♪ caroline: bloomberg's world headquarters, i'm caroline hyde. joe: i am joe weisenthal. romaine: another wild day on wall street. joe: the question is "what'd you miss?" caroline: again, there was a lot of angst over the economic picture, investors worrying about inflation, the debate

raging whether the jump in price pressures will be enduring and will force the fed to tighten sooner than expected. we bring you a debate. as the economic cycle peaked or not? what does it mean for the markets? what a turnaround for tech stocks. they almost closed in the green. joe: the nasdaq closed down 1/10 of a percent, but it felt like a day in the green. the nasdaq started down like 2%. all the tesla stuff got clobbered at the open, but it came back in an impressive way. romaine: did you apologize yet to kathy woods? joe: i apologized. i didn't do anything wrong. romaine: you've been ragging on her for weeks.

joe: for more, let's welcome our cross assets reporter. quite a turnaround. >> totally. down 2%. that is quite the turnaround. why now? i think it's a case of buy the dip. you saw it, two days of selling pressure in the premarket trading. this is not a reaction to yields anymore. romaine: the yields narrative doesn't hold, at least when you look at the top line data. what explains that at the open? >> is the most boring answer in the world, but i think it is profit taking. here's why. joe: more sellers than buyers. >> there were so many technicals that played into it. i'm going to give a shout out to bill maloney who is our

technical go to. there were these corrections in play. there were key levels of people watching to jump into the market, and those were the same levels that were hit. to me, that signals that there were people waiting on the sidelines to hop in, and they did. they powered through. this is not a concern about yields anymore. in february, we did see a clear reaction, but both moves were basis points. even valuations aren't as much of a concern. you can see it on your chart. the white bear is what was happening in september of last year. the blue is where we are this year. you can see there is that double correction, those two dips, but it tells you when you see them push against this upper price level, that does not necessarily mean that tech is dead. it means they can rally, if last fall is any indication.

caroline: back from the data, shortselling. how many people are doing it and making some money? >> what is interesting is this happened in february, too. we missed it in the gamestop retail saga, but there was a piece where hedge funds came out and were shortselling some of the big tech names. this could be one of the drivers. we don't know what is happening on the ground just yet, but there could be that driving. there are so many factors when you see tech take a hit like this. it is not all about those inflation concerns. this is not just a pandemic specific trade. we have to talk about how big tech fits into a post pandemic world.

joe: there is something weird about text selling off because of inflation. does facebook have a bunch of lumber? >> tesla has about -- has a lot of lumber to buy. only kidding. joe: it seems like there's a bunch of stuff going on, and tech is selling off. >> it's hard to pin it on inflation because this is not something that tech is specifically reacting to. every company is reacting. the bigger the company, the more sensitive they are to it when it comes to things like borrowing or commodity costs. you can look at the chart right now. you can see since september, you've seen the price earnings ratio on the new york faang index reverse. you can't really put those valuations in the same boat. romaine: real quickly, we are going to get that cpi data, it: 30 a.m.

ppi data thursday, retail sales friday. do you think the market is in tune with what those markets are going to show and if there will be any meaningful reaction? >> we are waiting for the bond market on that one. the equity market gets it wrong. the bond market would therefore get it right. sometimes, but not exclusively. when the cpi data comes out, they are going to be more reactive in the bond market. romaine: we like cameron. >> he's ok. romaine: he's about average. romaine: kriti gupta, giving us the breakdown. coming up, there's this big fight coming up here. floyd mayweather and logan paul. [laughter] you have to wait until then to see the real big heavyweights duke it out. neil duda is headed into the ring for a head-to-head debate

on whether the economic cycle has peaked. you don't want to miss that. this is bloomberg. ♪

romaine: today, we are focused on the economic recovery and the data coming out and how it's been affecting markets. we saw a huge surge in march, u.s. job openings to a record high. joe: can we pay attention to the jolts data? the labor turnover survey coming out for march, not even this most recent one, but it showed there is a 2 million vacancy gap, the largest on record. when we have these discussions about inflation and tight labor

supply, constricting the availability of labor for restaurants, one of the points arguing that there are some supply constraints in this economy. caroline: not to mention the nfib small business survey. what they said, 44% of firms can fill open roles. there is so much friction in the market. you want to talk inflation. joe: let's talk about all of these things. joining us, neil dutta, alongside bloomberg opinion columnist conor san to discuss whether the market has peaked. you've been warning about this for a while, supply constraints. you have a new column that says we won't be able to hit gdp goals if the labor market remains this tight or if there is so much friction. you've been warning this could not be great for the market.

why do you think that things have topped out, and this poses a risk for stocks? >> the first sign that growth is slowing, so we are still growing but at a slower level, was that manufacturing survey last week, which came down from march's historically high number. people say, it was a good number, but it is falling relative to what it used to be. we have the jobs report where we did not produce as many jobs as we thought we would, and that was due to supply bottlenecks rather than demand. we've got increasing signs in the housing market homebuilders are starting to pull back because of the material costs and pressures are too insane for them. it seems like demand growth is slowing a little bit, and we are hitting supply bottlenecks sooner than we thought. romaine: a lot of us are coming back out of the house for the first time in quite some time. people are looking to spend. we've got an accommodative fed

policy and fiscal policy out there on the table. >> i think that's right. that's the fundamental story. when we talk about peak ism, it is important for investors to remember why that signal has salience, and it is primarily because of the fed. usually, the fed steps its foot on the brakes. that is not happening this time around. it strains credulity to think that this is like 2010. europe was blowing up back then. the fact that the data "peaked" in 2010, not that it actually did at the time, it is more coincidental than anything else. this time, we have a phase reopening in the u.s.. latin america will start vaccinating more people. e.m. asia. each of those economies subsequently are more open than

the other. they trade more. that is ultimately good for the manufacturing sectors. when we talk about data peaking, it's important to think about it in terms of momentum versus levels. in terms of levels, we are not at peak anything. production is likely to accelerate from here. i take hunter's point about certain bottlenecks arising, but if you are an investor, what do you do with that? has the 12-18 month outlook really changed? prices still send a signal. if you are going to trade around the peak ism story, it's a trade you want to rent, not own. caroline: not an excellent

backdrop. connor, your perspective on this friction, how long it might remain. no longer fearful or going back to work. women perhaps returning to the labor force more easily. does that mean we could see this later explosion of growth? >> i think he's right about the 12 to 18 month view, but i think the market is focused on 3-6 months. maybe these short-term frictions are more severe and longer-lasting than we thought. last spring, we thought we would through the lockdown in eight weeks, and it turned out to be more like a year. maybe we thought we would have some transitory inflation the summer, and we are still going to get that, it seems like, but these bottlenecks seem tougher than we thought a month or two ago. that is given investors pause.

longer-term investors might be saying, maybe this pushes the growth on the 2022. if we get some downside surprises to growth, will investors be willing to hang on for the rest of this year when they thought that this year would be the big growth number and next year would be later? we could see investors struggle with the next two to three months of data. joe: we are getting that cpi number tomorrow. transitory base effects, we know the story. a, we do see companies hit by the bottlenecks. sawmills, which should be printing money, having some issues with trucking. when you get some hot numbers, do people wonder if some combination of real earnings hits, plus the fed starting to waver a little bit could create some volatility for the market if some regional fed presidents come off message? >> i guess i disagree with the

premise because they are actually coming on message. we've seen traditionally hawkish regional fed presidents buying into the strategy. bullard is the latest of them. you see it from rosengren, barkan, richmond. these are regional fed presidents who have been hawkish. the fed is going to pull the rug out from underneath it as you are getting more political buy-in from your lieutenant? that seems absurd to me. i think the fed being easy is the name of the game and will be the last central bank to taper. that is going to be negative for the dollar, and it could mean some rotation into equities overseas. when you talk about production, we are talking about one month, right? every data point that went into that one month before it was stronger in terms of employment.

we had a rising employment in the small business survey, alongside rising openings. does anyone really believe that the underlying trend in employment is 275,000? my guess is it is closer to 700,000 than not. as you bring those people on, you are going to get stronger rates of production. we started this segment talking about ism. the ism, last i checked, is in expansion. that means we are going to see more industrial production growth. you talk about inflation biting into earnings. we are seeing net margins expand, which would suggest the inflation we are seeing is not actually eroding corporate profits. it is actually helping. i disagree with some of the premise of that, but you know, i do feel like this is -- if you

are going to play this, you want to rent it. i also think it's premature to be talking about this. we are looking at equal weight equities for the s&p 500. that is still looking fine. this is narrow to a specific set of names, and i think the economy is generally on a strong course. conor knows this. the atlanta fed is tracking at, what, 11%? we are sort of quibbling over little things here. caroline: we need quibbling. this is a roundtable. we need some healthy disagreement. neil dutta will be speaking with us, conor sen. may the quibbling around the edges continue. we continue the debate. this is bloomberg ♪

joe: let's bring in our guest, neil dutta and conor sen. neil, you've been a big advocate of the pure reopening trade. planet fitness, peloton. doesn't everybody know the real economy is opening, and doesn't everybody know the vaccine rollout is picking up? what more juice is there in this trade? >> i guess everyone knows except many in this country. the messaging has been somewhat mixed. that may have taken some juice out of the reopening trade. it is sort of a two steps forward, one step back process.

to some degree, i sympathize with the view that the reopening trade has run its course, but this goes back to a point we were talking about earlier. investing does not stop when the ism hits 60. i can't tell my clients, only u.s.-backed assets is when we go from 30 to 60. i think that is the way to think about it. the broad reopening, it is still continuing in. we just hit a record in terms of tsa screenings over mother's day. the fundamental trends in the services economy is still up, and in the first quarter of this year, service sector consumption in real terms was no different from what it was in the fourth quarter of last year. when we talk about peaks, we are

going to see an acceleration in service sector consumption. again, i think there is a lot of momentum in the economy. maybe the equity story has run its course, but the momentum in the economy still has a ways to go. caroline: what is your thesis if we are at peak growth? where to put money? >> i think the risk is that the next jobs report looks like the april 1, and i think that would call into question the supplier response. in that environment, less than expected u.s. growth. it means we are not getting the response from the fed, which looks like a weak dollar, long commodity story.

if commodities are doing well, tech probably doesn't, even if tech earnings are growing. if housing kind of slows from lack of supply, homebuilders could be in for a rude awakening. romaine: i am curious. we are getting to a point where we will see some normalization of monetary policy, normalization of fiscal policy. the question is if this rebound can stand on its own, if we can transition to some sustainable growth rate that is not dependent on jay powell and what congress passes with regards to stimulus. >> in the last cycle, the mistake we made was trying to normalize monetary policy, which was normalizing interest rates. i think the shift under powell is more like, what we have now is normal, and normal does not necessarily mean two or 3%.

it's not a goal in and of itself. caroline: conor sen, neil dutta, we leave it there. ding! ding! that's the end of the fight. who won? joe: 10-10. they both won. caroline: snooze. [laughter] romaine: it was rigged. caroline: rigged for a draw. meanwhile, the battle continues between kathy wood and wood itself. joe: i think kathy won today. we will keep checking in on that one. [laughter] caroline: that does it from "what'd you miss?" joe: "bloomberg technology" is up next. romaine: have a great evening. this is bloomberg.

♪ is is bloomberg. ♪

>> from the heart of where innovation, money, and power collide, in silicon valley and beyond, this is "bloomberg technology" with emily chang. ♪ emily: i am emily chang in san francisco, and this is "bloomberg technology." coming up, u.s. stocks sliding as the stock selloff ignites. we will talk with dan