caroline: from bloomberg's world headquarters in new york, i'm caroline hyde. taylor: joe weisenthal and romaine bostick are off. it is ladies day. caroline: the s&p 500 worst day since may. the global market selloff. not a single member of the dow jones industrial average managed to be in the green. taylor: the question is, what did you miss? caroline: the u.k. is a prime

example. today was it's freedom day. a time when covid restrictions were removed. boris johnson spent the day in isolation. having to conduct a news conference virtually after having come into contact with a health secretary who tested positive. to the most in the world. it is a good example of how doubts are creeping into the recovery. it is also notable deaths are not rising at the pace we had previously but case counts are spiraling. taylor: there are case counts leading us to remember where we were a year ago.

there are two stocks that reminded us what goes up when you do these stay-at-home trades, namely peloton. you are up 7% versus the reopening trade. today was starting to unwind. you are down almost 5.5% for planet fitness. felt like the mood music for a year ago. trying to put some of this into perspective as we talk about some of the vaccinations and the rollouts and where we are with reopening. let's revisit the reopening trade and where are we with the bloomberg new cross asset reporter it was the russell 2000. some of the reopening stocks have started to unwind a bit today. >> whatever it is, that was risk off shared this is not a reversion to growth anymore. that was the story in june. we are going back to the familiar pandemic trade. today, it was all cash off the table. unless you were a biotech stock, which is an interesting bid. carolyn: peloton and biotech cared we all zoom fatigue. that stock lower. even of choice is month and dollar. >> absolutely. what is interesting is the

secular nature to what is going on. we are diving into the dollar. when you have a higher dollar, you are losing some of the investment to hop into the stocks. higher dollar not great for foreign investors. taylor: come on. the real story is bonds. down 10 basis points on the tens and 30's. when it he too on the 30 year. -- 182 on the 30 year. you were talking about the 120 level. the next gap below that, how significant was it we were not able to keep the 120 level? >> pretty significant. i would love to blame technicals but you are not seeing it hit a technical level. the 124 basis points was the

last one. go below that and the next level is at 112. we did not hit that yet. you cannot really base this kind of idea on technical levels. if you ask five different fund managers, you will get five different answers. some of it is going to be unwinding the reflation bets. some is going to be a bid for treasury. some of it is going to be geopolitical tensions. you solve this in a light of china headlines this morning. we have not even discussed in terms of the virus because it takes a backseat to the virus idea. you are seeing some of the assets, your copper, your chinese yuan. those semiconductor stocks taking a much broader hit. a little bit of the geopolitical tensions is the perfect risk off jump ally appeared -- risk off jambalaya. caroline: it makes me hungry. thank you so much.

let's stick to the bonded narrative. we welcome at harrison. your perspective on the narratives. we have it all laid out. for you, what is the driving force? >> i think there are two or three things that have been going on. there is a realization that number one we may have had peaked growth in q1 and early q2. we are beyond the peak of growth. we had a market that was priced for q3 and q4 outperforming. you have the delta variant, which is adding some downside risk. at the end of the day, investors are looking to move more of their portfolios into safe assets to hedge against the downside risks. those three together that create a perfect storm of positivity

for the bond market where we are breaking through a lot of technical levels with the technicals adding fuel to the fire. taylor: with those technical levels, i was reading a story that hedge funds were still short when you are thinking 20 or 30 years out. i was looking at a chart of 10 years and leverage funds are long on a 10 year. are we still doing a short squeeze? how much longer does that last? >> from the numbers i have seen in terms of the speculative short position, they have really started to take a backseat in terms of where this is going. i think a lot of it has to do with the fact that we were priced -- we were fully priced in the equity market for the full reopening. people were under leveraged to safe assets because there was not whole lot of pickup. there were trying to get a cup in other places like a high-yield. now that we see there is more

downside risk then we had thought, are starting to say, even though we are getting negative real return on treasuries, let's reallocate some of our money back into the treasury market. caroline: we get plenty of data this week whether it be on the housing market, whether it be on earnings season. are we destined to keep on crushing lower in terms of yields or are we going to have some sort of buy the dip mentality when it comes to the bond market? >> i think there will be some profit-taking at some particular juncture. things don't go down a straight line. the yield curve is still upward sloping more than 100 basis points. when people talk about recession, they're always talking at the yield curve inverting. we are talking about the potential for a growth slowdown. i growth slowdown does not

necessarily mean we are going to a 50 paces points on the 10 year. it just means that growth is less than we would have liked and the question becomes, what does the inflation picture look like? what does the growth picture look like? is there more stimulus in the pipeline? how does the employment pan out in the near future? those are all things that are still to be resolved. by the end of the summer, we get a better feel for that. i think that we are stretched in terms of how good it is for the treasuries at this juncture. taylor: it is that -.108 that catches all of our attention. thank you for those insights and comments. coming up, more on today's big market risk off move. some of the selloff that was underway. this is bloomberg. ♪

caroline: what a day on the market. volume spikes higher on the dow jones and s&p 500. not a single member of the dow jones industrial average managed to pop into the green today. all 30 members were down. boeing leading the charge. this is a story of economic concern, industrials getting beaten up. a story of economic weakness. we discuss whether or not the delta variant is the hypothesis. what did you make of today's market reaction?

did you see the writing on the wall? >> not yet for me. i think it is too early to say this is the alarm bell. the market has been really good historically and the last couple years in telling us what is coming. both for corporations and the larger economy. i look to the market in general to tell me whether there is trouble coming down the pike. i think it is too early to know this looks ugly admittedly but in the grand scheme of things, it is a big move. it is tricky to say what markets mean in real-time. it gets tricky when the moves are relatively minor in the grand scheme. were talking about a pullback of three or 5%. the reason i'm saying all this is the most important thing for investors to keep in mind is they should probably do nothing. taylor: i want to go cross asset with you. you are right to put into

specter. only the worst day since may. what was dramatic was the move in bond yields. i am curious the signals you are taking from the bond market that peaked a few months ago. it has been rallying. the yields have been falling ever since then. >> the good news is that there is a consistent story, we have not always had in the last couple years. they are telling us the same thing. the question is with the bond market be moving this dramatically because these moves -- these yields on the 10 year are pretty low. with the bond market -- with the bond market be doing this if it were just about a pandemic from the delta variant? i am not sure. i think it is worth considering there is something bigger afoot. when i am referring to really is it is possible that the market is telling us the growth of we are expecting economically out

of this pandemic is also a return to the earliest growth we have seen in the last 10 years. slow and steady growth is ok. in the 19 -- and the 2010s, we had corporate earnings growth that was well over 10% a year. that is double the long-term rate. it would not justify these valuations. it would justify lower interest rates. we should keep in mind the signal may be about much more than just the pandemic. caroline: in that narrative, you think growth could be choked off in some way, is that central-bank action? we had gina adams hinting this was all happening in hawkish signals coming from not just the fed. >> it is certainly possible. the thing i think is difficult is the central-bank experiment we have an in for the last 20

years, 20 years as a long time but in the world of financial economics, it is a blink of an ipo we don't have enough evidence to be able to make connections between the fed and what growth is going to look like. my guess is that the stimulus is not going to slow growth. what is going to slow growth is that growth has been unsustainably high when it comes to corporate earnings in recent years. i think what you are going to have is a better balance. more economic growth and less corporate earnings growth. people have been talking for a long time about this divergence which joined the market and the larger economy. what you're going to see is the economy do better than the markets going forward. my guess is that is not going to

be informed by the bank. taylor: always appreciate those comments. a very crazy day in the markets. we are going to do more on that next as we go cross asset. while it was gina that hinted that bonds and bitcoins, they told us the selloff was coming. if you or just to see the tension a few months ago. we slide back to the $30,000 level on bitcoin. we will do the latest move with the ceo of great scale investments. this is bloomberg. ♪

caroline: what a wild day on the markets. taylor, we have got to turn our attention to crypto. taylor: unfortunately, a little

bit volatile as we saw bitcoin tried to hang onto the 30,000 level. we had an incredible conversation earlier where we were talking about ethereum. trying to hang on the 1800. this is our bloomberg galaxy crypto index. not as big a swing as we have seen. let's do it all and get more insight with the ceo of graysc ale investments. people come to you and say it is to volatile. how do you respond? >> investor allocating to crypto know that volatility will be a part of it. most investors we deal with are not looking at short-term volatility. their allocations are over medium to longer term time horizons. i don't think people feel safe when they see sudden movements -- feel phased when they see saddam movements? -- when they see sudden movements.

it is a diversification for a a lot of investors. does not seem like there is any asset class that can avoid some of that liquidity coming out of the market and a lot of the deleveraging happening. taylor: how are you thinking about liquidity in the market? we know -- when the ftc will allow an etf and the discount behind that. how much of that is integral trooper finding not only confidence but liquidity in the market? >> you're referring to our flagship fund. even though there is no bitcoin etf, investors are not waiting to add crypto to their portfolios. it is doing hundreds of millions of dollars a day. it really is for many investors the easiest way for them to add crypto exposure one side stocks, bonds, etf's. as the fund continues to grow,

we will see liquidity grow as well. caroline: what about the 42 million shares that are due to be released? is that a short-term issue investors are taught to you about? what sort of pressures does that exert on bitcoin price itself? >> a lot of not only investors but people in the press have been wondering what the effect of the fund growing so large will do now that some of those shares are unlocking. it is a little too early to tell. what we have seen is with it trading at a discount, a lot of investors have been stepping into the trade realizing that capital can help them loan or control more bitcoin than if they were buying bitcoin at the spot market. in the longest case scenario, there would be an atf that would arbitrage the etf value.

taylor: you talk about investors stepping into the market. how have flows looked as of late? i am thinking of bitcoin and also ethereum. >> investors have their allocation. the trend among investors to have diversity within their crypto holdings. looking at other assets to build out their portfolios. a lot of them are getting excited about these new use cases of digital asset protocol starting to pop up. caroline: the grayscale d5 fund is what you are announcing. decentralized finance, what are opportunities people want to get exposure to yucca >> decentralized finance is additional financial services needing decentralization. for typical investors, typical consumers, they are going to banks and brokerage houses to

get borrowing and exchanges. defi offers the opportunity to do that in decentralized fashion. this is a hot area of crypto were investors are telling us they went exposure to. launching a fun -- a fund is a really attractive opportunity. taylor: what is that targeted opportunity investors are saying we want access to? caroline does this all the time. explain to me. >> i think defi represents a new subset of assets. we have seen bitcoin emerge as restorative value. we have seen the emergence of stable coins. we are starting to see various assets come up that have new and differentiated use cases and investors are eager to get exposure to them. caroline: exposure in particular

when they could also be getting into qvc as well, which is trading at a discount. is it going to be totally new types of investors coming? >> i don't think we will see cannibalization. the trend toward diversification is a really important one. this is grayscale's 15th fund. we have a lot of investors who have invested into all 15 funds. as investors are looking to us to provide them with these interesting opportunity sometimes before there is enough market sentiment to identify them and think about it as simplified access. caroline: your due diligence is focusing on the defi index. we have seen protocols not always work as intended. how do you ensure you are protecting people's money? >> when we look at the index,

every quarter, different assets will be included or excluded. there is qualification criteria that must be met. investors will see that the assets with the greatest value and exposure within def willi remain in the fund and those starting to fade away will be disqualified from the fund holdings. caroline: last question. bitcoin. at what point does it become a buy? >> i'm never one to make price predictions. i can tell you based on who is investing in the market the size of the allocations they are making and the convictions they do, i think the opportunity for bitcoin remains very bright. caroline: of course you're going to say it is bright. we love having him on. great to have him in the studio. taylor: bloomberg technology

coming up next. caroline: i'm going deep dive tech for the next few days. if it is not taylor, it is me. if it is not me, it is taylor. i'm going to be doing vtec. what are you going to be doing for the next half hour? taylor: i might go take a nap. have a great evening. this is bloomberg. ♪ (announcer) back pain hurts,

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announcer: from the heart of where innovation, money and power collide. in silicon valley and beyond. this is bloomberg technology with emily chang. ♪ caroline: caroline hyde infra emily chang. coming up in the next hour, we had to texas where emily is at the blue origin launch site. find out what t