>> 30 minutes into the u.s. trading day on this wednesday, may 29. here are the taupe stories we're following. merger mania, conoco phillips to buy marathon oil, to pay as much as $3 billion for an eye treatment startup. we're going to break down all the action. meanwhile, shipping strains. rising hostilities in the middle east are boosting freight rates, an unexpected boon for shippers. and a conversation with the u.s. deputy treasury secretary coming

up at 10:45 eastern a.m. katie: welcome to bloomberg markets. markets right now not too pretty. the s&p 500 on the down draft right now, currently lower by about .7%. it's pretty much the same story if you take a look at big tech. the nasdaq 100 currently off about .6% as well. again, we're coming off a big rally, five consecutive weeks of gains for the s&p 500, may be cooling this week. meanwhile, that is sparking a little bit of volatility, at least if you take a look at the v.i.x. we were trading with a 14 handle earlier. a little bit below that right now. but still a little bit of a rise when it comes to volatility. but let's talk about american airlines. really facing head winds.

the they add to uncertainty in the aviation industry, the outlook also sent other airlines tumbling and bloomberg's brooke sutherland has details. are we talking about an issue specific to american here, or does have this bad news when it comes to the real summer travel outlook? >> i think it's perhaps a little bit of both, so american, during the pandemic period, rejiggered its corporate travel strategy and how it markets its beat to business travelers. i don't think they're seeing necessarily the recovery that we have heard about from some of the other airlines, and that's really been a help to the airline industry. i mean, where we're seeing the strong demand right now is in that corporate travel recovery and in premium passengers, people who are willing to pay up for higher cost seats, a little extra leg room, things like that. and i think where you're really seeing a lot of the pain point is in that lower income consumer, looking for more of a budget type of option. we've heard about this from a

number of consumer-facing companies in this past earnings season, that the lower income consumer is really starting to cut back and be conscious about their spending in light of inflation. katie: sear seeing that a lot countries, consumers looking for a budget. makes sense that's hitting the airlines as well. i want to talk about costs when it comes to what these airlines are grappling with, when it also comes to demand worries. when you think about fuel supply chain issues, where are we on some of those stories? >> sure, i mean, it's a very persistent one, one that's not gun away for the airlines. they've been dealing with this for a while, but it's not getting better. they're still dealing with labor inflation, cost inflation, higher maintenance expenses. a lot of them are flying older planes for much longer than they would like, to or longer than they planned, because they're waiting on deliveries, specifically from boeing, whose output is stopped while it deals with quality control issues on the factory floor and tries to

get a handle on those in the wake of that alaska airlines incident in january. you've also had a significant chunk of the airbus fleet that's been grounded while they work through issues with the engines on those planes, which were made by pratt & whitney. you're seeing a capacity crunch, and that adds to the cost that these airlines have. they went out on a big hiring spree to make up for the shortfalls they were dealing with post-pandemic, but in many cases they overhired or overspent to build up the capacity that they now don't have the planes to serve. katie: a lot of head winds for this industry. brooke sutherland, really appreciate you breaking it down. take a look at american shares one more time, looking at the worse day since june of 2020. let's bring this conversation to the broader markets right now. we're going to do that with hsbc head of asset management. let's start with the fed. hsbc, you only see one rate cut this year. it seems like the markets are

more or less aligned on that. it's striking to me you've seen five rate cuts get priced out by these markets and still we're at pretty close to all-time highs with the s&p 500 and the nasdaq 1100. what do you make of that dynamic? >> i think it goes to what the narrative is. the narrative is still the next move for the fed, a cut, not a hike. we've had this conversation for quite some time that it's not important when the fed cuts, but if the fed cuts. we see it in september. i think if it doesn't happen in september, we're still expecting fed cuts in 2025. i know we're starting to hear a little bit of this narrative, the possibility of rate hikes, but for to us get to that level, where the market is starting to price in rate hikes, we have to see a reacceleration of inflation. and we're not there yet. what we're seeing is sticky inflation. we're seeing inflation that's not moving down, but not moving up. so i think this core p.c.

reading at the end of the week will be key. we expect it to stay at 2.8%, so it's pretty much stable from what we've seen in the prior months. so we're in this stickiness in the inflation, but we're not seeing a reacceleration of inflation. i think that's where you're really seeing the difference in terms of the equity markets still being supported by the fact that the next move will be lower rather than higher for the fed. katie: do you think where you could be approaching a point where we start to see growth fears overwhelm the sticky inflation conditioners, when it comes to the fed? i'm just going through some of the retail earnings that we just experienced, and i'm thinking about the airlines, for example, american talking about, of course, summer travel demand leading to that lowered outlook. could we be approaching that point? >> what we're seeing is mixed economic data, which is what we want to see. we don't to want see everything pointing green, because then

we'll get worried that the economic data is coming in too hot, so what we're seeing is this mixed news. we're seeing the labor market pool a little -- labor market cool a little bit, but we still have a strong labor market. you talk about the airlines, and i think one big thing we've been talking a lot about is the consumer, but we have two sides of the consumer. we have the high-end consumer that continues to do extremely well because of the wealth effects created by the higher equity markets, higher housing prices, and you do see a lower income consumer that's struggling. but what we're seeing in terms of companies and sectors, you can see those companies that cater for a lower income consumer actually doing well, as you see a trade down of the middle income consumer into lower income brands and gaining share in this sort of environment. so i think on the economic data, yes, we're seeing some negative surprises, which i think is what kind of what we want to see, and expectations have moved higher,

because we don't want to see that data coming in too hot. i think this mixed economic data is exactly what we want to see, to frame the narrative of more of a soft landing scenario that we see for the u.s. katie: the trade down is there, mixed data is there, still seeing the soft landing. you write that markets are price nag 40% chance of a mini stagflation scenario. what does mini stagflation look like, and where are we seeing that priced in? >> i think stagflation is very hard for us to get to that scenario. for us to get to stagflation, we really need to see the u.s. economic growth slow considerably and very high inflation, and we're not there. the u.s. economy is still very, very resilient, and thinking about sectors, if you're worried about a flag nation scenario, we're still very positive on the tech sector, so this is a sector that is really agnostic to rate cuts, to where we see inflation.

this is a sector that has delivered in terms of earnings, in terms of r.o.e., so i think if you're worried about this flag station scenario, which we don't think is in the cards, we think the tech sector is a nice place to stay at this moment. katie: hang tight. we're going to come back to you on tech and earnings. let's look at what's moving underneath the markets right now. we'll do that with denise. abercrombie having a great day. denise: yeah, the greatest day since 2023. this is a 70% jump. there are many reasons for investors to be happy. sales have jumped 22%. this is the strongest first quarter ever for abercrombie &fitch. four years ago, the company was at a record low, and they went through this huge transformation, and it's really paying off. the company has raised i said

full-year target outlook. it blew past first quarter sales. we saw that the company is adjusting very well to those rapidly changing demands from gen z and millennials, which is their target audience. and it has unvested heavily in e-commerce. this is really paying off. the company is now up nearly 100% this year and at a record high. so definitely great news for investigation there. katie: pretty amazing turnaround story. like you said, really paying off. we haven't seen that in some of the other companies trying to execute a similar turnaround. let's talk about cava. it feels like it was priced for perfection. deny he's: this stock was -- denise: this stock was up nearly 890% -- 90% this year. the small disappointment in earnings is leading to a big decline in the stock. it's reported a decline in customer traffic and investors

seem to have a very nice reaction to that. that said, the report was good. it was better than expected first quarter, same-store sales growth. there is good news about offerings that's coming up, the chain is excited that this will be a good bet for consumers to pay higher for those options. companies with same store growth as much as 6.5%, we saw it beat consumer estimates from chipotle, so definitely there is optimism in the industry, but that said, with that big of a rally, it's really hard to impress investors. katie: it wasn't enough, at least when it comes to cava. tell me about advance auto parts. denise: revenue and earnings came below what analysts were expecting. the stock was up 15% year to date, but now this decline is bringing more pained investors. the company outlined a plan to

improve operations, but a lot of people are skeptical about that and say that this may, in fact, take years. the parts retailer has recorded negative organic growth in six of the past eight quarters. perhaps that is one reason investors are worried. now the stock is up 7% year to date. katie: down 7% today, worst day since september. great roundup, as always. thank you, denise. coming up, another m&a deal in the energy world. we'll discuss the multibillion dollar deal between conoco phillips and marathon oil next. this is bloomberg. ♪

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katie: m&a in the energy industry is heating up. conoco phillips will acquire marathon oil in an all-stock deal that values the company at about $17 billion. this is just the latest in a wave of mega deals as producers look for new drilling sites in hopes that oil demand will remain robust for years to come. joining us is bloomberg's matthew monks. he leads the m&a team over at bloomberg news. feels like it's hard to keep up with everything that's going on in the energy sector. >> it seems like we're at the tail end of the m&a boom. coming out of covid, oil and gas drillers were making money hand over fist. now they're putting it to work to do transactions. conoco phillips had been left at the altar for a few of them, including endeavor. there was speculation that conoco would have been a takeover target itself. now it's striking this $22.5 billion deal, which is going to make it a lot harder to swallow itself, so it's going to remain

independent. it gets bigger in really core basins. katie: it's different to watch major drillers pursue growth by acquisition strategy. also today, we also have news that merck is going to buy a biotech for a deal as much as $3 billion. it feels like healthcare and energy have been some of the sectors that people have been calling for a m&a revival for a while now. >> i would say they're going to see continued activity, although i feel like we're at the tail end of it. healthcare is bumping. you got large companies trying to add too their pipeline. tech, you're seeing l.b.o.'s come back, and you saw some rumors in the press this week. there are a lot of big transactions that are still out there. m&a, i'm not going to say it's back, but let's just say it's coming back. katie: it's bumping in certain sectors, as you put it. the deals that are getting done, are they getting done because they have to? you think of the rate environment, and it's far from

friendly. >> i would say that they're getting them because they can. you have this b.h.p.-anglo american situation. b.h.p. is not going to go hostile, but they made an unsolicited approach. they can do that. we saw an unsolicited crypto deal yesterday. if you're a strong player, you've got good currency, you can go out and take advantage. katie: all right, flexing their muscles a little bit there. matthew monks, always great to speak with you. appreciate the breakdown. let's welcome back nicole from hsbc. energy and healthcare, you look at the earnings performance in the first quarter, those were two sectors that saw e.p.s. contract. will we see m&a help those sectors? >> we saw those earnings contract in the first quarter, because we really have a very difficult comp. this is due to other facts, and we expect those earnings with or without m&a to improve over the second half of the year.

they face easier comps. and i think we're talking a lot about earnings. look at the first quarter earnings for the s&p, they've been excellent. so we're seeing almost 80% of the companies beating on e.p.s. we're seeing earnings for the index coming in up 7% year over year. we're listening to what companies are saying on earnings calls and one of the most frequently used terms is strong start. i think when we talk about the equity rally, you know, a lot of this, we're looking at earnings, and earnings are coming in better than expected. and that will support the earnings growth, the acceleration or new growth that they're expecting the second half of the year. i think this is another boost for equities in general. katie: not to sound bearish, i'm looking at your research, and you point out ex-diluting tech and the magnificent seven, you saw s&p earnings kline 3% year over year. is that a comp story or

something that maybe should give investors a little bit of pause? >> great question. it's really a comp story, because where are you seeing this decline in first quarter e.p.s. are commodity sectors and healthcare that face the difficult comps. let's look at a sector like financials. you're seeing earnings swing from an earnings decline in the fourth quarter to an earnings increase in the first quarter, and why is that? part of it is because you're seeing an increase in investment fees, which is exactly what you've been talking about in terms of increased m&a activity in the sector, and this is coming from a very low base. this is something that is actually supporting earnings growth for the financial sector. so again, a lot of that, taking out, yes, tech, obviously earnings growth is very, very strong. but we think for the other sectors, as we get rid of the base effects and some other sectors, you're actually seeing a nice improvement as well.

katie: great point on financials there, the turnaround that we saw in the first quarter, do you think that's getting adequately rewarded by the stock market? i take a look at the sector performance year to date, financials are up 8%, underperforming the broader index, which as you know very well is just dominating by tech -- dominated by tech. >> i think it's difficult at this point, because i think investors are pricing in higher rates for longer, which usually higher rates are good for banks. i think under the current case, the banks are facing high deposit rates, so it's really impacting them. i think it's less of a positive impulse for banks in general. but, you know, overall, i think this is a sector we're neutral on, and we think there's pockets of opportunity, especially for those banks that are really more focused on the brokerage side of the business and can benefit from the increased investment

banking fee that is we expect throughout the year. katie: neutral on financials overall. pockets of opportunity when it comes to the brokerages, like you same. i want to return to tech, because before the commercial you highlighted it as a sector that you're pretty positive on, especially when it comes to the rate outlook. it feels like tech is almost macro agnostic in certain respects. >> if you look at the tech companies, look at the balance sheets, these companies, many of them are net cash. this is very different than what we saw during the tech craze of the late 189 90's. these companies have very strong balance sheet o. that aspect they benefit with rates staying high for longer. they're reporting r.o.e.'s of 30%. very high profit margins. and really are delivering on the earnings growth. so this is more a secular story, not necessarily a story that when we see rate cuts we'll necessarily be the huge

beneficiary. and i think really for that broadening of the market, rate cuts is important to see the other sectors pick up and start to outperform. katie: good point on kick. you can quibble about valuations at this point, but when it comes to the earnings performance, it's just best in class there. so you mentioned broadening it out, really needing rate cuts. with that in mind, what sectors, what types of companies are you feeling a little bit less positive on right now? >> if you look at where we're underweight, it's more the lower beta type sector, so you have real estate, you have utilities. those are the sectors that were not as positive right now, because we are constructive on u.s. equities, and we're constructive on risks. so i think going in to the second half of the year, we still expect a rate cut. we expect the fed to cut rates in september. again, if that doesn't happen,

and if the narrative shifts to rate hikes, then maybe you want to shift more into these more defensive sectors. but right now, we still like tech and we like pockets of consumer discretionary, consumer staples as well. katie: reallien void this conversation. hope to have you back again soon. our thanks to nicole, hsbc head of u.s. and latin america equity strategy. still ahead, we'll look at the companies making the most social buzz today, up next. this is bloomberg. ♪ so, what are you thinking? i'm thinking... (speaking to self) about our honeymoon. what about africa? safari? hot air balloon ride? swim with elephants? wait, can we afford a safari? great question. like everything, it takes a little planning. or, put the money towards a down-payment... ...on a ranch ...in montana ...with horses let's take a look at those scenarios. j.p. morgan wealth management has advisors in chase branches and tools,

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satellite communications companies ast space mobile to improve connectivity in the u.s. this deal is a new challenge to spacex, which announced a similar agreement with t mobile two years ago. next up, baristas at starbucks sounding the alarm over staff shortages. workers said they blame understaffing in part on an algorithm the coffee chain uses to allocate store labor. they say this system doesn't account for special requests, such as cold foam. starbucks disputes that it's underred, but it did say that longer wait times played a role in the company's sales decline. finally we have farraday future plunging. the company's shares skyrocketed earlier this month amid the recent stock rally. you can follow all the latest company buzz on tren go on your bloomberg terminal. coming up, freight rates are soaring as red sea diversions become the norm. we're going to have an an

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katie: let's take a look at these markets. at the tail end of her earnings season and before the next fed meeting it is quiet but it is lower. the s&p falling. you can see the nasdaq 100 currently lower by about 4/10 of 1% breathing some volatility back into these markets. currently higher by about one percentage point right now. one point below 14.

the federal reserve bank of cleveland has appointed beth hammock. mike mckee joins us with the details. a goldman sachs alum, she left in february. >> it's not clear she was attempting -- intending to leave goldman for cleveland. she is 52 years old, has been on wall street for 30 years. her recent role was head of gold -- financing at goldman. her previous roles of the firm included global treasure, head of short-term macro trading and global head of repo trading. she left in february, that was at a time when a number of women were leaving goldman complaining they were being passed over for top jobs. she had been thought of as a potential cfo for the investment bank, she took the current role in 2021 and the idea she would

work up to it but she got passed over for that job and while she did not say that's why she left, that was the inference that a lot of people took away. she was head of the treasury borrowing advisory committee, a group of wall street traders who talk to the treasury department on a regular basis about what's going on in the markets and help make the policy for financing for the united states. so she is familiar with the people in the government financial system. she's going to take office on august 21. that leaves one meeting open between nestor and hammett and it's likely the chicago fed president austan goolsbee will vote in her place at that point. she is the fourth woman to take the president's job at the cleveland fed. the cleveland fed was the first to appoint a woman as president

who was karen horn in 1982. that's a seat that's been filled more often than not. there is a new president coming in to the building at superior avenue and east 6th street in cleveland and it is someone who is married to a cleveland native and is a longtime wall street veteran. >> michael mckee, thank you so much. the cleveland fed naming former goldman partner beth hammack as its next president. let's shift gears because the shipping industry is facing some big and profitable waves. port congestion asia, rising hostilities in the middle east. labor strikes in north america and trade tensions between the u.s. and china making for choppy seas and higher frame rates.

here to talk about how to navigate this, the ceo germany's largest shipping company. what is the latest there. have you seen any reduction in the safety improvements would make you think you can resume sailing there again? >> unfortunately not yet. i think we are at a fairly severe attack yesterday where a terrier was hit by three missiles. at the moment it's settling not safe yet to go through the suez and it remains to be seen when that's going to be the case sooner rather than later. >> what are you modeling in terms of how long the suez root will not be navigable? >> i think it is anybody's guess. i've always said i think it will be resolved before the end of this year. but in fairness if we look at the situation today and compare it with where we were six months ago it has not become much better. >> when it comes to shipping

rates i'm curious what your view on what effect it's had on those higher freight rates that we've been talking about. how much that issue has contributed and as such when the suez canal does open once again how much could these come down? >> nobody knows but because of that we see it and on top of that we also see very strong demand and it certainly plays a role as well. as a consequence we see that particularly the short-term rates, i think it's also fair to say the contract rates we see on most of the major routes have not moved all that much compared to last year. katie: it's a good reminder on the other hand you do have strong demand contribute to high prices and am curious for a breakdown on where that supply is coming from. is that manufacturers retailers restocking inventories or is there something else going on?

>> it's difficult to say. we have data we have available and we see by and large very strong exports from asia. i think we already indicated at the beginning of the year we would not be surprised if we see a peak season prayed we see some restocking. when you bring those together and then with people being more concerned about what's good happen that's when you see the type of spike as we see it now even as most people have probably been surprised about how much short-term rates have gone up over the last three or four months. katie: how sustainable do you think that rise is is it the short-term spike or the beginning of something more? rolf: i think it is not going to last for very long, but it is difficult to predict how long this spike will take. most people would think it's can a last for another couple of

months, but we have been surprised before. if we look at this year so far we saw spike right after the red sea. after that we saw short-term rates normalizing and then really only last for weeks we've seen really strong demand which in my hypothesis is it's a bit of an old -- early-season and some restocking. that also means it puts -- could still last for a number of months if the red sea situation does not improve. katie: with this volatility in rates has that changed how you sign on clients? are you signing more long-term contracts for example maybe to have more visibility going forward. rolf: with us that's fairly stable we have signed up a bit for contracts this year than last year. but that's within the normal course of business. from that perspective you don't see any big shifts but that's also because there's so much uncertainty in the market.

two of a very long term perspective and what were doing now is trying to do everything we can to keep supply chains flowing. one could also say in a way it's good that the industry ordered quite a few ships over the last few years. it police allows us to keep the supply chains going now in a time where there's been some destruction. >> i do want to talk a little bit about port congestion when you think about this current episode of what we are seeing when it comes to shipping strains, how much is that tied to places like asia, the middle east or what is the cause of it? >> i think we see some port congestion but it's nowhere near as severe as it was during covid. the big difference between what we see now is most of the courts function. there are significantly more cargo that needs to be handled

and that certainly causes some congestion here and there which is not something we have never seen before. but of course we had not seen it over the last 12 to 18 months. >> what needs to happen? rolf: unfortunately some of these things take time because it's all about the rhythm that needs to get back into that supply chain and we've had some disturbance at the beginning of the year because of the red sea which also means a little bit later in the year a lot of ships come back at the same point in time including a lot of ones that they bring and that causes a lot of additional work and if you combine that with very strong demand, you see there is pressure on certain forces. having said that, maybe one more word to that. that type of congestion we see today would not be a major issue if it would not be combined with the red sea situation as we see it now. >> good perspective that you have layering on issues here

which is exacerbating those separate issues. just quickly i am curious about this demand we are seeing. how much is that demand being pulled forward from what is normally the peak shipping season. rolf: good question. i think there's a fair bit of that because typically when people have experience over the last couple of years some disturbance and they see the supply chains are under pressure i think everybody wants to be on the safe side and because of that it's quite logical some are being put forward but also that something they want to build up more inventory ahead of the christmas season in the second half of the year. >> really appreciate your time today. our thanks to the ceo. this is bloomberg. ♪

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katie: it's time for our daily wall street week conversation and today we are looking at artificial intelligence and the need for more data centers. david westin spoke with christine todd whitman, former new jersey governor and epa administrator. about the economic and environmental consequences of the data centers. >> those data centers have a lot of power and most people aren't thinking about that. they are beginning to now to understand just how much they draw down on the grid so this is were small modular actors can be perfect. you put them right next to those data centers and provide the power for that particular center

and it makes a whole bunch of sense when you look at the issues we are facing in the economic choices -- prices we are paying for what's going on with mother nature and the environment and that's due to changing climate. we all have to recognize that now. so we need to do what makes sense but doesn't crater our economy. we can build these things, we can distribute these things and it makes a great deal of sense. >> so it increases the demand and the opportunity for these, what are the hurdles. you and i've talked about this in the past. you've been advocate of experimenting. there's a lot of plans for them but i'm not sure any of them have gotten built yet. >> they haven't. in canada they are moving forward. obviously there are regulatory hurdles because you want to make sure they are absolutely safe and not all of those are federal. a lot of those regulatory roadblocks as they were are things that slow it down. which we know because money are

state regulations. and we've got to respect those but i think what we are seeing now is the pressure coming that is going to i believe as you mentioned perhaps spur an effort to move these through, not make corners but make sure you're not holding anything up. because they have a proven technology, they are easy -- easier to build, they're easier to use and they can be used in discrete ways such as putting them next to a data center and having them supply the power for that data center. >> you're familiar with the regulatory structure, with the very large nuclear reactors to the same considerations apply to small modular. should they be the same regulatory system or should be a different way of approaching regulation. >> it wouldn't be entirely different but certainly in the way things are constructed is

entirely different and that needs to be regulated and recognized for regulatory perspective. so there are vast differences, but people are concerned even though her history with nuclear has been extremely safe you have to answer those questions. the nrc needs to take a step back and say let's really look at the small modular reactors and identify the use different kind of material, an entirely different way of producing nuclear power. they are done in one place which is entirely different. they are not moving pieces sequentially to the site. you move the whole thing to a site. it is a different process and it does need to be handled differently. i'm just not sure, i'm not saying they are not doing it preyed what they need to do to update the regulations but they should be.

>> something you've been very outspoken on when you were governor of new jersey and since then, if we in fact build all of these data centers and do not use something like small modular reactors with the possible risk for the environment. christine: it's huge because the demand for power in data centers, you are going to go to the fastest power and that's good put more pressure and not closing coal. the thing i think you and i have talked about, the thing we are missing here is the understanding nuclear can be the bridge if we ever get to making our renewable power base power, it's good to take a long time before we can rely solely on wind and solar, the various forms of green power and so we need a bridge and this is the best way, to my mind, to do this

pretty quickly. it can be done, they can be put in place, getting the recognition of the regulatory framework needs to be different, but we have to understand what we are seeing in storms, every scientist, it's not just fringe people who are saying we have a role to play, we humans didn't cause climate change because it's part of a natural phenomenon but to think what were putting in the atmosphere and how we are building isn't having an impact, where and how and how much is part of the reason we have such high dollar impacts from these storms, but the midwest has been hammered this year. all of us are seeing unusual weather patterns. if the 12 month in a row that the worldwide temperatures have been increasing. our oceans are becoming increasingly stressed as well.

we've got all this feeding into itself and when the oceans warm that gets the more active and then you start to see the kind of storms that california has had. it's amazing when you look around and we pay a real economic price for this not to mention what it does in terms of a human impact of people losing their homes, losing everything. losing their life in some instances. we have to take this seriously. katie: that was christine todd whitman, former new jersey governor and epa administrator and of course our own david westin. tomorrow we will hear from glenn august, oak hill advisors founder and ceo. this is bloomberg. ♪ les tax with avalara, you don't have to worry about things like changing tax rates or filing returns. avalarahhh

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katie: let's get a check on these markets, still a down day for the markets but we are off the lows of the session. you can see the s&p 500 off by about half of 1%. we had been lower to the tune of 7/10 of 1% about an hour ago. some of those if you look at the nasdaq 100 your big tech index low by about 3/10 of a percent. you take a look at the volatility index we had been higher, we had been in the fourteens earlier. some of that volatility easing a little bit right now. of course the vix has fallen to really low levels relative to history even even though it feels like under the surface in this earnings season it's been the haves and the have-nots. that volatility has not made its way to the broader benchmarks even with this decline we are still very close to all-time highs from the s&p 500 and the

nasdaq 100. meanwhile you take a look at the 10-year treasury yield currently higher by five basis points building on yesterday's rise about nine basis points when it came to yesterday's session so you can see right now we are hovering around 460 on the 10 year yield. getting closer to the highs of the year. you think about where we were just last month getting closer and closer to 480 on the treasury yield. when we went into this year we were expecting some relief when it came to the rate backdrop particularly when it came to the front-end but we haven't yet seen that. of course when you think about where we could go from here, it remains to be seen. we have the treasury coming in and that will dictate the bond market. meanwhile let's turn to geopolitics because u.s. treasury secretary is in ukraine right now meeting with local officials and standing by we have joe mathieu and the deputy

treasury secretary joining us now. >> welcome to our global tv and radio audiences as we bring you the special conversation with the debbie treasury secretary. mr. deputy secretary thank you for joining us live from kyiv. this is your first trip to ukraine and of looking forward to asking you about sanctions and the administration's efforts to shore up ukraine's economy but i want to ask you first about what you're seeing on the ground. there were air raid sirens going off just before you joined us on camera seeing russia's attacks on ukraine increase as ukraine awaits weapon shipments preyed what's the mood today at the capitol? >> the mood in the capital is one of urgency in terms of doing everything they can to defend their country and were impressed by the brave men and women here in ukraine and the fact that they are committed to fighting

for their freedom and doing everything they can to build an economy and build a free and democratic country. the united states wants to be a partner in doing exactly that in addition we talk to them about sanctions have been able to talk about economic support and the ways in which we can make sure the united states and our allies and partners stands with the brave men and women. >> you said yesterday in kyiv that an unacceptable amount of weapons components are still getting into russia. there is a sentiment that sanctions are simply not working as the treasury's point man on sanctions does your trip confirm that. >> my trip confirms that we need to do more to make sure that our sanctions continue to stop russia from being able to get the goods to build the weapons they want. what we know as the kremlin has charge their intelligence services trying to get around our sanctions and we are concerned russia is getting access to key component parts particularly from china. countries allowing them to get

these weapons and what we are doing in kyiv is to talk at the new tools we are considering to try and go after the kremlin. fundamentally we need to do this with our allies and partners, so i'm heading from here to germany to give a speech and talk about the importance of us acting together. >> we are looking forward to that speech in berlin. will you announce a secondary sanctions against those responsible for those components getting in? >> i'm knocking to preview any actions we will take what what i will say is we will talk about the fact the united states and our allies and partners are going to be open to sanction any company or individuals who provide support to russia's military-industrial complex because we want to make sure russia doesn't have access to the goods they need to fight the war in ukraine. >> there are a few components to

this that also include unlocking money from frozen russian assets. i know treasury secretary janet yellen is working on this now with our g-7 allies to use those proceeds for ukraine. when can kyiv plan to get that money? >> it's important to give people context when the war started the united states and our allies and partners mobilized $285 billion of assets around. a war chest they had set up for this particular situation so they could use that to conduct the war but we were able to mobilize. now looking at ways to unlock those assets. collectively over 200 billion in the g7 and her countries are working together to think about ways we can unlock the value of that for the benefit of the ukrainian people. secretary yellen working with our counterparts on a number of options. meeting in june and we look

forward to those leaders meeting in june giving us direction in terms of how we can unlock that value so we can get that money to ukraine so they can invest that money in infrastructure that russia has destroyed and in defending our country. >> talking about recovery and rebuilding you spent time earlier today at a roundtable at the kyiv school of economics preyed what was your message to the room. >> i think the most important thing for me was how that roundtable started and it started with them giving me a tour of their bomb shelters. because today from a most any school that operates anywhere here in this country they have to have a bomb shelter which is unacceptable that young people have to live in a world where their education is can station -- is contingent on those shelters. those young people were focused on helping to think through two things. how sanctions can be used to slowdown russia's ability to build the weapons they want.

but also on how they can build a successful economy here in ukraine and ida chance to talk about the united states and what their partners are doing to support them in those efforts. it was impressive to see those focused on the issues and knowing that over time those same young people will be contributing to the growth of the economy here in ukraine and to the growth of their democracy as well? . >> it does seem that phase two of the oil price cap does not seem to be costing the extent to which it was expected to. how can the treasury department get to this? >> i think the key word you said was cost. often times when on the price cap we focus on the revenue side and the cost of a barrel but the reality is russia's cost of run-up significantly due to the price cap. before that