the big gains that we saw this week and whether the last beyond this week. This is Bloomberg. All right Bitcoin trying to get its mojo back right now. On course for what could be the best weekly gain that we've seen since March. Let's get a little bit more insight on a Bloomberg News reporter Munoz Shen joining us right now to talk a little bit more about the rebound. Right. Just below twenty two thousand right now at least based on Bloomberg pricing. I guess the big question everyone wants to know Yao is what's behind the recent move higher. I think there are too many things right now happening on the Bitcoin market. What is that. As we all know that Bitcoin and the rest of the market is highly correlated to the equity market. So when we see you know the U.S. equity markets in general doing a pretty great job in the past week and week weird. It's not surprising to see the same thing that's happening in the Bitcoin market as well. And another thing to say that some more crypto you know on element what's been happening you know there is is a contingent in fact happening in the crypto market where you've been seeing big lenders like Voyeur or big hedge fund likes your arrows that could be having this impact on this market. But as far as we know this week we kind of getting a part of this uncertainty out of the market right now. So you're seeing slowly relief from the overall market. Therefore we're seeing the price recovery way. Do you know who the buyer is at the moment when we're seeing these sort of slight inflections and price slight move higher to the twenty one thousand. Is that retail focus is institutional focused unit. Yeah I know. And you know talking to a lot of people I think it's it's easy or not hard to make the conclusion that retail floors has very much gone or is seeing they're just you know there are very few buyers on the market. And the very key part of the market right now is actually all the trades happening in the over-the-counter market right now instead of large exchanges. So whoever does buying through better will be the buyers. Just quickly here how are you thinking about sort of the contagion risk. You talked about correlations with the broader equity market but there have been some fears as Caroline was mentioning a few of the other bankruptcies within the crypto space that we've seen. How is contagion risk. I think we will see you know for example shoot arrows. They basically announced the bankruptcy and then we saw the same thing happen. Voyager which is counterparty party of two arrows. Then therefore they were exposed to the arrows. And it's not impossible that we may see other entities to you know coming out and having similar liquidity issues. But I would say so far we're seeing this kind of risk starting to tailing off. Well Shen great to have some time with you. Thank you for spending out some of the reason for the buoyancy. We'll see if it lasts. Thank you. Meanwhile how did the weekend not much buoyancy in the S & P 500 well flap just about but suddenly digging ourselves out of the lows that we had previously. Yeah. I mean take a look at the volumes here. I think a lot of people are in their cars on their way to their second homes. Hang Seng going for I mean they're working from home. That's right. A three day workweek. That's fine. How would like a free holiday that. Yeah. Put a camera in your living room and coffee. I love that. There you go. 21 7 9 on bitcoin. Look at the two year yield right now back above 3 percent. I guess that means we get another big rate hike. This. This is Bloomberg Markets the close to 30 here on this Friday afternoon. Let's get you caught up on what's going on in the commodity space settlement right now of New Mexico. Futures up about a two point two percent here on the week when we talk about the wild swings. Remember we started this week down below 100 bucks a barrel as there were a lot of concerns here about that demand destruction. But ultimately it's supply side concerns that continue to push us back above 100 bucks a barrel. A market a physical market at least still in steep backwardation. Meanwhile some of those fears about demand destruction at least in other parts of the commodity space are still there. You're seeing that reflected in iron ore prices in Singapore which finished the day down by about 2 percent as well as the week here. As a lot of people begin to doubt the follow through on China's commitment that ministry of Finance commitment that they made a little bit earlier in the week to allow a little bit more borrowing to stimulate the economy. And another wild week in the soft commodities space. You're looking at wheat futures higher by about 7 percent right now. And corn futures up by about five here. This is going to be the first weekly advance that we've seen in about a month. And it's a whole sort of hodgepodge of issues that are pushing prices higher. Primarily the weather but also some concerns here about the demand supply balance. Remember we're gonna get some interesting data next week out of the U.S. Department of Agriculture I believe on Tuesday with their big global supply and demand outlook. You talked a lot about supply and demand the entire week volatility that was oil was really all about that demand destruction. And where are we in terms of supply and demand balance. Let's welcome Sheila Tobin and of course our very own oil and energy reporter Sheila. You know looking at one way to 98 back up to 1 to 5. And I'm wondering if demand is still the narrative around these oil markets. I think it's still very much there. I think there are concerns still out there about how the inflationary pressures are going to affect people's consumption. I think we had earlier this week as you rightly pointed out I mean like banks are starting to sound out caution. Citibank Bank issued some revisions to the estimates. But against that I mean we also have to take a look at what's happening on the supply side that's still very much in deficit. I mean as a lot of major banks are pointing out that's still there. And that of course is why when we had the sixty five dollar low cooled by Citi you had on the flip side J.P. Morgan saying look this could get up to more than three hundred fifty three point eighty dollars a barrel if Russia does indeed perhaps fight back on the cap and prices. How much we expecting that to really occur. Sheila at the moment. Well I think I think it's it's it's very present. I think that the war powers are still trying to carry on with with certain types of sanctions and other ways to basically make it a pain for Russia. As far as they are waging war against the Ukraine. And I think if Russia fights back I mean and then starts to make things very very difficult for Europe. The most important market or rather the Europeans rely a lot on Russian energy. Then if Russia decides that they are not going to supply very much at all or if at all. So Europe and that's going to mean that much is off off the market to do the world. And it will. It could mean prices go up. Talk a little bit about the export market coming out of the United States to the rest of the world. There were some interesting numbers in that EIA that the data that we got a little bit earlier this week with regards to what we're actually able and willing to ship out of this country. I think that the export numbers as far as crude oil goes. I think that's still very much there. There's very healthy demand for U.S. crude. U.S. oil is finding a lot of new markets larger markets like Europe. They're taking as much as they can. I mean remember there is a difference between the different types of crudes in the world. And so certain regions were one type of grade that the other region doesn't want. So and as far as Europe goes which is as I pointed out earlier they are the hardest hit by the Russian crisis or the war. And they are taking a lot to try to offset what they can't get anymore. The sanctions are in place and they're going to go over a period of time. And very soon we're going to see even larger volumes of U.S. crude going over to Europe. Pushes forward to CPI data on Wednesday. The divergence between another acceleration expected in headline including food and energy of course the whisper number on the street about eight point eight percent. But then a deceleration may be on some of the core numbers. What is that telling you about peak inflation and peak energy prices. Well I mean I guess the fear is already there about inflation. So I think people are worried that it could get even more expensive especially with the monetary policy geared towards increasing rates over the next several months. All right Sheila Tobin there Bloomberg Energy and oil reporter for us. I'll keep an eye on what's going on in that space right now with crude oil here in the U.S. right around a hundred five bucks a barrel. And we should point out Brent crude right around 1 0 7. Still coming up a lot of stocks moving today. One of the biggest movers upstart in the quarantine. Unfortunately I said the downside here. The company lowering its revenue guidance blaming rising interest rates are going to talk about it in just a bit. It's our Stock of the Hour. This is Bloomberg. Time now for our Top Call to look at some of the big movers on the backup analysts recommendations. First up American Airlines downgraded to hold today. This over at August with the analysts saying higher pilots salaries and fuel prices could hinder free cash flow and debt reduction shares down fractionally on the day. Next up J.B. Hunt. Raymond James actually told me in its price target to 190 from to 10 on the trucker but actually maintaining that outperform rating saying that the trucking and railroad companies are actually weathering the economic cycle a little bit better than other shares though only higher by about two tenths of a percent on the damp only paper getting a downgrade today to neutral from buy this overhead. Bourne with the analysts citing deteriorating e-commerce trends and rising funding costs that could prompt a broader rerating of fintech stocks. PayPal down almost 2 percent on the day and those guys are some of our top goals. Sticking with that sort of a theme remain off the top because we go to our Stock of the Hour and shares an upstart while having a you know sort of a day sliding after the company lowers its revenue guidance and of course rising interest rates apparently to blame. It's a big move. Pretty good to us. It's a massive move. And of course this comes after they've actually already downgraded their guidance. So once again they're warning about the macroeconomic environment. We're hearing this from company after company talks about preparing for some of these recession calls that the market is at the end of the day pricing in. But I have to walk you through the numbers here because that second quarter revenue guidance once again it's getting cut. And the CEO Dave Gerhard said in the news release inflation and recession fears have driven interest rates up and put banks and capital markets on cautious footing. Remember this is a lending company driven by a guy by the end of day a lending company which is really perhaps kind of a negative harbinger and negative crystal ball for perhaps what we might hear in those bank earnings starting next week. And they're also saying that the second quarter losses what they're going to be a way larger than expected. So as much as 14 percent of gross. Rhonda ISE I mean the stock reaction here. I mean obviously it's about the numbers but this is a lending platform that to a large degree was supposed to be able to navigate. I guess that you know a lot of these sort of risk and now the company is basically saying well it hasn't actually been tested in a downturn. What was the point of that. I drove it. I'm confused. I wish I had an answer for you. But I mean I think this is the hardest test. These things run like a money with a simulation. You would think this is the risk to you. Carlo. Yeah I'm going to study until you're learning that. I'm almost as smart as the almost two thirds. Oh I think that's as far the risk of being in the fintech environment. You can see with the stock perform as shown on your chart here the losses while they're 90 percent of the value. Remember they actually gained in line with a big fintech boom that you saw. Let's say about two years ago. So I feel like this is just par for the course. Really appreciate it. Come back. We're gonna talk about it. What's the situation with the revisions in MultiClient revision shares spiking to the apparently Tim Cook like rode in the back seat of a car. Caroline Hyde was always guess what is going on in Sun Valley. Big news. And somebody in Sun Valley driving and really up a low available. Can we get them on right now. Where are these revisions and where do they go to dinner. Inquiring minds. My very expensive in the Rocky Mountain. Well all going down in Idaho. But for now of course we want to be turning our attention to some segment. We have another segment and can't all just be Tim Cook riding around in ravines in Sun Valley. Romaine as much as you love those apologize and all for him. Let's go right to the man of the next segment of course highlighting some of the best of Bloomberg intelligence that we're doing here at Bloomberg. And of course today no Herbert Bloomberg intelligence looking at distressed debt. And I am curious after the strong jobs report how you're starting to think about some of the fundamentals especially within your world of credit and high yield. Well first of all I'm disappointed to go from the man of the hour which you almost called me to the man of the segment. But that being said you know I'll take whatever I can get. You know listen I think the strong payrolls report I guess is a little bit of you know a tale of two cities whether you're looking at you know the establishment survey which is obviously the headline most people pay attention to versus the household survey where we actually had a little bit of traction is maybe a little bit more reflective I think of what people are thinking about the broader economy. Certainly what we're seeing getting priced in to the high yield market in the state of distress as we're talking about right now. So I think as I'm looking forward the thing that I'm really interested in is not you know next week or the week after. But once we start getting into some of the high yield earnings you know I think it's going to get really interesting. Overall I think those broad brushes to say the sectors that are most vulnerable or areas that we need to deep dive into or as it is it's in a broad spectrum. Right now it's kind of scattered all over the place. So it's kind of interesting. And I think one of the things that's going to make this cycle maybe more engaging for everybody at least certainly for the distressed industrial out there who over the last few years have sort of had a hard time as you look at 2018 or 2015 is very energy centric. Right. So this time around you've got a little bit of a scattering. You're talking finance companies you're talking some down cyclicals you're talking communications. And ironically sort of the one sector that's really sort of above the fray is energy at least for the. Being so I think one of the things that will be interesting to watch is you know are we going to get sort of more of a 2020 cycle. I doubt it. I was sort of obviously very short lived in Big Bang versus something more like a ninety nine to two thousand three where you had obviously the recession in the middle there. But if you look at sort of the wave of distress and default it was really a long gated and really piled on top of itself. It was really problematic from a high yield perspective. Well that's what I'm curious about here. And all is sort of the balance between I guess the credit risk and the sort of the interest rate risk right now in that space here. I mean do we see enough of an imbalance where people need to start being concerned. I think we do. So I mean if you think about high yield more broadly as opposed to just the stress right. One cue the first quarter was really all about rate risk and repricing in the marketplace or the losses you saw there were really about the rates part of it. The second quarter and certainly coming into the early part of July it's really been much more about the spread and repricing risk and re-evaluating sort of the earnings prospects. And I think one of the biggest things and right now we're really talking about public companies. Well one of the important considerations here is that so much of the lending over the last decade has really gone into the private sector. So you're talking about the private lending market. Yes. ISE you know that's a one and a half trillion dollar market that didn't really exist. You know at the great financial crisis and then the loan market itself is a you know a trillion and a half versus you know the corporate market which people tend to think of is equal size to those two. So it's a much bigger marketplace and a lot of pockets that are potentially very illiquid which historically not so great when you're trying to do sort of price discovery of a segment of the hour. Now hey. Thank you Megan. Had a great time. More research right. That comes from Bloomberg Intelligence. Just go to the function B. I go on the terminal now. Still ahead the political and economic legacy options will be more on that. Still ahead bring back. And of course we wanted to stop now to take a look at the life and legacy of former Japanese Prime Minister Shinzo Abe who died after being shot at a campaign event in Japan. You're looking at footage just a few moments ago of the president of the United States Joe Biden visiting the Japanese embassy in Washington signing a condolence book there. You can see with the Coy Pond right out in front as a lot of people now reflect on the life and the political legacy of IBEX. We also want to sort of take a moment here to reflect on his economic legacy as well an economic legacy that was not without controversy not a course without a lot of concern. But now after several years of implementation there are a lot of people who look back at that implementation of what is known as ISE nomics and say well maybe it was a lot more successful than folks thought. We want to get some insights from our next step. Guests Tucker Toshi Ito. He's a professor of the Columbia School of International and Public Affairs. And Talk of Toshi I do want to start off here talking a little bit about whether some of the early criticisms of Abbott nomics were misguided given in hindsight of course what we know now about what it was able to achieve. I think the ISE nomics is comprehensive economic package including a multiplicity of fiscal policy and growth strategies and I think controversies are around. Yes especially for the massive injection of the liquidity by monetary policy and also fiscal policy which was large in stimulative in the beginning but actually had to heights of consumption tax rates and so forth. Controversy criticism came from right and left that some of them some of the people wanted. The fiscal policy is loose and loose and some people thought that it was all or stimulative. But I think that looking back from now I think it was really a success bringing the economy out of deflation which had which proceeded for 15 years. And inflation rate is at least in the positive territory since he took office and injected is implemented. This three arrows to CAC just one moment because I like you explaining their success. And I just wanted to listen to Larry Summers of course former U.S. treasury secretary on how he sort of agrees with you. Just take a listen. By the standards of what had come before. But it was not fully mission accomplished in terms of what was happening in Japan. But I think it will be remembered as one of the more aggressive and successful reprogram means of macro economic strategy that we've seen in a long time. Not fully mission accomplished. CAC ship. What is yet to accomplish do you think. Yes. So I think monetary policy fiscal policy in the first least two to three years was a huge success and bringing the inflation rate out of negative territory. What was not accomplished was actually the third arrow of the reform and growth strategy agenda which includes many things many reform agendas. And we were hoping that once the economy is was out of deflation and ready to be ready to be reformed that premise IBEX didn't push very hard on the growth or policy reform agenda. Reforms could know could take place in the labor market. ISE policy and many others. So that's the place that I think that Larry was referring to. The UN accomplished agenda and Professor Worth thinking about the coordination as well not only a fiscal policy but then the handoff to monetary policy. And I'm curious your thoughts on some of the recent yen weakness in the markets. Testing the yield curve. Control of course that was implemented to help of course provide some additional stimulus as well. Actually you can't control is compromise between the large purse of the stimulative injection and the eventual possibility of tapering. And by setting the ceiling high enough that you could get a yield curve in the positive slope which is actually good for the banking system stability and not too high to kill the investment and so on. So the recent very recent criticism is that the Bank of Japan is not not allowing the long rate to go up but ended up in buying a lot of government bonds. And I would say yes probably the 25 basis point was too narrow that it could have been adjusted earlier to much wider than it was kind of tested that Japan didn't want to lose the fights. DAX socially we want to thank you so much Professor Ito of course of the Columbia School of International Public Affairs talking about the legacy of Shinzo Abe and the pros and cons of nomics and also where monetary policy stands right now. The moment. The markets currently stand in the green on the S & P Sonali Basak. Come down to the clue Bloomberg's comprehensive cross platform coverage ahead of the US marketplace starts right now. This is not the case. 60 minutes left in your trading session your trading week Caroline Hyde Romaine Bostick Taylor Riggs NASDAQ Carol Massar and Tim stomach to come together across TV radio YouTube. And can I be predictable. Can I say that. Yes or a bit higher. But yes volumes are really thin. Yes you can be because that's certainly something a story that we've been hearing a lot. As of late rather than broad market I'm just going to zoom in on one names in particular. We're talking about Tesla. It is your fourth best performing stock in the S & P 500 over the past week up about 12 percent. We got some good news over China overnight in terms of Chinese deliveries out of that Tesla factory there. And it was a hit a record. I just think it's interesting to see investors moving into it. And let's not forget we're going to hear from Elon Musk in Sun Valley tomorrow see what he has to say. Is he going to ride in a rip I wonder. I don't think so. Will he wear that white suit. Pretends that robot like what is he going to do. Is he isn't giving a speech. What's he going to bring his kids. I'd love to. Yes. He's speaking in this position the space that's usually reserved for Warren Buffett. Yeah. It'll be interesting to hear what he has to say especially about Twitter which we'll talk about a little later though. But speaking of Mr. Musk got to check in on crypto bitcoin higher by 50 percent this week. Can you believe it. It's actually going to be a winning week for Bitcoin. It's on track for its best week since October. We should note it's still down 60 percent so far this year 70 percent from those November highs. But looking like a solid week for the crypto looking like a solid correlation. Twelve percent. Tesla ISE. Let's have a look at two tenths of a cent higher on the S & P on the day of course. Overall we are still down on year to date of buy some 18 percent. If you look on a five day basis well we shouldn't really because of course it was a shortened week but we are higher on the week. S & P 500 up two tenths of a cent. We're up on the NASDAQ to a similar degree on the Dow Jones Industrial Average. The only laggard by just a tenth of a percent is the Russell 2000 up one point six points higher for the year. You're still looking at Entergy the only sector in the green here. But on the day it looks a little bit more broader though. Energy of course is second best performer is still up about one half of one percent remain. You also have discretionary in financials up there as well of course coming off of a stronger maybe than expected jobs report on that big headline number. So down at the bottom though it's industrials and real estate in materials. So sort of a mixed bag here. A mixed bag. Yeah. I think some of the optimism that we did get this week came out of the semiconductor space. Of course you got Samsung earnings over there in Asia a couple of days ago a 21 percent jump in revenue that surprised a lot of folks. And then we got Taiwan semi overnight that showed a 40 percent jump in revenue. So a bolstering the idea here that one of the more resilient areas of this economy the semiconductor sector might still actually have a little bit more room to run something to keep an eye on as we move forward into the next couple of weeks and start to hear from some of the U.S. based semiconductor makers on the Derna shares up about 2 percent here on the day in fact. Now up for a seventh straight day. This is the longest winning streak that we've seen from Madonna going back to September of 20 19 stock now something like 50 percent from that 50 tweet 52 week low which just hit a last month here. And I want to point out real quickly what's been going on kind of in the packaging space. Crown Holdings down about 2 percent silk and also down a couple of percent. A lot of this has to do with something that crossed the wire late last night involving Kaiser aluminum and force majeure basically shutting down one of its main plants in Indiana pretty much because it can't get its hands on a couple of the raw ingredients it needs including magnesium. This is something that's been going on for a while. And we talked yesterday with Bloomberg reporter Joe Doe about how a lot of these factors are shutting down because of power prices. But this is the other side of the coin here too. And it's having a lot of ripple effects like you said. You have a Kaiser aluminum shutdown. And then well that means the people that buy from Kaiser Aluminum they now have to curtail their production. And you have these ripple effects on the supply chain these rates. They're still out there. So the demand is there but no supply. Right. Yeah exactly. And this is the conundrum for the Federal Reserve of course because what can they really control. They can tamp down on demand but they can't really control the supply side. That of course is eating in and pushing up inflation. I'm looking now for it. What we've got on the jobs data earlier today of course it came in strong. There was some weakness under the hood if you pick poke into what the damage and revisions. But. But overall we did see the market price. And while another perhaps 10 minutes or so in terms of the calculus of where we'll see fed the Federal Reserve rate go by the end of the year it's still below its peak. But 348 another 10 basis points out of the net. Overall Carol. Yeah and that's a great chart to get us to some comments from John Williams the president the New York Federal Reserve. I mean we've talked so much about the jobs report today understandably so. But we know the Fed right now their mission is getting inflation down. And John Williams spoke at an event at the university Puerto Rico and he said the main risk is embedding high inflation in the economy. Here's what he had to say. You can't just look at the data and say that tells me what to do. You have to take all that information is OK. We need to get inflation down. How do we both try to get it. Look at all the data and get the right. The best approach to do that but also manage risks. You know the risk today is really inflation getting set too high. And we really need to make sure that that doesn't happen. All right. Of course that's the president of the New York Federal Reserve John Williams at an event in Puerto Rico. All right. So cue up CPI rate for next week. And for me I'm curious about what CPI has to say but how it kind of measures up with what we start to hear when we get earnings and what's what CEO and their C suite has to say about kind of the economic outlook. Well you initially it's from Bloomberg Economics was on our program earlier and she basically said does next week CPI even matter at this point. Because with the strong jobs report that we got today the Fed is pretty clearly on a path to raise rates by 75 basis points and the economy is strong enough to do that. Indeed. Economy is strong enough for that headline number. And I think what's interesting to me bromine is the divergence. You're still getting an acceleration of headline but a deceleration of core. But of course the Fed still can't discount sort of the food in the energy price. Yeah. I mean it matters I think distinctly. And not only that CPI report I thought it was interesting. Remember they started this new report. It was back in 2020 the Fed's own sort of inflation metrics basically with a measure Inflation Expectations Act sort of common inflation expectations index. And so they sort of go out and they survey the business leaders investors the forecasters and they come up with this idea of whether those inflation expectations are anchored. Now remember that's only a quarterly number but it's a lot more thorough than those monthly CPI numbers. That last number was only 2 percent that they had for the first quarter. You're going to see a big jump. Remember Jay Powell specifically said specifically said that it was that index that was a huge factor in them deciding to go 75 basis points at that June meeting. So interesting to see what happens when that's released next Friday. So we will garner ourselves for a more hawkish Fed. We will. Therefore the pendulum swings immediately back to. Oh my goodness. The Fed could go too hard too fast. And then we're back to the recession concerns all over again. But it seems to be this ongoing snowball effect in the market. Yeah I mean this is what plays out the markets right. Every data point investors either were concerned about in recession or we're not. Ultimately I have to say I think it's interesting that we still continue to see a strong jobs market with this aggressive fed. It does. Won't make me wonder could we actually see a soft landing. Well Peter Quigley over at Kelly the staffing firm just telling us that he has a really really difficult time seeing a recession when you see job prints like this. And he's and he's got a great view of this too. The companies that he works with all over the world and mainly here in the U.S. they are still hiring it must be said to I mean there's still a lag effect that we have to do. I mean we didn't really get the aggressiveness of the Fed until the middle of June. And you know I think it's going to take a couple of months before we start to really see the effects of that. So Hans sorry for radio recession or recession you guys a show of hands. Yeah. Do you think there's going to be a recession. Yeah I think eventually. I don't think we are talking ourselves into one. All right. So two of us Caroline Connan and myself. It's the kind of thing I'd say is voting by mail. All right guys we're gonna be back. That's going to do it for now. Our cross platform coverage. We will be back in less than an hour's time on radio and TV on YouTube 4:00 p.m. for a Beyond the Bell Covid. We're going to wrap up this trading day and this trading week. And we continue our coverage here on Bloomberg Television as we count it down to the closing bell. Little less than 50 minutes ago in the trading day of the week. Tracy Chen joining us right now global fixed income portfolio manager at Brandywine which has about 64 billion dollars in assets under management. And Tracy let's of course start off with the big debate here about what investors are most worried about those recession of risk or the inflation pressures that continue to persist. I mean nice to meet you. Yes I think the two burning questions is whether we have seen the peak of inflation. And if so where has it settled down into the new equilibrium level of inflation. And the second way is how are we going to see recession or are we already in a recession. And what what what's the shape of the recession. So I think there are potentially three market misconception right now. The first one is I think the market has been too complacent in it including for the peak of the inflation. I just think inflation has become more complicated than before because it's not only demand driven but also supply driven. And if you add people people seldom look at the components of inflation. It's just not. It peaks and they should sharply go down. It's not that simple. So if you look at the four components like goods services energy and food and I'm sure everyone see that goods inflation has has peaked but services has not. And of course inflation peaked because of base effect and because of the inventory build up. But energy is a little bit tough right. You have the war going on and there is another factor. So I would say property on headline inflation is peaking but the core inflation can be very sticky. You mentioned some complacency in these markets. Are you using complacency within your world a fixed income. Yes definitely. So in my view I don't think either stock market or corporate bond market has pricing recession. Never. It's more pricing in slowdown but not recession level yet overall. Are you seeing from your perspective in this market therefore you're feeling an appetite to be go by buying all or not at this particular moment when you're looking globally and we saw some inflows into various parts of the market. What do you think sentiment is like. I think we have seen inflow into what we still see inflow into equity market. I'm not sure whether it's because corporate and rebalancing but I think what we are seeing an outflow from our bond market and I think probably this rebalancing does not make a lot of sense because if you if you look at the market then the second misconception that I can see the market is pricing in is the Fed's rate cut. So the market if you look at Eurodollar the market is pricing more than two cuts. I think it's too premature because now that the usual pass for the market it is we see inflation and then fed hike and then inflation PPI and feeding and then we see recession. And then that is it's not that simple because I think inflation is very sticky and then fed my horse when they see Headline Pig. But then this is called inflation and can be sticky and then it probably will hike again next year. So that's what I get. So the question tracing here about this idea that even if you do believe we're at a peak or sort of nearing that peak here the idea is that you sold any time for that to come down to some sort of baseline that the Fed is comfortable with. Given that the disparity that we have right now between the Fed's funds rate and what is supposed to be an eight point eight percent print on headline CPI next week here how long do you think potentially it could take for us to get back down to that baseline. I think it's the Fed's target is 2 percent white people long time I think inflation is very likely to settle down between 5 to 6 percent. That can take what one or two years. So I just think the inflation dynamic has changed. Plus Kobe and now you have this geopolitical risk and the supply chain is retooling and globalization is reshuffling. So a lot of moving parts is not not that easy as the old on the old globalization 1.0 can indicate. But now we are we are having a post Kuwait in the post Covid world. And you can see supply supply disruption anytime you mentioned spreads had not priced in a recession yet. What level of spreads do you need to see where they start to look attractive. So right now high yield is in Lake Mead 500. In my view I think high yield can easily go to like 800 starting with 6 and then and then up to 800. So I think we have some more room to go. I feel like that 800 call was one we've heard before. Then the voice is building. Tracy Chan we really thank you for your time. Happy weekend. But why in global fixed income portfolio manager that coming up as we head towards the players we'll get you insight on today's trading from David Balan chief investment officer ever Citi Global Wealth. Plus Japan's former prime minister Shinzo Abe a assassinated shooting. The shocks the nation will look at his political and his economic legacy. We're also going to be talking and triple take earnings expectations versus reality. Our guests got any president in chief investment strategist or get any research. Well that's so much more coming up. Bring back. This is the countdown to the close. Forty four minutes left to go. Here in the trading day Tesla Apple Alphabet helping to keep this market a little bit higher but still seeing a little bit of drag from Disney metal platforms. AT & T and PayPal put it all together and you've got a market that's relatively flat year on the day with the S & P 500 up two tenths of a percent it's still headed for a weekly gain. Similar story for all the other major indices. But we should point out volume is low down about 20 to 30 percent below what we would normally see at this time. On this day Dow transports a lot of the cyclical names not getting a whole lot of love. But the big movers that we saw this week was really in the Treasury space. Remember we had that big drop in yields last week a 20 basis point decline for the two year and the 10 year recouping that this week nine basis points on the day for the two year about twenty three twenty four basis points on a weekly basis. We're up above 3 percent pretty much across the entire curve. And keep an eye on the commodities space. Still a lot of ructions going on in that space. Oil higher here on the week with some of the other base metals lower on the week. The Bloomberg Commodity Index though put it altogether up about 7 cents 4 percent here on the day. Let's bring Abigail Doolittle into this conversation as we do every day at this time for our Audience Insight segment. And Abigail you've been taking a look at a lot of that bond volatility and how it's influencing ETF staff. Exactly right. I mean it's really pretty interesting that you were just talking about that because last week down this week up in terms of yields. And that's really been a big story. More recently after of course the massive backup in yields. And there are ways now in ETF to hedge that along with inflation. Let's bring John Sinclair founder of Positive Trends Research into the conversation. John this is really pretty interesting that these new products are out there to help hedge against all of that kind of volatility inflation. What do you think. It really is. There's a there's a couple of theories here. I mean really the big thing that's been happening like you said is we've got a combination of both rising interest rates and also inflation. And what ISE what we're seeing out there is that there's two new RTX as you mentioned the IRR VH and the IRA each G. And what's interesting about these these VIX is they're using option strategies to try to capitalize on the on the bond market movements. Well that IRA of the H is so new that it's on. Right now I know one to Taylor Riggs favorite terms unchanged. I think that they just started trading on Wednesday or so. You I know from your notes do you think that these are they remind you at least of the mean mania some of those other stocks or do you think that these ETF last. Or do you think that this is just trying to play this this trend right now as a I mean a really great question. It's some to look at any time we're looking at an ETF you know we want to kind of dig into it and see what you know what's going on behind the scenes. Both these ETF are not very well capitalized. Great. They're about less than three million dollars per per ETF right now. And so the the general strategy the idea behind them is to use as a portfolio diversification products. The big thing that we're looking at with the for instance the RB age it's brand new. They haven't been trading too much but they're looking to capitalize on essentially on inflation using spreads basically looking at the yields and also looking at the tips and then the IRA H G because of the big bond route that we've seen recently. They're actually looking at purely getting puts on essentially bond products. And so what this reminds me of like you said it reminds me of the social media the meme ETF that came out there like Buzz after GameStop AMC really started to move where they're basically just trying to try to capitalize on that recent action. And sometimes you look at the charts and it really looks like you know maybe the move is done. We really really need to see how things play out. Yeah. Well that's an interesting point in that move index the bond volatility index. It is almost at its highest level since March of 2020 when we had all bad pandemic bond volatility. Is there an easier way to accomplish this right now irrespective of whether or not it sticks around. I think these RTX are trying to link us to their trend of carbon each for themselves where they're trying to use these options. I think it's it's a high risk strategy of course. You know any investment strategy can be considered high risk using the bond products themselves that are already out there that they're actually trading against and using options on could be ones to look at. There's the TLT out. There is one that's very tradable using options. So when we look at whether or not this market whether or not we're going into a recession or not a lot of times the bonds actually start to rally once we're in a recession. And so that might be some to look at a little. Alternatively possibly using option spreads to actually look to go long names like the TLT. And you can also trade the tips through the T IP as well. So I think there's definitely some possibilities out there. I wouldn't say I wouldn't look to rely entirely on these but I think they're going to give you data points. Really great perspective. Thanks John for Claire. Positive trends mean search for joining us today and options insight. Taylor back to you. Thank you as always our very own Abigail Doolittle. Let's get the idea of some of the other big stories of course making headlines at this hour. We're going to do that with our business headlines here. Tesla of course making a stunning recovery in China. The electric car maker rebounded to a record number of deliveries in June. That's after the lifting of the Covid restrictions that had led to severe cutbacks at its factory in Shanghai. Tesla delivered almost 79000 vehicles last month. That is a one hundred and forty five percent increase from May. Almost all the cars were for the Chinese market and second quarter sales at BMW plunged almost 20 percent. Deliveries plunged in China due to in part some of those Covid lockdowns I just described. Meanwhile the German automaker said that electric vehicle deliveries more than doubled in the first half of the year compared to 2021. BMW and its rivals have shifted production to higher margin models and of course ramping up that easy production and remains favorite. Shares of GameStop falling today after the company fired CFO and planned some job cuts. The moves are a bid to turn around the business that's been hurt by shifting demands in the gaming world. Game stops. Growth has slowed as gamers shifted from buying game discs. Also remains favorite digital downloads. The young hip. Oh yeah. I heard digital downloads are the future. It's now coming around. Hopefully you're not still on those desk things. This. Those are some of your business headlines. We'll be back in a moment. This is Bloomberg. So strong payrolls. Does that come our recession fears or does it antagonize them all. Because the Federal Reserve is actually going to refocus his attention on inflation which well to all. Case in point it would seem it's going to run hot. You Taylor of course pointed out the great note coming from Morgan Stanley earlier today. Is that. No really. Once again seeing eight point eight percent CPI and that looks like it's consensus now a new record high. Remember you were also saying maybe it's not Wednesday. We need to pay attention. Maybe it's Friday. Yeah. Because I mean those are the expectations. So obviously CPI will give us a read on what we actually saw and those expectation numbers that Jay Powell likes to sort of look at the idea of are they becoming an anchor here. And I think the answer to that is probably going to be yes. So ability to see what happens and whether there is any relief out there are those expectations because when we talk about the break evens that's sort of the market based. Yes. So how do we think about Friday the way that they're calculating those expectations. Well the what's much broader is sort of 20 different metrics. And I mean we don't have to go all all sort of geeky into the weeds here. But I think it gives them a clearer picture I think of what people expect business owners as well as well as investors. And also on just like the professional forecast I remind you set time and time again doesn't always matter what the day says. It's how you feel. And if at the moment we will feel we're in recession if 80 percent of people are already worrying about the job in a recession it doesn't matter whether we're technically in one or not. I mean it's a good point. And it's something I think that Jay Powell acknowledges something that this is. The most crucial moments in the trading day. This is Bloomberg Markets the close with Caroline Hyde Romaine Bostick Taylor Riggs. Counting down to the closing bell twenty six minutes ago in the trading day and week and a market is still relatively flat at least on the day we're seeing gains in the week with the volume just isn't there trying to sort of understand there's a good jobs report. Does that mean that the Fed is back in sort of aggressive hiking mode. If so what does that mean for equity markets. It's sort of the narrative that we're understanding the sort of half on half off a day like today up in the green. It's energy and financials and technology that's mostly ISE down to the bottom. It's utilities industrials that the new materials in there as well classic risk off. So I don't know what to make of it. Yeah it's kind of a mixed bag. I was taking a look. We got the earnings out of WD 40 a relatively smaller company here but the shares are down 14 percent. We actually saw an interesting drop in sales but the stock top out this idea that there's still dealing with kind of the reverberations from a lot of those supply chain issues. The idea that they felt like they had the demand but they really couldn't make enough of the product to meet that demand. Actually having their worst one day drop that we've seen going back to 2008. And this is sort of the setup as we head into the next earnings season. We're gonna get a lot of commentary like this. It'll be interesting to see the balance. Meanwhile you have some positive news out of Tesla with the reopening of that Shanghai factory and the output coming out of June. That was a lot stronger than people expected. We've been talking a lot about the semiconductor space particularly after we got the commentary out of Samsung as well as Taiwan semi. We're going to be a couple of weeks more until we start to hear from the U.S. semiconductor makers. But on set me on fire right now up 2 percent on the day now actually I think for its best week that we've seen going back to November of last year. And look at this. Even Bitcoin has actually seen a little bit of a bounce today. Marathon Digital up 20 percent on the day. Caroline Hyde. I'm gonna go exactly that. But right now please. WD 40. Yeah like one of my favorite products literally. Does it only make WD 40. It got a few other things but yes the WD 40 is or not. So I mean every day is a publicly traded stock. Meanwhile my love of WD 40 aside I'm making my my appreciation will remain with taking us math and digital. Well we're having quite a stellar week for crypto overall. Look at this Bitcoin look. It's still at about 21000. We're not managing to break out of a range but a catalyst is starting to build. We're having our best week as we said back to the week of March. So up about twelve percent. Correlations with well tech stocks for the time being. Well tech stocks in stacks. Caroline it's been off to a rough start in twenty two. We know that. But there have been a few successes and some of those share some similar characteristics. Let's bring in favorite lip shields of course are Bloomberg snack reporter. Big upgrade from meme stocks to stocks. Now talk to us about how you're thinking about the stocks that have done well in this market and what they look like. Yeah yeah. We've been seeing really a rotation force back. So you step back to February 20 21 we saw electric vehicles flying cars companies kind of operating without a real business model or product. And now we're seeing investors kind of dipping back into traditional companies whether that's transportation companies gold miners as well as energy firms. Obviously that's been kind of the rotation with this risk off environment broadly speaking. But that really has been playing out in particular with sparks and D backs. And that's what we've seen continue to really roll through. You know when we got to the end of the last quarter here a lot of people sort of looking back at the performance of some of these companies. Of course there are a lot of bombs out there of course that are trading well below I think where a lot of people got in. But there are a few bright spots out there as well within the spec space. Yes. Symbiotic is the best performer that went public this year there in warehouse automation company High Peak Energy obviously riding the boom for crude oil prices. I'm looking at that international money express cerebral therapeutics. Some of these companies actually really again have promising business models have proven ability to generate not only revenue but Ebola and have expectations that they will continue to grow that in the coming years. Again something that we did not see when sparks really began to boom a couple of years ago and a couple of years ago is important. Right. Because that kind of a ticking time bomb. When you say that you're going to do it back will you please put one into the public market. You've got that window of time to find your acquisition. How are we in this market environment. What's gonna be happening in terms of this something. What is 700 stocks that we need close deals just over 700 by the end of the first quarter next year really into the middle of next year. So the expectations are we're gonna see billions of dollars being returned to investors. So there are going to be a lot of liquidations obviously which is the protective aspect of sparks. When you're raising that money you can return it. But we are going to see again a rotation and a push back into companies that have real things. And not even companies that don't even have a prototype can accuse you all Huckabee of made more money by putting your money in a spark that then doesn't go public but doesn't find an acquisition because well if you put it in a public market you would've lost how much money off close the company. Well that's the point that a lot of investors have been making is that the opportunity for spark arbitrage it's safe if you're automatically going to get back a few pennies based on the money being put in treasuries. And a lot of sponsors right now are over funding it. So you're getting 3 percent guaranteed if you're willing to tie up your money for a couple of years which again when you're an environment. In a market that's down about 20 percent year to date guess it's not bad. All right. Not bad. Well there you heard it. That's hilarious. Hand-wringing about sparks and the fact that all the top of the market and what a ridiculous sign there. And then actually all along. Probably been quite smart. If you put one in and it didn't find an acquisition there you go. The ultimate inflation head. You heard it here from Caroline Hyde specs. What can't they do. Fairly live shots. Bloomberg's back. REPORTER here are giving us an update on a market down but maybe not quite out. Still ahead a lot more coming up as the countdown to these closing bells. David Balan chief investment officer over at Citi Global Wealth going to be joined the big program in just a minute. You're looking at the Dow Jones Industrial Average. Ponch looking at the S & P 500 on looking at the NASDAQ composite. Looking at the Russell 2000 launch. Terry Jeffrey what do you get. Wow. On ISE. Barely. That's why you don't want to work from home today. That's why you don't want me driving to the Hamptons today because it's unconscionable market. I know. It's so exciting. Stick with us. This is Bloomberg. Once again some of the big tech names doing the heavy lifting. S & P was saying Tesla Apple does that having fantastic week really up about 10 or 12 percent thus far. We're seeing the likes of Apple on the upside some of the health stocks doing well on the downside. We've got new Pacific papers some of the fintech names. I'm gonna bring it across the really though the muted music that we have on the market because well it's the Friday volumes. Again we're up basically flat on the S & P 500 NASDAQ up but only a tenth of a percent. They are still two thousand completely flat on the day. We although seeing some much money for once money coming out of the new U.S. dollar we're seeing money once again come out of treasuries two year tenure. After that jobs data was better than expected. Of course the horrific news out of Japan did move the yen a little bit earlier. Shinzo Abe. The previous prime minister being assassinated. Don't forget now flat. We had seen a move in the yen at the beginning of trade. I look at the individual movers and twitches down Teslas up. What more do we need to say about what's happening in Sun Valley. But David Balan is with us. Somebody say global head of investment and chief investment officer at Citi Global Wealth says about a billion dollars in assets under management. David. It's always great to have you with us particularly on a Friday. You need to rev up some of the energy that is lacking in terms of volumes and tell us what you're seeing in terms of market sentiment. Well I have to say that the whole idea that I'm here on a day where the main word is unsure is very exciting to me since that has been the antithesis of the whole year. We're seeing a pretty big sweep for clients into bonds an enormous amount of money actually moving into fixed income because we're well we may not be at peak rates. Now it seems pretty clear to our clients that no one holding cash is not very advantageous a number to the idea that you know bonds can actually give diversification given their terrible performance for the first six months of the year. And also let people protect their cash from inflation. So I think that that is really been the the theme certainly in our business for the last six or 16 weeks. Are you seeing them take on I guess longer duration in that space or shorter. That's exactly right. You know remain where we're seeing a much longer duration. Well people are taking in me intermediary a long duration in their portfolios. And what's interesting is we added a to present position in our discretionary book to long duration treasuries. The first time that we did that you know probably in the last seven years we're just getting started here with David Bale and he's sticking with us as we catch it down to these closing bells. Citi Global Wealth Global head of investments and chief investment officer there. Over there. We look we've got about 15 minutes ago here and you take a look at a market. Yeah. On the day. Not a whole lot going on. But you're still talking about it up week here for all of the major indices and of course a monster week with regards to yields in the Treasury space telling. Yeah you really see that. Caroline Hyde been sort of a waiting of course for the big jobs data that we finally got this morning in private riding a little bit more direction of yields higher as we look forward to CPI next week and really try to understand how aggressive the Fed really will be if 75 years ago in July. And the earnings that were gonna start getting right is that the banks that go faster than the airlines than the Netflix is that as well. Yeah. I mean next week I mean we're gonna get four Delta Airlines and of course we get the big banks as well and a few other companies in that space. And you know look I mean the commentary that we're gonna get out of them is going to be way more important I think than just the numbers. Right. Precisely. Particularly for the banks. What is the consumer doing. America yesterday said that I'm pretty OK from New York. Something back. This is kind of the clearest and Caroline Hyde I'm Taylor right. And I'm Romaine Bostick. Look at how this shortened week shook out. It felt like a for days. I'm not gonna lie. I'm currently saying well but we have headed higher. Today we've flattened out. We've overall seen a little bit more of a questioning of the strong data and whether that means you really want to be buying in stocks. We are flat in volumes very thin. Nevertheless we have been higher on the S & P the Nasdaq and indeed every major benchmark a low volume week. That could change next week of course with the start of earnings season and that big CPI report on Wednesday. Keep an eye on the bank stocks. NIKKEI W Bank Index down here on the day though is going to squeeze out a modest gain on a weekly basis. Health care stocks have actually been doing quite well here. We're gonna get UnitedHealth earnings next week as a group. They're up for a third straight week here. And then the Jets ETF really hasn't had much traction here. Remember we've kind of seen that go back and forth. There's a lot of people try to suss out where we go with consumer spending particularly in that services sector. And then at the top of your screen there those are the metals and mining companies which had a big boost earlier in the week on the back of that news out of China. But not a lot of people doubting just how much impact that stimulus is going to have as a group down one point four percent on the day. Lots of overnight notes of course not that stimulus abroad is still with us here in the U.S.. David Balan Citi Global Wealth Global head of investments and chief investment officer. Take us back here to some of the rates markets 3 10. Pretty much across the twos fives and 10 year curve here on yields. How are you thinking about the relative value that's starting to provide. When you think about treasuries here relative to equities. Well I'm not sure that they present a particularly great value but they certainly add diversification in portfolios. And what I think we're seeing though is is reach higher everywhere. Right. So it's not just in this area but if you buy a municipal bond in the United States if you buy investment grade if you if you seek out high quality fixed income you know that's where I think you can find value in the marketplace. Certainly way better than cash. I think you know the bond market being as flat as it is is indicative of uncertainty as to whether or not there's going to be a recession. And I think the jury's out on that score. But when we think about everything in its totality today's data on jobs I think is indicative of the Fed is likely to probably take an aggressive view in terms of its next rate hike. That in turn is going to cause concern about you know what is going to happen for consumer demand in the future. And of course you know that to me is that is the key question between now and the end of the year whether or not the Fed finds the right balance or whether or not we're already seeing material consumer demand degradation that's likely to continue to the end of the year. How many questions are you taking daily at the moment from your clients about whether it's a recession or not. You know I've had 20 family office meetings over the course of the last 10 business days. And I will tell you that that subject comes up in you know 75 percent of them. What it what should be coming up. That's not coming up is this whole question of earnings expectations. You actually think that this quarter's earnings are going to be fine. You know average up you know between 4 and 5 percent. But we are outlook for the next six months for the next 12 months really is very dependent upon what happens. Now with this question of recession or not if we don't have a recession earnings could go down next year in our opinion between 3 and 5 percent. If we do have a recession it could be down as much as 20 percent. And so what the Fed does with Kutty and Reach is going to make an enormous difference over the course of the next two to three months. I know the Fed has sort of made it clear that its focus primarily on getting inflation down bringing price stability here. But do you think they'll also have maybe a little bit more of an eye as well on some of those corporate earnings and I guess the potential systemic effects that could sort of arise if we do start to see those types of declines. I sure hope that that's correct. Romanian. I'll tell you why. We've been on the phone this week with a variety of different industry leaders. One group in particular having to do with the people who lend money to private equity companies to do buyouts. The rates on Lent loans for your lending to those private equity companies are now almost 9 percent. And this is for loan to values of 45 or 50 percent for private company takeout. That is a huge change 3 percent 100 basis points over the last two months alone. And there's now becoming capital scarcity. Right. Which is you're seeing reflected in the high yield bond market. Right. And probably traded higher your bond market. This to me is a dangerous signal that says we have to be careful of the Fed raises rates too much too much too aggressively Kutty. It actually takes capital out of the market. And that will ultimately be an indicator of recession to come. And we literally are at that tipping point in my mind right now. All right. Interesting stuff. We're in conversation with David Beilein over at Citi Global Wealth. Back to David in just one second. He's sticking with us as we countdown to the closing bell as he was just talking about capital scarcity. We're going to go over to the board with Taylor where I think that might actually fold into your stock of the hour. Yeah really interesting. I mean of course take a look at shares of Twitter as my stock of the hour. Dan Ives over at Wedbush out with a really interesting note. Of course looking at now a forty three dollar price target on this stock saying that now only 60 percent chance of this deal. Of course Ilan Long taking over Twitter actually going through and really sees it at a lower price range of forty two to forty five dollars a share no more than 54. Right. So really some concerns I mean if this deal happens or not. Thirty seven a share might show you the uncertainty around that change up the board here. And David I want to bring you back into this conversation when I'm thinking about a rollover of some of these inflation break events because we've talked a lot about peak inflation and big CPI report coming except the breaking things have really come off their peak as of a few weeks ago. How were you thinking about inflation. If it's sticky and unanchored this is a great point. And one of the few bright points actually that the Fed should be looking at which is expectations for inflation are already coming down. You know when you go to a store now the store is full of goods. People having sales. July 4th sales and after sales right now. And you take a look at that. That's good news because a lot of the inflation that's occurred over the course of the last nine months is goods inflation just simply an absence of supply. Now that supplies are back. We're seeing inflation start to abate and inflation expectations with it. This means that the Fed if it's capable of being patient can actually look ahead to lower inflation and not have to be as aggressive with rates. And to your point about sticky inflation a lot of this is not to get inflation. We're not seeing wages go up an extraordinary amount. You saw that in the jobs data that just came out that wage inflation is actually very modest relative to goods inflation. So are they looking at it. We sure hope so. And if they are that means they can give it give time to let the market adjust to the fact that oil prices aren't going to go up as much food prices aren't going to go up as much. And ultimately things will settle down on the good side of the equation. But that's a that's still an open question. Still an open question one that many a family that alone a viewer is currently hoping for. David Beilein we thank you. Citi Global Wealth Global head of investments and chief investment officer. Have a wonderful weekend. Me do we. March was this weekend with pretty thin volumes but some sort of designed vicious market harming. Yeah some sort of desire. I mean look I mean I think when you look at this sort of on a daily basis easy to talk about on. But this is an up week here for the markets. And you did see a little bit more optimism come back in at least maybe I should flip that around a little less pessimism. I'll come back into this market Taylor Riggs and still so range bound. When we think about the big moves in the Treasury market you're still right around 3 3 times. And that's of where we've been in the last few weeks as we digest further moves from the Federal Reserve. And one thing I think is interesting too when you look at the complexion of sort of what rally this week and more importantly what didn't. I mean some of the biggest decliners on a weekly basis are a lot of those energy companies that of course had been a haven for so many folks as we move closer to these closing bell. Stay with us as we have full market coverage as we take you to the bell and beyond. Beyond the Bell Bloomberg's comprehensive cross platform coverage of the U.S. market clues starts right now. And right now we are two minutes away from the end of the trading day. Romaine Bostick Caroline Hyde. Taylor Riggs. Gotten the Dow until the closing bell is here to help take us beyond the bell. It's our global simulcast with Carol Massar a.m. today. Putting in two days of work together this week. We welcome it all day. That is four days after buying a television radio and YouTube on this way. Look look I don't blame you guys. I should just take it off today because nothing's really happening in this market. We're basically launching all the major indices and volume very like you. Yeah I feel like I missed everything when I was home sick. You're right. I mean take a look at what we're seeing. There is light volume but the major indices are pretty much going to end up flat on the day. Yeah but there was some searching for direction today. You had the S & P 500 go in between you know gains and losses today more than a dozen times actually close to 20 at this at my count of course coming off of big jobs data. And I think what's so interesting what we think about the equity markets we fold that over into the bond markets. Caroline Hyde some of them do what I hear not what I say or do what I do not what I say in sort of the ideas around where you've lost like died Friday. Oh I think I got it. I think you. So I'm glad someone got it. That's was extraordinary day. We are up for just five days in a row on the NASDAQ on the S & P. That's the longest winning streak all year. Well that just shows you just how lack ISE volume and how was volume What'd You Miss?. Not a lot of conviction. It is not. Is that a technical term. Yeah I mean there's nothing there. I mean I'm looking at right now when you look at some of the volume across all of the major tapes here right now roughly about 9 billion shares swapping hands. They average on a yearly basis is more around eleven point five billion. So we're well below that. We are on a Friday afternoon a summer afternoon where maybe a lot of folks are off doing whatever they do this time and then they come home. All right. And we should try that sometime. The Dow Jones Industrial Average looks like it's going to finish the day down by about a tenth of a percent. We'll call. Forty five points as we wait for these numbers to settle. The S & P 500 down less than a tenth of a percent but still in the red. Meanwhile the Nasdaq composite flipping into the green as we get to the closing bell but only higher by about a tenth of a percent. And the Russell 2000 looks like it's going to finish the day. We're basically just going to call it unchanged here is basically down. I getting a look at that. It looks like it's less than one point here. But overall we should point to all of the indices right now Carol are higher on a weekly basis. All right. Well good to know. And if you care about the VIX some of us do. Some of us don't. We did actually see the VIX move down about one and a quarter points today coming in about twenty four point eight. So certainly well below 30 or 40 you know levels we've seen certainly in the past when there's been moments of volatility and concern but not to date him. Yeah not today. Look at this. If you look at the S & P 500 as I mentioned it did go between positive and negative territory close to 20 times today but 340 stocks advanced declining 159 advancing in the in the Dow which I know remain likes to follow really closely. 21 declining 9 advancing today half and half. You certainly see that when you take a look at where we are on this sector level and sort of the quietness on the headline number the unquiet nest that we're getting on sort of the individual sector levels. There's some green here right. Auto components food and staples some of those retailers you're up almost 2 percent to maybe about one half of 1 percent. Down in the bottom though there still is a lot of red as you think about the composition still tilted to the downside just a little bit today. It's sort of a mixed across the board its utilities. But then there's materials there's transportation there's also some household products in there. So you're certainly getting a mixed picture today Carol. WD 40 here. I loved Covid-19 favorite products. It's a that's a preview for what's coming up with decliners. All right. Well here's let's. We'll get to that in a moment. Let's get to the gainers today. I've talked about this name a lot. Tesla it's been on a bit of a roll no pun intended there. A roll over the last four or five days up another two and a half percent in today's session up about 10 11 percent over the past four to five days. Big headline out of Asia overnight. Record number of China shipments at their factory. They're up hundred forty five percent month over month. Don't forget he is going to be speaking from Sun Valley tomorrow. So we'll see what he has to say. I've got a Twitter poll whether he's going to talk about humanoid robots or kids or Twitter whistles. We'll see what everybody thinks. That's right. Randy says he's going to offer more child care right to NIKKEI. I mean he should. Our child care benefits. Right. Well that's another discussion for 60 Minutes. XP Logistics up two point three percent. Also an now performer Truckee Freight Company Morgan Stanley upgraded it to overweight called the stock too cheap to ignore. And then I just want to mention Vito Coco. It is up almost twelve percent in today's session. B of A global research raising its recommendation to buy from neutral saying potential upside to the calendar year 2023 and said that the ocean freight market is showing signs of stabilization and pricing continues to ease. And that should be a boost to that name. Take it away. All right. You've got the gainers Carol. I got the decliners. Let's start with Twitter. Shares finished the day down by close to 5 percent. Will go ahead. Com 4.0 9. This after The Washington Post reported yesterday after the markets closed that Juan Musk's proposed takeover is in quote serious jeopardy. That deal spread right now between the price that he offered 54 20 a share and where it's trading right now at its lowest since late May. Widest since late May. Let's talk WD 40 though. My beating heart was right. This is this. This is the WD 40 right. Because you do as a company or as a product because the product she just sprays this. Right. All right. Well this one's for Caroline Hyde shares finishing the day down by 15 percent. It's actually having its worst single day ever. This after the company cut its full year forecast for sales and earnings. Gary Ridge the company's CEO saying that inflation leading to lower margins and causing the company to take down its guidance estimates for the year experiencing quote short term margin pressure due to inflation and upstart finishing it down by nineteen point seven percent. It's an AA lending platform. You know it because it was kind of like a meme stock last year and earlier this year. Shares are down 93 percent from those October highs but it's finishing lower today because the company said preliminary revenue from the second quarter missed prior guidance. Meanwhile let's also look with on the downside. And when you're looking course at that commodities it is the metals on a precious steel was up by 3 percent. We're seeing on or off by 2 percent you're seeing copper on a fifth weekly decline. This is we fear more about global growth than we really do about oh some of them raise the lights that suddenly we saw in the jobs data earlier today. We are really all focused therefore also on Brent crude. It was interesting. I mean pushing higher all managing steady a little bit more of a second a rally going on an all at one hundred seven dollars a barrel. So that's your inflation push potentially. And one that of course needs to be tamped down by the Federal Reserve. WTI crude up one point nine percent 104. I flip it over to the affects market. Therefore an interesting me the Canadian dollar pointing once again reflecting the moves in oil as you see the loonie strengthen a little bit. Euro actually strengthening. Two tenths of a percent. 1 to 1. Those are voices that ongoing narrative about potential dollar parity is still growing at a wider as we see the difference in overall borrowing costs and yields and where the Federal Reserve versus the ECB will go. We don't have a yen on hand. Of course that a story of politics and one of course of risk aversion is the very start of trade after that shocking news that came out from Japan regarding Shinzo Abe. I'm looking also at sovereign bonds and really once again a sell off in Europe UK yields pushing up. Interesting that really soon Ike of course who was the chancellor exchequer. He's put his head into the ring for well becoming the future prime minister of the UK. We go from UK bond yields Caroline as you always do back here to full faith and credit. I think you mentioned sort of this global sell off in the nature of that. You really see that not only on the day but our producers do a great job of scrambling to get the weekly chart as well. And really Carol for me the focus has been on the front end of this yield curve. You're up twenty seven basis points. But I think what's so interesting two weeks ago we were at 312. On the two year we dropped to 284. Lincoln you missed it. We're right back up to a three 10. So this feels like a big move higher but it's just a racing. The losses of yields that we had a week ago were right back to where we started in just two weeks. I think the bond market has really been the story once again or continues to be the story and those big moves. And I guess this is where investors are trying to figure out you know where is it where does it settle out. Where's the equilibrium ultimately. And trying to figure out how aggressive ultimately the Fed will be when it comes to moving up rates and where it needs to settle in and that volatility in the bond market. It's a little disturbing. It's disturbing. And also sort of think it's kind of ignores I think the messaging that we've been getting out at the Fed which I frankly think has been actually relatively consistent. Right. And today we've heard from a couple of members our colleague Rafael Bostic. I know isn't actually a voting member this year but the idea here are that most of these Fed members have basically said look 75 basis points that's going to be the discussion at that July meeting. Maybe they'll only do 50 if they think it's warranted. But there's no sense here that the Fed is ready to let up quite yet. Well you've got to take it all in now because come July 16th there's going to be the blackout before the next Fed meeting. So we do expect to hear from more Fed officials to give us more insight into what they're thinking about when it comes to the economy what they're thinking about when it comes to interest rates. But come July 16th no more hearing from the Fed. Oh unless it's like last month. Yeah yeah yeah. Never say never. Right. It must. There's a leak about a 75 basis point rate increase. We don't need leaks anymore. I guess it's less it's less shocking. We've been sort of steered that direction overall and we'll wait. Of course with bated breath that some of the data this is going to come out before that. I'm really for me. What the banks up say in earnings that comes in thick and fast next week. However are they seeing the consumer. Yeah that's what I was thinking. Caroline Hyde as well. Two days before that blackout period we get earnings from the big banks. I'm talking about JP Morgan and others and what they have to say about the environment. The lending environment lending is slowing down a lot. That is certainly going to give me some cause for concern. And remember last quarter I mean they all kind of reasserted this idea that consumer spending in the least with regards to their credit card data was holding up. And that was an encouraging sign here. I do think it will be interesting to hear what Delta Airlines has to say particularly when you have sort of a company that seems to have plenty of demand but just can't really sort of get it. So I guess you know supply side if you will under control. So I think sort of the idea that even if you have that demand. Are there other sort of disruptions in the economy going to sort of undercut any benefits from that. Can you guys believe this was a shortened week. Yeah. All right. Well that's going to do it. We got to run. Certainly lots to come next week but that's going to do it. That's a wrap for our Beyond the Bell our cross platform coverage on radio TV and YouTube. We will be back tomorrow not tomorrow. Well you can come in tomorrow if you want but you're going to watch you know. Exactly. I'm looking forward to that. We're going to talk about Carol. I don't know. Check out my Twitter poll. We'll see what people on Twitter feel like. Vote on it. What do you think. Was it kids humanoids. What does it star languid or startling. And Southern Twitter. Yeah I would hope you would talk about what he talked about. None of these guys have a good weekend. We'll see you back on Monday. All right. You are listening to Bloomberg Markets coverage coming up right here. We're not gonna be discussing you know mosque. You can be talking fact Friday. You know it. Alliteration day discipline back. And makes kind of move on the bench markets a mixed kind of reaction to the jobs data because it was mixed under the hood overall of course it looked pretty strong. There were some downgrades the previous month but overall we are still thinking that this is a jobs market and can support the Federal Reserve tightening fast. And that is where trains the eye of the market. The S & P 500 had been flashing between gains and losses. We closed just down a tenth of a percent to three points. Volumes very muted when NIKKEI the Russell 2000 basically flat run interest. I mean the Nasdaq managed to get a lift only one a tenth of a percent. That was five straight days of gains for the tech stocks. That is the longest winning streak since all the way back to November of last year. I'm looking at really where the action was. It was a Taylor Riggs kind of a day. We see the sudden move higher in terms of yields when we got that jobs report. Animal strength is only two thousand jobs being added means well whack. Here comes the Federal Reserve. 50 or 75 basis points at the end of this month was suddenly up 9 basis points on the two year yield inversion still occurring in the 2s 10. So still that worry between inflation and recession. I'm looking now at what has caught the eye of the investor base. Mitt Bitcoin. Now actually on the day it was a mixed day but really on the course of the week which we should look at was having its best week about 12 percent higher best week that we've seen since March for crypto. So we're currently trading at about twenty one thousand seven hundred stand pushed to the higher end of that range of like 10. Classic inflation hedge line. See look at the end of the week of course as Caroline did a great wrap up for us. And that means it is time for Factor Friday. Joining us now Chris Cain of course of Bloomberg Intelligence looking at the factors on the five days. And it doesn't look pretty. It was not pretty Taylor. I would call it was a pretty brutal week for a traditional factor. Investors I would call it a very anti factor weak. Why I say that is because you know typically these factors are implemented long short and the short side beat alongside almost every factor. Traditionally this week so you had things like high volatility be low volatility by 7 percent lower meant to be high momentum by 7 percent. Value was down 5 percent quality was down 3 percent. Growth was was up. That was the only one. But it was basically a mirror opposite of the moves we had last week and certainly against the trends that we've seen for the last year or so. One week doesn't make a trend but it certainly it was a tough week for factor investor. You talk about of course how a lot of people structures these factors to be long one to short the other. Talk about momentum and what I guess that gets paired with these days which I assume has value. Yeah. So that's typically what happens remains. So value momentum long short are famously I would say negatively correlated. You know typically that's why a lot of quants they have both in the portfolio to mute the volatility of the portfolio. But right now I would not count on that. You know we spoke last week about how the high momentum group is very cheap blah. Reason is because value has done so well that a lot of value stocks are in that high momentum group which brings it down. When you look at the correlations between value momentum over a rolling twelve weeks it's basically the highest we've seen since 2010. That's because value is momentum. In many ways at this point. So typically they're negatively correlated typically is that thing you can count on. But as of this moment I would not count on it. And Chris of course as we talked before there's different ways of measuring this. And you look at the correlation that one also just about the sheer number of value cheap stocks that are current in the momentum. Sure. That's another way to look at it. Right. So we looked at a time series of Russell 1000 stocks and how many fall into the value quintile. So 20 percent cheapest in momentum quintile 20 percent most highest return. That has average 30 stocks since 2010. Currently it's 55 stocks. That's pretty much the highest we've seen and we've got a little higher in 2013 but essentially the highs we've seen. So a lot to choose from if you want cheap and high momentum. So some names like CBS Cigna Costco Kroger are all part of that. Part of that overlap would just quickly because I was taking a look at Signorile this week I was having a conversation with somebody a stock that basically hit a record high today and I think the day before. And that is that a big part of the reason why that some of those stocks that have that kind of make up that's where people want to hide out right now. Absolutely. Absolutely. I mean it's you know we wrote about this as well. Value has been very defensive this year. That's not usually how it is. But you see when the market goes down value long short tends to go up and vice versa. This was a good example this week. So to your point remains those become high momentum stocks. So that brings the whole momentum valuation down. And that's why there's such a big overlap because people are hiding out if you will in those stocks. The Venn diagram so we can go into when it comes to fact finding Chris Cain. So it's great having me on. Get some sleep. The baby sleeps me now. Let's keep you up to date with our news from around the world. First word Mark Crumpton. Caroline thank you very much. World leaders are paying tribute to former Japanese Prime Minister Shinzo Abe. President Biden said he's stunned outraged and saddened. And he says the U.S. stands with Japan in its moment of grief. U.S. Secretary of State Anthony Blinken described Mr Ashby's killing as profoundly disturbing and he called him a leader with great vision. India's Prime Minister Narendra Modi said his country will mark a day of national unity national mourning. On Saturday an outgoing British Prime Minister Boris Johnson called Abbey's passing. Incredibly sad. Rishi Sumac is throwing his hat into the ring to be the UK's next prime minister. The former chancellor of the exchequer soon announced his candidacy on Twitter today in the wake of Boris Johnson's resignation. Sumac whose surprising departure along with Health Secretary Sajid Javid on Tuesday kickstarted Mr Johnson. Downfall released a video on a social media platform pledging to quote rebuild the economy and reunite the country. Russian Foreign Minister Sergei Lavrov today blamed the United States for abandoning the peace talks regarding the ongoing war in Ukraine. Deeply divided. Top diplomats from the world's richest and largest developing nations struggle to find common ground over Russia's war in Ukraine and how to deal with its global impacts. It was not us to abandon all politics. It was the United States. That's all they can say. And we are not running after anybody suggesting meetings. If they don't want to talk it's their choice. U.S. officials said it was less important for the G. 20 to present a unified stance as an entity than it would be for smaller blocs of countries and individual nations to speak out and take action. The U.S. House committee investigating the January 6th capital insurrection is making plans for more public hearings next week. Bloomberg has learned the panel is considering a second televised hearing this one in primetime on Thursday. The committee has scheduled a daytime hearing this Tuesday focused on right wing groups like the Proud Boys and Oath Keepers. The panel is expected to issue its final report in August or September. Local news 24 hours a day on air and on Bloomberg Quicktake powered by more than twenty seven hundred journalists and analysts and over 120 countries. I Mark Crumpton. This is Bloomberg. I want to turn back to what we woke up to this morning the shocking assassination and the news of course of that former Japanese Prime Minister Shinzo Abe. He was Japan's longest serving premier and his influential economic policies came to be known as I'll Be Nomics. Joining us now from on the political as well as the economic legacy Kathleen Hays Bloomberg Global Economics and policy editor who also worked Sunday to Thursday jumped in to come in on a Friday here to be with us. And we're grateful for that. Remind our viewers again about the success of Albie nomics and really the big influence that Shinzo all they had on Japan and the world of Japan economics. Well when Shinzo they took office for the second time he had in the mid 2000s his first term as premier didn't go very well came managed to come back from that. That was in 2012. Japan had gone through. But the big real estate crash that hit the economy all through the 90s that was sort of the lost decade time. He came into office obviously determined to put the economy back on track. And that led to a nomics. It was the three legged stool of aggressive monetary policy aggressive government spending and then structural reform like corporate government governance. Another part of the legacy these hearings behind. And to get out of deflation back to inflation. Now he never and the Bank of Japan haven't yet achieved that steady 2 percent or inflation particularly on their core. But they did stop the deflationary spiral and get things moving in the right direction. There was a lot of flexibility in that too. It wasn't as rigid I think as some people sort of made it out to be. And I remember a lot of criticisms when he came back in 2012. A lot of criticisms of that policy and how it was just going to be disastrous for Japan. Now we know Japan didn't sort of you know move into some sort of flourishing growth period but there was a lot better than I think a lot of us see than what they had before. But a lot better than what people projected. Absolutely. And of course teaming up with how do we go. Kuroda who had been at the Ministry of Finance. Coming from that side of this or the political economy structure and the great innovations of this encourage the Bank of Japan to do first country to go to a negative rate on their key rate and then yield curve control. Nobody had done that before. Nobody had targeted an important yield like the 10 year yield a three year yield as Australia did later. And then this massive bond buying. Now we can all debate how bond buying has worked out for the world of central banks now. Fed European Central Bank and certainly the Bank of Japan. But put that on the map as well. Now of course we are now a globalized world that faces inflation which of course Japan hasn't had much of but stagnation. We can learn a lot from it. And also participation. I'm looking at the jobs data today. Participation rate still somewhere. We were pretty Covid and they really wanted that. Three arrows was womenomics in particular. How successful was that really reforming the jobs market. Well as I believe it was growth Reidy from our Tokyo team wrote today there's still a ways to go on that. But he did get that started. Corporate governance what goes on the boardroom completely changed. Moved forward and more into the 21st century. Another accomplishment but definitely then that is something womenomics. More women in the workplace now women are starting to rise in the corporate ladder. And Fumio Kishida his successor will actually soon go as his successor. But the latest LDP leader to be the premier has continue those policies as well. That's definitely made a difference in the economic landscape. How do you think going forward about the political landscape. We were chatting earlier and you mentioned the more influential role he's had on the Liberal Democratic Party and of course how that progresses without him. Well one of the most important contributions that Shinzo Abe made it was on the global scale in Asia forging for example. He's responsible for the quad. Japan India the US Australia. Let's in fact another opinion piece on Bloomberg today pointing out that he was the one who created the Indo-Pacific concept which extend the division of Asia and with the rise of China. Shinzo Abe was certainly the person leading Asia in terms of pushing back. He did. So he's done so much on that front speaking out against Taiwan. This is this is to me probably the biggest question about how Japan moves forward now what the leadership does. I think that economic part by comparison is not so hard. I think this is the big challenge. And we should point out. I mean his party is still in power. It is expected to remain in power. So there could potentially be some continuity. Absolutely. All right Kathleen. That was wonderful. Great wealth of knowledge out of our Bloomberg colleague Kathleen Hays helping to wrap up our coverage here today of Bloomberg Markets clothes. A lot that we covered here on this final trading day of the week. A triple take is coming up next. And we've got a look to the week ahead because we got a big week coming up with this big start of the earnings season. A lot of CPI data and a lot of people want to know how long and how much these companies are able to sort of hold up in the face. A lot of these rising prices. Remember that last earnings season we had. Really seen the full effect of it but we've seen it over the last few months. And whether or not we'll start to see analysts come out I mean a lot of people have felt that overall analysts haven't downgraded forecasts and many will anticipate. But we are going to start also crucially with the banks which is going to give us such a flavor of how the consumer is at this particular time. Was it David Beilein. I need to go back and listen in and run the three forty five time we was talking about. The earnings recession this quarter he says will look good. This quarter was fine. He's looking earnings recession. Was it early next year. Right. And if we get an economic recession does the earnings recession look like a drop of three to 20 percent by next year. Well I should point out though I mean I was looking at the data that Bloomberg actually compiles with regards to the analysts expectations. And on aggregate basis it looks good. But a lot of that is sort of weighted more towards those energy materials names. When you sort of look under the hood at some of that consumer's discretionary names are actually projecting a drop in the consumer discretionary space a drop in some of those techniques a drop in financial even the consumer staples and forward guidance. Yeah. So it's always going to be about you know what they see in the next coming quarter and indeed when inflation is hitting them. Are we going to get. Like we have with restoration hardware. Basically a macroeconomic picture. Well we're gonna hear from Ed Yardeni founder of Yardeni Research a wealth of knowledge out of him. That's coming up in just one second. Triple take coming up next right here on Bloomberg.

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Bloomberg Markets: The Close (07/08/2022)

Caroline Hyde, Romaine Bostick & Taylor Riggs bring you the latest news and analysis leading up to the final minutes and seconds before the closing bell on Wall Street and tackles the jobs report, the assassination of former Japan PM Abe and Guests Today: John Leer of Morning Consult, Lisa Erickson of US Bank, Takatoshi Ito of Columbia School of International and Public Affairs, Tracy Chen of Brandywine Global, David Bailin of Citi Global Wealth. (Source: Bloomberg)

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