Bloomberg The Open 02/29/2024

From new york City. For our viewers worldwide, I'm Manus Cranny in for Jonathan Ferro. This euphoria and equities will not be interrupted. Inflation behaves and is even revised lower for december. The details to come on this show. We're counting down to the open. It kicks in right now. Everything you need to get set for the start of U.S. trading. This is Bloomberg the Open with Jonathan Ferro. Coming up on the show, the latest data providing some relief on Wall Street. U.S. inflation figures com

ing in pretty much as expected, reinforcing speculation that the rate cuts are on the way. We begin with the only issue in America, inflation. Yes, January was a setback, I think. But, you know, to me, the overall story is still the same, which is we have a period of disinflation in front of us. When I look at things like the employment cost index and the quits rate, the inflationary impulses in the labor markets are fading. Talk to me in the spring, I wouldn't be surprised to see things like Ma

rch, April, core inflation come in weaker than expected. Let's get right into the results. Mike McKay is side by side with me. Mike, good to see you, sir. Take me inside the revisions. And Neil did a really did have a spot on with the dividend comment. Absolutely. He wins. I come in second P.S. headline up 3/10 for the month of January which was bang on expectations 2.4% on a year over year basis. PCE core 4/10 2.8%. Now both of those on a month over month basis are higher than they had been hig

hest for the quarter in a year. But given base effects, we see the year over year numbers continue to decline. And also what we saw was a revision lower. You can see 2/10 for December for the headline. And the core that has actually been revised down to 1/10 each month, which is what I think we're getting the reaction we are in the bond market. Overall, inflation is still going down. Not as fast as people would want. Personal incomes were up on the month by 1%, which is a very big amount. Neil,

as you mentioned, nailed it, 4.1% increase in dividend payments. Hold on to that thought. And wages and salaries up 4/10 of a percent, just slightly lower than they were the prior month. Personal spending, 2/10 gain. We had expected a slow down. Got that? And of course, we got to mention jobless claims, 215,000 up from 202,000, but still very, very low. All right. Here's why we want to talk about the dividend payments. When you're looking at what is contributing the most or a lot, at least to ov

erall numbers in terms of the the PKI. It is portfolio management, which was up about 5%. And overall, we're seeing that kind of impact on the markets because the markets have been so busy, there's so much turnover, there's a lot of charges, a lot of fees that go into that, and it's really helping boost inflation a little bit. The POGO problem, we've met the enemy and he is us. Now, how long does this effect last? We know the Fed isn't going to do anything at their March meeting, which comes up

late in the month. But next week, Jay Powell testifies up on Capitol Hill twice and he will probably have a major effect on how bond markets position and then equity markets for what the Fed may do and for interest rates going forward. February jobs is next Friday, not tomorrow. And then on March 12th, we get the February CPI. Now, normally we talk about the PC being more important to the Fed, but as they go into that meeting, this will give us more information about where inflation was in Febru

ary. A little bit fresher data. So the Fed may look to that for some guidance in whatever kind of guidance they want to give us about when they're going to do any interest rate cuts. Okay, Mike, thank you very much. It was a12 punch on surveillance. Let's continue the conversation and the debate. My guest this morning on discussion, Justin Feld of AllianceBernstein and Julia Coronado of Macro Policy Perspectives. Julia, good morning. So a touch higher, a pick higher on some of these numbers on t

he p, c, e, but would you agree with data, which is the disinflation narrative overall is safe? Yes, I do agree with that conclusion. We're seeing a lot of January effects in the data, both on the income side and on the pricing side. But because they are more moderate sort of echo effect from what we've gotten last year, the actual year on year keeps declining. So I think, yes, I agree with Neil that, you know, from Q2, we're going to see all of those beginning of the year effects fading and we'

re going to see some lower print ends just like we saw last year, but even lower than the year before. So that year on year will continue to decline in our forecast. So looking at the details of this data, it still looks like we're moving in the right direction on inflation. And on the spending side, consumers are still resilient. Came in a little firmer than we expected. Services keep carrying the day. Consumers pulled back on goods spending in January but are still spending on services. So we

still have a very solid economy with falling inflation, providing consumers a dividend and resiliency in their spending. And this is where maybe we need to review consensus and perhaps move away from the negative. You've cautioned. Good morning to you. You warned very clearly this would not be a paradigm shift even if it came in a paper to hire. It did come in a bit higher at plus point 4% at month on month. So in your view, are we still on track for the Fed to deliver three cuts? Because I thin

k we were debating even that we would get three. Up until this point, there was so much prevarication. Yeah, I think that we are on track to start getting cuts later this year. The real question is, and I'm glad you phrased that ever wants to know, is it going to start in May, June, later? It's not so much when it starts. It's how many we're going to get. And the markets come around thinking the average is getting more like three cuts. I remind everyone that when markets price in something, it's

the average of all possibilities. And quite frankly, the Fed doesn't know what they're going to do. It really depends on how the data comes in, not just inflation, but on the growth side. So if things look very stable, we expect the Fed to start to normalize, which probably will result in three or four cuts this year and more in 2025. However, if you know this has been a Goldilocks economy in many respects, if we do get weakness or unexpected downside, the Fed might have to cut a lot harder thi

s year. The question is, of course, where does that tail risk come from? And I'm going to ask you both the same question. I spoke to State Street a little bit earlier this morning. I said, oh, there aren't many yellow flags in this data. The wages are strong. The unemployment rate is is behaving itself. And I was pushed back by State Street and they said to me, no, you're looking at the wrong data. Look at the lending and the commercial side. Look at the bank lending, look at the commercial side

of the business, look at the consumer balance sheets, which are rising on credit cards. Those are yellow flags for State Street. Julia, are the yellow flags for you or are you still firmly in the go green? I think I would agree that a fading credit impulse, a tighter credit situation, more expensive money is a yellow flag. It should be something that is a headwind to growth as we move through the year. These are the lags and monetary policy. I'm a firm believer that are still there and working

their way through the system. The other yellow flag we've seen is in earnings reports. Companies are very optimistic that they can maintain or even expand their margins this year on moderate revenue growth. But part of the reason they're optimistic is that they're hiring intentions, which is something we track. We scrape these earnings reports and track hiring and firing intentions. We've seen hiring intentions continue to go down and a slight uptick in layoff intentions. And that hasn't shown u

p in jobless claims yet. And maybe it's that's either because it's not a widespread phenomenon. It could reflect the people that are laid off are quickly reabsorbed or it could be that it hasn't just shown up yet in the data. So I would say that's something we're watching very carefully to see how companies, as the earnings season continues, what they're expecting to do on the job front side, because at the core of every cycle is that positive feedback loop between spending and hiring that is fi

rmly intact right now. But, you know, again, I think we are at tighter settings of policy and that could lead companies to be more cautious on the on the hiring front. So gushing just just want to say before before I come back to you on what to do with Bonds. Juliette, can I push you a little bit further in terms of the adjustments on the on the job front? And it anecdotally, people are saying to us this is higher end job losses in the higher echelons of management and mid management, and theref

ore they're not able to sign on for their jobless benefits. Do you do you acknowledge not as a as perhaps a dislocate or in the data at the moment? Correct. Yes, absolutely. We are in a cycle where the job losses that we've seen have been concentrated in white collar jobs, not blue collar jobs. And those employees do tend to get severance packages. And so that delays that keeps them on payrolls essentially as long as they're receiving severance. And so that that could that would be the lag possi

bility that it shows up a few months down the road. Gershon I look at treasuries in equities. I mean, we're in a suspended spate of euphoric animation as far as equities are concerned. And then look, the Treasury markets, you've got there's there's malevolent drift higher in equities and you've got the bond market yields coming down ever so slightly. So suddenly we're back in a quasi traditional relationship. We popped it into a chart for our viewers. Again, this brings me to the bond side of th

e equation. Inflation is behaving, disinflation continues. There are no dramatic shocks in this market, but with a disinflation narrative and three pencilled penciled by the market, is this still time to pick up maybe a hedge in Treasuries as well as coupon? Well, look, I do think that you point out the the the negative correlation is a good thing for markets. That's a normal thing. You know, when the ten year was a one and a half percent, you weren't going to get that much. And for me, it's rea

lly a function of time. Right. The longer that that, you know, short term rates are elevated, just the greater probability that something is going to break. Monetary policy works with the lag, and that's why. Right. Even though, you know, even if things are okay, the Fed is going to normalize because they know you don't have to have an event. You know, this stuff is going to break. Companies are going to have to refinance debt at higher rates over some period as well. So that's why the Fed is go

ing to you know, is going to end up cutting regardless of what we see. But to your point, we definitely think that, you know, treasuries are going to be a good hedge if there's going to be a risk off market. You know, you mentioned equities. Equities to me have been incredibly resilient. You've really gone from a risk free rate, long term risk free rate of one in three quarters a couple of years ago to almost five now back to closer to four and a half. That should have you think about it should

have had equities selling off and they've rallied since. So I'm not an equity forecast or I don't know what they're going to do going forward, but certainly you're going to want some protection in case they are overvalued and duration is likely to do that for you. But you would also say that was credit is expensive. You still see pockets of opportunity there. Yeah. Look, credit. Everyone thinks that, you know, we look at it's tighter than average. Well, it actually spreads. It's higher than aver

age about 75% of the time. Or said another way. Right. The median is a lot lower than the mean. You know, a year ago I was sitting here and pound the table. The credit was cheap. Credit is not cheap today. It may even be on the expensive side, but that doesn't mean that disaster is around the corner are all in the yields are impressive. Defaults are almost certainly going to come from the lower end quality like triple C's, which already trade at an average price of $0.78 on the dollar, many trad

ing at 50 or 60. So even if those default, it's not going to have this huge impact on the market. The market, the high yield market in particular has never been higher quality. Many, many more double B's. So yes, are you going to get the kind of robust double digit returns that you got last year? Very unlikely. But are you going to get better returns in credit than some of the, quote unquote safer fixed income asset classes? I think that's highly likely as well. Judy, Just round off, we were beg

inning to see what was going on. Macy's in Lowe's. We've seen a few other retailers come in. When you look at the personal income side of this balance sheet, it's robust, isn't it? Surprisingly briefly. Yeah. No, the income is surprisingly robust that some of that is dividends, as you already mentioned. But what the retailers are seeing is that consumers have returned to price sensitivity. That's what's part of what's bringing inflation down. Consumers now want a deal and that's more challenge,

a more challenging environment for the retailers. Okay, Tim, stay with us. Since Justin Feld and Julia Coronado, my guest this morning on the market's PC Day. Let's look ahead before the opening bell. Abigail Doolittle has some of the movers about what's shaking. Well, at this point, we do have the overall index futures, as you know, manage shaking higher in relief on that in-line PC number. But to the downside, Snowflake plunging down 21%. They put up a huge beat in the quarter but it was the s

ales outlook miss and a change of CEOs. Well it's weighing on shares. Wall Street overall not impressed one analyst did upgrade we'll be talking about that more at the open. Marathon digital holdings despite a solid quarter, the stock's down about 4% perhaps the consolidation of the outsized rally. And then you, of course, have to wonder whether or not that's a tell of what could be to come for some of the other crypto stocks rallying in sympathy with Bitcoin back above $60,000 per Bitcoin, and

then Tesla and other big tech names all spiking higher on that p e print going from about flat to right now up 1.2%. The idea that perhaps the Fed is going to be cutting, maybe not sooner, but at least as much as the market is pricing in as you were talking about three times and that liquidity will be a little bit more fruitful for stocks. Okay, Abbi, thank you so much, Abigail Doolittle. She will track the stocks and the sectors through the show coming up. Well, new polling trouble for the pres

ident at the moment. This is a huge opportunity for President Trump, former President Trump. It's one of the reasons he won in 2016. And if Biden can't change the narrative here. He's going to be in even more trouble than he is today. The latest on the 2024 election. That's next with Amy Horton, our intrepid White House reporter. Biden is on the defensive here. And this is a huge issue in the campaign this year. This is a huge opportunity for President Trump, former President Trump. It's one of

the reasons he won in 2016. And if Biden can't change the narrative here, he's going to be in even more trouble than he is today. Struggling at the polls, the border issue gains wide and the economy is still naturally the top issue. On the latest Bloomberg morning consult poll, the results show this. The border and president Biden's age are the two key sticking points with the voters contributing to Donald Trump's lead over Biden in the seven key swing states. Annmarie Horden joins me now. So, A

nne-Marie, when it comes to the age and acuity test, joe Biden in the swing states is not exactly knocking it out of the park. Good morning. No, when it comes across multitudes of groups that we're going to see head to the polls in November. The continuous message is that Biden is just too old. And even before we're getting I asked that question, this poll is asking respondents that question. People are writing it. It something they've heard or seen about each candidate. They will talk about Bid

en's age. So eight in ten battleground voters say he's too old. And this also matters comes after that damming special prosecutor report that described the president as a well-meaning elderly man. We did hear from his physician yesterday, though, that pushed back and said he was fit for duty. When it comes to the former president, though, Donald Trump, if Biden is too old, Trump is seen as too dangerous. Six in ten voters nearly labeling him that when it comes to remarks of things like NAITO and

the degradation of Naito. That's when we've seen some of these respondents pick up also when it comes to former President Donald Trump. He would face a lot of issues and voters not willing to go out and vote for him if he was convicted. So that is why that issue yesterday with the Supreme Court coming out manners and talking about that they are going to take up this immunity case for the Trump campaign that delays a key court case that he is dealing with because he wants to extend that well pas

t the November election. It's interesting how the native aspect is now transferred very clearly into the polls, Ann-Marie, because we talk a lot about the domestic issues kicking in at the polls, but that global issue really coming home to play Annmarie Horden on the very latest Bloomberg poll Goshen decent felt and julia coronado on my guest this morning on good morning to both of you. I was listening to surveillance before i came on and the conversation around the desk was neither of these can

didates either had the desire nor the proclivity to go after the two big issues on the deficit, which is the medical care and indeed the entitlement program. To you guys. And for the bond market, is that is that what is not being talked about that I should be more concerned about regardless of who gets in next year? I think that is you're exactly right. We we live in a very polarized political environment. Right. And we think the Republicans and Democrats can agree on anything. The reality is th

ey won't say this publicly, but there really is no difference between the two parties when it comes to entitlement spending or getting the budget deficit, you know, reining it in. Remember, Trump spent more than any other US president beforehand. So, yeah, I think there's obviously lots of ramifications for who wins. I'm not a political prognosticator. I have no idea who's going to win. But, you know, we don't really know what that means for markets. You know, the market the bond market doesn't

really care about budget deficits, doesn't seem to maybe that'll change one day. I don't think it's going to matter who comes in as it relates to that. I do think it's important to remember that even if we knew who was going to win, that doesn't necessarily tell us what markets are going to do. I remind everyone that you're the overwhelming consensus in 2016 was that Trump won, markets would crash, and of course, markets did incredibly well under him. So we really don't know. But to your point,

that's exactly right. I don't know if markets are focused on it or not, but neither party is really serious about reining in deficits. Well, I don't think markets tend to focus on this issue, did they, Julia, until the ratings agencies really, as it were, make a very, very clear noise or bond markets revolt. So, Julia, when when you look at the deficit situation in the United States of America, just give me your top line on the risk at the moment because it is forever increasing. You know, the d

eficits are wide and that is sort of projected to be the case for the foreseeable future. They're not widening. So it's not a constant accelerating force and it means somewhat higher interest rates. We've seen that, but it doesn't really reflect any concern about the dollar or the stability of the United States, at least not yet. The dollar's very strong, so I don't really think it's an issue, the main issue for markets. The market's done well under both of these guys. And with widening deficits

, I think it's really more about the resiliency, stability and strength of the U.S. economy and that so far has continued to outperform. So I really don't think that the deficit is the main or will become the main issue in the election. No, I mean, there is something relative to the rest of the world. The US economy is on fire. It is turbocharged relative to the stagnation in the United Kingdom and the flatlining and even negative aspects of some of the German economy. Thank you so much for join

ing me this morning. That discussion, Justin Feld and Julia Coronado on the markets. Coming up, your morning calls. And a little bit later, we'll dig in to the markets on the equity side with Binky Chadha. He joins me shortly. But the market implications from today's inflation report. That conversation ahead on the flows at Deutsche Bank on Bloomberg. An inflation spike was the enemy of the equity market. The disinflation narrative remains very keenly in place. Two bids and offers. One is snowfl

ake tanking by 20%. That is on the software side. Good Morning America. Good morning. And video, don't worry. Stocks up over 1%. We're all fine. We're all safe. There you go. Wait until that breaks. Let's have a look at some of the calls from the street. TD Cowen Downgrades Macy's to Market Perform Expect in a restructuring of strategy to have limited impact this year. Citigroup adds United to its analyst focused list, highlighting the airline's positive earnings growth and to close off Jefferie

s downgrades tapestry to hold seeing limited upside due to mounting competition down 1.3%. Next up, we're going to have a conversation with Deutsche Bank's Binky Chan. He discusses the outlook for markets. The flows show from Deutsche Bank. Can anything stop the euphoria in equities? This is brain bank. So PC you had lying came in pretty much as the market had expected. Dig a little bit deeper into the core PC and that is a little bit hotter. But for now these markets have euphoria. We are drivi

ng higher in video is higher some of the tech stocks on yeah no on the dying side by 20% but that's not enough to drag these markets though yields are lower and that is the ultimate base to this equity market. That is the opening bell. The euphoric at the Nasdaq in terms of the price action across the rest of your asset classes is what we've got Bitcoin. It's at day two of the news flow. People like SkyBridge are delivering pretty good returns on the back of this Bitcoin move. I mean, we had a w

ild ride yesterday up 13%. We drive higher by another four and a half percent. Liquidity is flowing to the ETFs, anywhere between six and $7 billion going into the newly minted ETFs and open interest is up 90% since the late autumn. Ten year yields dip on the back of the well-behaved cool PCI plus 2.4% and oil is up a third of 1%. The speculation is about an extension in the cuts from OPEC. Plus, is that going to be enough to sustain the floor on the oil markets? Stocks is our game. At 930 in th

e morning, Salesforce is on the ticket delivering a lackluster forecast, but getting a boost after announcing its first ever dividend and an increase in the buybacks. There's that word again. Abigail Doolittle is with me, Abby. And this stock is all over the map minutes because just moments ago or I should say minutes ago, the stock had been up more than 1% in the after hours. Yesterday, after results were first announced, the stock was down right now fluctuating more down, though, down 4/10 of

1%. So they did put up a pretty strong fourth quarter. Very good execution there. But it was the outlook that weighs or is weighing right now with the stock down 1.2%. $38 billion for sales for this current fiscal year versus the estimate of $38.6 billion for this customer relationship software company. Now, instead of just focusing on the guidance to continued profitability, it's the operating margin of 32.5% is better than the expectation of 31.4%. So that could be something that could help th

e stock get back into positive territory along with that increase buyback of $10 billion to $30 Billion total. And that quarterly dividend that you talked about, the first one $0.40 per share to be paid in April. So it's clear that the cost cutting measures are taking some effect for the bottom line. Lots of job cuts have been announced over the last several months, but sales growth is going to soon be the key as well. The company is attempting to address in a number of ways the stock over the l

ast year into today up more than 80%. So investors at this point, they're going to want to see more than trimming some of the excess numbers to make the bottom line look better. They're going to actually want to see more growth on top to minus. I mean, thank you very much. The magic words, dividends and buybacks in this earnings season. Let's stick with that because we've got Weight Watchers. The stock is plunging. This is after Oprah Winfrey said that she's preparing to leave the board. Natalie

Cooney Jarvis joins me now. The power of Oprah. Good morning, Italia with Money matters. Yes, Oprah joined the board in 2015, but this is not just related to Oprah's departure. The company posted disappointing guidance for the full year. They expect a big drop in revenue. They also lost about 200,000 subscribers last quarter. And there are lots of concerns for investors. But to take a step back, this is a company with a 50 year history. It was very popular in 1990 and 2000. And historically the

y also had lots of in-person meetings. So this is basically all about health care. They provide healthy diet plans. But now, as we can imagine, they are facing competition from similar companies as well as GLP one drugs. So the three biggest concerns for investors, number one, growth and number two, liquidity. And number three is leverage. The company was able to get a very favorable refinancing during the COVID 19 pandemic, but overall now it has leverage at ten times in terms of cash. In total

, they have 160 million cash plus revolver availability. But when it comes to debt, it's $1.4 billion. And bonds minus are trading at the distressed level, with yields approaching 20%. Evolution in the market. Natalia, thank you very much. On the what's your story? Let's turn to the media space. Paramount shares. They're moving higher after posting a pretty upbeat set of numbers for streaming. AMC not as fortunate. Coming in short on the profit estimates. It's a battleground out there, isn't it,

Simon? Good morning. It is in the test for both of these companies. Was putting on a show that the future quarters in 2024 could be better than 2023 when both of these names experienced losses. AMC after losses, massive losses last year, not able to convince investors that it is really turning the corner despite. Taylor Swift and Beyoncé concert shows, which brought a revenue up 11% year on year in its fourth quarter. It saw EBIDTA that fell short of estimates by four and a half million. EBIT w

as only 42.5 million in the quarter. That led to a cut in target pay for the CEO by 25% this year. Citi says no surprise that this name is trading lower today, substantially the most since November, especially considering January. February box office was down 45% from pre-pandemic levels. Paramount, however, able to tell a little bit better story here. Despite mixed results, its streaming business subscriptions rising about 4.1 million from the previous quarter, now 67.5 million. And it says its

streaming service domestically will be profitable next year, even despite the overall revenue miss. We're seeing some enthusiasm in the shares today, now up about 6%. But there is concern here. KeyBanc saying that with at least one potential acquirer halting talks recently, we don't see much to get excited about. Maybe the only thing to get excited about is that shares closed at their lowest since November yesterday. So this news a little bit a positive headline for the company. Simon, thank yo

u very much. Let's turn our attention over to the hardware side of the business, HP shares. Little change after Q1 earnings came in in line with estimates. Ed Ludlow is with me. ADD. Yeah, it's a pretty mixed bag for HP. It's a story about PC on the consumer side and a story about PC on the commercial side. After basically two years of sales decline, the Street was looking for HP to tell us that they would at least rebound in the consumer unit. What we got was a decline of 1% on the consumer PC

unit, $2.76 billion. And on the commercial PC revenue, 5% decline to $6.5 billion. What's interesting is the narrative looking forward. HP is saying we expect to return to growth in 2024 on the PC side of our business, and that will be driven by enterprise or commercial customers. A lot of that stems from improvements in software which they can attribute and thank Microsoft for some limited upside they see in PC sales coming from AI. There's a there's a big conversation happening right now about

us interacting with generative AI tools locally on device, both on PC and on on smartphone. But we're yet to see that materialize in the kind of upgrade cycle that's coming. I find it really interesting. So HP just recorded the end of the fiscal quarter ending January 31st, but it includes the holidays. And if you look at the third party IDC data and it's reflected in HP sales as well, it's the weakest holiday period for consumer PC going back to 2016. So we're kind of waiting and we're a bit n

ervous, even though the stock's up 2/10 of 1% after a decline in after hours when they posted the numbers. Ed, thank you very much. And I know that with the very latest on the tech stories now, Deutsche Bank's Venky Chadha says this weighing in on the equity positioning, solid inflows again this week. It's the fifth in a row. The inflows over these five weeks of total $75 billion is the strongest in two years. Inflows this week again being driven in part by U. S funds. Binky joins me now. I mean

, there is this sort of almost euphoric FOMO scenario. It reminds me very much of the meme frenzy from a few years ago. Binky, good morning to you. When you look at this kind of movement in the markets, are you comfortable with the pace and velocity? Good morning. Good morning. Balance. In terms of the flows, they're clearly robust. But, you know, I would rush to point out that they're actually coming in in line with the macro data. I think big picture, you want to keep in mind that we've been g

rowing about trend in the US for more than a year and a half now, and we look set to do that again basically for the seventh quarter in a row in the first quarter of this year. So yes, we're getting robust inflows, but they're just as robust as the macro data basically. And in fact, I would go wider than just the flows equity position or changes in equity positioning which generally produce basically, you know, very sharp moves when there are sharp moves in positioning, especially off of extreme

s, they're also in line basically with the macro data. So, you know, the macro data has been good. The macro data has been pretty stellar. I mean, again, this morning, PCE in line and real income. Is that coming in Binky? And this is what the market live team are talking about on the blog. They are talking about rising real income support. The S&P. I look fear ye not for that consumer. And that chimes with you. You've got 5500 as your target. Strong real incomes is a pretty strong pillar in this

narrative, isn't it? It's a very strong pillar. I think it's also important to keep in mind that, you know, a big part of it, if you're looking back over time, over the last year and a half, where we get this strong growth, we got it because oil prices came off and so real incomes got a boost and real incomes have basically been growing sense. What happened in the summer of 2022 is something pretty unprecedented in the sense that we had real incomes falling for about a year. But the inflection

point is really, you know, post the Russia Ukraine boosted oil prices as they started to come off, real incomes basically began to grow again. And that, in our view, has really been the driver of the very strong growth that we've had. Now, inflation has come off. And so we are now talking about much smaller sort of declines in inflation going forward so that a boost is going to taper off. But, you know, there's plenty of others that could boost growth. I mean, number one that comes to mind, of c

ourse, is destocking. You know, almost everybody and every company says that it's over. But it you know, it's not clear universal or widespread signs basically, of restocking. So that still has to happen. And I think will, you know, be the next basically or one of the next, you know, carriers of the baton, if, you know, that's fine. And also, I think what you said sort of chimes with what Collins, Williams and Bostic make here yesterday is that it's going to be a more uneasy path to 2%. And we'r

e playing for the long game, according to Bostic. Tell me, what do you make of this? Over at the house of Hi, I was going to say highs of Bloomberg over the highs of Goldman. They have this to say. They're breathless by the euphoria. One should say we've gone through a period of euphoria which is proved impossible to call. A top march suggests a fuller house. The rally is tired, Pinky. However, there is no catalyst for a potential sell off. Now, this is the kicker, Binky. This is where I want to

spend our last minute and a half together. This has left the market participants unhedged. Are we naked? What is it? Defensive. A smart, defensive tactical deployment in the market. That is a hedge. I think given everything that's basically going on, it's not easy to really find that hedge because, you know, first it was just stepping back. And before we get totally into the hedges, it what I would say is that, you know, we are very, very close followers of positioning. We have a weekly report

that I highly recommend actually produced by one of my colleagues. And I think the important thing to keep in mind is that, yes, positioning is clearly overweight, but if you think about it as a z-score between minus one and plus one, we serve in the middle of the upper half of the range. Typically, when there is euphoria, you would expect to see equity positioning all the way at the top. We are clearly not there. In fact, we are kind of where we were basically in July, maybe a teensy bit lower,

a teensy bit higher. So, you know, the aggregate measure of equity positioning does not suggest euphoria, I think from a demand supply point of view in terms of thinking about equities, you've got to think basically about the other drivers in the demand supply. And I would highlight really buybacks which are, you know, enormous driver from a demand supply point of view historically. And what is going on with buybacks is that in 2022, so all the way back in 2022 when earnings were falling, buyba

cks also fell. But in 2023, as earnings recovered, buybacks did not. So there's a lot of room for buybacks to rise. We can discuss why buybacks didn't rise. But I think the key point here is that what we got from Q4 earnings is that buybacks are now picking up so they have more room basically to rise. And they had a very important driver. Basically, I would say, I think a fantastic context around the overuse of euphoria. If you look at it through the prism with which you have just presented, it

gives me heart for deployment. Intel one one more rally in this market. Thank you. Thank you very much. That is Binky Tatton over at Deutsche Bank. Be careful how abused you are with the word euphoria coming up on the show. Bitcoin reaches for that record high. It's a bullish environment when it comes to Bitcoin. I think it speaks to just the overall risk on environment that we're seeing from tech and others where unless you have a telescope, it's hard to find this recession Conversation Ahead o

n Bloomberg. It's a bullish environment when it comes to Bitcoin. I think it speaks to just overall risk on environment that we're seeing from tech and others where unless you have a telescope, it's hard to find this recession risk on everywhere. A thing of beauty. Bitcoin outperforming stocks. So far this year. Investors are turning to alternative assets amid a wider caution in global markets. The token jumping 45% in the past two months, bringing the pandemic era record high of $69,000 into vi

ew. You can smell it. Katie Greifeld is with me for more. What's driving this, Katie? Is it events within the spaces that flow? Just give me give me the various components. Well, this one is interesting because it comes amid not much action in the equity markets. Of course, we're hovering near those record highs on the S&P 500, etc.. But you're not seeing the big, huge moves that typically accompany the risk on appetite that you're seeing in Bitcoin. But I think it really comes down to supply, d

emand and leverage. We know there's a lot of demand for Bitcoin right now. You can see that in the ETF flows, a lot of assets can or a lot of fun flows competing for Bitcoin Right now supply is an interesting one. We are approaching the having of course that's expected in April. Basically at that point, the block reward for miners will shrink. It will be cut in half. So people are thinking we're going to have some supply constraints on Bitcoin as well. And let's talk about leverage, because I th

ink this is really an interesting and important part. You have aggregate open interest on Bitcoin derivatives, which can be levered up to 100 times minutes on centralized exchanges. That's risen nearly 90% since October. That's probably exacerbating some of the moves that you're seeing right now to the upside. We'll see what happens on the downside when this rally if this rally breaks. Can I just say, as a former broker, that just the thoughts of this scale of leverage just it's salivating quite

literally. I would imagine you just write the tickets and it's ten times bigger than you thought you're ever going to do. You talked about the dominance of some of the new players and the new entrants into this market. I think how dominant are the players? The flow is is quite significant. Since the ETF was christened, yeah, the flows have been really impressive. I have to say so far. You take a look at the BlackRock product, the Fidelity product BlackRock's taken in 7.2 billion so far. It only

launched in mid-January, Fidelity not too far behind. We're talking about $4.7 billion there. And then you have a solid middle class as Eric Balchunas over at Bloomberg Intelligence would call it, also taking in more than $1,000,000,000. So I think that demand for these spot Bitcoin ETFs have really surprised many across industries. On the other end, you do have the grayscale product that's lost about $7.8 billion so far. A lot of pent up demand for selling since in its prior structure redempti

ons weren't allowed. But even with that, you're taking a look at net inflows for these spot Bitcoin products, and that's definitely contributing to the price. But also the euphoria around this asset class right now. Madness. Okay. Well, let's see what Mr. Novogratz is going to say later on in the day. There's a few of them coming out calling for a doubling in Bitcoin over the next 18 months himself and SkyBridge Capital, I'm sure are in the pack. Let's get the SEC to price action. Abby is with m

e. Manus We are looking at a 4/10 of 1% gain for the S&P 500 and it's a broad based gain. Most sectors for the S&P 500 tend to be specific, are higher led by communications services. Some of those mega-cap tech stocks up 1.1%. We also have a nice pop for real estate with yields in just a little bit. Materials tech. The one lone sector that is down, health care down about 3/10 of 1%. So nothing too big there now on the month because we are, of course, on the last day of the trading month and most

sectors are higher consumer discretionary, the best up 8.2% industrials. So some breadth on the month, up nearly 7%. The one lone sector or subsector. Take a look at that KBW regional banking index on that New York Community Bancorp blowup on the increased reserves around commercial real estate loans. Well, it's down two and a half percent minus. Okay, Abbi, thank you very much on those movies. Coming up, we'll set you up for the events for the rest of your trading day right here on Bloomberg.

To understand the deflator is to understand the core of what bond markets debate this. Is that the shift? No, it's not exactly dramatic, but this is when inflation PC is well behaved goes in line, the market reacts solidly. This is about bond yields beginning to perhaps top out as we see that well behaved pc e and the market still believes that June is alive for a rate cut. The transference is to the broader market as inflation is behaved, as inflation remains the narrative. So the broader conte

xt of the Russell expands by 1.3%. That's the dependence on rate cuts for the Russell narrative. The rest of the markets remain firm in video, also strong on the day. So at the moment you've seen stocks higher. The correlation is very real. Stocks are rising behind you. Over to the rest of the team for your trading diary. In the meantime, Rafael Bostic speaks a little bit later this morning. We get more fed speak Goolsbee, Mazda and Williams reaffirming, I suppose, the long road to cutting down

reports the earnings after the bell Friday University of Michigan consumer sentiment and we get the ECB manufacturing that's it for cutting down to the open right here on Bloomberg from New York on Manus Cranny the rest of the team will carry you through the rest of your trading day. Good morning.