tv Bloomberg Markets Bloomberg May 10, 2022 1:30pm-2:00pm EDT
his economic policies helped raise wages. speaking at the white house, the president acknowledged americans are being squeezed by climbing prices. pres. biden: our economy has gone from being on the mend to on the move. for every worker i met who has gained a little breathing room to seek out a better job, every entrepreneur who has gained the confidence to pursue small business streams, families across america are hurting because of inflation. mark: the president criticized republican tax and economic proposals saying his plan to fight inflation will lower costs while the gop seeks to raise taxes on many americans and let companies off the hook. vladimir putin is preparing for a prolonged conflict in ukraine. that is according to the top intelligence official in the united states. national intelligence director
haynes told a senate panel that president pruden's decision to focus military efforts in eastern ukraine is probably a "temporary shift to regain the initiative. haynes says the conflict became increasingly unpredictable and could escalate further in coming months. an escalation of violence in sri lanka. the army has been ordered to shoot at people who are damaging property or threatening lives. that comes a day after mobs targeted the homes of ruling party politicians. protesters angry about the country's failing economy have demanded the resignation of their president. prince charles delivers the queen's speech at the opening of u.k. parliament for the first time, standing in for his mother who is suffering mobility problems. britain's monarch has pulled out of several public events in recent months and has only
missed this ceremony twice before in her 70 years on the throne. both times because she was pregnant. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. ♪ >> welcome to bloomberg markets. >> let's dive right in. we started off in the green, then went down to the red. we are briefly hopping into positive price action. the s&p 500 a .2%. we have nasdaq outperformance. apple, naz -- microsoft all higher. the 10 year is lower. dropping below the 3%.
volatility in the other direction and we cannot forget crude down 3%, dropping below $100. jon: you have seen energy stocks struggling as we climbed deeper into the stock story this afternoon. the reality is that some technology stocks have been holding in better. apple and microsoft after recent weakness. but we had the jittery part of the market. peloton, weakness following their quarterly results and we are waiting mers from coinbase. a lot to watch her as we roll through this trading day. kriti: talk about the crazy trading days we have seen lately. let's talk about today's session. investors remaining on edge earlier today. peter oppenheimer of a chief strategist at goldman sachs told bloomberg he sees value amidst volatility. >> the -- of equities on a relative basis. we've got -- and the modest
double digits over the next 12 months in most equity markets. we think some of the tensions investors are focusing on and uncertainty about where rates will be and how weak economies will be, will fade in that period. jon: let's stay on this bigger picture theme of what is happening. joining us for more perspective, just menton. i was reading one of the stories he wrote this week about wall street strategists. it felt like for a long time there was morgan stanley against everybody. increasingly, it is feeling like these days when you see a little bit of buying that bleeds into selling. it is a reminder the sentiment has been bearish. >> it has. even looking at this morning, the turnaround tuesday hope fading. a bit of resilience in technology names. and seeing those weaknesses in real estate and other
industrials and things like that. something i wrote about for a taking stock column, when you see apple, a standout strong company, but when you see weakness in a stock like that, that could be a signal there are liquidity concerns. especially in the bond market. if investors are concerned and want to raise cash and selling stocks like apple. we saw that last thursday and we saw that again yesterday. today, resiliency. a lot of that has to do with signaling investors and strategist saying we need more weakness in big technology names to be a step closer to capitulation. kriti: we are monitoring headlines coming from elon musk. headlines he said that banning trump has amplified his voice on the right. speaking at a conference with
the financial times. picture shares down about 1.2%. let's get back to the big picture. which to me seems like a lot of volatility, low liquidity and it sets up the technicals a little bit. >> especially on the technicals front there has been more net new lows than new highs. that is concerning to investors because obviously if you want to see some strength the broader market, you want to see more new highs leading the way and it is structurally not there. another big thing is just looking at volume. one indicator that gets brought up a lot in conversations is the arms index, or measuring buying pressure. -- at strategic is pointed out that it's usually below 0.5, the side that more entrants are coming in the market. that happened last wednesday after the fed meeting and we saw a big rally. thursday, it skyrocketed above 2%, showing fear in the market.
right now it is about 1.5%. there still concern even though we are seeing maybe not as much stress in technology stocks today. there is still a concern and really not a lot of conviction that this could be any sort of potential rally if we see that in coming days. more headaches could be on the way. jon: thanks for that breakdown. the safety trade through all of this has been the u.s. dollar. let's get more perspective on that with mark mccormick, td securities. just looking at the performance of the dollar index, getting back to levels we have not seen since march of 2020 or late 2016 when we were talking about tightening. after that, you go back to 2003. how would you characterize the appetite for the u.s. dollar? mark: the -- is constructed
through sterling. a huge reflection of that is the [indiscernible] there is a huge component that we are missing the broader perspective, which we do look at the markets through april. this has been a broad dollar move. we have seen emerging markets through most of the year actually start to falter. latin america and other asian baskets have come off a bit through april. that characterization is a representation of a few factors. the fed has gotten tighter and real rates have skyrocketed over 100 basis points. that is reflecting the discovery for where the fed is going to move and we are also seeing on the external side, china global growth risks and tensions around russia, ukraine and inflationary supply chain concerns. kriti: let's move this ahead to tomorrow where we are getting the cpi report.
eight .1% year-over-year inflation is expected. if we go cold on that number, does that become a number that falls below the threshold, what is the market reaction? what if we go hot again? mark: great question. if we do get a weak number below expectation, this is risk on. the dollar is going to sell off and equities will come back. we will ciber -- moves around fixed income. we will confirm the rate pricing sitting around three to 3.25. that will pull risk sentiment back into the market, especially as you mentioned there are exhausted technical signals. we see on our indicator that things are stretched. there is a tremendous amount of value, but the macro drop is not dynamic enough where you would want to just start selling the dollar. if we get a weak u.s. inflation number, that would be a strong signal that we are starting to see confirmation that inflation is peaking. if we get the hot number,
there's -- we are probably going to see better -- on a weak number they on a high number. there's just so much bad news priced in the market, we see it in risk appetite. the biggest thing we have seen is valuation models underperforming since the dollar rally in april. we probably don't see much further stresses, but we do not see an improvement if we do get a hot inflation number. jon: quickly, just to stick with that idea of the cautiousness in the equity market, assuming investors just want to keep risk off the table outside of what we hear on the data front, what does that mean for the u.s. dollar? >> it is very clear that a big driver -- linked to the fed and linked to china growth and european growth. there's a couple of different factors that have all been negative. if we do think about equity sentiment and risk assets, the
correlation of commodities to currencies, we do need a reversal in sentiment, we need equities to come back and we need to see emerging markets or even european equities start to outperform the u.s., or chinese equities outperform the u.s., those would all be signals we are confirming a cap at the top of the dollar. if we don't get that change were either equities are up across the board, or other markets outperforming the u.s., we will continue to see elevated strengthen the dollar across emerging markets. kriti: certainly something to watch. mark mccormick, thank you so much. coming up, our interview with boris jordan as we discussed the company's first quarter results and its change in leadership. this is bloomberg. ♪
kriti: this is bloomberg markets. very quickly let's check on the markets. s&p cash up .8%. a rebound from just a few minutes ago where we did see them in negative territory. a lot of technicals playing in. can it sustain the rally into the close? we will tell you. shares of curaleaf hitting the lowest level since may of 2020 today after the cannabis producer reported revenue for the first quarter that missed analyst estimates. let's bring in -- >> those high hopes that curaleaf was able to cut that stocks slide may have been faded on release of first quarter numbers that showed they missed on multi-topline and the bottom
line. growth in a lot of american states that had legalized cannabis for recreational and medical usage of -- appears to be flat. that revenue is down for 2% quarter over quarter. over several quarters, the revenue appears to be flat. some analysts call it disappointing. however going forward, the company is expected to see a bounce back toward the latter part of the year when more u.s. states legalized cannabis and allow for sales either for medical or recreational use that includes new york, connecticut and maryland. those are large markets that clearly have an existing presence and likely will continue to have a commanding presence. all things considered, there is a paul cast upon u.s. cannabis stocks given the fact that legalization efforts appear to be waning. while there are warmer edge -- indications that a piece of legislation that would allow cannabis companies to engage in
figure -- federally regulated banks may be passed by the end of the year. as far as the legalization that would see uplift to major markets, there is no indication that will happen. with that, investors are kind of taking a look and saying, i do not know if this is going to be a growth stock in this current market. jon: thank you for the context. let's get some more on that theme. maurice jordan, executive chairman of curaleaf joining us in an exclusive interview. one of the things that your company, through that scale, operating as so many -- is the opportunity to grow that lead as more states open up. and potentially at a time when you are seeing consolidation or can -- or inflation concerns could give you a competitive edge. how would you characterize what is happening with your business? >> let's put things in perspective. we grew in 2020 about 93%.
if you look at the last four years, we have grown from $70 million in revenue to this year, 1.5 billion. our first quarter missed by a couple of percentage points. though we grew 20% year on year as we were flat down 2% on the fourth quarter. however, we believe the flatness of the market in the u.s. we saw in the second, third and fourth quarter of last year is over and we are going to see substantial growth going into the second come a third and fourth quarters. we already seeing march was a record month. we had the highest growth rate ever in our business. in april, it is continuing on that pace and we anticipate in the rest of this year, curaleaf is going to have a substantial growth year. we have a short period of time for the last three quarters where growth was largely flat because there weren't new catalysts. allie catalysts are coming into market with new jersey launching
adult use, our continued growth in florida and illinois, new york and connecticut coming online. -- at the end of 2023. we have to -- the next two years to be substantial growth. kriti: you mentioned new jersey, a key growth area for cannabis sales after making it legal when it comes to recreational weed. do you see a shortage in new jersey, given the expected increase in demand? >> no question. all the states i have seen in the last eight years convert from medical to adult use, this is the most underserved of all the states in terms of the capacity and retail dispensing locations. to put that into perspective, illinois of, which had something like 60 dispensaries, we have 13, they had i think almost one million square feet of cultivation, we have less than 500,000.
this is a state almost equal in size so yes, we are going to be underserved for some period of time. but that is good news because we are the largest operator in the state. over 30% market share, the largest distribution capability as well as cultivation capabilities. in the short-term, that will play. jon: before we let you go, just to clarify, when there is the tighter market, i imagine that helps your profit margins? >> we anticipate growth margins well over 80%. -- margins nearing 55%. very substantial margin increases in the stage during that period of time where the market is undersupplied. we anticipate that to be the case for two years. we think after two years, they will have more competition. over the next two years, we
taking oil and getting it to the gas stations. as we move into summer, this is one of those inflationary pressures a lot of people are dealing with. kriti: it's interesting how much of that is going to eat into demand. we've been talking about demand in the industry for so long, but some of these railroads are not seeing the same thing. your point, curious about what that's ketamine for the summer season. at the pump is also where inflation is being felt by several, many consumers across the country and other nations across the world. today, the cleveland fred -- fed president spoke about the central banks rate path. >> we don't want 75 forever. i'm going to do 50. the cadence we are going now seems about right. we're going to have to assess whether inflation is actually moving down. and then we will get more information after we do a couple of those and see. both supply and demand are going to be moving over time.
the aim is we need to use our tools to do what we can to get demand in better alignment with that constraints apply. i do not want to rule anything out. when we get to that point in the second half of the year. if we don't have inflation moving down, we may have to speed up. if we seek inflation and demand moving down more than we are predicting, we will have to adjust. we need to be committed to being resolute in doing what we can to get inflation down and that is both the balance sheet which will start in june, and also the policy. >> if you get inflation down, down to where is acceptable? and then what happens? have we changed inflation dynamics? >> it will take time. i do not expect we are going to get inflation down to 2% this year, or by the end of next year. we will see monthly numbers moving down in a convincing way.
i would have to see compelling evidence that that is happening before i would want to say we can ease up on what we are doing with policies in terms of taking away accommodation and perhaps moving above the neutral position. kriti: loretta mester, cleveland fed president. she said, it's not off the table, just a matter of if it actually does get worse. the question is, do we see peak inflation? jon: as we watch these markets try to make a comeback in the later stages of the afternoon, we will be watching those markets. this is bloomberg.
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knows rising prices are hurting american families. speaking at the white house, the president blame high inflation on pandemic disruptions to the economy and russia posit invasion of ukraine. mr. biden says his economic policies have helped cut unemployment and raise wages. the u.n.'s top human rights body will hold a special session this week following a request from ukraine to discuss the worsening human rights situation in the country. the meeting will be held thursday at the u.n. european headquarters in geneva. the council held what it called an urgent dialogue to discuss ukraine during its last session. the head of the world health organization is urging china to rethink its so-called zero covid strategy, saying it is unsustainable. the attorney general says the approach no longer makes sense as the omicron variant spread through populations and the country's