alix: 30 minutes into the u.s. trading day. here are the top market stories. pricing in, recession risk. morgan sees more downside for u.s. equities. europe's worst-case scenario, the european commission looks at what happens if gas is cut off from russia, inflation source.

retail sales, we get the port side view with the executive director of a port of los angeles. from new york, i'm alix steel. my cohost, guy johnson, in london. it has to do with the slowing growth and we get confirmation from the empire manufacturing index. it was really terrible. guy: i know. take a look at the chart, and it pops around quite a bit. it is one of the more erratic indicators of the u.s. economy right now. there are indications starting to suggest there is a slowdown. i am waiting for tomorrow. the u.s. economy is the u.s. consumer. the u.s. consumer has a problem and we got hence about this in the michigan numbers, with a lot

of corporate reporting numbers this week, if that indicates slowdown coming, then the fed's soft issue landing may come harder -- soft-ish landing may come harder. alix ran through the news. china overnight, the outlook more worrisome. goldman sacs ceo talking -- former ceo, talking about the risks of recession on face the nation. >> you think we are headed toward recession? >> we are certainly heading -- it is certainly a high risk factor. there is a path, it is narrow, is definitely a risk. if i were running a big country

-- company and if i were a consumer, i would be prepared but it is not baked into the cake. guy: the question of the day -- should you position for a recession? what kind of recession should you decision for? joining me is gina martin adams and michael mckee. michael, lots of people talking about a recession. the fed has hinted at that being probably a realistic option. we have moved from a soft landing to a soft-ish landing p review talked to fed speakers and what is the take away? do you think the base takeaway is the u.s. economy is headed toward some kind of recession? michael: i don't think it is the base, at least among

policymakers but there are concerns being expressed paired when i spoke with loretta mester , she suggested things are going to be bumpy, which is about as much as you will get out of a fed person on whether there is a recession rising. you see recession odds rising in the market as people pricing all of the things that are going on around the world. i thought one of the most interesting things to come out of the fed is jay powell's interview with marketplace, in which he said there are a lot of things we cannot control that will determine what happens in the u.s. economy. that is a much more pessimistic outlook that he had been expressing for. with china, the war, energy prices, food prices, a lot they can't do anything more. alix: you not, do you need to start positioning? gina: i think the market has learned to position for a

recession. it suggests that we are at 4000 in the s&p 500. you only have another down 6%. when we look at valuations, the spread in favor of incentive is at levels we haven't seen since the covid crisis and above levels that occurred at the peaks in the 2008-2009 crisis. investors are starting to rotate to anticipate by hiding in inflation sorts of ways. guy: gina, does that rake down? the market has moved toward values -- break down? the market has moved toward values. if we start to see the consumer is beginning to crack, does the strategy change, do the numbers

change around the main market indices? gina: the consumer construction area -- the consumer discretionary is one of the worst. you have to figure the idea is stocks are telling you they were anticipating a weakening in the consumer outlook. you referenced the manufacturing survey earlier this morning and that is indicative of what is happening in the auto space and that is weighing on what is happening in the consumer discretionary sector, but it is rotter than that. we have a unique situation -- but it is broader than that. we have a unique situation. margin pressures have emerged profoundly for the consumer space and that is weighing on the consumer space the most. is the consumer capitulating? i think it would be a stretch saying the consumer is weakening

materially. there is little sign the consumer is giving up and stopping spending. you get out around the country come activity is robust but still the weakest component of the market, because there is a limited amount of a pricing power for companies they are keeping spending robust by constraining margins. alix: mike, let's pick up on that point. the consumer has held up, ok. we had the balance sheet for consumers relatively good. how long can that hold up until inflation comes their problem? michael: we will see in the economic data report due out tomorrow, not just to see what was spent in the month of april but whether it was rather the control group was negative for the much of -- month of march, and if that is up, then it is

there. all the data they are working -- looking at is backward looking and monetary policy is forward acting. there job will be to be nimble and anticipate where that is going so they cannot stop raising rates in time if we continue to see the fallout. guy: mike, they want to tighten financial conditions. financial conditions look to be the key metric for the fed. the housing market is going to be a key component of that. just in terms of the lags and how policy acts on the housing market, how quickly are we likely to see a significant impact? this is what i can't figure out -- how nimble can the fed really be? i the fed being talking about being nimble, but it is the only tool the fed has got right now.

michael: that is true. they work with much shorter legs than they used to come in part because information is so widely available, and they point to the housing market where you have seen a slowdown in home sales and a big slowdown in mortgage applications, refi applications have stopped dead. home builders are getting more pessimistic. the first place it shows up when the fed is raising is in housing and auto, and auto sales have been slower. they do have some indication the policy is working and they have all mentioned how the markets have run with it and done some of the work for them. alix: gina, as we deal with the uncertainty and the numbers, do we feel we can't say the price for a total recession for sure. gina: the bond market is not my

purview but the equity market has caught up with yields. to the degree the bond market is rising 3% for yields in the next three years, the equity market should be valued around 14 times forward. the pe multiple for the s&p 500 is around 14.5, just under 15 times earning on the date you measure it given the volatility. the equity market has started to catch up with the bond market. if this is our peak, you would anticipate we are getting pretty close to the lows in terms of valuation. alix: that is a fair point. thank you both for setting us up on this monday. we are going to continue talking about how to position your portfolio. next, the cofounder of evans wealth. this is bloomberg. ♪

alix: equities heavy today. we want to get into the question of the day which is, should you, how do you position for eight recession. are you positioning for a recession?

>> good morning. thank you for having me. to answer your question, i think our base case, as your prior guest mentioned, there is a lot of recession priced into the market. it is hard to believe we are in the near bear market territory with the s&p down 30% year to date. i think from a portfolio management standpoint, take advantage of the volatility now is the time to value dividend paying stocks. for long-term investors i think there are possibilities if you have cash to get into names you haven't seen since 2020. guy: if you have cash, does that mean you want to buy growth but if you have a growth do you want

to sell growth and by value? elizabeth: good question. from a portfolio standpoint, we are overweight. there is a lot of uncertainty in the market. we don't know what the fed is going to do. there are a lot of reports coming out with slowing gdp growth. so i think you want to be in safe companies that have strong balance sheets, strong free cash flow yield. if you are a young investor that has a time horizon and is looking to buy companies, sometimes we will say to bottom fish, buy companies at a low price, i was looking at in video, and -- nvidia, and it is trading cheaper than clorox , so i think not all tech is

the same. i am certainly not suggesting to go into tech but you have to be selective. alix: currently, the top forming socks -- stocks, occidental, that is how you are going to position somewhat in terms of inflation. do you want to be investing in those or do you need to be buying the beaten up apple and google, they are not going to lose their revenue like her vona , but have been beaten up quite a bit. -- like carvana, but have been beaten up quite a bit. elizabeth: you have a long-term high-rise in these like nvidia and some trading at 14 times, google asbestos alphabet trading at 18 times. there is availability but

overall i continue to think large value outperforms. guy: in terms of the multiples you have been naming, clearly not all tech is the same, but ultimately tech has benefited from higher multiples because rates have been superlow and been there for a long time. we talked to a guest who was suggesting that if rates stay at an elevated level from here, what you are going to see is a more permanent shift lower of the valuations you can ascribe to some of these names. do you think this will be the case? even if they bounce from here, are they going to bounce that much? elizabeth: i think you look at what was considered big blue chips, utilities, at&t, verizon for years with a base companies. i think as you mentioned, not all tech is equal, but some big companies, microsoft, apple are not going away.

those are so entwined in our daily lives that those companies are still going to be here. i think you have to be really selective. there is a lot of risk still in the market. you want to be selective about the companies you are in. alix: we were talking about inflation and what it means for the consumer and how do you play a consumer and typically when they hold up well but what do you do with one that is maybe deteriorating? elizabeth: we talked about being in seyfert companies. if you think -- in a safer companies. real assets should continue to perform well. we have been incorporating structured or market length investment that use options to buy some downside protection but upside participation. we are getting more defensive.

i think there is a lot of weakness priced into the market, but we are not out of the woods yet. guy: how long do you think we will be in this period of volatility? how long do you think in basis will have to be whip side and a day-to-day basis? elizabeth: you need to take a long-term time horizon and have an evaluation you are -- have a valuation you are comfortable with. if you understand the financials of the companies you are invested in, it is easier to hang in with market volatility, but i think it is here to stay. guy: great to have you on the show. elizabeth evans of evans may wealth, thank you very much indeed. jetblue going hostile. robin air -- reiner -- we are going to find out what happens next.

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>> a look at some of the biggest business stories in the news. mantech international sold and valid at $3.9 billion. a 2% premium. the last trading day before a possible sell, man tech primarily works in u.s. defense and intelligence agencies. -- leaving russia after more than three decades per they will sell their russian business. mcdonald's said in the wake of the war in ukraine, continued ownership is not consistent with that company's values. jetblue has begun a $3.3 billion

hostile takeover of spirit airlines. they are urging shareholders to vote no on the airline takeover paired they are offering three dollars less per share than their latest bid. that is your latest business flash. guy: shares in the spirit jumping after the hostile offer. let's bring in our bloomberg airline reporter. spirit shareholders have a decision to make. mary: we will see jetblue lobbying the shareholders trying to build up their case, which they did a lot toward that today, laying out each point for the shareholders. a vote is scheduled on june 10, which they will support the frontier offer or vote against joining forces with frontier. alix: what will be the edge from

spirit and jetblue? mary: spirit is going to say you didn't look through all the elements and never engaged in discussions with us. spirit looked at the offer and said we don't take this offer will ever be consummated, mainly because of antitrust issues, but we are not going to consider the financial details. jetblue is saying, you wouldn't talk to us and we are going to cut the offer and go directly to your shareholders. guy: the issue is the american deal and overseas regulators are looking at that. but is that a done deal and do regulators have an issue with that? mary: it is potential it could. you are looking at the two biggest altar discounters in the country and proposing combining them. there is some overlap and when you look at florida, there is a lot of overlap by a number of low-cost carriers.

it could be they could face some investiture's they -- divesting they don't want to make. i don't think there is an offer because they tentatively accepted the frontier offer. i guess frontier could walk away but i don't think spirit has that option at this point. guy: how would spirit's offer to the customer change as a result of them taking over? what they are offering is not low-cost but what spirit is offering is. how does the product change? mary: you would see spirit airlines disappear. this is what jetblue said they would redo all of the planes on the interior next here and airport facilities. it would all become jetblue. it would be no discount on jetblue, it would be all jetblue. it will be costly.

you would have frontier left alone but would quickly be able to build up by of the spirit customers who no longer have an ultra is counter to go to. guy: thank you very much indeed. i want to talk you through some headlines out of the treasury select committee in westminster. governor bailey, andrew bailey, the governor of the bank of england currently being cross-examined. a lot be made of this in the u.k. he says the u.k. has suffered unprecedented sequence of shocks here he is testifying here we will get more and see exactly what he is going to say maybe on rates going forward. economic activity has been a surprise, this according to andrew bailey. we will continue to monitor what is happening and bring you the headlines from it. governor bailey struggling a little bit in terms of

mitigation strategy. we will commit to an economic shock, paying the price for the zero covid policy in china. data overnight, very weak. this is bloomberg. ♪ cal: our confident forever plan is possible with a cfp® professional. a cfp® professional can help you build a complete financial plan. visit letsmakeaplan.org to find your cfp® professional. ♪♪ this? this is supersonic wifi from xfinity.

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alix: our into the trading session. stocks trading heavy but off the lows of the session. tech underperforming. abigail: we have seen this training before and the volatility as early as the day, s&p 500 down 1%, now unchanged or nasdaq down 1.4%, now just down slightly. a big piece has to do with yields coming in. the 10 year yield down for basis points. down at 2.87%.

from a sentiment standpoint, that point -- bitcoin is down 4%. the big story is, if this does turn into some kind of game, were -- will the bear market extend? will we even get a bear market? for the all world index, similar to the s&p 500, down 18% off the lows, down 16.7%. let's see if this reprieve at the end of the week will continue the slide we are seeing. not quite a bear market yet. as for individual movers in the u.s., eli lilly up 5.1%. they have a drug that could bring in $14 billion in revenue. exxon mobil up 2.4%, oil slipping around, it has everything to do with big tech

here we have microsoft down 1%. twitter down for a seventh day in a row as elon musk's bid is on hold. as floor -- as for the inflation story, for those of you who eat a true american breakfast, wheat up 62%, lean hawk up 27%, eggs of the 69%, orange juice 24%. i don't eat too much of that in the morning so it is not affect me too much but those are huge gains. guy: absolutely. abigail doolittle, thank you very much indeed. talk about what is happening with data, because it relates back to the inflation story. the big shock coming in this morning overnight was the data out of china, which we knew was going to be bad. you look at what is happening with the lockdowns, course it

will have an impact on the economy but the raw data we got was significantly worse than anticipated. the factory output data that we saw overnight, -2.9, the worst number since the early 1990's, but it doesn't stop there. retail sales down sharply. you look at the youth on of limit numbers in particular which is what politicians spend a great deal talking about. use one of limit really is starting to pick up rapidly at the moment. the big question alix, is this as worse as it gets or is there more to come? alix: if you look at the dips in the chart that guy had, the extension of the financial crisis, it rebounded because the government supporting the economy. does this happen again? jamie: the data was worse than anyone expected.

it forces us to take on the full year gdp forecast. we were at 4.4%, now down to 3.6% and in china what we have had to do is take up the forecast. we were at 75 rrr cuts and now at 150 basis points. what china didn't do was it did not cut the medium-term lending rate. we were hoping to see that cut to maybe 280 or 275. we might see that this weekend. i will have an announcement over the weekend and we will see if that materializes. unemployment, 6.1 percent, worse than expected. we were expecting the decline in retail sales, the month over month decline for autos is shocking. guy: we talk about stimulus, but is this stabilization?

until you find yourself in the situation where you are easing covid lockdowns, which is coming, is that all chinese can hope for? jamie: and can it came -- come again, with wave after wave? there are some real openings in shanghai but beijing is under lockdown and so are a lot of other cities. if you look at the property at the property sector data come overnight property sales down 2% year-over-year. you saw property investment down to put 7%, the worst since march 2020. it comes down to the property segment. we have 82 billion property debt outstanding coming due this year. that is a lot of money that has to be paid back. without any stimulus from the pboc, i don't how they will achieve it. alix: what about fiscal? jamie -- damien: we know the

10-year is at 282 here we could ceos go higher. the china u.s. yield differential tracks closely we know what is going on. it would be surprised to see dollar you on at --yuon be a. guy: first time buyers, .2, but that felt more tangible than some of the other action taken. damien: it will not have any material impact, because lowering a funding rate and having people access and borrow is another. if you look at the data over the weekend, less than half of what we saw in the prior month and they didn't announce loans, medium and long-term loans to households.

that is a data point they usually announce. the reason being is that it was probably really bad. the fact of the matter is, lowering the rate is one thing, lowering the floor which is what they did, but people need to borrow. it is only for first time homebuyers and i don't see a stimulus impact on that. alix: in 2009, china came to the rescue for the oval economy with fiscal. is the opposite true? damien: i think they may have learned their lesson. the debt ratio is nowhere near than what it is now. i think china is trying to do the right thing or they don't want to over stimulate and create that debt to gdp, the highest in the world right now. i think they are doing the right thing here they are going to need to stimulate. whether we see it on par closed -- post financial crisis, i don't think we will see it.

guy: how much worse can it get from here? when you think the low is? damien: the pboc did release data saying much of the slowdown was due to supply shortages, raw material shortages. lockdown specific items. they didn't need to say anything, but they did here they are pointing a finger at the lockdowns and hoping that once lockdowns subsided, things are going to normalize. your guess is as good as mine. covid zero isn't going away. alix: will it hurt the fed of hospice ability to soft land? damien: we are seeing inflation rolling over. core inflation rate in china is falling. whether or not they are ahead of the curve or not means to be seen. it seems there covid zero policy is messing with the data. i don't see them exporting,

inflation or deflation and bringing down prices as we have the supply chain crisis. alix: coming up, we will go back to market turmoil and talk about what it means. apollo making a million dollar bet on life sciences and we will talk about the chairman of the european company apollo is buying about what the selloff means and where the opportunity is. this is bloomberg. ♪

>> this is the mark. you are -- this is "bloomberg markets. the national defense -- joins us. keeping you up-to-date. it is another dramatic change in europe's security structure triggered by russia's invasion

of ukraine. they rallied around finland and sweden when they are joining the alliance. turkey is unhappy. ukraine's foreign minister said that european union faces a mild failure if it doesn't approve the application by june. he spoke exclusively to bloomberg's maria tadeo in brussels. >> this is really the moment for europe to take itself to the next level, to legally enter ukraine in the eu innovation project by granting status. ritika: he was in brussels to meet with his eu counterpart. economists at goldman sacks say the new outlook and shakeup in markets and higher interest rates, they see the economy growing 2.4%.

global news 24 hours a day, online and at quicktake on bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm ritika gupta. this is bloomberg. alix: one of the biggest victims of the sellout so far, the nasdaq index tracking performance down 40% since last year. and the doolittle is digging into this underperformance in the market. abigail: and some ways it has gone under the radar because we have had so many declines for big -- abigail doolittle is digging into this underperformance in the market. abigail: in some ways it has gone under the radar because we had so many declines. the s&p 500 peaking this january. leading the way over the last three years, down 17.8%, peaking similar to some of the other high data, such as the ark etf,

the china stock, at this point, brutal action. m&a not surprisingly is also -- has also dropped for the biotech sector. early there were big gains in the m&a piece of the biotech sector, what with liquidity coming out of the system, the peak in the first quarter of 2021, now the second quarter just 23 deals, tighter monetary policy not helping at this point. very interesting is the fact that right now you have a bulk of the stock and the nasdaq 100 biotech trading below cash value. it suggests maybe there is a buying opportunity at some point for the rights investors. there is another reason to think this, given the fact that right now you have three-year forward sales for biotech holding up

better than prices. there seems to be a dislocation for biotech stocks. in the matter for this not being for the faint of heart and knowing investors -- investors knowing what they are doing and stepping in. alix: heavily topped out or bottomed out for m&a? appalled -- have we talked out or bottomed out for m&a? apollo is investing in life sciences companies. here to discuss is the ceo antoine papiernik . congratulations on that. antoine: thank you for having me on the show. we have been in business for 60 years. we have a hundred companies in our portfolio.

for us it is about growing in a field that is not going to go away. we invest in life sciences and sustainability. the field is one where nobody wants to die. they want to have solutions. for us, abigail was saying it, today is an amazing opportunity. apollo was looking for a partner and the sciences and this is what we provide. we have accumulated a huge amount of information, data experience and finding the next innovation of tomorrow. guy: what do you make of current valuations? what are we missing in terms of the public sector? antoine: look, it is the

anticlimax of covid in many ways. code has generated giants here if you think about moderna and they on tech -- biontech. the macro economic back down -- backdrop is that the high data industry gets hit and that is the case for health care and biotech, but we have been around long enough that we know that crisis happens in that it goes. there is one field that we think is here to say -- stay, life sciences. we are convinced this is a viable opportunity. alix: where, and with the changes in life sciences, does it change where you might look and life sciences? antoine: you mentioned m&a, i think it is important that the industry needs biotech.

people talk about billions of fresh cash, white powder in the from industry. this is not something that will, immediately. if you think about whether market will pick up, that security net to the industry knowing they need the products to feed the pipeline. guy: where do you think the biggest opportunities lie, oncology, vaccines question mark -- vaccines? break it down for us. within the space, where do you see things being super exciting right now? antoine: for sure, cancer kills people and people need drugs to treat those diseases. you name it, all diseases today need a cure and there are a lot

of opportunities in general. there are new modalities, you mentioned mrna. you have heard about christopher -- crispir. one thing that has been shown is the fact that digital medicine is up and coming. this is a big field we see was not here but everyone sees how the digital side of medicine can be brought forward. alix: i am still recovering from the effects of long covid, fatigue and brain fog and have been out for four months dealing with that and just returned to the office. i am wondering how the effects of long covid, a lot of which we don't know how to treat, are you

investing in that and do you see opportunities there? antoine: absolutely, and i feel for you. this is something real, and people don't understand it. there 500 million affected. 10% to 30% of those who have long covid syndrome, we are at the very beginning of trying to understand. you are the clear witness of this, this is not something to be taken lightly. there is a lot of research going on trying to understand from chronic fatigue to the brain fog you are describing. it is not going to be sold overnight, -- solved overnight, but this will be an opportunity for investors in this field going forward. guy: why is it important for you

that you remain independent? i am sure apollo would have liked to have taken more of your is this, why is it important that you remain independent, and what -- independent in what is going to become increasingly complicated? antoine: from our end, we were created in 1972, and we have been proudly independent for a long time. the idea we can develop our own business owning forward, be it the help of partners, was how we look at the deal from the get-go. we started looking two years ago and interestingly enough, apollo was of exactly the same mind. if you have reviewed what apollo has done to create partnership, they have a fintech partnership, in areas historically not

present, they don't want to mess up how we are operating. they want to learn from our expense with life-sciences. they don't want to meddle in which come is we invest in. there is a logic we saw eye to eye. we will bring them a skill set we don't have eared we wanted a partner that would bring us firepower and knowledge how to build the business. you have to give it to them come from zero to 500 billion is pretty good. guy: they have a few schools -- skills. i am sure you do as well. thank you for joining us. this is bloomberg. ♪

alix: one of my favorite stories of the day.

goldman sachs allowing senior staff members to take an unlimited number of vacation days, according to a company memo as seen by bloomberg that they can take time off when needed "without a fixed occasion day entitlement." do we think that is going to happen? guy: i am not sure they are going to take anymore holiday or less holiday. i find it hard to believe this is really going to change anything in reality. this feels like -- alix: a bone you're not going to eat. guy: i would be surprised if it had a meaningful impact. headlines coming through from andrew bailey giving testimony down in westminster. andrew bailey talking about firms focusing on how to hire people.

80% of inflation over shirt due to first-round. andrew bailey saying food prices is a major worry. we are going to focus on europe. european close is coming up next. this is bloomberg. ♪ xfinity mobile runs on america's most reliable 5g network,

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guy: the bear market rally seems to have faded rather quickly. technology stocks leading europe lower. miners having a fairly good day. the countdown to the close starts right now. >> the countdown is on in europe. this is "bloomberg markets: european close" with guy johnson and alix steel. guy: 30 minutes until the close. this is what the price action looks like.