>> welcome to bloomberg markets. a day after the selloff in global sox. global stocks, the debt buyers are out in force. we are at session highs. this marks the first gain in four days. we are clawing back about half of the declines from yesterday. the vix has settled down back to the mid-20's. this is after yesterday it spiked to 65. treasuries are lower across the curve shared that is pushing up yields. demands for safe haven easing. the bond market needs to absorb some supply this week with a 50 a billion-dollar auction of three-year notes taking place in 30 minutes. one of the recurring themes driving the rally in tech stocks is concern all the corporate spending on ai has not paid off.

palantir seems to have made its case to investors ai is boosting its business. shares of the data analysis software provider or higher after the company raised its annual forecast. palantir posted bigger than expected 27% jump in quarterly revenue. the best performer in the s&p 500 is kenvue, the consumer goods company. a clear standout from competitors like png which had reported disappointing revenue. it's discuss where the equity market stands after all of these market swings with bloomberg intelligence chief market -- chief equity strategists gina martin adams. when you look at the. recovery today, how fragile would you say it is at this point? gina: we are in the u.s. because a lot of the potential volatility seems to be emerging out of japan and the divergence we are experiencing in central bank policy.

the first move out of the central bank of japan in more than 17 years does appear to have sparked this risk off event and instability in the asian markets look us up on monday morning to an unpleasant environment in the u.s. a lot of the outlook depends on how much the central bank and the japanese equity market shows stability going forward. if we can have more stable days out of asia, the u.s. market is finding its footing. scarlet: it is a little bit of the tailwagging the dog here to rely on the japanese markets to give us our direction but there are events stateside which could boom markets. which economic data points, which fed speakers could determine price action? gina: i think that -- i do think when you are in an environment when you have had a major risk off event built on central bank policy, the central banks are the most important. you have to watch the boj.

you do also have to watch the fed. . there has been a lot of chatter about maybe the fed needs to cut interim meeting. . maybe we need an emergency cut. i think that would exacerbate the existing weaknesses because of the divergence we are experiencing in policies. you do want to watch the fed as well secondarily. and watch the bond market. the bond market is saying we are going to get 100% chance of a cut in september. if the bond market does start to ease back off the assumption i think that would be a healthy condition for equity markets which have moved into some kind of panic mode. first sparked by the central bank tightening in japan. then exacerbated by some weak economic data which only created a bigger policy divergence between the banks. scarlet: what counts as a reliable safety play given where we stand? we have had the big three day selloff. . now we are in a turnaround mode. where do you go for the safety? gina: the only safe asset is

cash. if you're talking about where we go for safety inside the equity market, there are consistent safer sectors. low volatility stocks. in particular, staples, utilities, real estate, lower beta stocks. stocks that benefit from the potential for rates to reverse lower in the yield curve widening and the yield curve spread finally positive could be an interesting place over the course of the next six months. traditionally low beta sectors are always going to perform better in big market downdraft. . it depends how long you as a portfolio manager can tolerate holding those low sectors in an environment that may be changing quickly. scarlet: that gets to my next question which is this is part of a great unwinding. you have the carry trade which drove people to seek out risk and higher returns elsewhere. as we unwind these positions and a believe j.p. morgan said we are only halfway through the unwinding, what do you think the

next phase looks like? how rocky does it get? as people reach for safety, will they overreach and make those crowded trades? gina: it is very rare we see the vix accelerate to 65 on an intraday basis. we would have to have a covid type of experienced for it to get worst desperate to get worse. -- for it to get worse. that is something to look out for. it has not happened that the conditions are fairly right for something like that to happen. our small-cap strategist has looked and basically the small-cap market is pricing for a full-blown credit event to occur. we have gone a long way to pricing already in equities for a pretty big risk off potential to emerge. it is in unpredictable kind of aspect of markets. you never know how long these things could last. i do think what we tend to do is

we quickly price down. side we rapidly price down we look six to 12 months out and say how bad could it get. this is what we did over the course of the last week. now the big trigger is if we have even more movement in rates, if rates explode in one direction or another, that could be a big event for equities. always the scarlet: rate of change rather than the actual level people are watching. bloomberg intelligence chief equity strategist gina martin items on the recovery we are seeing in equities today. are other top story is in politics. kamala harris announcing she has tapped this on a governor tim walz as her running mate went to -- we need to bring in bring balance of power cohost kailey leinz who joins us from washington. before we get to tim walz as the nominee, i'm curious to hear what you think about the meltdown we had in stocks yesterday and the recovery and what that means for harris's campaign.

there is a lot of focus on the economy and this idea the stock market tumbling is not considered good for someone of the incumbent party. kailey: she is effectively the incumbent in this race. she is attached to the biden administration which was already facing so much blame for the high inflation seen during the years of this presidency who she has of course been serving as vice president. what we have been hearing from strategist as it is the economy that makes a difference in how voters cast their ballots. you did not see trump wasting the opportunity to blame yesterday's action on the vice president. he kept repeatedly referring to this in social media posts as the kamala crash saying this is the kind of liberal policies she is pursuing. of course that is not the case today. we still have about three months to go until the election. even though a bad day like yesterday can happen, it is probably going to depend on what is happening in real time in late october and first days of

november. scarlet: now that kamala harris has picked tim walz, how does he help shore up her case on the economy? does he contribute to that discussion? kailey: he has a lot of progressive economic thinking attached. he is bringing this ticket executive expense having served as the governor of minnesota for now what is his second term. in the second term he has had the benefit of having an entirely democratic state legislature. that has enabled him to enact progressive policies like paid family leave or free lunches for school children. a lot tied to labor specifically. prolabor kind of legislation he has signed which is why we have seen labor coming out and endorsing him today. the uaw president has said kind words about him. the american federation of teachers given he is a former teacher and coach has had praise for him. the afl-cio endorsed him today. . it does bring that kind of prolabor dynamic and this idea he could attract blue-collar

workers. he grew up in rural nebraska. he is representing this midwestern folks in this in which the harris campaign is hoping he can appeal although he does not come from a swing state. minnesota is safely blue. it does have the proximity to other blue states like michigan, wisconsin and pennsylvania. the hope as he can appeal to some of those motors with economic messaging. scarlet: the harris campaign rally is this evening and that is where he will be making his first appearance as her running mate. kailey: this evening in philadelphia and that kicks off what is going to be a multi-battleground state swing. they will be visiting other states including michigan tomorrow where there will be rallying alongside the united auto workers in detroit. it is going to be a blitz of this harris walz ticket. you are going to be seeing a lot of these two as you are going to

be seeing a lot of public and attacks on the selection of tim walz. we have seen attacks on him being what it clear liberal or radically left. going after the left-leaning record as governor and member of the house of representatives. scarlet: thank you so much. kailey leinz, bloomberg's balance of power cohost you can catch. kailey leinz and joe mathieu at the top of the hour. coming up, celsius and yum! brands among the companies working on ways to boost profits despite consumers pulling back on their spending. they are our stocks of the hour. this is bloomberg. ♪

when you automate sales tax with avalara, you don't have to worry about things like changing tax rates or filing returns. avalarahhh ahhh susan: where am i headed? am i just gonna take what the markets gives me? no. i can do some research. ya know, that's backed by j.p. morgan's leading strategists like us. when you want to invest with more confidence... the answer is j.p. morgan wealth management america's largest gutter

and gutter protection company. leaffilter has over 150 locations and has been installed on over a million homes. we've been protecting homes now for over 20 years. our patented technology offers total protection for your home and comes with a lifetime transferable warranty. the process is simple. give us a call to schedule your free gutter inspection. if you decide to move forward with the project, you put nothing down at all. 833 leaffilter or visit leaffilter.com today.

scarlet: this is bloomberg markets. it is time for the stock of the hour. first up is celsius, the energy drink maker. after reporting better-than-expected earnings and revenue last quarter as it takes market share from red bull and monster. also in the food and beverage space is yum! brands which owns kfc, pizza hut and taco bell. second quarter profits beat estimates and is maintaining its profit outlook. . joining us for more is abigail doolittle. i like focusing on the consumer space because these are staples. people can choose which brands they are going to go after but they are going to spend on these brands regardless. abigail: we need to eat and drink so it comes down to what brands, what types of foods and beverages people like the best. starting off with celsius, the stock down 47%. this is considered to be a better than feared quarter. they beat earnings by four cents putting up $.28.

a put of revenues of 402 billion. that was about 3% better. a lot of mixed messages beneath the surface. the revenue beat that was driven by a inventory clear out at one of their large distributors. this drink -- i have never had it. it sounds like your son loves it. scarlet: my son drinks at which i'm not psyched about temp abigail: it is hard to know what is in some of these drinks. they are taking market share from red bull and monster. they have 11.5% control of the market versus 8.7%. they are saying they did see share decline in july. there is an overall slowdown in the u.s. market for energy drinks. i would say that is true to some degree for food especially in the fast casual and we're skipping over to yum. taco bell popular also something i have not had in forever. pizza hut at which i personally love and kfc as well. all of these funny quirks can come out here. those two -- those two latter

brands not so good. we are seeing some of these companies saying they have to respond. scarlet: there's a lot of competition whether you're talking about celsius with red bull and monster or taco bell with mcdonald's, wendy's. they are competing for the same dollars. for the same scarce dollars. marketing and sub becoming the difference maker. abigail: a huge difference maker. i'm not so fully with these energy drinks but relative to celsius, or are pretty attractive. they are white and what i consider to be -- scarlet: lightning bolts or something. abigail: some of the other brands, they are black cans. it is going to come down to that. and advertising. it also comes down to the personal preference. these companies seem to suggest it is going to come down to pricing. companies saying they are pricing -- saying the pricing promotional strategy is key. we are hearing that from mcdonald's. shake shack saying they are not

going anywhere near price reductions but it is for them the marketing. the marketing they gave few details about that. they are considering that to be the secret sauce. a company like texas roadhouse. people are willing to pay up. for years out of the pandemic we have been talking about what is the consumer going to get tired of disinflation. i think we are heading that moment now. it is a bifurcation between brands. more seem to be suffering from the pricing fatigue. fewer seem to be able to hold up their prices. moe information is to come. >> scarlet: you scarlet: scarlet: offer deals like everyone else and can beating against them. maybe they'll do litter with our stock of the -- abigail doolittle with our stock of the hour. the s&p 500 sitting there session highs but still lower to start the week after the race of -- after the wave of selling the culminated on monday. we're going to discuss how private equity investors are handling the volatility after

what has been a couple of rough years. this is bloomberg. ♪

i earned my degree online at southern new hampshire university. after i graduated, i started a new job. i was finally able to realize my purpose and passion in life. pursuing my degree gave me so many opportunities to grow don't just think about yourself. think about the lives that you can really change. snhu laid the groundwork. i am doing what i've always wanted to do. if i was back at the beginning, i would choose snhu all over again. (♪♪)

scarlet: this is bloomberg markets. the higher for longer rate backdrop has not been kind to private equity. the slump in pe returns has been pushing u.s. pensions and endowments to lean on stocks and making them vulnerable to selloffs. i'm joined by patricia miller zoeller who heads newberger bergman's private investor practice and sonali basak who is an expert on things private credit, private assets. great to see you. >> great to see you as well and you as well. scarlet: i'm curious to get your take on what a market selloff like the kind we have seen over the past three days, not today, how does that put pressure on private market investors? the pensions and endowments that are invested in pe are feeling

nervous. >> the first great thing is all of us in private equity are happy to be in private equity when we see this volatility. private equity is about long-term decisions. it is about very patient capital and it is not about the day-to-day. it is about the next 10 years. because of the way we are thinking about adding value in companies over the long term, we don't have to be worried about the day-to-day volatility. sonali: what is going on with what people are calling the denominator effect? when you see these selloffs, you all of a sudden have these private asset portfolios balloon to be a bigger part of the larger lp portfolios. what is happening there? patricia: that is a real issue especially if it happens over an extended time. if you look at quarter ends and you still see this big drop and down drop in public markets, it

will have an impact on the value of those private equity portfolios as a percentage of the total. if that percentage becomes higher than with the allocation is intended to be, many institutional investors will need to cut back. the hope is this is hopefully minor and short-term volatility. by the time we get to the end of the quarter which is when these decisions are being made, you will see the markets coming back. the denominator effect can be very real. that being said, if at the same time you have folks who might have to cut back, i was just with one of the largest institutional investors last week and they are putting more into the market. they have been under allocated to private equity. they have already put more than $4 billion in private equity investments already this year. as you can see, at a time like this, it can precisely be a great opportunity to be adding more to private equity. scarlet: there's a lot of

shuffling and it is a matter of who is in what position. the idea of a way to cut back a quarter end, how does a private equity firm complied with that how do you prepare for a moment like that at the end of the quarter? patricia:patricia: the good news around the private equity, the moneys you have already invested is locked up. what you want to do is with your larger institutional investors is figure out if there is a need for more liquidity. there are lots of things you can do like our business, we are committing $18 billion last year across the private markets assets. many of the areas in which we were investing in were to provide liquidity to some of the underlying companies so private equity firms could return liquidity to their lps thereby helping them to erase some of the concerns around the dominator effect. sonali:sonali: ultimately this has impacted fundraising. even the biggest firms in the world with prop at a funds have not been able to raise new money because these large lps just have too much money in private

equity already. some of that money is being returned to tragedies. if you see the market selloff like it has been, does it prolong the ability for new funds to raise more money? patricia: it could. one of the things you have seen over the last couple years is on average has been 18 months to raise a fund. that is a much bigger timeline than what we have traditionally see. even some of the largest names have not been immune from this. some of the brand names have started to occur. that being the case, there are lots of thing private equity firms can do to continue to show their value. having this value creation playbook where they are going to buy these companies and make them better, increase their earnings, beef up management. those things and looking at those companies that have the resilient business models and being able to do that day in and day out will prove themselves to many other partners you are

trying to attract. scarlet: there is private equity. there is also private credit. there are areas were record funds are being raised. private credit being one of them. do you worry we are in bubble territory? patricia: no, when you think about the percentage private credit still is in terms of the total debt market, there is still so much room to grow. . it has been great. when you think about the fact banks, many of the largest institutional banks needed to cut back over the last few years in terms of their lending, one of the reasons why you have seen the private equity markets stay as robust as it has an broadly it is because private capital lender stepped in when many of the large institutional banks had to step out. scarlet: thank you so much for joining us. sonali basak, our expert on all things private markets. appreciate it. i want to give a quick check on public markets. you look at the public markets

and we have a recovery underway. you have the s&p 500 up at session highs at the moment gaining 2%. the nasdaq comp advancing to its best levels of the day gaining 2.2%. when you look at which groups are leading the advance, it is all 11 groups. they are up by at least 1%. technology which has felt the most pressure the last three days is leading the way up 2.8%. reit's which have been beneficiaries of the idea the rates start coming down are the second best performers laggards on the day, energy, health care and materials. this is bloomberg. ♪

with so much entertainment out there wouldn't it be great... ...if you could find what you want, all in one place? show me paris. xfinity internet customers can enjoy the ultimate entertainment experience and save on some of the biggest names in streaming, all for just $15 a month. get the fastest connection to paris with xfinity.

>> from the world of politics to the world of business, this is balance of power. live from washington, d.c. joe: kamala harris chooses midwestern balance to complete the ticket. welcome to the fastest show in

politics. the vice president picks minnesota governor tim walls as her running mate set to appear together later today in philadelphia. just hours after the rollout that may not have gone the way the campaign planned it. kailey: it leaked first. we got the official statement from the vice president that she has tapped her own vice presidential nominee. that governor walz will be running with her. we will hear from them both later this evening in philadelphia. it took many people at least partially by surprise given he is the governor of minnesota, a safely blue state. not a swing state governor like josh shapiro or senator like mark kelly. what she seems to have chosen is someone who can still appeal to the rust belt, appear to progressives, appeal to labor and generally be a nice guy. joe: can minnesota nice when the campaign? we are going talk about this as the new lines of attack are delineated from republicans. we have been hearing interesting