♪ caroline: from bloomberg's world headquarters in new york and from here in london, i'm caroline hyde. joe: i'm joe weisenthal. romaine: and i'm romaine bostick. the s&p 500's weeks a record high. -- 500 squeaks to a record high. joe: the question is, "what'd you miss?" caroline: tesla growing

production, but was that priced in? the u.s. also seems to be in the driver's seat when it comes to its economy with another manufacturing today beating forecasts and economists keeping an eye on inflation and maybe they should given that we have seen increasing prices today in wheat, soybeans, corn, what we all live off. before we dig into the economic side of the equation, let's start with tesla. what we anticipated? joe: more or less. i think the fed needs to cut rates, the average selling price of a tesla fell a bit this quarter and if that is our new inflation basket, maybe we should see some deflation there. despite the eps with a modest selloff. romaine: don't forget about the big bitcoin purchase that they made, saying that they made $100 million from selling some of that. joe: what are they doing?

for more on tesla earnings, let's bring in our bloomberg markets reporter. this is a nothing move for a company this volatile after hours? >> i know. 2% after hours, small by tesla standards given that it is something they beat on a number of measures but tesla was in a tricky spot heading into today. obviously they enjoyed the first mover advantage in the states for years now but you are seeing more traditional carmakers stepping into that space. volkswagen and general motors in particular. last year it may have peaked already. that was the set up heading into today and the action that you are seeing play out in the stock right now. you've got the likes -- caroline: you've got the likes

of gene munster saying everything happened that we thought would happen and maybe we just all tune in on may 8 two "saturday night live," maybe he's using his material on the analysts call right now. but it's not just numbers in sales and the geography, but the movement into bitcoin. katie: absolutely. i was surprised to see that they sold already. i was expecting elon musk to have diamond hands when it came to crypto. but bitcoin doesn't seem to be too ruffled by news of the sale, it's up 11%, quite a rebound. they have had a tough run of it, still not above the 50 day moving average, even with today's move, but it is interesting to find support around the 100 day moving average for someone who pays attention to the charts, but you know we did get some fundamental news on bitcoin, or as close as

we can get for an asset without cash flow or revenue and jp morgan is preparing to offer actively managed bitcoin funds to wealthy clients this summer and it could help out to coin a little today, just another reminder that wall street has been embracing bitcoin and continues to do so. romaine: going back to the delivery of competition here, the forecast we got wasn't much of a forecast, saying that they could achieve 50% growth off of what they have now, but if that is the case it would take, doing the back of the envelope math, above one million deliveries on a full year basis here, which would be a full -- huge milestone for a company that a couple of years ago we were talking about less than 100,000 deliveries per year. with that type of scale with a new competition for volkswagen, acura, and these others, you would think that would solidify their advantage to a certain extent, right? katie: that's the first

question, can they capture it in other markets? china is obviously a big focus in the space. berlin as well. romaine: do you own a tesla? katie: i don't. romaine: would you buy one? katie: i met more of a buick gal. romaine: i have a buick. katie: we should talk after the show. romaine: you can have mine. [laughter] katie: we got some headlines around that and expected to come up on the earnings call. joe: from the cash action, other speculative areas are looking good today. the tesla bitcoin act -- after hours action, whatever's going on there. katie: it's a pretty interesting dynamic because tesla has driven sentiment in the speculative

tech space but maybe it gets handed off towards bitcoin because bitcoin obviously is rallying and is lifting the rest of that speculative tech space and we will see how things fair tomorrow if the move gains some steam. if you look at options beforehand, the -- implied move was 6.2% and we are not at that level yet. romaine: a relatively volatile stock, down right now in after hours trading, i'm sure we will catch up with you again soon, katie. higher prices on the shelves? wheat, corn, soybeans, the backbone of the worlds diet unless you avoid grain. we will talk about that with a professor from the university of illinois. that's in a minute. this is bloomberg. ♪

romaine: paula -- all right, a rally in crop prices and prices could spill over into grocery store shelves. 80% of the stuff in there is corn, wheat, soy, or some derivative of it. caroline: corn syrup. joe: corn syrup flavored coin. [laughter] joe: if that's what you are getting, it's getting more expensive. i mean it looks like lumber. look at the charts on the bloomberg agricultural spot index that are ab -- absolutely soaring.

break out the individuals, they are going next -- nuts. caroline: the place to be is the new speculative trade. joe: mia b -- maybe elon musk has corn and soy and wheat. joining us now, investors scott irwin, chair of agricultural marketing. we talked to you a couple of months ago when the rally was well over -- well under way and you talked about chinese restocking as a major driver. china buying a bunch of agricultural goods, sending up the price. is that still what's going on or is there another dynamic pushing prices higher? prof. irwin: well, that's kind of the overall context, it's what fueled the initial stage of the rally, chinese buying, phenomenal up to the latest data we have had, 900 bushels of corn in a good year, would have been 200 million bushes.

what they are buying, it has slowed down quite a bit in the last month. i think it is some other factors really pushing prices higher just in recent weeks. romaine: well, let's talk about some of what those other factors are. people point to the rebound in travel, particularly vehicle travel here in the u.s., but also talking about consumption here in the u.s., factoring in the weather conditions. what is fueling the demand? prof. irwin: well, you are absolutely right. mainly the channel is through ethanol. we use about 10% ethanol in every gallon of gasoline used in the u.s. and as driving and the economy recovers we will use more ethanol and it has been bullish. but in recent weeks there have been two big supply factors that supercharged the rally in corn.

one was a big usda report at the end of march that indicated that despite these high prices, they won't be expanding corn this spring as much as others had expected. now in just the last week or two, we are seeing real concerns emerging about the second crop corn in brazil. it was planted generally late because of the wet conditions of soybean harvests in the two crop system and now on top of that, it is turning dry, a big chunk of that. a lot of don't realize but brazil is second largest exporter of corn in the world and this matters to the global market. caroline: some might blame climate change on the weather issues wrecking havoc, others might blame climate change policies, right? prof. irwin: i think that that

is certainly, it makes a lot of people want to be long in agricultural commodities. particularly the grains. the biden administration just recently announced that they want to pull 4 million extra acres into what's called the conservation reserve program. they want to take land out of production as part of basically carbon sinks for their policy and there are all sorts of discussions about different kinds of climate initiatives that would increase the use of biofuels and whether that is corn or ethanol or biodiesel, it is going to take acres. joe: i swear, this is like the lumber conversation that we had last week. what eventually causes things to stop looking like a rocket ship? prof. irwin: well, in the short run, good u.s. spring planting

season and a very good weather season for the u.s. this summer. june, july, early august, plenty of rain, good sunshine, and it looks like we will have a good crop that will definitely stop this rally. how far prices will fall will depend on how much demand has been rationing. it always matters with price surges, behind the scenes users are getting hurt and they will start to fall out of the consumption demand and we suddenly realize my gosh, prices have gone high enough to do their job to ration the available supply. romaine: i'm curious, when you look forward to the next planting season, go forward several months here, is there any incentive to see an increase in planting off the moves that we are seeing in the supply

demand a dynamic we are seeing right now? prof. irwin: oh absolutely and that's probably one of the number one items of market chatter among analysts right now, which is ok, how many corn acres can the market buy, so to speak, right now. always hard to tell but i'm on the sthat the market is going to successfully increase the planted acreage number above what the u.s. reported at the end of march. how much is the big question and i wish i knew that. [laughter] caroline: don't we all. irwin, thank you. great to have you with us. we will keep an eye on that rocket ship. meanwhile, coming up, fed rate decision out wednesday and our next guest is looking at each divergence. what does he mean by that?

they join us next. this is bloomberg. ♪

romaine: -- caroline: the u.s. and china are seen as the engines of growth in economic recovery right now and they continue to move higher with key data support in this recovery has, amid an interesting slowdown in chinese credit. is there more? joe: the global recovery has multiple engines, the u.s. consumer, the broader recovery, and china, one of the only major growing countries last year, but look at the credit impulse and the effective new lending and we are starting to see a bit of rolling over, making you wonder if one of the drivers of the

rebound is going to fade a little bit. joining us with more insight, jon turek, author of the chief convexity newsletter. how significant is it if we look at this surging all the time, industrial commodities soaring and the global growth rebound, how important is china to the story and how significant is it that those credit impulses are starting to fade? jon: thanks for having me on. china is of course a massive part of the global growth story and going back into the latter half of last year, china was a huge buffer for the global economy in terms of getting the supply side up and facilitating the pickup and consumption that we saw on the back half of the year in terms of robust fiscal spending. over the past decade we have seen china as the growth contributor, less than in terms of global growth, in other years

that, 15, 17, and 19, coincided with global growth accelerating. they were driven by chinese credit and total social financing. more alert to the slowdown in chinese credits so far this year. romaine: what happened last cycle was certainly big but we have seen some shifts with regards to which countries rely on other countries and we have seen those dynamics shifting words. a bit less -- shift in wards. how much of that could help to blunt the impact, should what's going on in china proved to be more serious? jon: there are really two things to keep in mind going forward.

one, chinese deleveraging needs to be thought of in a financial crisis went china was asking for a loan and the u.s. and europe work looking for austerity and thinking through the cycle, a lot of it was dependent on china being a credit engine in terms of aggregate demand and this time around we are seeing a much more robust fiscal extension and we are seeing in europe a more balanced fiscal approach when it comes to moving more asymmetric. i think that china is cognizant of the fact that they are not going to have to act alone to recalibrate their domestic policy structure relative to where the rest of the world is and it will allow them to achieve a much more stable economic outlook going forward. maybe this time around the

deleveraging and chinese credit impulse doesn't spell the bad news that it used to. caroline: it's interesting, earlier in programming i was listening to a debate about whether we have got a synchronous group or not. there was a lot of handwringing about it, concerns over key emerging markets affected brutally by what's happening with covid-19, but are you now perhaps seeing more real global growth as the european catch up happens without being held back by a lack of credit? jon: that's an interesting point. the story of q1 was the divergence around the rest of the world where the u.s. was rolling out and being most accommodative in terms of fiscal spending and we were able to kind of, you know, the market was able to discount fed reaction in terms of tabor being hit faster and in that light

europe was struggling with a poor vaccination rollout and further lockdown. maybe a dovish turn. we also had the china credit impulse rolling over. and a significant underperformance on the back of regulatory concerns. it was a very divergent kind of first quarter. what stood out to me in that light was despite that, looking at the dollar, china is below 650. china is discounting a much more synchronized global growth outlook as the vaccination outlook picks up and the european commission expects 70% of the population to be vaccinated in july and they come or to terms with the idea that the chinese policy posture will be much more calibrated and specific to how much they are

importing and it will be less of a blunt tool than it was in the past. the last thing that will matter a lot in terms of the fed meeting is the market started here thinking that the fed would be the first mover because the market u.s. would be the fastest to recover and while the u.s. has been fastest to recover it seems they won't be the first mover or asset purchases as we have seen in the last week where the ecb will probably release a pepperidge program in june and bank of england rba will be fixing the emergency program runoff by the end of the year and while we while -- and while we will see the fed adjusted the idea of substantial progress around the corner. it will involve a tapering of the 420 two. it's a much more synchronous and balanced world. joe: do you think the market fully appreciates what you describe, particularly around

the recovery of the european vaccination drive and the fact that it is going to catch up and converge, as you mention, with the persistent strength of the euro. is there further for that to run as it becomes clear europe is getting that together? jon: yeah, i think so. i think we have seen a bit of a turn and move where european fixed income has started to trade relatively weaker and i think one of the important narratives that will mark things as more cognizant in the second half of this year is the divergence trade really only works when the direction is divergent, nothing levels. what i mean by that is in 2018, europe was manufacturing a recession leveraging the national party in this year europe will be growing and china will be growing. yes, the u.s. is still growing but it isn't pure divergence.

caroline: jon turek, thank you. meanwhile, that's it for "what'd you miss?" romaine: have a great evening. this is bloomberg. ♪ [ sigh ] not gonna happen.

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carolyn: i'm caroline hyde in london in for emily chang and this is "bloomberg technology." coming up, record production and deliveries. the bitcoin bet pays off. we will break down the numbers and have analysts impact the reaction. apple doubles down on the u.s., pledging a 430 billion dollar

investment to create tens