katie: 30 minutes into this trading day. here the top stories we are following grade bracing for volatility. 5.5 trillion dollars worth of options set to expire with the latest housing numbers crossing the terminal momentarily. ferrari goes electric. the carmaker unveils a new ev plan as it readies its new electric vehicles set to cost half a million euros. we will get details from the company's ceo next. one analyst says taylor's error -- arrows tour in europe could influence with the boe does. ♪

katie: i'm katie greifeld a new york, welcome to bloomberg markets. we are seeing a bit of a decline in the s&p 500, you can see currently off by 2/10 of a percent. not as far down as it was a couple minutes ago. the direction of travel has been lower so far this morning. a little bit of volatility coming back into the market at least measured by the vicks. currently trading at 13.5. we were below 13 just a couple -- ago. we are still lower on the day. after what we saw with pmi and now we are getting some existing home sales seeing that rally out of the market. u.s. may existing home sales up .7%. you can see the estimate had

been for 4.1 million so it's a little bit above that but still compared to the prior release 4.1 4 million a definite decrease there. so we will follow that. this could provide traders with some short-term market swings today. we see an estimate of 5.5 trillion dollars worth of options tied to indexes, stocks and etf's fall off the board. abigail doolittle is here with a preview. abigail: 5.5 trillion dollars estimated worth of options tied to the indexes, this could bring volatility and volume for this particular triple witching. traders are closely watching two things. they are watching long gam a rolling off. the near-term selling of options. some saying this is cap the market in lockstep going higher but after this expiration,

stocks could trade more freely and implying that could bring some volatility to the downside. i spoke to chris murphy at susquehanna who said it is having a real impact in terms of the selling of near-term options and yes there will be a lot of movement in trading today. but he's not convinced it's not, come back quickly. we may not have a huge surge in volatility. katie: it seems like the market close that the event to watch today. abigail: that volume will climb around the market close as a lot of these expires. plus the rebalancing. you have some index managers reshaping their portfolio to the newly refashioned s&p 500. another big influence today, there's one particular trade that's often watched but is being particularly watched.

jp morgan collar on the s&p 500, the exact level is 5570. that is taking and having a big impact psychologically and in terms of price it's very well tracked and watched by the market. if we grind higher in the weeks ahead that could have a big impact. or his chris murphy was saying is it more likely will we see not so much of a change as some investors are thinking. katie: a lot of technicals at play in this market. thank you so much. let's turn to the broader markets with barbara reinhardt. great to see you. let's talk about some of the economic data that passed in the past half hour. u.s. pmi's, a beat across the board pretty interesting to contrast that with what we saw from the euro zone when it came to some activity numbers early this morning.

a divergence there. how do you play that in the stock market? barbara: the u.s. has been one of the markets powering ahead, economic growth has been strong but trending down 1% 2%. we think that's ended environment for risk assets. europe has continued to struggle and we are seeing japan struggling. china's data which was out over this week was really not all that strong. so the u.s. seems to be the market to be in. we are overweight in our portfolios in the u.s. and underweight international and developing markets. katie: you mention the economic growth picture. that's a huge part of it but talk to me about tech. i hear the case you think about the u.s. tech sector you just don't see that in europe for example. barbara: we also think about the overall earnings picture.

the u.s. went through an earnings recession. it's unlikely to see another one so quickly on the back of that. when you look at first-quarter earnings over 80% of companies beat estimates inside and outside of tech as well. we think it's a good underlying potential for the u.s.. tech has really been powering the market ahead this year. it has some of us set up to take a breather at this point. even what were seeing in the european markets with the european election coming up in france it's causing a lot of uncertainty and markets don't like uncertainty. you can see something similar on the u.s. election this fall but we look at the underlying fundamental picture. one to 2% in terms of inflation. and it just makes the u.s. a better place, attack or no tech. -- better place, tech or no tech. katie: do you trade around that?

do you invest around that or do you try to ignore that volatility? barbara: we are running multi-asset portfolios that are generally for retirement or those going to college. these are long-term investments. we are going to continue to invest through it. generally investing around politics does not pay off. we have a longer time horizon. katie: when you're investing with a 40 year time horizon may be the 2024 presidential election doesn't truly matter. let's talk more about earnings because you make the point when it comes to the latest round of earnings it was a lot of these other sectors as well. even still you have this very narrow market and it feels that we been asking this question for months but why are we seeing that out? barbara: you're not seeing that broad now because there's concern about the u.s. economic slowdown. so growth is not powering ahead as fast as it did last year.

this time last year we were adding something around 400,000 jobs a month. now were adding closer to 250,000. it's a downshift growth. in that environment investors and market participants tend to go to where the strongest earnings outlook is. everyone is talking about ai. but i think as you see the fundamental picture brought in out and the federal reserve starts to lower interest rates which we think will happen in september you should start to see some other parts of the market do well. there have been some divergences in this leadership in the market. any correction we see at this point we think will be technical in nature because the underlying growth picture is very good. katie: you have seen divergence. apple and tesla falling out of bed this year.

nvidia covering those. let's talk more about that time horizon. we don't often talk about fixed income on the show but you had people say we've seen a generational reset when it comes to bond yields and to the treasury market. are you in that camp as well? is this a generational sort of moment. barbara: we think it's been a big move off the 2020 lows you saw in fixed income. you've been in a very big bond bear market really since the pandemic. 55% over the 2020 through 2022 time period, so we think there's been a big reset. the financial question that had been in place and the intervention in place since the global financial crisis has exited. this is a much healthier bond market we've seen really in the last 15 years.

you have positive real yields which are great and working on living on just fixed income. it's not normal to have all that's behind us so we think it's much more imbalanced and fixed income is a really interesting asset class. >> a lot of people agree with you. our thanks to barbara reinhardt and let's take a look at what's going under the equity markets now. tell me about spirit air systems. >> shares are rising because airbus is edging closer to agreement to take over parts of its business. this paves the way for the bulk of the company for boeing as early as next week for the final terms are being negotiated.

that means they can change things and could fall apart. spirit has come under financial strain as slow but deaf boeing slows its output of 737. it's not a surprise investors are looking at this news as some sort of good news. katie: spirit aerosystems and boeing nearing that deal. we will watch that. talk by the earnings picture because we heard from carmax. >> carmax reported good earnings beating its quarter estimates. investors are celebrating the news. truest thing results were in line with expectations and carmax seems to be seeding share to carvana and broader dealership base. we have rbc saying there's something for everyone. it's really not a thesis changing quarter but it still a decent corridor and they continue to like the stock over the long term and there's likely not to be that huge positive

catalyst down the line unless the macro picture improves. katie: it's good and also bad but let's finish on microstrategy. isabel: shares are edging down. we have them raising their price target for the company to 1880 which is a rise from 1450. that's good news for a company known as a bitcoin company. and good news because bitcoin saw its one-month low also microstrategy news, it was announced yesterday they bought 786 million in bitcoin between april of 20 -- april 27 to june 19. this is the third largest acquisition from its last purchase in march and this brings the total holding to 226,000 three under 31 bitcoin.

michael asserted buying in 2024 years ago as a hedge against inflation. katie: you can rely on michael seiler for that. isabel lee, thank you so much. ferrari inching closer to unveiling it's all electric vehicle. we will speak to the ceo of ferrari next. this is bloomberg. ♪

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great to have you with me. how should we be thinking about this new factory. is this a new crown jewel in your portfolio? >> it's a factory that has a good name. the in front of it stands for three things, energy, evolution and environment. it's a factory where we make new strategic components, we will make all the cars we intend to make for the future and do everything in full respect to the environment. e building. >> let's talk about what the goal of it is because you shipped just under 14,000 vehicles last year. is the goal of this new factory to increase your annual output? >> the goal is to increase the capability of what we are doing here. we want to provide something that allowed them to continue to

make unique ferrari and we want to provide our client the freedom to select the scheme they want. if they want on hybrid, they can have the choice to select which car they want. we are a strong believer of the technology when it comes to cars for our segment. >> it's not just about increasing the numbers but that being said how any cars could be produced at this new ee building then? benedetto: it's not meant to increase the capacity, the ability to develop a unique product. to increase the possibility to personalize cars and offer the client more to select. it's not meant for increasing capacity. we want always to push for value.

katie: quality, value. not quantity. let's talk about the all electric ferrari. it's coming in the fourth quarter of next year. when might you start production of that new vehicle at that plant you are standing in? benedetto: we unveil q4 of 25 and in 26 we will see that in this facility. we have several prototypes on the road. everything is going as planned. katie: there was a reuters report in the past couple of days reporting this new ev will cost at least 500,000 euro. is that accurate? how should we be thinking about pricing? benedetto: usually we find the price before -- one month before we unveil them so this is something anyone can express can speculate. you have to wait a little bit to

no what it's good to be the price for our first electric car. katie: is there any sort of range we should keep in mind as we wait for the official price? benedetto: we don't like to talk too much about these things. we want to make a unique car with -- which is unique for our client so let's wait for that. and then we will talk about the price. katie: as long as you come back to talk about it. let's talk about hybrids versus ice versus all ev's. 60% of the cars you sold in the first quarter were hybrids which was definitely interesting to hear. do you see in the future looking about five or 10 years ago do you see all electric demand outpacing hybrid or even ice demands? benedetto: what i believe it's our duty to be able to provide our client what they want. if they want hybrid or electric

we need to be able to be ready for that. as for me i think it's favored to tell you which is the split of the model we will offer to our client, what is the services difficult. if you want my point of view it's clear the three kinds of car and then we will have different kinds of clients. a client we think will stick to that car. a client that will take also electric car and then a client that will become -- we will have different kinds of clients. katie: i think that's really interesting. with this ev, this all electric supercar do you see that is appealing to the existing ferrari customer base or do you see potentially pulling in new clients who may be are not in farah recurrently? >> i keep discussing with many

clients as i told you, their clients who like the engine and they will stick to that. they tell me they will not buy an electric car as well as existing client saying when can i buy it because i want to use electric cars. then there are clients saying i cannot become your client until you are in electric cars. we are on the spectrum of different clients depending so it's a little bit, it is interesting. we see how it's changing. for this reason flexibility is important and this ability is giving us the flexibility we are asking for. >> definitely fascinating to follow that. i want to talk about some recent news outside of ferrari's business. a series of cyberattacks at the dealer management system. has that affected your u.s. stores at all?

benedetto: zero impact for us. some of the dealers have been touched by this but no impact for us. we are looking carefully but for us there is no impact. katie: can't say how much i enjoyed this conversation. hope to have you back soon when we have those pricing details we will be in touch. benedetto: waiting for you here. katie: i will have to come to italy for that one. until then really appreciate your time. the ceo of ferrari. still ahead we will look at the companies making the most social buzz in our social climbers segment up next. this is bloomberg. ♪

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katie: time for social climbers, a look at the stocks making waves on social media. smith & wesson missing the mark on earnings. sales in the first quarter will be down by about 10% thanks to softer demand. the company is expecting a small rebound as the u.s. election nears. a big step forward in the fights against hiv. gilead says its twice yearly injection was 100% effective in preventing hiv infections in a late stage clinical trial. the news adding to their dominance in the hiv market. we have american express card holders may find it easier to nab hard to get dinner renovations. dust reservations. they are known for catering to high-end restaurants including hot spots.

you can follow all the latest buzz on your bloomberg terminal. let's get a check of these markets right now. just about one hour into the u.s. trading day if you look at the s&p 500 currently hanging out around 2/10 of a percent lower. we will finish this week higher it looks like. third straight week of gains. things could get funky around the close as we near that triple witching spree. for right now it's pretty quiet. even still you do have the vicks edging higher right now trading with a 13 handle. the vicks doesn't do much these days preyed volatility is pretty low. the bond market unchanged. pmi's at 9:45. beat across the board which was interesting that divergence between the u.s. and the rest of the world continues.

taylor's record shattering tour is supercharging consumer spending. could also delay a boe rate cut? this is bloomberg. ♪

>> taylor swift is kicking off her tour at wembley stadium. how prepared is the u.k. economy? swiftenomics may impact the boe. i am so excited for this. how do you think about quantifying the impact this

concert may have impacting the european economy? >> we start with inflation. we collected a lot of hotel prices. looking through one week ago started noticing spikes and overlaps with taylor swift dates. it's not new. we've seen it before. we have raw data. we could see it clearly. why not write something about it? katie: people making a destination out of her tour locations, flying from other parts of the world. this is not new. how much blueprint did you have when it comes to her previous locations? james: the places you see the biggest impact are the cities

that are smaller cities. they cannot handle the added pressure as easily. you've seen it in smaller states. in europe, in sweden, in april we saw increased pressure on the travel services industry. the eurovision finals around the same time. edinburgh, liverpool, they are midtier cities. the hotel capacity is not there to take on everybody at competitive prices. it raises the prices and we see it in inflation. katie: you mentioned eurovision. the olympics coming up. where does the tour rank? james: it is short and intense.

we will see those impacts for a few days. then it disappears. the euros, the olympics, we will see it more spread out. from a technical point of view, the stat agencies pick a couple days a month to gather data. they may not see taylor swift if they pick a different date. with the olympics you will get a bigger impact because it will be more sustained pressure over longer days, people making more of a holiday out of it. katie: short and intense, the tour. 700,000 people expected to see the shows in london.

how noisy it could make the inflation data, what does that mean potentially for boe? james: central bankers want to be in a position where they can understand what is temporary and what is persistent. they have their eyes on inflation two years down the road. concert dates are not going to affect it. what challenges them is it will make the data noisy and hard to see. in the u.k. data there have been signs of pressures in discretionary services. that is the same sort of stuff her fans will be spending money on. suddenly you get the tour dates. what is true underlying demand here and what is temporary? it will make reading data harder. to some extent they will want to wait to see the following month

to make sure things cool off and what they saw was temporary. katie: can you extrapolate anything about consumer spending from what we are seeing in demand so far for the tour? looking at these figures, it seems like this is a consumer willing to spend on experiences. james: absolutely. inflation coming down. wages strong. people are feeling better off. playing against that, this is what we watch for in the next few months, we've seen warnings from travel firms that revenge spending of last year, which was intense, is starting to come off a little. maybe they are spending their money at taylor swift. i don't know. we have to keep the bigger picture in mind.

revenge spending is unwinding at the same time. could be the taylor swift thing is a narrow thing. we see trending downward in the broader services sector over the summer. there are early signs of that. for now it's going to be noisy and difficult to parse. katie: we talk about the u.s. consumer all the time. give us details on the state of the european and british consumer. in the u.s. the story has been sentiment is miserable by most surveys but still consumer keeps spending. the american consumer is resilient. does that carry over to the rest of the world? james: america stands out. across the g10, american consumer is strong. there are underlying signs of weakness. it's a different animal to european consumer.

we got great data out of the u.k. this morning. retail sales data shot up more than expected. there are signs of life. the fact wages are still growing more than inflation and inflation has come down from double digits in europe. we are getting toward target. maybe we are at a turning point. we are optimistic on the eurozone economies for the year. a lot of the big negatives from higher energy prices and all that have worked through the economy and as they disappear it will be generally good from here. katie: are you going to the concert? james: my little girl would wish we were but unfortunately we are not. katie: maybe next time she comes to europe. appreciate your time.

let's get a check. abigail: third up week in a row, the s&p. the rebalancing could see more extreme volatility on the day. indices are down a little. perhaps this goes away. the vix higher, probably has to do with options contracts rolling over, expiring. 10 year up a little. ponds down. risk on picture even with the mixup. bloomberg dollar index flat. the s&p, volume on a triple witching day, there are clear spikes when contracts expire. '21, '22, each of these days, pretty significant volume. we will check back in on this

next week to see whether or not it goes in that area. volatility today on the ai trade rolling over a little. nvidia declined yesterday 3%. last two days down 7%. micron, not directly in ai but analysts saying memory and flash products could be helpful. applied materials down with the overall macro. broadcom put up a good quarter recently, helped by ai. big rally -- similar, giving some of it back today. katie: thank you. coming up we look at russia's growing influence in africa with ian bremmer. this is bloomberg. ♪

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joins at 11:30 a.m. new york time. katie: russia's expanding influence in west africa, ian bremmer, eurasia group founder sat down with david westin to explain the potential impacts. ian: there are a lot of resources. the russian government secured direct access to major gold reserves in the central african republic as well as sudan, platinum in zimbabwe, diamonds as well, the uranium in namibia.

the u.s. still gets uranium from russia and congress is trying to stop that to ensure there is money to increase production in the u.s. and with friends so if the u.s. is going to build reactors again, that they don't have to get it from russia. the more russia is on the ground , the lead supporter of many of these illicit governments, these military regimes in central and western africa, the russians are going to end up also having control over critical nodes of the minerals necessary for a transition energy revolution. david: west africa has traditionally been a zone for france because they colonized it. emmanuel macron is distracted closer to home with this snap election. the possible ramifications?

ian: his own party lost historically, 17 points under the national rally, far right of marine le pen. on the back of that embarrassing larger than expected loss -- historic over 50% french registered voters turned out to vote in this parliamentary election, that doesn't sound high but with that much at stake, it is by far the highest france has ever had -- huge embarrassment. felt like he would get censored by the government, the parliament over the course of the fall. his budget wasn't going to get through. he wouldn't continue to be fiscally responsible. he decided to call a snap election which in france means three weeks of campaigning, and then they go and vote. the idea for him being if he

wins, because he will have 70% turnout for parliamentary election as opposed to 50% for the european parliamentary elections, suddenly his party will do better and scare people away from voting for the far left or the far right. the left-wing parties have come together and are working to not run candidates against each other in parliament. that is a problem for the center. the average french citizen doesn't oppose or believe marine le pen and her party is a threat to democracy. 40% say she is, compared to 80% 20 years ago. anything can happen. right now, we are a week and a half away, these elections look very bad for emmanuel macron, very dangerous, and if marine le pen and the national rally are able to capture government and her party takes the premiership,

then anything in the eu that requires agreement of all the parliaments, she will be opposed to. france will no longer be one of the strongest supporters of more aid for ukraine for greater defense spending for europe or more fiscal accountability or more coordination on industrial policy. instead one of the largest and founding members of the eu will be strongly opposed to eu consolidation and sovereignty, supranational governance. it's a huge risk against the backdrop of u.s. elections, which if trump wins, you will have a president that supports a frexit, very different from biden. david: is it too far to speculate on frexit?

marine le pen has been hostile to the eu. ian: very hostile. brexit went badly for the u.k. one of the reasons marine le pen is pulling so well in her party is because she has backed away from frexit and instead picked up all the policies that show euro skepticism. where she to become premier, i think she would be aligned with hungry and a trump policy on europe which essentially means europe would get weaker, not stronger at a time when a lot more countries including ukraine are counting on a stronger europe for their own well-being. david: you take a global look at these things. are there trends you are seeing more broadly? we are seeing a rise of populism, often on the left and the right, not in the center.

something in india where mr. modi one won -- mr. modi won -- certainly with donald trump, is there a rise? ian: yes, incumbents are getting weaker generally speaking. you are seeing a strong push for change, elections, except in the small number of countries where the leaders were really seen as being themselves, very supportive of local, working and middle-class. mexico is the exception. the morena party was against the oligarchs and the traditional parties that controlled mexico to support the poor and mexico's south. otherwise you see underperformance for the anc in south africa, for modi in india,

for france, soon in the u.k. and perhaps in the u.s. all these countries, places where higher inflation, anger about migration and lots of disinformation in the country that is polarizing and angering people, makes them feel their countries are on the wrong track and when lots of people feel that way they want to throw out the people running the government. that is something that is a principal challenge for joe biden as we look ahead to november. katie: ian bremmer, eurasia group president and founder alongside david westin. wall street week tonight at 6 p.m. new york time this is bloomberg. ♪

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katie: one of the world's most prominent technology etf's is set for a rebalancing. emily, we are talking about xl k. what currently is going on with nvidia? emily: xlk is the third largest holding in the etf, nvidia. apple and microsoft have 20% weight. it drops off when you go to the third holding. this is due to the wonky index diversification rules that govern etf's. a lot of investors have not captured most of them but exposure this year -- most of

nvidia's exposure this year. katie: pedestrian. emily: it's not that bad but you think it would be more given the fact nvidia is up 200% this year. the benchmark index, the s&p tech index is seen as the gauge of how tech stocks are doing in the s&p, that's up 30%. this etf has underperformed the benchmark. katie: pretty wild that drop off in the allocation, that's by design. the investors in this i imagine are frustrated. the technology select sector fund you would expect you are getting tech exposure but it is up in the air whether we will see that flip-flop between apple and nvidia. emily: chris harvey, our analyst, has now predicted when

the s&p indices rebalance at the close today, we could see a flip between the weight in nvidia and apple. apple is 20% now. it would drop down to about 5%. nvidia would get the second largest holding. these market caps are net and -- and -- neck and neck, but like you said this etf has not given the full gains of nvidia this year. katie: indices imply passive. still, people have a lot of discretion. we are talking about an $80 billion etf. pretty big. the volume is joy norma's -- gi

normous. emily: if we see the flip, we could see $13 billion selling in apple and $11 billion purchased in nvidia today if we see the flip-flop with apple becoming smaller. billions of dollars changing hands today. katie: fun to watch on this triple witching day. thank you. 90 minutes into the day. the s&p looks big right now. it's lower on the day. the vix calming down. technical forces in the market today. not exactly seeing that in the vix. that bond rally went poof. the two-year unchanged on the

day. diana lee coming up, the ceo of constellation next. that does it for markets. this is bloomberg. ♪

announcer: this is bloomberg technology. ed: i'm in san francisco. caroline hyde is off. the latest on tiktok arguing the u.s. disregarding its national security plans. the vision for an era of