>> lighter volume after a 6% rally last. stocks fading. blumer markets starts now. -- bloomberg markets starts now. kriti: as we welcome our bloomberg audiences, let's get a quick check on the markets. read on the screen across the hemisphere. the s&p 500 down 1.3%. the nasdaq is where you see underperformance, down over 2%.

that is the case even in latin american benchmarks. commodity exposure not helping. let's look at where you are seeing green. commodities exposure is so crucial when you talk about -- because the 10 year yield fell flat overall but was actually higher earlier in the session. strings -- mom you are still seeing commodities higher across the board. crude trading with a 111 handle. wall street analysts sticking with bullish earnings forecasts for the quarter. >> economists have begun to cut their top-down economic forecast for gdp. yet, fundamental company analysts are sitting there like deer in headlights, not knowing what to do with the numbers. kriti: for more on the state of the markets, let's bring in nadia lovell.

thank you as always for joining us. let's talk about this equity market because a lot of today's price action may be rebalancing. a big question, is the market getting it right? are we overreacting? >> i do not think so. we wouldn't chase the rally we have seen over the last week. -- market rallies things we are in a downward trend. you look at historically bear markets, they typically have five or so rallies. in the back half of the year, we are -- outlook. [indiscernible] -- into 2023. when you think about cost questions companies are facing, they are having a more difficult time passing on -- to customers. that is going to continue. we have seen discounts already in the consumer segments of the

market. and we look at the outlook for markets, valuation has come into more reasonable levels, but the -- component of the question is still there. that is why we do not expect much outside -- markets. 3900 on the s&p 500. arthur you mentioned market compression. that is -- kriti: if you look at earnings, we are not there yet. people are still spending. nike reporting earnings earlier and their global sales actually rose 3%. does it really matter when you see market compression in the face of ongoing sales? >> it does matter. you do have topline sales which we are still looking forward to next year. we just do not think the 10% growth translation that -- is going to happen. we are looking at 3.5% growth for next year.

a lot of that is going to -- drag of market compression. even if you have topline growth, margins are still the story. kriti: what about things like share buybacks? the haven bid? there is massive worry. how much could be see the equity story simply turned into a -- story as investors in the rest of the world come back to the united states? >> it is going to take time to see a sustainable rally in the equity market. there's obviously recessionary concern. when you look at past bear markets, it takes a couple of things to go back on. either you are -- economic data, and usually a lead-in indicator like pmi will set the stage for that. we will be watching that closely. people think there is downside to pmi. or, the fed pivots either through rhetoric or an outright

cuts. we know the fed is focused on raining and inflation, so we do not think that is on the horizon. but those are things you typically need to get yourself out of this bear market. we just do not see that near-term. kriti: interesting you bring up the fact that there is recession fear on the rise. it is inevitable, even if it out us -- even if it is not your base case, it is inevitable we had a recession. it is a function of the economic cycle. as you get closer and closer to that moment, to what extent do you see that anticipation, that fear in the market accelerate, given that inevitability? to what extent does that mean markets could revalue further back to the gains we saw in 2020? maybe even accounting for the momentum we saw at the end of 2019. >> there could be additional giveback. historically, there markets in a recessionary environment, you

typically get a 30% plus pullback. that is a downside scenario. i do wonder -- it remains to be seen when recession hits. it is a matter of time. do not see it happening in 2023. as you go forward, the risk increases. you want to position a little more defensively, as we head into the back half of the year. it becomes more evident that -- can navigate to avoid recession. kriti: nadia lovell, always a pleasure to talk to you. as we speak to you, we are seeing the nasdaq underperform, dropping as much as 2%. thank you as always. let's get now to the first world news with mark crumpton. mark: the u.s. house select committee investigating the january 6 attack on the u.s. capitol is holding another hearing today. it was a surprise when it was announced yesterday.

witness -- a former top white house aide with special access to donald trump and the west wing. in san antonio, texas, an official has confirmed the deaths of more people found in an abandoned semi trailer, bringing the death toll to 50. apparently victims of heatstroke, authorities believed they were migrants. texas has seen a surge in immigration along its border with mexico in recent years. smugglers sometimes use commercial trucks to bring over migrants. in california, the state senate has passed legislation that would allow the public to sue firearms manufacturers for harm caused by guns. the bill is designed to use industry standards to permit lawsuits despite federal law which immunizes gun makers and dealers from civil liability. it is part of a package targeting gun violence. california governor gavin newsom has promised to sign. nato set to label china a

"systemic challenge --" when it outlines new policy guidelines. bloomberg has learned the u.s. led alliance will highlight beijing's deepening partnership with russia. still, nato will not go so far as to call china an adversary. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. ♪

kriti: this is bloomberg markets. several analysts lowering price targets for nike after the company gave a downbeat forecast. it was cautious in its outlook for china. let's break it all down with our senior u.s. retail -- we see shares of nike down about 7%. there's a lot to digest but i have to ask, what is the biggest driver? the margins story or the china story? >> it's the margins. china is -- for long-term growth but right now it is about margins. just like it is for the rest of retail. there's too much inventory. margins will still be down. that is a big concern. kriti: let's go to the china

side, you said it's only 25% of their business, that still per quarter. how much extent is that an issue? is it a question of sales, or getting exports out of china? >> less than 20% of their business. the issue is covid lockdowns and consumers still preferring to shop local brands. nike is still a leader there and we think there is opportunity for nike to succeed in china, but near-term it will take time. it will take time for the lockdowns to go away and for consumers to come back out and start spending. and start spending with american brands. that is where struggles have been. some brands have been boycotted or left behind to local brands. kriti: during the covid period, online business had skyrocketed, accelerating a trend. for nike, can you explain about

their direct consumer business and how much e-commerce is aiding? >> e-commerce is growth for them. they expected to be top of their business. if you look at their business, 24 percent of nike business is through e-commerce. they say in their own channels, over 10 billion dollars in sales come from e-commerce, up from the roughly $20 billion they made in the -- kriti: let's talk inventory. we saw with walmart and home depot and target as well, the inventory buildup for nike is not much of an issue. >> it was up 23% at the end of the year. that is significant. we are expecting to see more markdowns. nike has enjoyed a long period of -- given the supply constraints we have seen during covid. but now with more inventory coming on in transit or in stores, we think there will be pressure to promote more could

as not only they have more inventory, but the competitive landscape is going to get more promotional. kriti: thank you as always. really putting that into some context. you heard it there, china is becoming a bigger part of the story not just for nike, but around the world. it's not just about their business there, it's at -- exports as well. china making its biggest shift by reducing quarantine times for inbound travelers by half. let's bring chief economist tom orlik. thank you as always for joining us. how much of a difference could this actually make when it comes to the rest the world? >> on its own, this is not going to be the game changer. the question is, is this the signal of the beginning of a broader shift away from covid zero and all of the disastrous impact it had on china's growth,

towards living with the virus, as almost all major economies have decided to do. kriti: we were just talking about that difference between exports and the actual chinese consumer. we know china is more of an export related economy, what do we need to see when it comes to getting more exports out of chinese ports? >> if we look at the pattern of china's behavior over the course of the covid crisis, what they have done well is keeping industry humming. that means there hasn't really been a huge problem with china's exports. even during the latest lockdowns in shanghai, a main your -- major manufacturing and court sector, we have not seen china adding to concerns about global supply snarls. what we have seen is caution at home. consumers, either because of government policy or their own

decision, staying at home. not going to shops. not going to restaurants. we just heard that has contributed to nike's negative sales growth in china act -- back to the end of 2021. it continues to weigh on the chinese consumer kriti: today. kriti:do you think that will lead to a decline in investment? we have already seen that when it comes to investors hopping into chinese stocks. i am curious what that means for companies who are perhaps looking to expand their footprint. think mcdonald's, starbucks, they will discourage that move? >> there's a bunch of things that have happened in the last few years, all of which have contributed to a darkening of the china outlook from the perspective of multinationals. first we had the u.s.-china trade war, the prospect of decoupling the economies. of course that makes it less attractive for foreign

businesses to do business in china. and then we had covid lockdowns directly impacting industry, but also making life miserable for all of the foreign managers who are going to oversee their firm's activities in china. and then we have the common prosperity agenda, aimed at bringing greater equality and opportunity for chinese families , but coming in many cases at the expense of profit to big businesses that have a presence in china. those three things, the trade war, the covid crisis and common prosperity, that doesn't mean we don't want to go to china. businesses want to be in the world's second-biggest economy, but they are certainly negatives. kriti: thank you as always for breaking that down. in addition to russia. coming up, president biden heading from germany to spain as the nato summit kicks off in madrid. we break it down with our reporters on the ground.

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kriti: let's talk about today. they natural gas average in the united states has risen to $4.88 a gallon for unleaded. that reflex a slight drop from the record we had a few weeks ago. still a thorn in the side for many consumers as they deal with high inflation. almost every category in the economy. the war in ukraine playing a massive role in higher gas prices. that means g7 leaders are promoting the idea of price -- on russian energy. the focus now shifts to spain as some travel to madrid for the nato summit. running is now is maria tadeo. inc. you for joining us. we will start with the g7 story

because there was a price cap on russian oil in the works. what happened? >> this is something that had been floated a number of times for g7 leaders. overall, western democracies joining and participating in this nato summit today in madrid, it is very hard politically to stomach the fact that on one hand, putin yesterday shelled a shopping center. also simultaneously making an incredible amount of money on the revenue he gets from russian energy. politically this is toxic. in some ways it works against the sanctions as these leaders have put in place. they want to cap it, they want to adjust a maximum amount, then ultimately ditch russian energy long-term. if anything the g7 has shown us the limits of that conversation and the reality check they've had. this is an idea that on paper

sounds great, to make sure vladimir putin does not make an enormous amount of money while waging war on ukraine. when you apply it in real terms, you see it is difficult to agree on the price. what is the amount you want to cap it at? how do you implement it? would you look at the global coalition that is going to have to to sip eight, india are clearly not playing ball for the time being. and then you have the chinese. kriti: let's switch to the nato summit. quickly, what can we expect from this summit? >> this is probably the most important summit we have had in 20 years when it comes to nato. for a long time, the idea was the g7 would set the agenda and nato would rubberstamp it. this is the opposite. this meeting really matters. it is about war, weapons and to

the future of defense strategies. we have confirmation from the nato secretary general who said russia will now be labeled as the most significant and direct threat not just for europe, but the alliance and china will be branded now a strategic challenge to nato. kriti: thank you as always. we look forward to your reporting from madrid. i am jealous she has that assignment. back to the u.s., the january 6 committee announcing a surprise hearing today after citing newly obtained information. let's bring in emily wilkins. this is interesting, an emergency meeting, but i am curious what is actually new? >> one of the things we are getting from this top aide to's tash to mark meadows was what was really going on around trump in the days leading up to january 6 and on january 6. we are hearing some shocking revelations already.

before the crowd marched to the capitol, they were at a rally. trump was speaking. he was told some folks could not get into the rally because they had weapons. hutchinson has testified now that trump said to take the magnetron barriers away and that those there with weapons were not there to hurt him. hutchins testified that pat cipollone told her to not go anywhere near the capitol on january 6, or they would be charged with every crime imaginable. this testimony we are hearing is from someone who was close to trump on the day, with trump, who really knew the chief of staff mark meadows and is giving this inside -- of what happened on january 6. kriti cove she has testified before, why bring her back? >> a lot of this testimony was behind closed doors.

we have heard video testimony from her before, but the committee felt her statements could be particularly powerful being on the record, in the room. there were also concerns potentially about her security. we know she got security guards in the days leading up to the hearing, according to cnn. certainly time is of the essence for the committee. kriti: emily wilkins. bringing us everything we need to know from that testimony. inc. you as always. that's check on the markets. we are seeing a lot of red. we did open positive. now we see the reversal. -- a lot of what we saw yesterday. these massive opening gains, perhaps -- only to reverse them. low liquidity and laid volume seems to be the name of the game. the s&p 500 down 1.4%. nasdaq down about 2.3 percent. remember, this is the last week of the month and the quarter. a lot of this is going to be

rebalancing flows and a lot of it will simply be a function of the dollar. what kind of exposure to foreign investors want to the united states right now when you have that higher hurdle? thank you for joining us. this is bloomberg. ♪

mark: authorities say a fourth person has died following the amtrak derailment in missouri. they say the total number of people injured has risen to 150. a cross-country amtrak train hit a dump truck, causing several cars to derail. it happened in minden, missouri, northeast of kansas city. u.s. health and human services secretary javier bar sarah addressed questions concerning what action his department will take in the wake of the u.s.