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tv   Bloomberg Surveillance  Bloomberg  May 12, 2022 7:00am-8:00am EDT

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>> there is certain a lot of moving pieces in the outlook. >> we seen a lot of froth come out of the market. >> i think the market is trying to find a level. >> these levels are too hot. >> the federal reserve has not been forceful enough in stating not just with the goal is of 2% inflation, but the means to achieve that goal.
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>> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: it is not getting better. good morning. this is "bloomberg surveillance ," live on tv and radio. alongside tom keene and lisa abramowicz, i'm jonathan ferro. futures down 0.4% on the s&p. on the nasdaq we are down 0.75%. lisa: so why is nobody buying the step? we heard that -- this dip? we heard that people were coming in. it feels like people are waiting for another shoe to drop. what is going to give them conviction one way or another? jonathan: psychology has shifted in a massive way. the buy the dip mentality has been retired alongside the fed put. equities were up off the back of the inflation report. it lasted about five minutes. i think that is representative of so many people. we're looking at the moves, we see the nasdaq down 27%. we have seen these big tech
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stocks down by monster amounts and they are still nervous. that is when the psychology starts to shift another way and we are really gripped by what is happening in the bond market. lisa: we have seen a bubble burst. that's your words, basically talking about some of the tech names, some of the high flyers that have been a spilled -- that have been absolutely even serrated. we are not seeing a blowout when it comes to financial conditions melting down. how much are people waiting for something to break? when you get the likes of the dollar strengthening this much and stocks and bonds selling often tandem, things happen. jonathan: things break sometimes. are you worried about financial stability? lisa: i am. the crypto sphere is a bit of a taste of that. what happens when money market funds go to sell their assets of treasuries and find out they are worth a lot less and have to redeem some of their cash positions? what happens when some of these people look at their positions and have to sell? we have not seen mass selling.
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are we starting to see it now? jonathan: on the way in to manhattan this morning, talking to mike huber driver, talking about how much money he lost in the equity market, and crypto, how much more expensive it was to drive the car, a lot of people going through those issues in real-time. kailey: these are people who had money to spend during the pandemic get they had stimulus checks in their pockets. now a lot of people who have gotten into the market over the last 14 months have seen all of that gain even serrated at the same time -- that gain if the serrated -- that gain eviscerated. that is when you start to have a real conversation about the man destruction in this he was economy about demand instruction in this -- about demand destruction in this u.s. economy. jonathan: how much narrower has that landing strip gotten after the data of the last few weeks? lisa: a lot of people say it is incredibly narrow to the likes
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of almost impossible because the fed has to act, and they are acting in the face of what a lot of people see as slowing growth, and we are already seeing some of the demand instruction around the edges, retail sales that came in negative on a real basis. at what point does the fed rethink? they can't because this is not stagflation, but something else that is really difficult for them. jonathan: the fed has a problem. i think that is stating the obvious. on the s&p, down 18, off zero point 5%. the nasdaq down 0.9%, nothing compared to what we have seen. if you are hoping for a bounce, you don't get one this morning. yields come in by eight basis points. i find this absolutely fascinating. from 3.20% down to 2.8371% this week alone. this bond market has changed. lisa: we are talking about a growth scare now, not just a federal reserve hiking rates more than people think the market and the economy can handle. the growth scare perhaps not translating into the forecast
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for inflation, which still are rising in terms of where we are going to end the year. why are people not having the conviction to buy at a time when you're seeing the fundamentals continue to be strong and a lot of the companies that are the stalwarts? cap rilla santos -- gabriela santos, j.p. morgan asset management global market strategist, is joining us now. what will give you the confidence to say that this is the washout, we can go in and buy? gabriela: there's three things happening at the same time. there's this gross conundrum, trying to figure out is it a recession, a soft landing, stagflation. you add onto that the excesses we have built up over the last four years and amplified by a third factor, which is very low liquidity in both equities and fixed income markets, so i think at the moment we have seen a big correction in valuations. we have seen nearly a 20% contraction in the multiple with
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the s&p 500 now trading at average valuations, but you still have very low conviction from investors to truly believe this is the end because you still have all of these uncertainties. so what do we need to see? i think you especially need bigger conviction on that growth scenario front, so you do need to see peak housing cost, peak sanctions towards russia to feel more comfortable about commodity prices, and you need to see peak lockdowns in china to you more comfortable about the growth outlook there. lisa: you talked about liquidity concerns. you talk about the froth in markets that has gotten beaten out by the readjustment in valuations. are you starting to worry about financial market conditions, about the functioning of the basic nuts and bolts of how things trade and sell? gabriela: in terms of financial conditions we have definitely seen a tightening in those ultra-loose conditions we had at the beginning of the year.
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you now have the tightest financial conditions since 2018. but still pretty loose, just approaching neutral levels. so we are not quite concerned about tight financial conditions yet. in terms of the markets, i think at the moment that is not a reason for concern or a need for federal reserve or other regulators to step in. it is just something that amplifies any of the moves we see, driven by the macro stories and something that causes more risk aversion and a hesitancy to step in from investors. kailey: your base case is still the fed being able to execute that soft landing on that very narrow landing strip. each day that passes, how much risk grows around that idea? gabriela: i think you invest based on your base case, but you diversify the other routes just in case, the recession and
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stagflation scenarios. in terms of investing based on the soft landing, we would still advocate for adding a small overweight to stocks, underweight to ration, but you want to still be diversify the other scenarios. diversifying the recession scenario, it is a small underweight to duration, overlaying a quality factor on top of any of the stocks we are thinking about investing, and in terms of diversifying the stagflation scenario, it means bringing the candidate for stagflation in europe down to neutral. it is focusing on diverse fires like real assets that do well when inflation is the concern. kailey: you mentioned europe and canada. let's talk about china which you mentioned at the beginning, investors kind of need to see something change with covid zero policy. but it is not just that. you also have a serious crisis in the are pretty sector.
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how are you thinking about china right now and where you would find an entry point in that market in particular? gabriela: i think emerging markets are also dealing with this trifecta of issues we mentioned. in china you had correction of the excesses that already happened last year. that was a market that february 21 he won was one standard to be asian expensive. now it is early one standard deviation cheap. you also have a growth scare happening at the same time, driven by some of those structural slowdowns in the economy, namely property and low-end manufacturing, as well as the pandemic. i think for investors, the correction of the valuation excesses is already there in china. now you need to get a bit more comfortable on the growth picture. for that i am looking for three things. the first is a redefinition of success when it comes to covid zero. it does not mean abandoning the policy, which is very tough to do. it is just redefining success, lowering the threshold for
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reopening. we also want to see that the policy put is still in place in china, so we want to see more monetary stimulus, maybe a cut in the loan prime rate this month, and we want to see silence on regulations. kailey: just stop talking. [laughter] gabriela: to get a bit more comfortable. there's a meeting next week, and it would be welcome news to not see anything new come out of that. lisa: gabriela santos of j.p. morgan asset management, thank you so much per gets -- you so much. just silence. i'm sure we could use that. jonathan: can teak a stay out a little bit longer -- can tk stay out a little bit longer, is that what you are asking for? [laughter] lisa: just some silence. jonathan: do you hear it today? it is beautiful. you can take a beat and don't have to fill it in with anything. lisa: just going back to investing in china and investing in some of these areas, we were talking about how there's no yield anywhere and how high-yield was no longer
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high-yield with average 4% yields. you can get an average 22% yield on chinese high-yield bonds right now. that is how high they have climbed, and nobody wants to touch the stuff. jonathan: fortunately financial markets don't operate like main street when things go on sale. people run the other way. on main street, people go into the store and they buy. on wall street, they worry that things are going to get worse because he got a lot of confidence, you've got a psychological shift away from buying the dip. a lot of things have changed in the last couple of months, and a lot of it goes back to the federal reserve. that said put is retired, and we have guest after guest coming on to say they are not ready to step back anytime soon. this is going to be the story through the summer. a lot of people saw chairman powell last week and thought him clarifying eight hikes through the rest of the summer was somewhat dovish. given the worries of bad growth, it starts to sound more and more hawkish because we are having this tightening of financial conditions, and the fed committed to going further to
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bring down inflation, and no real sign of that story breaking just yet. lisa: and frankly, if it were just that, maybe we get actually move through it, but it is also an actual slowdown in china, in europe, and other areas. jonathan: futures down 0.5% on the s&p come on the nasdaq down by 1%. you might have noticed tom is not here. he will be back tomorrow. he's really excited about arsenal-spurs. he wants to start drinking early apparently. kailey: the tots. jonathan: i cannot believe we are calling this the tots. kailey: i had to do it. jonathan: seema shah coming up very shortly from principal global investors. from new york, this is bloomberg. >> keeping you up to date with news from around the world, with the first word, i'm laura wright. it has been a day of big swings in the crib the currency market. bitcoin had been as high as a little more than $28,000 and as low as $3000 less. the collapse of the stable coin earlier this week triggered a
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flight for any popular digital tokens. senate democrats were blocked in an attempt to enshrine abortion rights in federal law. all republicans and one democrat, joe manchin, voted against it on the senate floor. the supreme court is poised to overturn the landmark roe v. wade decision. it has been two months since negotiators left vienna, and expectations are fading that iran nuclear talks will resume. the u.s. and around won't talk directly -- and iran won't talk directly to each other, so they can unit kate via messages exchanged by the european communicator. disney reported subscriber gains for its flagship streaming service that were better than expected, but the entertainment
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giant birds outlook for the rest of the fiscal year, and the company says it will trip spending on movies and tv shows. 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'm laura wright. this is bloomberg. ♪
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>> we are focused like a laser beam on inflation. the president has made clear he knows it is the top priority for working families and therefore his top priority. jonathan: the senior advisor the president and former national economic council director. futures this morning down 0.4%, still lower by 0.75% on the nasdaq 100. you just come in by eight basis points, round down to 2.8353%. the excuse tore, some people have -- the excuse tour, some people have called it that. the administration going through a long list of things to a tribute to blame to come about ultimately saying the republicans don't have a plan, and the plan that they do have belongs to senator rick scott. the problem that the republicans have with that is that the
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republicans themselves say it is not our plan. mitch mcconnell said it is not the republican plan. do we know what the plan is? lisa: honestly i have not seen the republican plan. how do you have a plan? this is the tricky issue president biden is facing, and both democrats and republicans face. how do you have a plan when you don't really have a good solution? there is no silver bullet to how to bring down inflation. if you are going to get blamed, what do you do with that? jonathan: let's talk to a member of the republican party congressman french hill from arkansas. the president says you have a plan. mitch mcconnell said it is not the plan. what is the plan? rep. hill: it is great to be with you. you are right, there is not a silver bullet here. this is the result of 10 years plus of suppressed interest rates that have led to increased asset values, and by the biden administration, failed policies. they doubled down on spending and increasing demand by adding $4 trillion to spending last
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year passed through the congress on top of the $4.5 trillion we already spend every year to run the government, and the federal reserve was too lax and too late to raise rates. that is coupled with the supply chain issues we have, and here again, the biden administration has done nothing to ease supply chain constraints on hiring workers, getting truck drivers back to work, easing the logistics burden. so the republican plan is first, don't keep spending money like drunken sailors, encourage the fed to do the work it should do, and let's unleash the supply side and break down these supply chain barriers. lisa: the republican plan sounds a lot like the biden plan from what you are saying because they are not talking about spending more. they are talking about reducing the deficit. they are talking about investing in the supply chain. they have talked about releasing oil and gas and trying to figure out ways to bring down costs. what is the distinguishing
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feature about what you're saying other than just pointing at different places for the blame game? rep. hill: the biden administration policies are the ones who have created this demand slide surge on top of low interest rates. it is the $4 trillion he has added in spending in 2021 doubles warned against by larry summers, jason furman, strong democratic economists saying it would lead to too high demand in the face of supply constrained. on energy it is all talk. he's doing nothing to unleash american energy and make it easier for companies to get the permitting, building pipelines, get permits for new lng export facilities, and get our production back up to over 13 million barrels a day. kailey: if we could focus on the monetary policy aspect of what you mentioned, having the fed would's job, in theory, if the fed does tighten aggressively, it could lead to a higher unemployment rate, a slowdown in
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growth, if not an outright recession, something the market in particular is concerned about. would you be happy to see those things if it got inflation under control? rep. hill: inflation is a thief. inflation steals from hard-working families. it makes it very hard and it hurts our seniors who are on a fixed income. this is a result of bad fiscal policies by the biden administration, and keeping interest rates too low for too long at the fed. so this is the anguish of central banking faced by chairman powell and his colleagues. they have a tough policy choice of tightening and potentially producing a recession, or not tightening as much, perhaps leading to stagflation or market volatility. it is a tough position to be in, but we should again to shrink the balance sheet and raise rates, and the fed should try to do the best it can to achieve a soft landing, which i know is chairman powell's ultimate objective. jonathan: two points you have made in the last four or five
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minutes. i will put some emphasis on the. that this administration made some policy mistakes with fiscal policy, and this federal reserve waited too long. chairman powell has not been confirmed for another term yet. do you think he deserves another term? rep. hill: i do. let me tell you why. jay powell has the temperament, the knowledge, and the leadership skills to navigate the fed through this process. because he was there and did an outstanding job during the pandemic's height in march 2020, he knows the fed has the tools to do this. i want him to on this issue and help guide the fed through this next phase that is so challenging. jonathan: what youth inc. of this term ultra -- what do you think of this term ultra-maga the president is using? rep. hill: he has done nothing but divide the country even more in the first year and a half of his presidency. he is constantly saying the dog ate his homework on the exit in
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afghanistan, inflation, crisis at the southwest border, and trying to build relationships with we publicans. he calls them names. i don't think joe biden has been effective in managing the u.s. government or building a coalition to get things done on a bipartisan basis. jonathan: great to get your perspective on things, as always. french hill, wonderful to catch up. a difficult moment. to his point at the end, this is the issue that some people have with this white house at the moment that is still divisive. lisa: right now, how much has politics gotten so divisive that a lot of the discussion points have to be shrouded in blame game? honestly, all around. i think that has become an incredibly polarized political backdrop that you see on twitter, that you see on facebook. we could go into all of the reasoning, but how much is it this white house and how much is it playing into the political sphere in this nation right now? jonathan: what is it about chairman powell? ? he seems to be bulletproof. a lot of people come onto the show and say they didn't do
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this, they didn't do that, and the congers been follows it up by saying second term, i trust the guy. lisa: well, who do they were placing with? who do they bring in that is not going to have that learning curve before they get their legs under them and stop saying stupid things? how much is that what they are trying to protect against? jonathan: not going to say what i think. lisa: please do. come on. jonathan: we are all session lows to start off. the nasdaq 100 is down 0.6%. in the bond market, yields are little bit lower on the tenure by eight basis points. lisa: everybody wants to know. jonathan: he missed it. just in such a monster, massive way. they just missed it. lisa: everybody agrees that he did. jonathan: they carried on doing qe. qt hasn't even started yet. think how ridiculous that is. lisa: so you would kick him out? jonathan: this is bloomberg. [laughter]
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jonathan: it is hard to call this a correction anymore. it feels like a bear market, looks like a bear market. it is a bear market on the nasdaq. the likes of apple, they are almost there.
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equity futures down 0.3% on the s&p, on the nasdaq down 0.8%. the nasdaq down 27% year-to-date. something is changing the bond market. yields aren't higher, bonds aren't lower. treasuries are rallying again. hi of the week, 3.20%. backed away. we are down another four or five basis points to 2.5921%. the bond market rallying, four straight sessions lower. can close to 20 on the tenure bond -- close to 1.20 on the 10 year bund. want to finish on foreign-exchange. 103.88 some of the lows of december 2016. we are not far off or get that currency pair down 0.9%. the euro weakness is biting hard. lisa: you said it really well
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earlier. if they raise rates, if the ecb raises rates, it is your weakness. if they don't do enough, it is also euro weakness. that has been the common area for a while. jonathan: lose-lose. that is sometimes when narratives shift the other way, but i don't want to be the person that tries to call that. the ecb next month, i think they have one of the hardest decisions as a central bank because the downside risk to growth is now. it is materializing. it is not may be in the future. it is happening at the moment. the inflation rate is too high. what on earth did they do? christian: especially because -- lisa: especially because this inclusion is the wrong kind. it is coming from services. people are able to charge more. not the same in europe where it is energy, it is imports, and the euro has depreciated. i think i would rather be chairman powell because i've got a second term. french hill told me that i would. jonathan: there you go.
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we think that is going to happen today. that is a very good answer. let's get you some single name moves and say good morning to romaine. romaine: we have been in bear market territory on an individual and aggregate basis for some time now. take a look at some of the price action we are seeing in the premarket. that is going to continue. i thought it was interesting yesterday, you had the nasdaq composite not only down just about 30% from that all-time high, a 30 percent drawdown, but if these declines in the premarket hold through the close, it is going to exceed the drawdown that we saw back in march of 2020. a big part of that reason is all the major memory of that index have been in bear market territory for quite some time. one of the outliers was apple. apple shares down about 19% from its all-time high as of yesterday's close. it is a 1% decline in the premarket. if that holds through the day, that would put apple down about 20%, joining the likes of amazon, tesla, microsoft. that is the flipside here, with
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what i would call the more stable companies with real gross, and more importantly, real margin ability to grow their margins. the flipside of that are the names that did not have that. zoom is down 90% today, getting a downgrade from piper sandler. fiscal first quarter earnings were not good at all. disney has been struggling. those shares up, and then they were down. overall the numbers weren't bad, but some of the guidance on the conference call not really encouraging here. maybe there will be a little bit of a slowdown in growth, particularly in that streaming business. some concern about a year from now what that parks business is going to look like. some concern about a pull forward in the recent court or may not hold going forward. then there's the ev space. interesting note by the folks at wells fargo, downgrading ford and gm because of the added cost
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to their ev vehicles. he said that higher raw material costs are adding about $13,000 to the price of the chevy silverado ev that they are making, and for forward, the mock -- for ford, the mock e, whether that gets passed on to the consumer, that is a big question. rivian which is trying to stay the course with its push into the ev space, says it is still going to meet its production targets for the year. those shares higher by about 4%. jonathan: a point you have made repeatedly, if you don't have any earnings, there's no way to make up the pe, you've got a problem right now. romaine: big problem, and you're seeing that reflected. jonathan: in a massive way. looking forward to the close later on on bloomberg tv, and a little slice of that on bloomberg radio. tesla down 30% year to date. rivian down 80% year to date. lisa: just shocking talking about the bubble bursting, and ford sold some of those rivian
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shares at a discount, and we are to seeing that play out. jonathan: joining us now, christyan malek lisman -- christian mueller-glissmann of goldman sachs. is this a bubble breaking? christian: to some extent, that was in the making. we spoke a few months ago and we wrote about it in our research. unfortunately, coming out of covid, you had this constellation of both bonds and equities being incredibly expensive, and now you are entering into a very challenging growth inflation mix, where inflation is sticky, growth is decelerating, and i think the market is the rating those valuations, and in particular in the markets, i guess the uncertainty on the growth and on the earnings is the highest, so long duration tech and more recently, before that, defenses
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i think have been derated materially. lisa: how far into this are we? christian: it is tough to say because if you look at valuations compared to the average since the 1990's, we are moving below that average now. we know we are not in the 1990's anymore. we are dealing with much higher inflation, much higher inflation volatility, different uncertainty on monetary policy, and even the growth picture has certain uncertainties which are may be more tactical in nature with russia, ukraine, and china, but there are also some structural questions with regards to the next growth engine, so you could argue that the valuation derating could continue, but what i would say, and i think jon mentioned it earlier, i think we start to see the peak a bit in the bond yields, and we also have seen tentative signs of the peak in inflation. we might shift from a high rising inflation regime to something where inflation maybe is starting to decline and could
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start to stabilize things a bit. lisa: hopefully we didn't disrupt anything too much and no one is calling from the compliance department. jonathan: no, i think he cleared it perfectly. i asked is it a bubble, and he said it is a valuation relating. that is how you do it diplomatically. lisa: we didn't necessarily get them to complain. i am wondering what opportunities may be emerging. the derating has been uneven, or perhaps heavy-handed. do you see any opportunities, or do you think at this point hiding out in treasuries, in duration, and the dollar seems to be like a better bet, just go with the flow? christian: near term we might be stuck in a fat and/range. -- fat and flat range. sentiment is getting more bearish as we speak, and that creates asymmetry creates opportunities. but you still need to find momentum.
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a good investment thesis is always built on good symmetry, more upside than downside, and good momentum. i think right now you have to be very selective in picking those battles. i think we have been very focused on real assets, and i think opportunities related to that, clearly commodities are pretty high up in that range and commodity related assets. infrastructure is a very interesting real asset because it does not do only well when inflation is high. it also does well when inflation is high and falling. i think clearly, what we need to engage within the next six to 12 months as we look a bit forward is to really add risk and eventually cyclical risk, because that is where the market is getting the most bearish. you can think about the cycle driving selective opportunities. you can think about places that are linked to consumer discretionary spending, which are clearly a lot under pressure, eventually they would
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provide symmetries. kailey: as you say these things and as jon, lisa and i have been talking about the brutal action we have seen in the markets, someone writing to me on twitter, "the three of you make me want to crawl up into a ball and cry this morning." i'm sure there are a lot of people feeling that way. for those people who just want to pull their money out of the market and go into cash, what would you advise them about how much cash you want to hold now to redeploy when those opportunities prevent themselves -- opportunities present themselves? christian: this is a very tough thing to generalize because it depends on each individual investor, the circumstances, risk tolerance, these type of things. but i think we have been overweight cash since the beginning of the year. i'm not saying there's not opportunities emerging for medium-term investors, but i do feel a decent cash allocation still makes sense. to your point, i think bonds are starting to buffer a bit, so you
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could argue if you are really worried about a recession starting to introduce duration risk might make sense. but what we have been saying is duration to some extent is not a buffer right now. it is a risk. so it really depends on what you own right now. if you own long duration assets, i think adding duration tech into portfolio probably doesn't make much sense. a decent cash allocation makes sense. real assets that can protect you. dollar investment has been difficult because the dollar has been a key safe assets, but if you are a non-us investor, clearly the dollar still has the characteristic that currently it is protecting a kind of purchasing power as the fed is fighting inflation. jonathan: brilliant work, as always. thanks for being on with us. just in response to that tweet, if you are an equity market bull looking for therapy, lisa is not going to provide it. lisa: good with feelings.
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we can talk about your feelings. honestly, just lean into it. allow it to happen. jonathan: you want to talk about feelings? lisa: if i were tom, i would start singing. jonathan: please don't remind us of yesterday. we are down 20% on the nasdaq 100 your to date. on the s&p 500, we are down by 17.4% year to date. real losses. lisa: and we have not seen the forced selling yet. when do people start meaningfully readjusting and away we have not seen? jonathan: on the s&p 500, down by 0.6%. from new york, this is bloomberg. laura: keeping you up to date with news from around the world, with the first word, i'm laura wright. president biden marked one million u.s. deaths from covid by calling on congress to maintain funding for testing and treatment. lawmakers remain unable to agree on how to pay for the fight.
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today the u.s. opens its second summit aimed at quelling the spread of the coronavirus. it would be another jolt to the european security landscape. finland and sweden are inching closer to joining nato. finland's president and prime minister through their weight behind an application. the nordic countries are seeking to deter aggression from russia. moscow warns there will be consequences if they join nato. russia's oil revenues are up 50% this year, despite trade restrictions following the invasion of ukraine. according to the international energy agency, russia earned roughly $20 billion each month this year from the combined sales of crude and products. the iea says new sanctions could change that. the pentagon negotiating to buy a tank busting drone it would be sent to ukraine. it can fly more than 24 miles
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and link up over a target for more than 40 minutes. 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'm laura wright. this is bloomberg. ♪
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>> we have seen a lot of frost come out of -- a lot of froth come out of the market. i think about the retail call buying on lot of the meme stocks and the high momentum names. a lot of that has gone away, but it is also not fully gone. jonathan: but it is going. that was amy wu silverman of rbc capital markets. futures heading south, down 0.6% on the s&p come on the nasdaq 100 down by more than 1%.
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yields headed south by nine basis points, down to 28 point -- down to 2.82 45%. this is euro-dollar breaking down by 1%, just about holding onto one of 4.07 -- holding to 104.07. lisa: honestly, there is an element of dammed if they do, dammed if they don't. but we are getting headlines from the german finance minister about russia weaponizing gas and how they are prepared for some sort of gas sanctions. i do wonder how much that is playing into the outlook for growth. jonathan: the economy minister saying things are escalating, and i think it is definitely playing into what is happening. if you look at the u.s. versus europe, europe is more exposed to the story in russia, ukraine. more exposed to the story in china than the united states. that is the channel that a lot of this stuff is playing out income of the fx channel.
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not even sure how much it has to do with rates because even if they hike next month, is that you are positive or euro negative? i know a ton of people who think that is negative for the currency. lisa: or is it agnostic? honestly, at this point, what will that actually accomplish? jonathan: we will move on. kriti gupta joins us with our chart of the day. kailey: good morning --kriti: good morning. it does look like there's a lot of pain in the markets, but if you compare this to the historical trend we have seen, it is a pity tom keene is not here to see this. you are seeing this only dropped one standard deviation from the historical trend. if you are looking at the technicals here, which has driven a lot of the trading, it is actually not that bad. but before i get yelled out on
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twitter, this is important to keep in mind because how often has the market dropped below more than one standard deviation? the answer is not much in the last couple of years, which kind of means there's a little bit of panic here for the bears and a little bit of positivity for the bulls. jonathan: perfect timing. 103.95. pretty brutal. 103.88, back end of december 2016. so we are the lowest since then. not pretty at all. lisa: what is going to be the reprieve here if there is not any clear-cut shot? they are already talking about fiscal stimulus. they will keep talking about it at the g7 meetings. how much do they have to write it out? jonathan: let's do that was get oregano often -- with geetha r anganathan, bloomberg intelligence media analyst. talk to me about disney. geetha: the numbers were very
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good in my opinion. the key metrics we were looking for, one was the disney plus subscriber growth, expecting about 4.5 million subscriber ads. it came in with nearly double with 80 million. so huge success there -- with 8 million, so huge success there. the other was the park number, and they have outperformed there. it has led to this fantastic outperformance. we saw them with operating margins that were 300 basis points above people performance in 2019, so they are way ahead of where they were, pre-bend them at levels. parks have made more than a full recovery. i think where we are really seeing this nervousness is investors have gotten so skittish about the streaming story. just like lisa was talking about, you are dammed if you do, dammed if you don't. if you are not making the pivot, you are punished. now if you have made the pivot,
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you're getting punished as well. it is this very funny time, and there is this economic overhang. investors worried whether they will be able to replicate the strong performance quarter in and quarter out. kailey: prices at parks were already inflated even before inflation. but on the streaming story in particular comedy ads -- in particular, the ads are coming. what realistically will that make? will that make a substantial difference? geetha: i think it does. disney already has a lot of expertise in this field. they do have the gold standard in video advertising with their hulu product. what you see on the hulu product is with the ad supported tier, even though they are charging you a discounted fee for the product, they are also making seven dollars from advertisers, so they are more profitable with their advertising tier than they are
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without. i think that is what they are trying to replicate with the disney+ service as well. it not only boosts revenue and profitability, but also will he reinvigorate subscriber growth, especially if you look across the world, where people are very sensitive in developing economies to price points. so i think it is an overall good move that keeps subscriber trajectory as well as the financial metrics really up and running. jonathan:jonathan: i will moan about my hulu pricing a little later. can you tell me what the hopes and dreams are for that platform? geetha: hulu has really been in this tough spot. there's been this custody battle going on between disney and comcast. disney owns 66%, comcast owns 33%. disney does have an option to buy it out, but it is really one of those assets, it is a u.s. only asset, so it has not really had much international presence, but having said that, they have
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done a good job, just given all the constraints. have -- has it been able to obtain full potential? i don't think so. but given all the limitations, it has been a good job in terms of advertising. they have really excelled there. but i do think that one of these platforms, whether it is disney or comcast which of these companies needs to own it fully to take it to its full position -- its full potential. jonathan: great work. that stock is down 5% in early trading. you said it more than once. it is not about the earnings for q1, the first quarter of this year. it is show me something they can't tell you. show me the future and tell me it is better than people think it is. lisa: and to the degree they can tell you, it is not great. they are talking about waning demand. they talked about how there would be a cooling-off, how they would be pulling back from investing in certain types of productions. how much is that really what people are responding to even though people are still going 15
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parks and buying subscriptions? jonathan: and as for hulu, once you have started paying for all of these streaming things and then you have paid for broadband, we are basically back to the cable bundle, aren't we? lisa: this is your third rail, huh? jonathan: we are back there. my third rail is on the weekend, when you try to find the games, you've got to go from hulu to paramount to peacock and you can't find anything. lisa: if they were a bundling kind of service, would you be happy to pay the same amount? jonathan: what i just get cable back? [laughter] lisa: well, it would be a bundle. jonathan: you know why i got rid of cable? it was never about money in the first place. i did not like the wires. lisa: that is so you. jonathan: i liked escaping the living room tidy and clean and zen, just like me. [laughter] lisa: the control room is laughing. jonathan: what are you laughing for?
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