♪ caroline: from bloomberg's world headquarters in new york and right here in london, i'm caroline hyde. joe: i'm joe weisenthal. romaine: and i'm romaine bostick. joe: the question is, what'd you miss? caroline: we saw the cooling off

of some of the hot trades, and tesla, cathie wood's ark etf falling, and now the question, is it a blip or was today's bounce back an end of the month close? could tech set off once again on monday? that's pretty wild. joe: i start every day these days by looking at the ark etf, because it encapsulates so much of that momentum trade. tech, tesla, biotech and bitcoin in it, so everything that is momentum. down 14.5% on the week. earlier today, it had not reached those tuesday lows and bounced back a little bit. if you are looking forward, you have to keep an eye on that to see if it is a blip or the start

of a meaningful change in how the markets trade. romaine: when you hear people talk about shorting the ark innovation etf and other etf's, we no tesla -- we know tesla is in there but some other names as well, baidu, others. joe: if you short it, you are shorting the future. for more on the wild week that was in the markets, let's bring in process it reporter -- cross asset reporter sarah ponczek. are you going to tell us something interesting about inflows? sarah: that's what everyone's talking about right now. the move we saw on bond yields toward the end of the day today was really remarkable. just yesterday we saw the flash flash crash like move after the weaker seven-year auction. at the end of the day, we saw the 10-year move from above 1.50

to 1.42, and you close out the day with a very large move lower in yields. you look at 10 year nominal yields, 10 basis point move lower just today. that was following a 14 basis point move higher yesterday, which was the most for any single day since all the way back in march. what it comes down to is yes, maybe this has something to do with month-end flows. we have heard a lot about tensions rebalancing at the end of the month. obviously we have seen some big moves when you see some volatility in the bond market and stock market in the month of february. at the same time, it's not unusual that we are seeing large swings these days. it has almost become commonplace in this recent week, where we have seen large swings in the stock market and bond market. caroline: i'm trying to make sense of some of the moves today, because we did see

rotation come to a screaming halt because we saw energy and financials lag, but small caps are on the upside and some of the more speculative ends of the trade, like spac's, were down. sarah: it's a bit confusing, considering you look at the nasdaq 100 and the nasdaq 100 without performing, but at the same time you look at your speculative areas of the market, like ark or, as you like to call it, the future, romaine, and the index created last august. tesla and archiving their worst week since march and continuing lower today. a point that many investors have been making, when you look at the nasdaq 100 or classic big tech, we will use faang as an example, the faang trade on your speculative tech trade are two different trades. you think about companies that etf's like ark hold or companies

like tesla. it is a different set up and looking at facebook, google, alphabet, microsoft, so you have to look at them in two different ways. but when you look at the rotation we saw earlier today -- we sawtek get the chop, we saw consumer discretionary at the top, both of this a snap back from the performance that we saw over the past month. got energy in the month of february, still up 17%, financials up 8%. romaine: you run are r.g. on the bloomberg terminal and you will see it is there. there is this narrative prior to the week that the stock market and the bond market really weren't speaking the same language. now some people are looking at this movement in yields and saying, the bond market woke up and caught up to what the stock market has been pricing in, and that's the future, as i pointed out to joe. growth.

sarah: i have asked this question many times to investors this week. i have asked look, is the bond market just now signaling what the stock market has been signaling for a while now? look at the stock market over the past couple of months and it has been cyclical value outperformance, looking forward to future growth. all of a sudden, you look at the bond market and that is exactly what investors are saying i'll do your -- saying higher yields are predicated and we will see growth really pick up in the future. we have also seen economists upping their gdp forecast. another thing i found very interesting lately, there have been two baskets to fast-track, a strong company balance sheet basket and a weak basket. companies that are more debt laden have been outperforming handily, on track for the best two quarter performance since 2009 following the stock market bottom. some making comparisons to now

what we are seeing in the stock market is reminiscent of an early bull, early cycle. caroline: sarah ponczek, who has all the charts and how to make sense of a wild week. have a great weekend, our friend. up next, we dig deeper into the week's yield moves. romaine, you mentioned it yet again. what a day. romaine: we have to get taylor back on here. we drink every time we say that word. word.

romaine: welcome back to what you miss, a.k.a. the second

derivative. it's been all about convexity and a bunch of things i don't understand. joe: what is that? we need to get taylor riggs back to explain it to us. there is a line going up, and the line is rates. we have seen it across the curve, but particularly in the belly, the shorter move on one week. check out the increase in the five-year yields and five-year reels and five year breakevens, all up. there's a lot of up arrows. that's what i see. caroline: something about the rate of change -- i will play taylor here, and it is something about that rate of change. do i get to drink now to? romaine: please. joe: joining us with more insight is john turich. thanks for joining us. we saw the belly of the yield curve get blown out there, the five-year, breakevens, five-year reels on the rise. was there any sort of catalyst

for it and what in your view is the main message you took away from the market? john: thanks for having me on. this week was pretty important, as you said, and there are obviously some technical considerations as well. i think in terms of catalysts, the market is starting to interact with this time inconsistency issue as the economy evolves. the market is projecting a possibility of a double-digit nominal gdp year while the fed is still talking about a you six -- u6 or double-digit unemployment. this is leading to some friction within the fixed income market as the fed tries to enforce this reaction function they have set forth, and a lot of this can be broken down to, if the fed wants to be very outcome based in their forward guidance. as we saw this week, as chair powell and some governors also emphasized, they are a long way

from achieving their goals, but the market is saying, continue achieving your goals. that's creating some friction that is leading to their outcome based forward guidance losing a little luster. romaine: but the fed started being clear last year that they were moving to an outcome focused type of model, and the idea that the market is somehow frustrated that the fed is not moving or is not signaling that it is ready to move, i can understand why they have a cause for frustration. the question is, if we take powell at his word, that the fed will move when they get to the outcome, will it be too late to have the effect that we would expected to have on inflation and the markets? jon: yeah, i think it will be very important.

especially leading up into the march fomc meeting for the fed to establish itself as the dominant mechanism in terms of interest rate pricing, because the market is now leading into this friction where they are saying it is going back to the traditional circuit breakers, seeing real yields rise across the curve, seeing the market price in rate increases to the end of 2022, and that is pretty inconsistent with what the fed is saying, they seek to achieve, especially first on the balance sheet, and in terms of the rate, it would require maximum employment over the 2% inflation target and we have even heard from clarida where you would need to percent inflation. in terms of the fed reinforcing itself, it needs to be much more

dynamic and less static in terms of their forward guidance to keep the market in line, because a lot of the forward guidance is only relative to the rate of recovery, which seems to be pretty robust. one of the interesting things is that the fed thought there commitment was this 2020., where they had unemployment or core pc at 2% and no rate hikes. the fed is now saying we need more, and i think they will have to be given more. caroline: talking about giving them more, we have seen global central banks respond to the yield update. we saw the rba in australia move and do more stimulus, basically. we saw the korean bank promise more and the ecb come out and say look, if we see yields back up that much more, we are worried about our long-term growth prospects. what do you think about the vet

having to speak to this? jon: one of the interesting things we saw in the beginning of february that was one of the leading catalysts to this global fixed income move is that the rba went to a calendar guidance and said, we do not expect the outcomes that would warrant a rate increase. -- they will rely on the fed to reinforce their guidance for them. i think even on the calendar side, a lot of these central banks have a very heavy outcome based guidance, and markets are looking through it and saying, we think growth is going to be better than you do. i think that's leading to a lot of this friction where the market is saying, you guys are not right on how fast growth is joe: joe: going to be. -- is going to be. joe: could it be that the market is getting it wrong? they have not internalized the new fed regime and are still thinking that rate hikes more or

less correspond to near-term growth and don't appreciate the fed's commitment to waiting until it hits that outcome? jon: i think it's probably both. there is an element that the market isn't or doesn't fully understand, but i also think there is this element that the fed and other central banks have to lean into, which is forward guidance is not static and they are going to have to readjust and recalibrate their forward guidance relative to the pace of recovery, and a lot of that can be seen as the fed keeps their foreign guidance posture the same, and this means the market is going to need more. i think the fed actually has it in their toolkit and they talked about it, saying it was only natural to add to this cyclical expansion of policy. it is only natural for the evolution of guidance to become ever more targeted.

i think that means that calendar for guidance is likely coming up. romaine: john, great thoughts as always. jon turek. we are going to turn our attention to what else? crypto. we will speak with the ceo of lally. he's joining us next. this is bloomberg. ♪

♪ joe: all right, bloomberg holding its crypto summit this week, speaking with the leading voices who weighed in on the future of digital assets. i spoke to the first chief executive a big -- of a big company, michael taylor of microstrategy. take a listen.

>> our expansionary monetary environment, you want scarce assets. the scarcest asset in the world's bitcoin. it is digital gold. it was designed and engineered to be the scarcest asset in the world. joe: i want to bring in the ceo of lally, bitcoin rewards app that allows users to earn bitcoin when they shop online. thanks for joining us. it seems like there is this attempt to expand the universe of bitcoin holders. on the retail side, i imagine a lot of people are still very nervous about bitcoin apps and wallets and dealing with seed phrases and long strings of numbers and letters. how does your company sort of make bitcoin i thing that is more acceptable to people in their normal lives? >> great question. lally has created the best way to get into bitcoin by simply

earning it. when our users shop on merchant sites, they earn free bitcoin and it goes into their lally.com wallet. caroline: at the moment, with bitcoin being worth about $50,000, let's call it, you are earning little bits of crypto. how are you assessing the way in which your users are seeing this build up in some way, and people building substantial amounts on your app? alex: absolutely. for three years now, we have had people earn up to two bitcoin on lally.com. you think it is a little bit, but when you change your purchasing decision to be focused on earning bitcoin and considering we launched when bitcoin was around $4000, $5,000 a coin, we have seen a lot of our users 10x, 11x their

earnings. we believe bitcoin is better currency and better store of value than any currency in the world. romaine: what type of customers are you seeing? are these your og bitcoin owners like joe or newer people out there? alex: i would love to know if you are a user, and if not, i have to send you my ref link. we have users of all types. we started with a lot of bitcoin maximalists, people who wanted more bitcoin, they needed to buy groceries and sneakers and things you need to live. we transitioned well outside of the bitcoin community and have gone into the mainstream. we have merchants like groupon and nike, adidas, booking.com, chewy. so every day, people are shopping and earning upwards of 30% back with an average of 7% back on their everyday purchases. some fun stats, our users are primarily around 18 to 30 years old, so a much younger

demographic than a lot of the coupon and cashback sites out there. additionally, 30% of our users are female and 70% male, so we are finding we are bringing a lot more diversity into the crypto space. the last stat we saw was that only 4% of crypto users were female, so we are excited that we are bringing a new wave of customers into bitcoin and really building with this mission of financial inclusivity and making bitcoin more accessible to all. joe: we just showed some of the big retailers that you have, but is this a type of thing -- or small retailers who might not the as well known, could they look to this as an opportunity to raise their profile because they say look, if you shop with me you can get this bitcoin cashback advantage you can't get with others, and it ends up becoming a selling point for them to attract new customers? alex: absolutely. everyone right now is in a fight

to compete against amazon. lolli serves as that democratization of commerce. it gives everyone in the world to earn bitcoin and gives merchants the ability to compete against the big investors like amazon. if you are willing to not shop at amazon and shop at merchants that are bitcoin friendly and want to play a part in this financial future and financial inclusivity for all, you go to lolli.com, check out the merchants we work with, and shop with those merchants. we have merchants of all types from all different categories. if you ask me a product, i can probably find you away to earn bitcoin back on it. caroline: what was the tipping point? you were saying people were using the app in 2018 and now there has been quite a bump in the bitcoin they were earning then. i remember 2017, 2018 walking around and it was usually the

bait stores that would have signs outside and would accept bitcoin. but what point were retailers like, we want 10? -- want in? alex: i built a company starting in 2011 called cosmic. one of the things we built was the buy button. we gave merchants the ability to sell anywhere and consumers the ability to buy anywhere, we build the underlying structure and technology for that. when i learned about bitcoin, i went to a lot of these merchants and said hey, would you be interested in excepting bitcoin? none of them were. consumers didn't have it, remittance networks weren't set up for these merchants, and then eventually we were acquired by one of the biggest cashback companies

in america and the world. this would be a great way to distribute bitcoin to people, but would also be an incredible way for merchants to get into bitcoin without having to do with anything -- do anything on the payments and remittance side. we built honey for bitcoin, we go to these merchants and got 500 merchants to start. we have over 1000 merchants and are finding it is not just a way for consumers to adopt bitcoin, but it's a way for merchants everywhere to adopt bitcoin and participate in this new financial future. caroline: alex adelman, lolli ceo. romaine: a reminder, subscribe to our weekly podcast, called cleverly, what'd you miss this week? it's available everywhere you get your podcasts. joe: caroline, do you use

bitcoin or something else, and what's your favorite flavor? tell me fair. caroline: straight up cash. i have to say, i am not a vaper, but if i had to pick a flavor, it would be vanilla. romaine: that does it for what'd you miss. this is bloomberg.

emily: i'm emily chang in san francisco, and this is bloomberg technology. i will talk to the ceos of door dash, airbnb, and salesforce about where their leanings --