tv Bloomberg Markets Bloomberg June 14, 2022 1:30pm-2:00pm EDT
from the train cars and get it out to the ocean and get it across the world. mark: the president made his remarks at the afl-cio convention in philadelphia today. the house committee investigate the january 6 2021 assault on the u.s. capital said it needs more time to assemble videos and witnesses. it has proponent -- postpone tomorrow's hearing and moved it to thursday. there is pressure placed on justice department officials like president trump to convince state officials to recalibrate results of the 2020 presidential election step scotland will push ahead with a vote. the scottish first minister said today she will use whatever legal means possible is a government tries to reinvigorate the campaign to leave the you k. boris johnson is refusing to
give scotland another boat. the south korean prime minister's warning and nationwide truckers drag could cause major damage to the country's economy. 5800 truckers rallied at different sites across the country is the protest entered its eighth day step it could cost them more than a billion dollars in damages. striking truckers are calling for an increase in wages amid soaring full prices. global news, 24 hours a day and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. ♪
jon: welcome to bloomberg markets. >> it's been a quiet session. a little bit of needed reaction but we opened in the green but we are down one/10 of 1%. a little bit of a risk off mood and a little bit of caution. you have a 32 handle. perhaps investors are not quite confident risk off move is off. 345 in the 10 year yield and the two year and five year and the margin of premiums will be a big theme. is it worth going out further on the curve? will the higher yields trump a stronger dollar which is having ripple effects across the entire market. jonathan: it's been a hedge for a lot of companies but there are
some corporate stories of encouragement going through big management overhaul and dividend news that is exciting for investors. the cloud business really sent out confidence to the market we have the continued interest in energy stocks like occidental petroleum but it is the elevated price of oil now that is one of the key concerns for the broader economy around the world. kriti: certainly a big concern and another is volatility that's gripping financial markets ahead of tomorrow's fomc decision. we talked about the pressure in the treasury market. >> i think there will be appointed which the curve starts to invert but that will become more aggressive and we will get outright bids for the long end of the treasury curve. when that happens is a critical question.
what we are searching for here as market participants is a level of neutral. once the fed is priced to go above the level of neutral, historically, it returns to the long and but we are not there yet. kriti: some hesitation on the bond side but let's talk about the equity markets where we see more volatility here to date. for more on that is anna hahn, thank you for joining us. the last 24 hours has been crucial with 50 basis points turning into 75 basis points from the fed but is that a negative tory positive for the start market that maybe they are getting a handle on inflation? >> i definitely think there is a positive aspect. we get 75 this month which is our view which means that the
fed is moving forward. they are acknowledging that inflation above 8% going forward is something we need to get control on. if they don't and they are more dovish than the market expects at 50, it can move the equity market further down giving us fears that we will move down and have to be more aggressive to catch up step jon: walk us through how you're thinking about the next six months. there are starting to be some greater concerns about whether the u.s. consumer can weather the storm. if they see that kind of hike in rates and people are viewing the pain in their pocket book so what's the wildcard for you? >> there is not just one. i think it's all of it put together. we dealt with inflation.
when your real purchasing power gets decreased, people are becoming more price conscious and they are feeling those energy prices. on the other hand, equities are a large part of household wealth, almost 25% coming into this year. people got involved in stocks when we were stuck at home and now that we have an official bear market, you have to look at the impact it has. i think that's another factor we want to remind investors. i can see the consumer weakening and other impacts are outside domestic control. these are factors that could lead to less spending, less earnings growth in the equity market. kriti: what is actually driving the market here.
there are concerns about valuation so how much of this is liquidity and how much will continue to be the story in the face of quantitative tightening? >> that's a great point, the liquidity aspect. people start moving their books around and you see a lot of shifting with bigger value stocks or growth stocks. we are focusing on slowing corporate earnings. a lot of the reopening trade coming into the year and for the last year, a lot of that has been played out. i think people still consider services and travel but it won't be as robust as last year. looking at the stable price of growers, that's what we prefer in our portfolio now.
jon: just on the areas where margin pressure could be greatest, what are the sectors you will be watching closely? >> i think we are seeing margins come in with that combination where consumers jump need the lockdown and now discretionary sectors are not a focus for people on top of the issue with continuing supply chain problems. those are the kind of markets we can avoid in the low-quality part of the market companies with high leverage and high volatility, that would be my recommendation. kriti: your first time on our show and we look forward to having you back. coming up, we'll talk about the other issues plaguing markets, supply chain disruptions affecting the finance sector and are gazed is from city local head of banking and that
kriti: this is bloomberg markets. supply chain issues, rising rates, there are many reasons why corporations could be facing a cash crunch putting investors on the sidelines when it comes to capital raising. we have an update to walk us through these issues. sanali: let's look at shipping costs. even though they have come down from there highs, they are elevated from where they were two years ago or one year ago.
these are different routes. they are facing an extraordinary inflationary development and that's a complicated picture because the cost of financing will be rising. look at the high yield spread with the average high yields for the year. that is a cause that will get higher as rates rise. jon: stay with us. we want to stay with this theme of the supply chain and get perspective and the banking sector. our guests unit make sure these logistics do not make them insolvent. a number of considerations that
are key with your clients right now. can you tell us where the financing needs have been greatest? >> all of these are the major themes, inflation, supply chains and whether recession is coming. the financing is interesting. the bond market is still receptive to an -- investment what we are seeing is a little bit of a move of borrowing from banks. it's been a tepid market for bank loan growth in the last couple of years coming out of covid and we are seeing some of her clients looking for bank borrowing so that's picking up a little bit. kriti: there is a host of companies that saw when the market got choppy that they became fallen angels and they
lost good standing with investors. >> i don't mean to suggest that there is no reason, there is some. there are some who were more highly leveraged. the bank market is still there and that's helpful. what we are generally seeing his high levels of liquidity across the spectrum and that's been the theme since covid. a lot of our clients decided this out of the pandemic and have not brought the liquidity down as much as expected step we are in a market where inflation is depressing margins a bit and the ability to fund across the spectrum is more challenging and more expensive. we are not seeing a lot of
concern quite yet because the bet -- the fed balance sheet is providing some question. sanali: are they finding a place for cover? do you expect that to continue? >> i think the investment great companies are in great shape. around their own p&l performance, they will have challenges in the next 12 fighting -- 12-18 months. that could be a demand impact in the supply chain issues are there. with the help of these balance sheets, that will keep this recession from being as severe as it might have otherwise been. we are going into this with relative health of the large corporate in particular. i feel pretty good about that stuff we are going in with open
eyes around the fact that this will be a more difficult near-term outlook stop kriti: one of the big conversations has been in the wake of not only the trade war but the supply chain. bringing production lines from china, what are the geographic trends you are seeing your business? >> it's certainly a trend aspirational he. i don't think we have seen as much supply chain moves as we might have expected step we see interest in south east asia and interest in india, canada, north africa, this is where some of her clients want to look at closely now. china is still very big part of the and provide services and
manufacturing and ability to source materials very well. the current lockdowns in china are decelerating in some cases. there is interest in moving out and looking for determining plus other places to manufacture. it's still severe, we have preinvasion by russia, there was a shortage of chips but with the stored energy prices in the short supply of chips but we are not seeing tightness across other commodities. jon: thanks for your perspective and the time today. our thanks s toanali . we will take a look at the restaurant industry in the wake of the pandemic coming up next.
jon: this is bloomberg markets. the u.s. restaurant industry is in the spotlight as owners are grappling with rising food and labor problems. let's get more perspective from melba wilson, owner of melba's restaurant in harlem. i miss the opportunities to make a stop it's been such a challenging time for the restaurant industry coming out of the pandemic and ideally with a new set of challenges. what would you say about where the restaurant industry is now? >> it's really a product of the pandemic. this was extremely devastating
for the restaurant industry which is second largest private employer in the country. on top of that, we had the labor shortages which everyone is experiencing. and the rising high cost of goods. it's important for me to really try and be inclusive. we want to be inclusive of the neighborhood so that people in our neighborhood come to our establishment but when you look at the price of goods, it makes it difficult to keep my prices down. kriti: this is the second to time in 18 years that you've have raised your prices. there is the idea that fewer people will look at these prices? >> someone came in the other day
and said i raise the cake -- the price of cake by $10 but they were grumbling. i get that but look at the job market. we are paying people more than we have to because the labor shortage is affecting us as well as the increased in everything from produce floour. we have to increase our rises to stay in business. people who come in understand it. they know what's going on so they know it's not just us. that makes it easier for us to deal with. jon: we just did a segment on lending. during the pandemic, having access to capital was key for the industry and it would seem that this is a key issue for owners of restaurants. >> can you say access to
capital? the restaurant industry is a difficult industry to begin with and margins are thin. most restaurants don't have access to capital. when i opened up melba's in 2005, i saved up money. no bank would give me alone at that time. times have changed and i can -- and i can now get alone but when we look at businesses like restaurants starting out in this industry come is very difficult to get capital and during the pandemic, the ppp loans, i was on the forefront fighting for smaller businesses and local businesses to have access to ppp loans so that's still an issue with us. kriti: can you talk to us about
sourcing your food as food prices get higher? you are starting to see food prices increase and how do you combat that from a restaurant perspective? >> it's difficult to combat because it's not like we have a choice. we need to find these items and keep them on our menu and keep the customers coming back. the only thing we can do is smile a little brighter and be kinder and give them good service and be generous. often times, my staff will send over a dessert for a guest. it's a let people know we care. people are happy to eat out right now and we realize people need people and it's always good to sit down and enjoy a great me with family and friends. kriti: such a positive thought,
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romaine: now with news from around the world, here is first word. ukraine's president says the war may stagnate and more may die if the delivery of weapons to his country does not speed up. president zelenskyy told -- that he needs adequate weapons to be able to hit targets from long distances within its territory