of financial conditions. katie: think about what the fed is thinking, probably not thrilled to see conditions these. taylor: huge rally underway. it is only one-day. we will bring you the one-day moves. s&p since closing, 125 points up, the biggest one-day rally we have seen since may, 2020. technology, big outperformer, up 3.2%. nasdaq 100 up 3.4%. that rally, the biggest going back in a week. the last time it was up was over a week ago. interesting volatility underway. the dow is almost four digits. 930 increase on the dow. let's talk about the russell.

marginal underperformer. domestic focused cap stocks. typically you would see in outperformer. on a day when yields are falling, that makes sense. huge relief rally when it comes to long-duration assets. tim: really broad-based rally. dow jones higher. s&p, only 25 stocks lower. 479 higher. katie: take a look at the sector level. a lot of green bars. autos, tesla, energy, semis, tech, rally pushing higher. yields down today. quite a lift for the cyclicals. worst-performing, a relative term here. you have real estate at the bottom, still up over 1%.

taylor: yield space unbelievable. two year yield, day-to-day, powell said 75 basis points is off the table going forward. certainly talking about 50 basis points in the next couple meetings. two year yield decline 15 basis points, to 63. five-year down 12 points. 10 year, 291. 30 year at 3%. re-steepening of these yield curves underway. tim: back to that moment really moved to the bond market and equity market when the fed chair said 75 was off the table. chair powell: it is not something the committee is actively considering, assuming economic conditions evolve in ways consistent with expectations. there is a broad sense on the committee additional 50 basis

increases should be on the table for the next couple meetings. tim: the chairman of the fed, jerome powell. he continued to say we will make decisions at the meeting. we will be paying close attention to the evolving outlook. romaine: ok. can we get something straight? is he driving the ship? remember, 25 basis point hike at the last meeting. he told us everything was fine. i understand communication. why he would talk down 75. at the end of the day, the fed is not driving the ship. inflation is driving. if inflation is out of control by the time you get to june, july, i guarantee you 75 points will be on the table. mike: what a surprise today. the vix down 4 index points, the biggest drop this year. next biggest one was december 7,

2021. vix back to 25. katie -- romaine: is the negative re-rating over? where everyone said valuations were too high in the face of rising rates? what changed? does the neutral rate change? does the target change? based on what the fed is saying? for what the market is pricing? whether you get there in 75 or 50 or 25 increments? it seems like we are headed to the same place we were a couple days ago. mike: i think that is true. the relief today's they are not going to try to get there quicker at a hasty pace the way some people were worried about with 75 basis point increases. katie: if i could jump in, we have a lot of news. earnings season rolling on. reports from booking holdings. first quarter revenue, $2.7 billion.

expectation for $2.5 billion. still he beat. the ceo saying, rather the bookings on booking were large. shares after hours up 7.2%, quite upbeat. first quarter, 198 million, stumbling over words here, above estimates. all the different inputs was a beat. taylor: the booking, first quarter record for the company. they are preparing for a strong travel season. this fed day, we look at consumer health. with inflation, people are traveling. similar sentiment with trip advisor. first quarter revenue above expectations. 262 versus 250. naming a new ceo. replacing the cofounder originally, matthew goldberg set to succeed in july. you are seeing a renewed passing

on the baton. tim: watching shares of ebay. the company reported results. miss on guidance for continuing operations. $.87 to $.91. the company sees net revenue second quarter 2.3 billion to 2.4 billion, miss on the top line. the company maintaining quarterly dividend, $.22 per share. shares after hours down 6.6%. taylor: wrapping up comments, we think about ceos. they have been cautious on forward guidance. really highlighting the health of the consumer. excellent comment from jay powell. tight labor market, consumers have seen wage gains. some of this eroded by inflation. it does not show signs there is a massive drop off in consumer. some of the big reopening trades

are reflecting that. katie: think of the earnings we got this week from travel stocks. airbnb, expedia, booking. they all point to the same picture. pent-up demand for travel, for experiences. they consumer has been really really resilient. romaine: obviously this will be the key going forward as we keep an eye on inflation numbers. it is about consumer spending. not sure about ebay. i feel like that is an outlier. when you look at e-commerce stocks, even though they got beaten up after amazon earnings, you wonder what place consumer spending is in now? taylor: you could perhaps see downside to that. i know you love etsy. importantly, huge miss. romaine: i love it. do not buy etsy. [laughter] how about ebay and reunite it

with paypal? tim: everything old is new again. romaine: hours of programming i just gave you. taylor: etsy second quarter revenue doesn't look good. adjusted margins way down. this is of course on the side where you could wonder about execution. tim: good point. i want to end on a sobering moment from the fed chair. he started by speaking directly to the american people, talking about the pain of inflation. that is something that affects the american people but when it comes to what the fed says, the average american is not paying attention. he clearly wants to get that message out. we are out of time. remain, are you ever going to come back from sunny california? romaine: no. you were out here. how did you get home so fast? where is carol? tim: she took the day off. romaine: ok. i might show up tomorrow. tim: enjoy the rest of your

time. that will do it. we will see you tomorrow, same time, same place. taylor: coming up, big conversations still ahead. really big for their reaction to these markets. this is bloomberg. ♪

katie: s&p 500 had its best day

since may, 2020. taylor: doubling capital focused on equity markets. i'm curious about what you're thinking about a two year yield 17 basis points on the day and that big repricing we experienced. >> the repricing began at the beginning of the year. big move across the yield curve. 2-year note's up 180 basis point, 10-year up 100 from the start of the year. the market had fully priced in today's actions. today's actions were a little bit hawkish, that is why your see a rally. romaine: long-term path for the fed, do you think we continue to see these hikes in succession or

maybe the fed will have to pause and wait for things? ken: they are set on doing another 250 basis points. there is a couple month break. that will give them time to wait for more data. two 50's are in the bag. that it is wait and see. katie: we heard powell point to the strength of the economy, in particular, the labor market. that seems to be the shining star. if we think about the past few weeks, we have heard so many high-profile recession warnings, 2022-24. where do you fall? i meant 2023. it has been a long day. ken: last time i was with you, we talked about inflation. goods inflation back then.

my view was a second wave coming through in services driven by wages. what was going to be driving that increase in wages was supply and demand imbalance in the workforce. that is what powell spoke about today. we have 11.5 million job openings and only 6 million people looking for jobs. that will keep pressure on wages. it puts consumer in a good spot. consumer is the bright spot in the economy. elevated savings rate. even in negative gdp print first quarter, consumer can seemed -- consumers seem to be a bright spot. the continuation is can consumer spend on discretionary basis in the face of higher costs? that is key. that will be the driver of whether we enter a recession or

not. if inflation stays elevated, recessionary risks are higher. if inflation comes down, those risks are lower. that backs the fed off financial tightening mode. taylor: did you hear anything new on the balance sheet reduction? does that change what you're thinking about treasuries and mbs? ken: the treasury part was down the middle. they have more than enough bills to cover any shortfall relative to cap targets. mbs, once they get to that billion dollar cap, that implies 35 billion of mbs per month. current turnover rate, the speed people prepay mortgages and paydown principal, there is a deficit of $15 million mbs. they didn't mention it. i was looking at if there was any mention of the need to sell mbs sooner.

i think they are taking a slow path as far as the balance sheet is concerned. they said they would start unwinding. romaine: interesting to see what happens with reverberations in the housing market. curious on bonds, nominal's. basis, whether the yield environment now has made them more attractive. ken: they are way more attractive than they were three months ago, six months ago, nine months ago. we were seeing nominal yields across the treasury curve, highest since 2018. 10 year treasury, 325. 3%. we are almost there. 25 basis points away. you are seeing nominal yields we have not seen in quite some time. investing in great corporate bonds is an example.

outside of a couple weeks in march, 2020, when we had the big selloff in risk assets, you have to go back to 2018. they were probably only north of 4 for a couple months at that time. since then we have not seen yields this high on a nominal basis is 2011, if you can believe it. yields look way more attractive for investors. headline cpi is so high, relative to headline cpi, you're still talking real negative yields. that has kept some investors out of the market. they're waiting for headline inflation to come down. institutional investors i think will start stepping in at these levels. taylor: appreciate your perspective. taking a look at big conversations you have, you are lucky you are still out there.

romaine: still out here on stage at the beverly hills. got more reaction to the fed rate hike and general outlook for credit markets. don't go anywhere. this is bloomberg. ♪

romaine: we are back here in los angeles, california. romaine bostick on stage focusing on private equity real estate. i want to get your reaction to the big news of the day. the fed hike was largely priced in. fed telegraphing it may be won't be as some people thought. >> that is the way the market is reacting. i believe it is normal to review. we're coming out of 10 years of accommodating policy. that is creating spillover. about time we get there. as an investor, i welcome that. we can approach the marsh are bash the markets with the cost

of capital. romaine: how much does this affect it? mathieu: for us, it doesn't. we always captured the liquidity premium. we tend to do exclusively rates on the private traded side. i would not say this is no news. it is just part of what we have to manage. it is about macro, micro, working on companies. it is business as usual for us. romaine: you are a bottom up investor. you have to pay attention to broader economic conditions. when you look at economic conditions globally, are you anticipating we could be in for a significant slowdown in growth? mathieu: it is likely. we have a little bit of a perfect storm, the mother of all

happy hours. you could not be more company to -- accommodating. investors have lost some basics. as both slow down and you have the macro geopolitical issues, inevitably it creates expansions. we are coming out of the end of a cycle which was itself. romaine: you are heavily invested across europe. is the cycle there different? mathieu: europe is many different countries. most of them don't have the same dependency on russian energy, which is one of the main issues. the ecb has been more accommodating lately. the messages we have to raise

because inflation is strong. to help this recovery plan, we sought strong leadership from europe government. the french election. we have more visibility. it is about being on the ground, with the right people. romaine: with the companies you are invested in, is there direct or indirect exposure to energy shock? mathieu: obviously we have. this megatrend of energy transition we have been working on for years already. we started with the paris agreement, the objective we set. romaine: is that transition still intact? mathieu: oh yes, it is accelerating. that is the silver lining of the situation. people realize the dependency, countries are very different. germany, russian gas.

in france, it is accelerating. romaine: what areas of that energy transition do you find most attractive? mathieu: companies working on de-carbon icing the economy. access to markets. it is about injecting capital. it is not about buying companies. it is about fueling the transition. romaine: this is still a global environment changing a lot. the globalization has changed a lot. do you still make a bet on synchronization in our global economy? mathieu: we are exporting the strata -- strategy to the u.s.. even if you have in the u.s., much less effective, by the energy situation, we as a whole

coming back, geopolitical environment, the objective of the pairs agreements, we have to invest now. romaine: i want to circle back to the rates picture and ask you about differentials we are seeing in monetary policy. does it worry you not all the central banks are moving in sync? mathieu: the past cycle, it was in a crisis moment. they were reducing interest rates. i'm curious about increasing and fighting inflation. which in itself is a primary mandate of the central banks. that is what they are doing. here you have one currency, one bank, one country. over there we have multiple

countries in different policies. the ecb is here to help sustain the recovery. i don't think that is way up, it can be coordinated because it is too specific. countries are impacted differently. romaine: great to catch up with the. having a good time here? mathieu: it is great. great to be back in person. romaine: alright guys. great discussion here. we have had a lot of great discussions here. we will wrap up our coverage here. we're going to focus heavily on the fed. post fed special, live from the institute global conference. from beverly hills to new york, this is bloomberg. ♪

taylor: let's take a look at how the markets performed on the day. a monster rally on the day. the biggest move in the s&p 500 since may of 2020 on the biggest move on fed day for the s&p 500 since 2011. it is up 3%. that shows you perhaps so much of the hawkishness priced in. a relief when jay powell says maybe only 50 instead of 75 basis points moving forward. that means a long-duration asset like the nasdaq really catching the bid and a two year yield falls 14 basis points on the day.