>> it's wednesday, april 3. here are the top stories. stocks on edge. markets are tilting lower and bond sell-off ahead of a busy day. a.d.p. employment data shows wages are on the rise and oil is drifting higher. and the baltimore key bridge cleaner. we will talk with the c.e.o. about the weight of the destruction. ♪ >> in new york and welcome to "bloomberg markets." let's get a look at the markets

here. s&p 500 just flipping into the green. really trying to shake off that third day of declines today. the nasdaq 100 still down more than .1. you have the two-year yields up about one basis points now, just under 470, very volatile. and then you also have crude oil still above 85 here, still up .8 at the highest level since october. and we have some breaking data and michael mckee has the details. >> life would be a lot easier if we didn't have contradictory situation coming in. so not as big of move down in prices paid for services as we saw a move up in the prices paid

for manufacturing. the only people that cared about is i'm employment in the service -- ism employment. we are seeing some contraction in employment in the services of business. all in all, this is a good report but slightly weaker than it has been and that sort of breaks this chain of strong reports that we have seen all week. sonali: just as i was on the board there, you had two-year yields above 73 for a moment there, getting back below 70's. how do you think about what's ahead? >> i suspect everybody is going to be focused on j. powell this afternoon. there's not enough data that would cause him to change his view. maybe people are looking for more guidance on what they'll be looking at or how he describes the economy since the numbers

that we have had have come in for the most part, strong or stronger than expected. sonali: yields now at 469, hanging that to a 470 level. a lot of fed speak ahead. let's dive into those markets now. because we are joined by chief market strategist. you look at this conflicting data and it is really throwing a wrench in a lot of the expectations that we're seeing for rate cuts. but how do you read into the volatility for new money to put to work? >> the risks are underpriced as pertains to the uncertainties in this market. we could see a rising risk of a

fed induced recession with too high nominal rates meaning that real rates really start to bite the u.s. consumers. so those two fat tail risks are underpriced in the market. sonali: where do you think they're most underpriced right now? >> the front end of the u.s. treasury curve and if i'm right and the fed does cut this year two times, then we're going to see that big swath of cash that's sitting in in money markets that's returning 5.3%. it's maintaining some exposure to the equity markets which you can protect yourself with at the money for 12 months out.

sonali: how do you think about the mag 7 where it stands today and frankly, even some of the a.i. stocks? kathryn: i was looking at the numbers with our team and after the major breakout we've seen january 10 which is the highest the market top in the past two years for the first time in a year, historically, that implies around a 15% return for the next 12 months. and when you look at the breadth, 86% of the s&p 500 companies are above their 200 day moving average. so that's a good sign. that shows that the breadth is widening. you hope you don't need it but when you have it, you're very happy that you do. and you can buy the protection pretty cheaply, around 4.5% on the s&p 500 for 12 months out at the money and you can protect those triple q's.

the technology sector as well. so you maintain your exposure to this ongoing rally which is likely to continue without some flop in unemployment and consumer but you're protected. sonali: basically you're saying keep buying but hedge? kathryn: yeah. complacency is pretty high. everyone's discounting this perfect landing underpriced risks. sonali: would you take profits further given that the breadth is expanding? kathryn: i think it makes sense to rotate out of the high flyers. and that's why i like the barbell approach. maintaining exposure to the cyclicals but then buying those underloved sectors such as utilities and staples that have underperformed in the past year but in the event of some we were

talking about oil prices potentially surging. oil could jump $40. that would incite inflation. so it does make sense. sonali: with so many people concerned about that acceleration of inflation, do you start to almost bet on it at this point? how do you think about what role inflation plays in the market today? kathryn: 1.8% of that last number of #.8 comes from housing. if we do see housing drop in terms of prices, which new tenant rents is indicating will happen with a four-month lag because new tenant rents have been dropping, that could take some of the pressure off of inflation. i do have a 2.6% in core p.c. by the end of this year but that's going to be hard to get to that 2% trend. so the fed's going to have to make some tough choices, higher

target or break something to get to that 2% target. sonali: when you think about what could get hurt under higher inflation environment, where do you start to worry? kathryn: the interest rate sensitive sectors i think we've run the risk of recession. so then you see leverage loans for example, which have outperformed massively in the fixed income space get hit. high yields get hit. you see the bringing forward of the credit cycle which we have not seen play out as yet that one would expect after 525 basis pointses of rate hikes. that's where we will see vulnerability where the fed would have to maintain nominal rates.

sonali: jess, we're seeing a pretty significant move. the lowest since november. >> that's right. and it's seeing its biggest percentage drop since late january. so when you are looking at intel, one of the biggest s&p 500 and the biggest decliner, so this does come after it did disclose operating losses in it's semiconductor business. and this is something that they're having to push off those expectations. the stocks down 18% year-to-date which obviously underperforming the broader s&p 500 and also if you look at intel and stock have been around 90%. pulling back but in other corners, have to bring up tsmc. so if you look at the u.s. listed shares for this dipping, pairing back from some of its earlier declines, given the earthquake in taiwan, even bloomberg intelligence or

jefferies, they're pushing back on how much concern because you do have more factories opening up. sonali: how is this impacting other players? apple is shaking off some of the bad feelings that investors have in the market for that stock. >> just the massive buybacks that apple tends to have. also just the dividends and then also when it comes to tax laws harvesting and given the stock was up closer to 50% last year. looking at those key thresholds, it might be getting close to a

support level. cal me foods. -- cal-maine foods. the biggest supplier of eggs in the united states. so looking at this stock and its gains today. up close to 7%. this would be its best percentage gain of this year but this is al coming back of a steep decline. that was at that time, the biggest decline. you're looking at what's happening temporarily after chickens at its texas point did test positive for that highly contentious and contagious bird flu there. but when it comes to an earnings perspective, so you are seeing that stock more supportive. this is something that wouldn't be an issue for this company. sonali: we thank you so much for keying an eye on all that's moving. next, that boardroom battle at disney coming to a close. vanguard coming in hot. we'll bring you the latest next. this is bloomberg.

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♪ relax into a caribbean state of mind. visit sandals.com or call 1-800 sandals. sonali: another company that we're following this morning is disney. walt disney and c.e.o. bob iger are poised to win the proxy

battle. vanguard and blackrock, disney's largest investors are siding with the board. and while the battle might be nearing to a close, this could have a major impact of markets. a proxy battle in the magic kingdom does not go unnoticed. disney's weight is over 2%. and nelson's proxy stock could move the dough. and joining us with the fallout is bloomberg's ed ludlow. is it in the bag right now for disney and what comes next? >> it's hard to say it's in the bag. good morning. wow, that's a new one. vanguard and blockbuster are in the bag. the institutionals has sided with bob iger but there is an unknown, a wild card which is the largest body or single entity is a group of frankly retail investors that make up 30% of the shareholder base and retail investors historically

side with the activists that's bringing the proxy battle. at least 60% of the vote was counted and you factor in as well, the shareholder can change their vote at any time. as reported with george lucas backing iger, the force is strong with him right now. sonali: ha, ha. coming back at me with a george lucas joke. how do you think about the challenge forward for bob iger even after this battle? >> the nelson peltz wants a succession plan and he's upset about the streaming business performance, which continues to lose money but bob iger promise left hand deliver a profit in 2024. what's harder to tell is that in the 133-page manifesto that nelson put forward what is fixes any different from what bob iger is going to do whether or not peltz is on the board. that is the question.

the strategy from disney has been to raise prices for consumers on streaming while cutting the budget on comment spend. and peltz takes issues with did's issue with the linear tv business and the issue with fox buying to achieve scale. so, bob iger might not necessarily do anything differently and as you pointed out at the beginning, investors do pay attention. succession probably being the biggest question that lingers if iger manages to ward off the activist threat. sonali: ed ludlow of bloomberg television, thank you for keeping an eye on the story. we're back with kathryn rooney vera. i love using disney to talk about the dow jones industrial average. we're talking about breadth in the market here. how do you think about the indices? kathryn: the estimated earnings growth is 1.3%. if it turns out to be the case would be the third consecutive

quarter of earnings growth which is setting us off for a positive year this year. historically outside of recession, sonali, who consecutive growth is rare. and i suspect that even if the fed isn't able to cut economic growth, the combination of economic growth and disinflation if 2024 is a repeat of 2023 means the s&p could move higher. but this is a market that is so built on this fundamental concept of soft landing that were it not to occur the repercussions would be dramatic. sonali: let's talk about anything outside of the s&p as well. there's been that russell 2000 raid that has been brewing under the surface. that has constantly gotten beaten down at any sign of inflation. kathryn: yes. sonali: how do you think about how vulnerable those small and mid cap stocks are right now? kathryn: the truth is is that

under the expectation of dramatic rate cuts, small caps would do remarkably well. and i had to steepen our calls. but those two calls do well with the fed that cuts rates. were it not to, the growth is above potential and that is reinflationary then they don't do so well. where inflation remains sticky, small caps underperform and we get an important retracement in duration as well. sonali: you're not the only one closing out trades out there. when you think about what we're facing a week from now, what are the big earnings upsets or surprises that you might expect? kathryn: i think that if we get some surprising economic data, we've seen very mixed data as you pointed out earlier this morning. if we get some surprising data on the labor front, then i think the cyclicals could be hard hit,

especially the high flyers. so we get non-farm this friday. it's going to be a good number. but the labor market is what the fed is focused on. a billing upside or a dramatic downsize. that will bring a market. sonali: we say volatility but how much and to which markets? kathryn: yeah, i think tech, which is the leader would face the most downside under an environment where the fed cannot cut. and we interest a potentially stagflationary scenario which is the biggest risk. so i would say the equity markets, they're almost breaking three deviations from the mean and in terms of their overvalued nature would be the hardest hit .gold is doing very, very well. that's one of my top picks as well as cash instruments. sonali: now it's interesting when we talk about tech, is tech

a monolith? do you think there are some parts of tech that would be insulated? we've seen prior parts of the cycle where almost some of those big tech names have been like a shield? kathryn: that's right. that's a very good point. where can we find the tech trade that hasn't already been priced in? and there are opportunities within financials, within health care, sub sectors of these areas which have companies where you can stock pick and go in and say these guys from actually deploying a.i. because at the end of the day, what we're seeing is corporations like to talk big game but they haven't executed technology or a.i. so i think a.i. has to deliver to maintain the -- maintain earnings growth and validate that multiple expansion, which drove the market last year. sonali: when we're talking about tech spending, when you're an infer and you're looking at these companies, what do you prefer at this point? do you want them to be spending

their cash on dividends? do you want them to be buying other companies, going out there and acquiring as m&a markets come back? kathryn: there's a lot of profitless tech companies. i think that this is a different market. i don't consider at it bubble similar the tech rupture in 1999 principally because a lot of these companies are profitable. and i think there are legs to this rally. so i think the trick is to find those as you mentioned, i think you alluded to this, find those sub segments that have not yet priced in this improvement in productivity that i still think is in the offing from the actual deployment of artificial intelligence. sonali: the nasdaq 100 flee into green teraon the day -- territory on today. what is that interest level that

will not impact the exuberance we're seeing in the market even if you expect less rate cuts? kathryn: if we get 50-75 basis points, that's going to be what the market is expecting. if we get zero, if economic growth does post 2%, and we get zero cuts, i think the s&p can be up another 15% according to that major breakout theory. but then again, we have those fat tail risks. were the fed unable to cut and have a hike, that's another story. so i think we're -- my base scenario is 60% chance of a softer landing. 40% of stagflation coming into 2024. sonali: kathryn rooney vera, we're going to have you back soon. thank you so much. still ahead, we're going to take a look at the companies making the most buzz on social media today. our social climbers is up next. our social climbers is up next. this is bloomberg. awkward que.

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sonali: it's time now for socioclimbers. a look at the stocks making waves. first stop is spotify planning to raise the price for the second time in a year. the streaming giant will increase prices by about a dollar to $2 a month in five markets including the u.k. by the end of april. it will raise prices in the united states later this year and next up is wework. the troubled co-working company is predicting $8 billion in rental savings. and meanwhile, wework co-found irhas submitted a bid to buy back the company. you can follow all the plays company because on your bloomberg terminal. it's been a little over a week since the francis scott key

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sonali: courts across the east coast are racing to absorb the cargo diverted from the baltimore harbor after last week's collapse of the francis scott key bridge. debris from the bridge is starting to get cleared but the aftermath is likely to be long and severe. we are joined by abigail doolittle with more. abigail: something interesting is despite the tragedy last week and what you were talking about, the uncertainty and debris, we don't have performance from some of the bulk carriers that would reflect that. take a look at the shares of genco, up 3.2%. international seaways up 5%.

we have some strength. for the other carriers, small declines. investors don't think the collapse will affect the financials of these companies very much at all. relative to the ports this is some interesting data here. these are the ports that ships go to after they go to the port of baltimore. norfolk, virginia, the biggest percentage. 26%. charleston, new york, new jersey, halifax in nova scotia. 1.2%. we don't know how much traffic is necessarily being diverted. some of these ports could be affected and either a positive way in terms of ships going directly they are or may be negative if they have to go to the port of baltimore first and then go to these ports. interesting to keep track and an eye on the data. the type of ships that go into

the port of baltimore. we are looking at in purple at bulk carriers. 82. this does include the bridge collapsed on march 26. down but not the lowest over the last year to date. dry cargo, passengers, 46. nonemergent and tankers. it's interesting to see the traffic for the week did not go down in a massive, massive way. sonali: we thank you so much for your analysis. for more on the shipping industry we are joined by john wobensmith, genco shipping and trading president and ceo. genco ships dry bulk commodities like grain. let's talk about the shipping process as it has been changed over the last week. john: we have been fortunate we did not have any ships in the immediate area. we have from time to time because baltimore is a large cold port on the east coast of the united states.

what we have done is continued shipping globally. we move iron ore, coal, grains, and a host of other commodities such as salt, sugar, steel products, wood products. there runs the gamut and turns of dry bulk shipping commodities. sonali: what is the impact across your industry? we showed a stock strain about you and your competitors, how different companies have been impacted. what do you think the ultimate impact will be? john: relatively small. you have to put into perspective there's about 25 million tons of coal split between thermal and mineralogical coal which goes to the steel industry. most of that goes to asia, indian particular. when you compare the 25 million tons to the 450 million tons that china imported last year, the over 200 million tons india imported last year, it is not that large. our expectation, and it is tough

to tell right now but hopefully in the next few weeks there will be deeper channels that are established in baltimore. i believe it is more of a local economic issue than it is necessarily for global shipping, at this point and as we know. sonali: how do you see the road to recovery here? john: i think it's difficult to tell right now. this morning i watched the ntsb video of the guys on board that were doing the assessment. you obviously can still see massive amounts of debris on the ship and in the background. it is a little difficult to tell how long that will take to clear. from what i understand they established two channels but they are fairly -- really from work to again barge. they don't -- for tug and barge. maybe 11 to 14 feet of draft.

are ships are anywhere from 30 to 40 feet of draft. i think it is a little while before an actual commercial channel can be opened up. sonali: there is the channel itself and the fallout from what happened in the first place. how do you think about the responsibility to the industry after what happened? john: it's a very difficult situation. we obviously don't know what caused the ship to have issues. i would certainly focus on possible fuel issues and contamination. possibly an electrical issue that occurred on board. it is just too early to tell. there's obviously a long investigation that has to go on. sonali: we were talking about the industry applications and about applications to baltimore as well. what about to the commodity markets? we are talking about critical commodities like iron ore, coal, grain. what is most impacted with a lot

of these diversions? john: it's interesting. shipping is in the new so much because we started out with the panama canal and the issues curtailing the number of ships going through the panama canal, which has a lot of grain on the dry bulk side that would normally go through there. because of lower water levels that can only push through 27 ships today day versus normally 40 or 41. then we had the issue that has taken place in the southern red sea area. the unfortunate attacks on maritime assets. you take the panama canal, the red sea, that is adding 20 days just to u.s. grain shipments to go around south africa and out to asia. now we have this unfortunate disaster that has occurred in baltimore, from a dry bulk standpoint about 25 million tons. some of that can be diverted and

taken from hampton roads. railed down and put on ships. once the channel is open again there will be catch up as well, mostly for coal shipments. it's also a large car carrier port. most of that is being diverted to other ports in the u.s., including new york, newark, and a container port as well. most of that can be diverted to other ports at this point. sonali: when you think about the supply chain disruptions and diversions is that short for saying among the most heavily impacted commodities would be grain? that implies food prices facing a bigger hit moving forward. john: grain has been heavily impacted by the panama canal putting down the number of ships second go through and also the red sea. it was all most a double whammy that took place in a very brief period of time. most ships now, and we certainly

have been since the end of december diverting our ships around the red sea area and going around south africa to head out to asia. sonali: if you think about all these incidents are they isolated and one-off, or are they interconnected? how do you plan for all of this? john: it is difficult. any time in shipping you have to be able to adjust quickly. certainly i think having gone through the operational issues during covid in 2020 we are more prepared than we ever have been in dealing with the short-term issues. i think the panama canal -- the panama canal was more of a drought issue and lack of rainfall. there is hope is we get to may and june the rainfall will take up in panama and the water levels will come back up and more ships will be allowed to go through. the red sea is i think a longer-term issue. i think it's a difficult

decision for a shipowner to put their crew in peril by going through the suez canal and then all the way down through the southern red sea at this -- it is not safe. which is why we are going around the south africa. sonali: put on your macroeconomic hat here. if you had to predict the direction of travel here between fuel and commodities do you think -- do things get a lot worse in terms of prices? john: what's interesting is we have been shipping a lot. not just a lot of iron ore and cold but from an unseasonable standpoint usually the first quarter is the softest time of the year. what we have seen our higher freight rates. if you look at the guidance we put up for first quarter a couple of weeks ago, we showed higher freight rates in the first quarter that we booked in the fourth quarter. highly unusual. usually because of rainy weather

in brazil there is not enough iron ore shipped. this year with el niño it has been very dry. the price of iron hovered around $150 for a long time. inventory levels from china needed to be restocked. we had a perfect storm and freight rates outperformed in the first quarter. sonali: we thank you for a look inside the industry. that is john wobensmith of genco shipping and trading. let's get a check on the markets with abigail. abigail: take a look at the s&p 500 at or near session highs. the index had been down about .1%, heading at that point to a third-down day in a row. breaking that streak and a piece of it is the fact the ism data came in weaker than expected. some folks hoping that means the fed will be back cutting three times this year as some officials had recently suggested. take a look at the ten-year yield. yields are higher. up five basis points.

yields not really matching the expectation of stocks in some way. the move pretty small. oil at a multi-month high. gold down ever so slightly. yesterday we were talking about apple hitting a key support. apple doing something different than the rest of the markets. let's look at these movers. taiwan's semi conductor up 1.6% earlier. down on the tragic earthquake in taiwan, the worst in 25 years. they shuttered some facilities but now there is a headline out that they are expected to resume production overnight. initially we had pressure on chips because of headlines. analyst thought the closure of tsmc's facility in taiwan could in fact move the supply chain. now it seems less likely that is going to happen. amd popping in sympathy. take a look at intel, down 6.6%, the worst day since january due to the fact that the losses at

one of its factories widening. that factory not expected to be profitability 2030. investors not liking that in supporting the turnaround plan. i was talking about apple and the idea that it is deeply in this correction, down 10% from last year's high, hitting on support. looks like the selling could continue. lots of fundamental issues around the iphone. the s&p 500 and white. apple the second-biggest component. it seems unlikely this spread at this point is a 3% to 4% spread will continue. something's got to give. it is not clear if the s&p 500 will follow apple or maybe we will see apple climb back up into its range to meet the s&p 500. sonali: thank you so much for that analysis. tesla's sales wipeout is driving concerns about lagging ev demand. we will talk about that with david sandolow on the columbia

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abigail: this is bloomberg markets . he was looking at a live shot jason pride joins limerick tv at 3:45 new york time. this is bloomberg. ♪ sonali: time for the daily wall street week segment. tesla's disastrous sales report is raising concerns about dwindling demand for electric vehicles in the u.s. we will bring in david sandolow, columbia university inaugural fellow at the center on global policy, and david westin. david: one of my favorite subjects is ev. we've had growing indication that a ramping back of demand for ev's in the united states. we have a new data point with tesla. is that a tesla problem that we

saw yesterday or broader issue? david s.: thanks for having me. two things are true once. demand for electric vehicles in the united states continues to grow, but at the same time that demand growth is slowing. let's not forget in 2023 there were 50% year-over-year growth in electric vehicle sales. that led to a spate of stories about how growth was slowing down. it shows how high expectations work. in the last quarter we have seen not just tesla but other slowdowns in electric vehicle sales. i think there are a number of factors we can talk about. i point to interest rates continuing to dampen the market overall for new car sales. with electric vehicles prices are just too high. the average price for the electric vehicle is around $50,000. consumers are looking for lower prices. then there is concerns about

charging infrastructure as well. sonali: when you think about the adoption curve, how quickly can demand slow? it is the rate of change that many are worried about. david s.: demand is up significantly in the past quarter. there is a range of projections. it depends upon a number of factors. it depends upon interest rates. it depends on how quickly new models come out and price points that consumers are more interested in. a number of the manufacturers, including hyundai, kia, others have had pretty good quarters as they put out some cheaper products. in china, we are seeing dramatic growth in the market with very low price models. i think it depends upon how manufacturers respond. in the united states, it depends on charging infrastructure. david: we had brian deese on recently and he said one of the

big gating functions for electric vehicles is the lack of charging stations. there is money in the inflation reduction act to try to buttress that. how big is the problem with the infrastructure to support charging? david s.: kitchen interesting chicken and egg problem. when you ask electric vehicle owners or potential buyers why they may be reluctant to buy ev they often pointed charging infrastructure. once they buy the vehicle they use the public infrastructure. people usually charge their cars either at home or at the office. it is a cross between a cell phone and a regular conventional vehicle the way people use it. that is creating some distance model challenges for electric vehicle charging companies. the biden administration has been ambitious in putting out significant funding for electric vehicle charging infrastructure that is starting to roll out. this is the type of thing there is a snowball effect.

once we reach critical mass for electric vehicle charging infrastructure it will make a big difference in the market. david: you mentioned price point. as we know, some of the big three from detroit made a conscious decision to go in with higher prices. general motors with cadillac. is it time for them to rethink that strategy? david s.: it's a typical way of introducing premium markets is to come in at the high end and then move down cheaper. that is what the big three and other carmakers are doing. one of tesla's problem is tesla has not put out a new model in a number of years. they are relying upon models are out almost five years ago. they have invested enormous amounts of corporate attention and resources into the cyber truck, a very niche product. they ar -- they're cheap sedan which is coming still projected to be a few years away. it's a big issue for tesla and

the rest of the market. sonali: i want to draw on your government expertise. you have been at the department of energy for a while. when you think about the administration's plans when it comes to electric vehicles how important is that for them to step in in this way? how much can those charging stations still demand? -- stoke demand? david s.: government plays an important role here. there are three major markets for electric vehicles now around the world. in europe, the united states, and china. we have seen governments playing roles in all three of those geographies. government has incentives but also it plays a critical role in the infrastructure of element. david: china has made a priority of electric vehicles. they are really subsidized a lot of their operation. we have very low-priced vehicles from uid. -- byd? what we have antidumping -- will

we have antidumping? david s.: we are seeing chinese vehicles move around the world and it's a significant trade issue in europe. the german industry is very concerned about this. i think this absolutely is going to be a real issue going forward. they will be strong pressure to protect the u.s. market against the entry of chinese vehicles. sonali: let's expand on that. how important is it for tesla and the other motor companies to be catching up for the sake of american competitiveness? david s.: one thing we have seen in the past couple of years is the manufacturing in the united states due to policy interventions and bold moves by the biden administration. i think american competitiveness is key here. i grew up in the great state of michigan. great manufacturing center. it has been for a century a home of the automotive industry.

it needs to stay ahead of the curve and is staying ahead of the curve for the vehicles of the future. sonali: david, thank you for your time. columbia university inaugural fellow on the center of global energy policy. david: a treat for me and maybe is a long discussion with ray dalio, legendary investor. he was on wall street week in 1982 and was adamant about what would happen in the wake of the mexican sovereign debt failure. he said it almost drove his company in the bankruptcy. he will talk about what he learned that might apply now. sonali: very much looking forward to that conversation. stick with us. this is bloomberg. ♪

sonali: let's take a look at stocks hitting 52 week highs. caterpillar hitting a high after news departing boeing ceo dave calhoun will also leave the board of caterpillar. it comes less than two weeks after calhoun pledged to step down at boeing which is grappling with the most severe prices in years. santander hitting highs after it was raised to a buy. we will talk to ross gerber. he joins bloomberg technology next. the big conversation around tesla and elon musk and much, much more. that does it for "bloomberg markets." this is bloomberg. ♪ ♪ hi202 pounds on golo.e lost

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