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>> welcome to bluebird markets. taylor: i'm taylor riggs. really wild today for the markets as we kick off at this hour, pushing forward to the closing bell. trying to stay -- trying to hang onto session highs. it is fully green on the screen. technology, which is interesting given some of the individual tech stocks you are going to be looking at. the key outperformer is on the day, i'm looking at a 10 year yield continuing to rise for a third straight session. and this is interesting. we are looking at some of the dollar weakness. long-term trendline has been massive dollar strength. certainly a factor microsoft is exciting in the reduced outlook going forward. -- is citing in reduced outlook on forward. jon: i be of this -- obviously this week there was encouraging news from salesforce.

that stock continues to rally today. shopper five, hit by one of these hard-hit canadian stocks, bouncing back to a certain degree. we still have some reality checks. the supply chain hiccups are hurting hewlett-packard enterprise, and the profit was at microsoft courtesy of that strong dollar. taylor: let's talk about that. i want to stick with microsoft. earlier today we caught up with portfolio manager marks stoical, spoke about the dollar's effect on the sector. mark: salesforce the other day talked about fx headwinds. other companies have talked about fx headwinds. but they have not been as small as a hit as they are to microsoft. so we believe that microsoft is handling this better. jon: well, for more perspective let's bring in senior analyst who has been tracking this story, which seems obvious now that we are talking about it, we

had so many other things to think about. just in terms of what this potentially means for the rest of the software sector, is there a possibility we will be getting more kinds of announcements like this one? >> i certainly think so. i think adobe is going to be after that. i don't see any large technology company that is not going to see an impact. largely because the issue is, they generate a large portion of the revenue outside the u.s.. in most cases it is over 40% of their sales, and with the dollar rising it has more of a translational impact. to be frank, from our side we only look at revenue growth, or for that matter operating drop in currency. we don't care that much about fx movements. taylor: you are giving me pains. level two currency adjustment on that balance sheet, reminding me of the good old days here. i'm curious if that gives you confidence if this is just dollar strength, forex

headwinds, and not perhaps something more fundamental which might be more concerning? >> microsoft really made sure they said this is all an fx-driven one, but even if we take that aside, i would expect some time of -- i'm kind of a slowdown in spending. cannot expect the same level of spending as last year, only because the world is a very different place. we look at sale-side estimates, they have not budged even slightly compared to when microsoft reported the results. there should be some tempering of expectations, but so far i take this news a bit of a positive, that the drag is only because of fx, and not demand slowdown. taylor: really appreciate it. senior analyst anurag rana.

collin martin, analyst at the atlantic council. not only the level, but the rate of change of yields rising in the last few days, is this a market back in on the inflation, reflationary trade with yields higher? collin: i think it is a rebound from a was likely too much of a pullback over the last few weeks. kind of in line with the bounce we are seeing in risk assets like stocks, high-yield bonds. i think it is a reversal of seeing that 10 year yield fall too much. in terms of where we go from here, maybe yield can move a little bit higher, but what we do not see much room for them to rise, there it is in the immediate or long-term, based on what our outlook for the fed is. how outlook has been that they are probably going to have a difficult time getting even getting to 3%. we have been slightly below market expectations. it seems like they have come down to meet what we are

expecting. right now given expectations of a fed funds rate only in that peak 3% area, there is not just room for yields move much higher from here. jon: obviously to build on taylor's question, a lot of pundits are weighing in on whether or not the fed can ultimately lead us towards a soft landing. i want to ask you some historical context, because you have looked at the charts. we know about the history when it comes to being able to manage one of those so-called soft landings? collin: the history is not in our favor, unfortunately. we think it is going to be difficult for the fed to engineer a soft landing. we look at the fed's projections, the point -- they paint a relatively rosy picture. unemployment remaining near 3.6% for the next few years. we are not as optimistic. one of the concerns we have is that when the fed hikes rates,

things break, and we think we will continue to see some cracks in the market. we are getting nervous about the impact on jobs. so far the numbers have been pretty good, but we are starting to see, you know, these headlines of companies starting to pick up the pace of layoffs, or at least announced some. we are worried that even though you see that number of so many jobs available we are worried that under the surface the picture is not as pretty as you see from those numbers. we are a little bit nervous. think there probably are storm clouds on the horizon, not to steal jamie dimon's term. we see a lot of cracks forming right now, so to engineer that soft landing will be pretty difficult in our opinion. taylor: i just came off of a panel from the fixed-income analyst society talking about the impact the fed has had on not only the treasury market, but the mbs market. i'm curious as we move from full faith and credit into some areas like mortgage-backed securities,

how are you thinking about qt and pivoting from qe to qt, and the impact that has had on areas of the market like mbs? collin: we see it as a risk to the mortgage-backed security market. not so much in the question of, well i get my money back, but when will i get my money back? and in the interim what happens to the price of my holdings? the fed has been such a dominant buyer of mortgage-backed securities, and as they step back and have plans of really focusing more on treasuries than on mbs, we see a risk that mbs spreads rise more. see a risk that their prices fall, and maybe there is more of an opportunity down the road as the fed is just beginning the qt process now, even though it has been well-telegraphed. you see risks, and we would exercise caution as it relates to mortgage-backed securities. jon: as much as the world's

markets are watching the fed, central banks are watching inflation in canada we saw the bank of canada once again aggressively hike rates and telegraph more to come. how closely are you watching the synchronization of aggressive tightening around the globe? collin: it is something we are watching very closely. that has been a theme of ours. this is not just the fed hiking rates. as you alluded to, a synchronized global tightening cycle. that does not have an impact in the u.s., but across the globe. it means financial conditions should slow everywhere as these central banks continue to begin to hike rates. this does pose a risk -- again, not to u.s. growth, but global growth. it is something we are keeping an eye on, and one risk we see, and something we see as it relates to the u.s., but this can have spillover effects, is if the economic consequences of tightening become too much, that

growth does a slow too much, that limits how much central banks can hike rates. it doesn't mean we are suddenly going to see the fed stop anytime soon. they are very committed to hiking rates. that could prevent them to getting to 3.5 percent that markets were expecting a few weeks ago. that poses a risk across the globe. taylor: really appreciate it. collin martin of the schwab center, thank you. coming up, opec-plus agreed to open up the taps just a little bit wider, increasing the size of its oil supply hike. you going to be speaking with ellen wald of the atlantic council energy center. that is next. this is bloomberg. ♪

taylor: this is bloomberg markets. i'm taylor riggs with jon erlichman. earlier today opec-plus agreed to increase oil supply hikes. they did so by about 50%. global sacs head of monitors research, jeff curry, downplaying the hike a little bit. jeff: does not change anything. when we think about what they did, they compressed three production hikes into two months. so it doesn't really change the terminal level of production. the market tried to price in a much bigger terminal level of production over the last several days. what you are doing is getting a rebound rally to levels where we were before a lot of these rumors hit. i think the key message here is that if you distribute russian supply across other members of

opec, they can't even hit their quota right now. so they are already significantly constrained, with the exception of saudi arabia and uae. you think about how does this change the fundamental picture, it really doesn't do anything and that is why the market is rallying. jon: that was goldman sachs head of global commodities research jeff currie. joining us for more is ellen wald, senior nonresident fellow at the atlantic council's global energy center. goldman sachs not impressed, although we should say the white house welcomed this news today. what is your view? ellen: i for more on the side of goldman sachs than the white house, although i think the white house had to issue the statement that it did, especially because they are talking about the president going to saudi arabia to meet with leadership there. you know, they didn't really

have much of a choice. i think it is important to understand what this will and will not mean for the market. like jeff said, this is not necessarily that we are going to see a lot more barrels on the market. they are just kind of pushing up some of the increases that the plan increases to come during the summer, which makes a lot of sense, because demand is so much higher in the summer than it generally is in september, october, and so forth. at the same time most of these opec players can increase production. we are talking about saudi arabia and uae mostly. it comes to rush i think it is important to realize that russian production is down in april, but it does seem to be rebounding in may and they are planning to open more wells in june. it would not be surprising if we actually see more russian oil on the market now that the eu has agreed to sanctions.

it just may not going to eu countries, more will be heading to india and china. taylor: do you see the demand from india and china sort of able to absorb the increased production from russia you just described? ellen: absolutely. if you look at the numbers between december 2021 and april and may now you will see that russia has essentially opened up a huge new market in india. exports increased by a very large amount. india used to be a very small customer, and now it is russia's second-largest customer after china. so huge amounts of oil are going to india. india doesn't see any problem buying it, and i think that the eu and u.s., if they want to try to convince india to adhere to these sanctions they are going to have a really rough time. this is not the same thing as the iran sanctions. they're going to have a hard

time convincing india to both not i oil from iran and not by oil from russia. jon: obviously in these summer months there is going to be steady demand on the energy front, but we just got through a segment on where the economy goes from here. how bad it could get. obviously there have been days when oil has been under pressure on that growing growth concern for the global economy. how are you watching that story? ellen: i think it is a really important question. how much demand destruction could we potentially see if the global economy -- economies start to crumble or show cracks? i think europe will really be more of an indicator than the u.s., simple because energy prices are higher there than they are in the u.s., and it is already impacting and has been impacting the citizens there for longer than it has in the u.s. if you start to see demand

numbers go down there, demand for gasoline, for diesel, etc. -- and also industrial production lag -- that could be an indicator for the u.s.. taylor: ellen, usually engaged and interactive audience we have here on bloomberg you're getting some fewer questions. i'm going to ask you one we are getting. you are thinking about the refining capacity for more russian oil, given the waxing nature of russian crude, how do you think about the refining ability that may be maxed out due to the nature of that specific oil? ellen: that is definitely an issue. crude quality is an issue. a lot of the refineries in asia, in china, want to import that light crude that the gulf countries make, and also that the united states makes. remember that you can combine different types of crude oil together to get the exact mix

you want for your refinery. i also think at this point, for a lot of these refineries their margins are not so good, but also the prices are so high that if they can get russian crude, even if it is not the exact type they would like at such a discount, that will incentivize them to put it through their refineries, even if they cannot run their refineries have max because of tight -- the type of crew. i don't think it will impact the demand for russian crude oil all that much. jon: real quickly before we go, you alluded to this earlier, but that distinguishing between the freedom to produce more and the ability to produce more, obviously something we will continue to watch on the opec front. ellen: without a doubt. it is a huge issue, and when people talk about increase in output of almost 650,000 barrels

a day, that is not what we are seeing. you're not going to get that on the market in any way, shape, or form. jon: thanks so much, ellen wald of the atlantic council on the oil story. coming up, the bank of canada raised rates yesterday. they say they may now have to go over the neutral ranch as they fight inflation. we will get the latest details next. this is bloomberg. ♪

jon: this is bloomberg markets. i'm jon erlichman with taylor riggs. taylor was talking about qt. in canada we are focused on the bank of canada and the number today, 44 billion dollars, canadian, of course. the government bonds that are set to roll off the balance sheet by the end of this year. obviously the bank of canada has

been very active in that market. that would bring down their share of the bond market but it would still be elevated at 35%. earlier today we saw more aggressive talk from a senior official, the deputy governor of the bank of canada. there is an expectation we will see the bank continue to raise rates. earl davis, ed of money markets at global asset management shared his perspective. have a listen. earl, -- earl: what was not expected was the hawkish notice of the bank of canada, it is a prelude to a 75 basis points hike in regards to that being the last statement of their announcement, that they could be more forceful to get to 2%. there is three takeaways. 75 basis points next move, and possibly another 75. so they will get rates up to 3% by september. the other one was, and we are seeing that in the bond market too, that terminal yields could

be possibly higher than 3%, saying they may not stop at 3%. then the third thing is, the economy is still doing well. that is what they are trying to slow down, that excess demand, for goods as well as employment, and slow that down to get a soft landing. taylor: really interesting, the bank of canada, the canadian economics team at morgan stanley writing in and focusing on that word, act more forcefully if needed. more hikes may be on the way. jon: absolutely, and yet we are seeing the markets in a buying mood today. obviously there is a few sentiment factors out there on getting through some of those supply-chain bottlenecks, but we do have that jobs report tomorrow, and historically it could be a bit of a rocky ride for stocks. taylor: a huge jobs report tomorrow. we are looking here within the u.s. as well. he talked about sentiment, and i

think it is incredible, the sentiment shift underway within technology. we were speaking with analysts yesterday, saying sentiment has never been worse for tech stocks. you are starting to see a little bit of that turnaround today. mentioned microsoft at the top of the show. green on the screen for equities, for bonds, and for jon erlichman, i'm taylor riggs. this is bloomberg. ♪

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charlie: here is the first word. i'm ed ludlow. resident biden will urge congress to pass gun-control legislation in a primetime address from the white house tonight after a gunman killed four people at a medical facility in oklahoma and a week after a teenager killed 19 children and two teachers at an elementary school in texas. on capitol hill, a bipartisan group of lawmakers is negotiating a possible agreement following that string of high-profile shootings.