>> welcome to bloomberg markets, the s&p 500 turning positive in the last few minutes, it is capping its fourth consecutive month of gains and define concerns over and over again that the stock market has peaked -- defying concerns over and over again that the stock market has peaked. the nasdaq 100 also lessening its losses on the day, count less than 1%. two year yield back up above

460, seven basis point move and bitcoin barreling past $67,000. we are too thousand dollars away from the new record high. but as talk about some mid-day movers, we have some green and red on the screen and we are watching shares of american and boeing after the airlines announced plans to buy planes from boeing and airbus and emperor air. american airlines down 3.5% and boeing up less than .5%. more on the airlines and a lot of news here, jetblue and spirit edit plans to merge following antitrust concerns here. they are making it official, jetblue up 2.6% the spirit extending its decline more than 30 present on the day. jetblue had hoped that the 3.8 billion dollar deal would boost growth at a time when both are in short supply of planes and pilots. we talk about that later in the show. shares are continuing to decline. it has eclipsed saudi aramco making at the third largest

company in the world. esler shares are slower after shipments from its factory in shanghai plunged year-over-year by 19%. tesla down 6.6% and the worst performer here on the sm p 500 -- the s&p 500. apple buying from the eu, the company is down from its december peak and the company can use to divert from the rest of the s&p 500. abigail doolittle has more on the apple moves. >> this decline we have had for apple since the beginning of december since last the all-time high and since that time period as you were mentioning, down more than 10%, down 2%. look at the s&p 500 in white up about 9%. that is a 21% divide in performance between the s&p 500 and apple. the second largest member in just three months, something has got to give. this is unlikely to continue. apple will go higher or maybe

apple can also become a smaller member. as for what is behind the apple news, a few factors and concerns around iphone growth that is a big one, trying to slow down fears in terms of that being about 19 or 20% of revenue if that is less than a status symbol or the economy is not great. i think the biggest factor here and people are not talking about it is warren buffett's berkshire hathaway started selling in the third quarter of last year. it is static pressure of a seller suggesting they may still be selling. if that happens, i suggest we could see some more downside for apple. it is put this into context of the waiting of the s&p 500. microsoft is up 7.1% of the s&p 500 and this is typically reversed, apple is 6.1% and nvidia and amazon and met up, if apple remains the second largest member, maybe apple

declines. something has got to give. sonali: thank you for keeping an eye on the hot stocks and in regard to the economic outlook, the equity rally could hit a snag if they fit faces a no landing scenario and is not end up not planning at all. >> what if this is will about potential? technology and other factors. the fed does not catch, sometimes people say zero. last year, the expectation of the event in august and september, the 10% correction of equities. i think the potential paradox, it may be bad news for the market. sonali: alex reported on strategists having trouble this year making sense of the recent rally. she joins me now. would take a look at today, we could hit a new record high on the s&p 500, bank of america

also changing their tune, how much concern is there as we stared at these heights? >> it has been incredible, hitting all-time highs, 15 closing records this year alone. we are seeing strategists across wall street quickly upping their targets for where it will end the year. bank of america, the latest firm to live their target, we have barbara sandler and others all lifting their targets, some banks lifting them twice since publishing them in late december which is unusual. we spoke to jonathan who said he has never done anything like that and his 20 years on the strategy job. there is concern we have hit this level of euphoria that sentiment has gotten way too optimistic. if you look at it more closely some of these revisions only in-flight modest gains from where we are, 5% if you look at the highest target on the street. we are not at this level

everyone is gone for gains of 10 or 20%. -- is looking at gains of 10% or 20%. it is supported by earnings that we saw. sonali: we have to talk about this from a valuation perspective, price to earnings, what about the stocks that have flown away? the magnificent seven the best performers, uber intelligence's -- bloomberg intelligence compares it to 1999. >> there is some validity. there is an interesting data point that they said the s&p 500 is trading at its 95tj percentile going back to data from 1990, it is from a violation perspective expensive historically. the bank of america makes the argument you cannot compare to prior versions of itself like during the dot com bubble given the fact that there is less earnings volatility and it is

less leverage an overall higher quality. when you look at the magnificent seven names are is reason to be concerned about concentration when so many other stocks have not seen the growth that they have. so far they are justified by their earnings. they have been deliberate on those earnings and that it has driven optimism. sonali: how much risk is there under the surface and is it giving people caution in their upgrading? >> the main concern is that we could see an uptick in inflation again and perhaps the fed will have to keep interest rates higher for longer. the people i am talking to did not seem to be too concerned that even if we do have higher rates, witnessing a recession. the fit has been successful -- fed has been successful at watching the economy be resilient. they are citing very strong earnings growth and strong economy and none of them are talking about the prospect that sauce will fail if we do not get the rate cuts many people are hoping for this year. we have seen in the last months investors have priced in only

three cuts and the stocks have gone up and it is driven by fundamentals by those earnings. sonali: thank you for keeping an eye on what is under the surface. we speak to a chief market strategist at nl putnam. the concentration of stock striving returns so far this year, when christ returns for the s&p 500 through the remainder of this year if you believe that -- what drives returns for the s&p 500 through the remainder of this year if you believe it is going up? >> it is up year to date and that would be a good year in most circumstances. high single digit. we are already there. even though some companies and go higher, we think that there will be volatility between now and the end of the year whether that is caused by changes in the fed and their commentary, whether it is caused by more

companies like apple beginning to slip. so that the maintenance visit seven -- magnificent seven gets smaller and slows down. whether or not this is caused by small and value stocks beginning to outperform. you might get rotation under the surface without seeing a whole lot of movement in the overall index. i think it is difficult to paint a picture for the s&p 500 to be materially higher at the end of the air compared to where it is now. sonali: where do you think the rest of the magnificent seven goes? nvidia and others, even the newer names as people add into the group, it is gaining, do you put more chips on the table into stocks that have already accelerated so quickly? >> that is a nice word phrase you use. but more chips on the table. we think there is room for the semiconductor companies to run a bit more besides nvidia, a company like amd, that is up a

lot but it is a well-positioned company for ai. look at a company like broadcom, and other positioned company for ai and you look at the semiconductor related names like the semi cap equipment as well as semiconductor design software. there are some areas that can do well. having said that, the stocks and semiconductor indexes up a lot year to date and i could also take a breather. nvidia has gone straight up and it is true they are positioned phenomenally. they started off this year at a lower pe multiple then they started off last year. that is how strongly earnings at nvidia have been. -- strong the earnings at nvidia have been. that will depend on the budgets of the hyper scalars. the semi's are going to be somewhat a function of a portion of the magnificent seven in a punitive sort of fashion -- in a reader active sort of fashion.

sonali: some of the beaten-down sectors finally catching up, it begs the question on when, when do you start seeing the index start to go outside of the mat seven start to get gains? >> it is difficult to say. if you study history, you see typically small-cap stocks outperform at the beginning of a new economic cycle. we are not at the beginning of a new economic cycle. we are mid to late cycle. we are not going to be at the beginning until after there is a significant slowdown or a recession. even though the evaluation discrepancy is fairly large it is among the largest it has been in the last 25 years. it is hard to see what will make that change if we do not see the accelerated growth. we have seen in terms of the magnificent seven and the subset of magnificent seven which are the internet names as they were so well-positioned for ai and the pandemic and the big are getting bigger and there

economies of scale in this business. it is hard to see what will dislodge them so long as the economy continues on the path that it is. sonali: what do you think about the risks? putting your money to work in other sectors and you worry about the same things that would impact the broader market and the exhilaration of inflation or other broader risks, how do you protect yourself from the unknown? >> i think you have to have a quality focus and a barbell focus. for quality we look at invested capital on gross margin, debt levels, how sustainable companies, advantages and we were to pay up a little bit if you get that quality. we do not want to pay up a lot, a 3045 percent we are indicating a bit more of that competitive advantage will sustain. on the one end of the barbara lee have quality and on the other side you can find individual names in these sectors whether it is small-cap or value, whether it is

areas that have been left behind like health care but it is specific and name by name. i think there is valuation risk to a number of those innocent seven if it is the case -- magnificent seven if they begin to have hiccups. sonali: chief market strategist, we thank you for your time as we reach the brink of another potential record day in the market. we talk about airlines under jetblue terminated its $3.8 billion offer to merge with sprint. that is our some of the our. -- stock of the hour. also donald trump on presidential ballots this year. >> it took me four months but it was a very strong thing i gave. i said get them. ♪

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markets and it is time for the stock of the hour. there watching shares of jetblue which abandoned its 3.8 billion dollar merger with the spirit one month after federal judges box the deal. -- blocked the deal. what are the options for jetblue post the termination of this merger? >> this deal was important for jetblue and this was going to help bring them into the top tier of u.s. airlines and it is hard to grow organically in the airline industry. they needed this acquisition to really help them compete at a higher level. without that they are relegated to second-tier status for the foreseeable future. i will try to go organically but there is only so much you can do when you cannot really get planes for many years out. sonali: russell seen the price

action hit spirit -- you are still seeing the price action hit spirit. what are the actions for spirit moving forward at this point? >> the consequences for spirit or a bit more dire. there are some questions about whether they can survive and how they are going to be able to. some analysts on wall street are really questioning that right now. spirit said they are going to renegotiate certain debt maturities and try to address that. that is going to be tough for spirit for a while. sonali: how do they shape the story? they hired weinberg brothers as an advisor and citigroup saying it is unlikely they could find a merger partner after what you saw happen with jetblue. is this a matter of finding a new financer at this point? ways to refinance and pay down debt? >> that is probably the best option available to them, the market is in such a different place than it was when jetblue and spirit agree to this deal

more than a year ago. at the time, it looked like a good deal but now, spirit is in a tougher place, travel demand is not what it once was. i do not know if they will have as easy of a time finding someone who wants to merge. sonali: we started this conversation about how jetblue is relegated to the second tier now. how has that set them apart from tier one? >> it is certain markets where jetblue might seem really big because they are in that market but there are a lot of markets they are not in throughout the country. airlines like american, delta, united, they're everywhere and you can fly internationally with them. jetblue is going to have a real hard time getting to that level. they have added a few international destinations but ultimately they will remain probably a smaller carrier. sonali: thank you for this time, this is a big reminder that

marriages fall apart and those divorces can be messy. we will talk about wall street at its retreat on dei programs as backlash is growing. this is bloomberg. ♪

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markets and it is time for the wall street beat, goldman sachs is opening up his possibility summit for black students to white students as well as dei ships on wall street and they are one of many banks who are shipping their policies in different ways from -- from what we are joined by simone. it is worth talking through what is driving essentially the reversal of the de i policies if not full shift in how they are handled. why now? >> there is some litigation risks and i think that when you

talk to lawyers and consultants in this space this is the big concern. the supreme court ruling on affirmative action back in june, did not immediately impact businesses, it is likely, many feel to have a knock on effect on the corporate world. ideally you do not want to offer certain benefits to protected groups. not only. offer them to everyone else and that is a part of the inclusivity id at that weeks off but there are other things -- inclusivity idea that you see but there are other things. some of these cut at the heart of what these programs we are talking about are doing and that is what we are seeing some changes. sonali: we are executives atop the worries about litigation risk for themselves and the companies. how is it manifesting? this story is full of examples, it is worth talking through some of them. >> targeted protected groups, you are trying to open it up now

to everyone. bank of america, it was specifying that its employee network groups should welcome everyone although they are exquisitely targeted as a specific groups -- specifically targeted at specific groups like women of color, etc.. there is a link to targets of compensation and they have removed that language from their public facing documentation. they are rethinking this because their lawyers are telling them this is something that could draw you under fire. you could be sued by the likes of america first legal or potentially even edward bloom and his organizations. these are the things that are changing. sonali: is there a sense that these dei programs that are meant to make these workforces more diverse as we know wall street has lacked diversity for a long time. does it mean that these banks are reducing their commitment to making their workforces less

diverse? >> the banks that we cited here have said we are still committed and we are still committed to this and they point to their numbers over the last couple of years which he has, while for example the number of black executives remains relatively low comparison -- in comparison to the overall population it had been rising. the challenge here is that if you eliminate these programs are them back or pair them back, there may be less opportunity for people of color and women, through these various routes. even if you just stop talking about these things, what does that mean? what kind of signal does that send? that is what we are grappling with. it should be noted that it seems to be a bit more problematic for programs that pursuit racial equity rather than gender equity. this is very much in the early stages. we have to see how this plays

out. sonali: thank you for your time and your reporting, that is on wall street dei's initiatives -- wall street's dei initiatives. the s&p 500 has been on the brink of gains and losses and we are trying to rake back into a new record high, firmly above the 51 .47 level, the nasdaq 100 and steepening losses. .2% lower on the date. it almost broke into the green. we are not quite there yet. the two year yield, head, critical economic data later in the week before the two year yield at 461, an eight basis point move. we broke below 455 at the tail end of last week and we are watching the 10-year yield take a four basis point move higher on the day and also watching bitcoin on the side of past 57,000 dollars and less than $2000 away.

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