romaine: let's take a look at aware financial markets and of the day it was a down day and down week. caroline: investors cheered sales topping for press across the board. the fear of inflation returned. showing high prices driving in

u.s. consumer sentiment. wall street is in the heart of earnings season. of course, and earnings season that might have given us or information that investors can comprehend. before we dig into that issue, let's look at the chart from this report. joe: guessing that university of michigan report that confirms that inflation anxiety is on the rise. it is hard to see but this is people complaining spontaneously about higher prices for homes and when the line is down, it is counterintuitive and there is more complaints about higher prices. you see this sharp line move in the last several months or less you months. people are more complaining now than the 1970's. worst on record. this whole thing about inflation and higher prices is clearly

seeping into the public mind space big time per that report. maybe dragging down sentiment overall. for more, let's bring in reporter. katie, i was looking at stocks. they were down 1.6 from all-time highs. that is nothing. reporter: it feels worse than it is. 1.6% from all-time highs is nothing to write home about. if you want to be comforted, goldman sachs said we can win this on weekly options expiring. if you look at june so far on average, 500 liam dollars -- $500 million. it is the wizard behind the screen. you have seen a ton of options traded. it is mostly concentrated in big names like amazon, tesla, apple that make up a big part of these

indexes. romaine: on the other side of that, you have the bank of america survey that came out. this is a small subset of investors out there that you showed that people in that survey thought we reached the peak of the cyclical boom. that seems to be reflected in the selloff we saw in the russell 2000. reporter: if you look at the bond market for example, they are eager to write off inflation anxiety that we were dealing with in february and march. if you look at the stock market and zero in on the companies that supposedly have higher pricing powers, better abilities to pass on those higher costs, they are outperforming in a big way. goldman has a basket of these companies. if you compare high and low pricing powers, height pricing powers will beat the low pricing power stocks for the most since 2020. there is some form of inflation anxiety but it is focused on the companies that have to deal with it. caroline: goldman getting a

little bit of love in this chat. it is a complete conundrum as to what yields are going down and inflation is up higher. please don't tell me that is technicals. reporter: i won't say that. i will draw your attention to real yields. if you look at 10 year real yields, they are down 45 basis points from their peak in february. that is what is dragging down the nominal yield that we are paying attention to. i've had a lot of conversations about why is the u.s. growth outlook so bad? it does not feel that bad. the answer is you are basically getting growth priced into the treasury market europe there is a lot of concerns about the delta variant and reopening plans across the world. romaine: explain why it mattered's the divergence between these two lines?

reporter: if you look at nominal yields, you can see that blue line. that is your breakeven. they are not going anywhere. if the white one is plunging, mathematically, that will lay on nominal treasure yields. romaine: going to the delta look variant more. that is the one thing that is beyond anybody's control. how much are people starting to change their view about say, the trajectory, the reopening, the perceptions on what the fault will be like? reporter: it is showing up in the u.s. bond market. you are seeing it in the airlines as well. that area has been hit hard. we had comments from delta airlines this week. caroline: the gc that response? -- did you see that response? reporter: business travels will

only return to 60% of pre-pandemic levels by september. that is not very good. airlines are dependent on airline travel. even if they don't like that name, the delta variant will weigh in on those sectors. we can see a repeat of the plays we saw earlier in the pandemic. caroline: even that we got a little push up higher and talk between europe and u.s. travel. it looks like delta will have an issue with that. thank you. meanwhile, disclosure dilemma. we got a great conversation for you. this latest blog, you got a deep dive on it. it is about disclosures, requirements and whether any of it muddies the water. this is bloomberg. ♪

romaine: we are heading into earnings seasons. a time where investors pour over these earnings reports. everybody pours over the big sec filings. there was a blog post from and talking about the idea of disclosure and maybe we are getting too much of it from these companies. maybe that is causing trouble for investors. joe: took up this chart. they just want to tell you more and more and more. this is the number of words. crystal, right? 20,000 words in a filing. 40,000 must be really good. romaine: that looks le chart of the day. joe: joining us with more

insight is professor of finance at nyu. professor, investing should be easy. we have all these words now. what is the catch? >> i think we lost the distinction between data and information. it is all become data dumps. in a sense, it is deliberate. i will confess at the end of the week and because i confessed it, it is off the table. the way that companies can disclose so much will give them the license to behave badly. romaine: how much it of it is the companies complying with the rules and how much is it them trying to cover their bases for a lack of a better word? >> i think it is a mix of a two. they need to stop being so helpful. i know their intentions are

good. in the process of trying to help us, they are essentially contributing to this phenomena. i think it is in the hands of the company. i will give you a simple contrast. why does it take coca-cola 250 pages where it takes apple less than 80 pages for 10k on the same year? they are by the same rules. what is it that coca-cola is disclosing that is taking 170 pages? caroline: you previously mentioned it allows them to do worse and worse. you insinuating that the shorter the 10k, the less they are trying to hide? >> absolutely. i'm stating it directly. caroline: is apple behaving well and coca-cola isn't? >> one a pages -- when a prospect is 400 pages, my first reaction is what are you hiding from me? it should not take 400 pages to discuss a business model and

discuss their ipo proceeds. i know it sounds strange but the younger -- longer it is, the more likely it will contain stuff that you don't want to find out about the company and they hope you never read it. it is interesting that we talked about pouring over disclosure. what happens when they are faced with these data dumps is they stop reading and they go back to what i call mental shortcuts. they make up stuff like let us look at the adjusted multiples and not read the rest of the announcement. joe: maybe coke buried the secret recipe and nobody ever noticed. in all seriousness, can you build investment portfolio on some of these ideas? could you build a quad screen we look for quality and -- clarity and brevity in sec filings and they will find an out forming factor? >> it might not be a bad idea.

maybe they should screen the number of pages in a 10k. it seems facetious but actually, i did. i did a study that every 100 additional pages in 10k reduces your price to book ratio 5.3. what is happening is -- 0.3. complex companies are much more difficult to value and invest in. it might not be a bad idea. joe: let us partner up. romaine: there is this idea here of i guess feedback loop in terms of the types of details" -- disclosed. explain that a little bit more and why you think that might be a concern. >> i use one area where disclosure has increased

massively: corporate governments. they created a whole host of corporate governance disclosure. this is the early 2000's. do you as a shareholder feel more powerful with companies now than it did 20 years ago? i don't. after that disclosure requirement came in, companies had multiple shares and restricted's stock units. companies are worst at corporate governance now hoping that nobody reads it. romaine: i want to get your thoughts on macro issues. we need to take a break here. he is sticking with us. business professor of finance at nyu. we will broaden out this conversation. stick with us. this is bloomberg. ♪

joe: we are back.

thank you so much for sticking with us. is this moment in the market remind of another time data a lot of inflation talk, rates are low. you are an encyclopedia of the markets. when you look overall at investing these days, there's anything come to mind or is this uncharted territory? >> i think it is unusual. we never had an experiment like the one we had last year. shutting the global economy down. i don't think anybody quite knows how we come back. i think all year, we have seen this tension player. expectations that it will come back strongly and the worries that inflations will back with it. i think what has changed is that people are starting to worrying about growth coming back the way it is. partly because of the delta variant and other numbers not coming in as expected.

worries about inflation continued to be out there. having this duel between real growth and inflation will continue through the rest of the year. i am old enough to remember the early 80's when we had to fight inflation and how much pain that created. i just hope that we don't take inflation too lightly. caroline: you are known from nyu and outside as the dean of valuation. when you're looking at valuations at this level, we are near record highs, do you feel like the only way is down when you're looking at inflationary pressure? >> i don't think inflationary -- inflation will ever be good for stocks. i know people can paint these examples of how companies can do well with inflation but i look at history and i look at whenever there is unexpected inflation, stocks have been hurt every single time. i can't think of a scenario where stocks continue to go up.

for stocks to stay or rise, inflation fears have to go away. i can't see that happening near-term soy worry about that. for me, that is the biggest worry. romaine: i wonder about the disconnect between the big investors and market participants and people on the ground. the saw this play out at the jay powell this week. members of congress spoke about having trouble paying for their grocery bill or going to restaurants and doing normal things. we talk about inflation being less in number and more a feeling. an issue of sentiment. is there a way where these two worlds can coexist? people on the lower end of the income scale are feeling this pain but people on the higher end can work through it, dismiss it, and profit?

>> i think it really depends on your faith in the fed. i would argue that we put this unnatural or unreal belief that the fed can do whatever it wants. i don't share that feeling. i have called the fed chair in the wizard of oz. they don't have actual powers but it comes from the perception that they have power. i think central banks play dangerous game. they act like they can keep inflation under control. that is why i think you see a big divide in markets. there are people out there, especially younger people. they have never been through an inflationary episode who think the fed can keep it low. i don't think the fed has the power to do that. for me, that is the biggest

divide. i don't think they can keep inflation low. we need to be careful. joe: there have been many scarce. there was the whole aeropostale great financial -- era post financial crisis. how do you think about yes, there is a risk that inflation picks up. the belief that fed can control it. unwarranted, so to speak. how do you think of the overall risk of sing out on what has been a market that just goes up? >> there is a reason why i'm not in the bubble of tech. they have been active for the last decade. you get the market hit a high, there is a bubble. i believe that markets are a price.

they should be high given inflation. at the same time, i agree with you. staying out of markets is not an issue. we gotta find a way to stay in markets and get protection in case protection comes back. that is a position i put myself in as an investor. i won't freak out, sell everything and bite cold -- gold or bitcoin. caroline: what is that? digital gold has been talked about not being the right hedge. >> i think part of what you need to do is what you talked about witches look for companies that are less exposed to inflation than others. there is a reason why tech has made a comeback in the last few weeks. the big tech companies have far more pricing powers than manufacturing companies that we have around us.

the old adage of the strong getting stronger, those stocks looking awfully good to me right now. if i had to pick stocks, i would go back to them and hold onto them because simply, they have the power to pass on pricing and that might be what separates winners from losers. romaine: do you worry about the changes or the push amongst the people in congress, washington for greater regulation of these companies? not just their size but the reach, a reach that has provided some benefits. >> that risk is there. companies worry less about it with microsoft than i do with amazon. the reality is amazon is feared by so many people that there is a vested interest.

amazon, i think is a real and present danger. on microsoft or netflix, i am less concerned. it is a risk but only a slight one among big tech companies. joe: we were just talking about how the s&p 500 is really only down a little bit from its all-time highs. you mentioned some of the risks you see there. by and large, this tech story is incredible. people have counted out so many times. is there anything that has changed that will make you think overall that area one will continue to show leadership? >> i don't think so. i think in many ways, what we are seeing is a shifting in the economy. i tell people how much time you spend in the ecosystems are

different companies. you will see premarket gaps of these companies where we spend our time and money. caroline: he just said don't use gold or bitcoin as an inflation hedge. howard are you when you look at crypto on a balance sheet? >> i think it is insane. i think it is absolutely insane. even if you think bitcoin is the place to be, you have no business as a company putting your cash balance in bitcoin. i can't believe a board of directors can be allowed to get away with that and safe we are doing a good responsibility. i just don't understand it. caroline: jack dorsey and elon musk paying attention, i am sure. thank you so much. great spending time with you. romaine: just a reminder, you can subscribe to our weekly

podcast. you will find all the best conversations we had on the show. great stuff. you got a podcast. joe: bloomberg technology is up next. this is bloomberg. ♪

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>> from the heart of where innovation, power, and money combine in silicon valley and beyond, this is limber technology with emily chang. -- bloomberg technology. emily: this is bloomberg technology. coming up in the next hour. days away from jeff bezos launching into space. whatever happens, it will be a