>> stocks trading lower. yields. and the dollar surging. . a hawkish fed trade is certainly in play. "bloomberg markets" starts right now. let's dive into the price action. we are seeing right on the screen. the s&p 500 only down .3% pure when it was down almost over 1.2% at its session lows. you can see some of the losses get paired as we go throughout the trading day. take a look at the bond market. we are starting to see the volatility seeped back in. now you're looking at a 10 year

yield at 377 and eight basis points move higher. the dollar getting stronger as well. that is where you are seeing the bloomberg indexed all their by .6% feeding back into the commodity complex -- index up by .6%, feeding back into the commodity complex. nymex crude hitting a 70's handle. in the equity market, there is a little bit of a rotation we want to keep an eye on, it divergence when talking about where people are spending. consumer discretionary and staples, following the market that are both lower, but take a look at where the real pain -- the real pain is today. consumer stocks down almost 1%. what does that tell you about the need for spending people have? no longer are people spending on just anything. it's really about coming down to household products, food, it is the sentiment really reflected in the market, consumer staples only down .2%. one of the names really standing out today as macy's in the retail space, on pace for its

biggest gain since may after exceeding earnings expectations and bonus raising its outlook. earlier its ceo gave us it to be on the -- his be on the consumer. -- gave us his view on the consumer. >> i think the consumer is relatively healthy and there a compounding effect of inflation all around the consumer in all sectors, and services, discretionary and not discretionary, categories, our customers are feeling that. kriti: joining us now is the host of "lower technology," -- "bloomberg technology," caroline hyde. the market tells us to reward the stock for it. caroline: we can talk about how much analysts downgraded the outlook coming into the season and they beat sales falling, but not as what is expected. this company is managing to have the right product for the right income bracket, they don't just have macy's, they have

bloomingdale's, etc., we saw sales rise on both of those areas, so therefore they are able to really be catering to a kind of consumer that is less affected by inflation. what you have jeff saying that it is a compounding effect. inflation is something they have to keep on worrying about into the future. therefore the inventory management is so crucial, when looking across the board at other players that have just built up in general about 30% year on year inventories, macy's just built up 4%. they have been very digitally savvy in this manner. kriti: walmart said they actually cut their rising inventory by 50%, something that really made them the outperformer relative to home depot, lowe's, target, how is macy's able to execute on that? caroline: it is about being more digitally savvy and making sure that they are not having their own branded product that they then can't cancel, they are more mobile by understanding what they've got whether that is on trend or something they want to be selling at this point.

he felt incredibly confident about the goods they got into the holiday period. they do think suddenly there will be a surge on christmas day of purchasing. it is a saturday as well this year. it will be beneficial. what is the overall impact of everyone else having to cut prices? he said that is smart, there is an issue, they have to have the right kind of product at the right time and the right price. he felt pretty confident about how they have lined up and they can add to their overall offering in the last few weeks towards the holiday. kriti: have to ask about the supply chain issues that were such a hallmark of a lot of these regional issues -- is that not a problem anymore? caroline: last year that is what everyone was talking about and that is why you saw panic purchasing, now everyone is eased about it and they are focused about getting the right deal with inflation. kohl's still has about 30%

increase in inventory. losing their ceo and perhaps offering up the right product at the right time. but it's not about supply chain headaches anymore, it is about getting the right deal in this inflationary environment. kriti: a really tricky environment to navigate. caroline hyde, thank you for bringing that down. on the consumer level -- earlier fed president james bullard spoke about the range of the rates. >> even under these generous assumptions, the policy rate still is not at a zone that might be considered sufficiently restrictive. to get to this sufficiently restrictive level of policy, we will need to increase the policy rate further. kriti: joining us now is lisa h., from schroeder's. always a pleasure to have you on the show. let's talk about the bond market. it feels like today's trade is really perhaps moving and proving, for lack of a better term, off of a lot of fed speak, and it feels like as more people

say the fed stepped down narrative that happened a couple of days ago, that is not really in play, they are still hawkish and still going to raise rates at a very fast clip. it seems to be impacting the bond market. has anything really changed, lisa? >> first of all, thanks for having me, and second of all that goes to show you how important the fed is in this environment. the trade this year has not been to fade or go against the fed. the trait has been to listen. each time we get -- each time the markets get billions about the pivot, the fed comes out and says don't not get too excited because inflation is still way too high and we still have further to go. today is a prime example of that. we've got the cpi data. it was better than expected. everybody thought, this is it. it is not it yet. we are not there. i think certainly the fed is probably considering i'm probably right to consider stepping down from 75 to 50 basis points, but i think the point is, how long are they

going to hike rates for? not just how large is a merger -- how large is the magnitude right now. we see the discount and markets today. kriti: we are looking at a move in the two-year yield higher by 11 basis points. we are looking at 446. we are looking at expectations of a terminal rate that surpasses 5% as you pointed out, shouldn't the two-year yield to be rallying far more? >> i think nobody really has a handle on when the environment -- when the outlook changes. historically, the market is happy to front run the fed and get all the rate hikes priced in, and then the fed moves quite quickly from the first hike to the first these. but we don't know when the last hike is going to come and that -- and at what place inflation is going to fall. they may have gotten a handle in

terms of peak inflation, but by conservative estimates, we are still going to see core inflation running north of 5% -- 4% or 5% for the next several months. i think that will keep pressure on them. you can't really get the rally, i think, until we have some confidence that in fact inflation is getting to a more normal territory. it may have peaked, but it is still way too high. kriti: to what extent does the mark market take its cues from the commodity market? brent crude falling, a lot of oil prices and commodity prices falling, shouldn't that be a good thing perhaps for the bond market? >> i think it is, to the extent that it puts a lid on core inflation -- on headline inflation absolutely. i think the other side to that is, your starting to get signs in various markets, the yield curve is one of them, that we are headed towards more of a recessionary outcome. while that may be good for certain parts of the bond market, it is not good for all parts of the bond market. it may be good for yields

overall but not necessarily for riskier product. that's what the market is grappling with here. when does the real pivot happen? how long is it until inflation actually comes down to more moderate levels? and to what degree do we have to hurt the growth outlook to get it there? i think that is the other point here, is that the yield curve is telling you actually that it is extraordinarily inverted and that tells you that growth is going to come down quite materially, i don't know that all markets are looking at things the same way right now. kriti: we are looking at a new version of about 69 basis periods usually have at least 50. -- 69 basis points,. usually have at least 50. >> nancy pelosi announced she is stepping down as speaker of the house. >> with great confidence in our caucus, i will not seek reelection the democratic leadership in the next congress.

for a new generation to lead the democratic caucus that i so deeply respect. >> the announcement comes after republicans security slim house majority in last week's midterm elections. pelosi was the first woman to serve as speaker of the house. her departure from the rule opens a way generational change in the democratic party's congressional leadership. in the u.k., chancellor hunt has outlined $65 billion in tax hikes and spending cuts so the government can plug the hole in its budget. the wealthy will be hit with higher taxes on wages and dividends. meanwhile a windfall tax on oil and gas companies has been extended. hunt said the british economy is already in a recession that will shrink output by 1.4% next year. workers at a starbucks who are seeking union contracts will stage a daylong strike today at more than 100 stores. they say management is not bargaining in good faith. starbucks workers united has unionized about 260 of the

chain's 9000 corporate run sites in the u.s. starbucks says it will respect the workers' right to protest lawfully. and bankman-fried is telling his side of the company's collapse and doing it through a series of tweets. he admitted ftx got overconfident and careless and said he would do his best to save customers' cash. the new management said bankman-fried does not speak on the company's behalf. today a court filing showed bankman-fried and two other top executives at the exchange received a massive loans from its affiliated trading arm, alameda research. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm john hyland. this is bloomberg. ♪ ♪ we all have a purpose in life - a “why.”

maybe it's perfecting that special place that you want to keep in the family or passing down the family business or giving back to the places that inspire you. no matter your purpose, at pnc private bank, we will work with you every step of the way to help you achieve it. so let us focus on the how. just tell us - what's your why?

kriti: this is "bloomberg markets." airbnb aims to strengthen its relationship with stronger verification tools and offering extra support to those who list on the home rental platform. emily chang is in san francisco with more. emily: thanks so much. the airbnb ceo and cofounder is actually with us now. a host of announcements yesterday, including improved protection for guests, also making things a lot easier for hosts to throw up their properties on airbnb. you are rolling out verification and 35 different countries. talk to us about the problems you are trying to solve with these new features. >> we are expecting still very strong travel demand, that is what we saw last q3. at the same time, the economy today is similar to 2008, when we started airbnb. back then during the great recession, many people were turning to airbnb to make extra

money. we think people want to do that again. as you talk to them, they told us there are a couple of obstacles becoming -- obstacles to becoming a host. the first is people don't know how to get started. we have a new product called airbnb set up. an easy. way to set up your airbnb. . what we do is we met you do a super host in your area. we have thousands of super hosts around the world, in 81 different countries. a little like the genius bar where you can talk to somebody, except they are on the phone, they help you through the process. the second thing we realize is people are nervous about having other people in their home. so we wanted to make a leap forward in making people more comfortable. what we are going to do is we are verifying the identity of everyone in 35 countries. this covers 90% of reservations. by next spring, everyone on airbnb, booking on airbnb will be verified. we also have reservation screening technology, to lower the incident rate of parties. we did a pilot in australia, party incidents were down by 40%

and increasing damage protection from $1 million to $3 million. at the end of the day, we are trying to get more people to put up their actual homes that they live in on airbnb, in anticipation of travel demand. something that i think is going to resonate especially now during these difficult economic times. emily: you are also listing your own guestroom on airbnb, brian. you seem like kind of a busy guy, should your guests expect you to be making coffee and chit chat or what? >> i will make coffee. i have the famous chocolate chip cookies, they have been in the family for a few months since i found the recipe on google, i will be hanging out with them, there's a bunch of cool stuff we can do together. some people ask why you are doing this -- i have always believed people who build great products build them for themselves. i also wanted to show people if i could do it, they could do it as well. obviously i would -- obviously have to be thoughtful about who was in my home. that is why i'm doing it. emily: very curious about those

chesky chips. you just reported your best revenue ever. he said bookings are going to moderate. we are heading into a lengthy and very painful economic downturn. there is anecdotal reports about an airbnb bust, if you will, that posts are saying bookings or dropping. are you saying that happened yet? >> we are not seeing that at the aggregate level. the best thing i can tell you is what i told everyone a couple of weeks ago with the earnings -- and that is that we are at a record quarter -- we had a record quarter, record revenue, record free cash flow, a $3.3 billion. almost half $1 million free cash flow per employee. obviously we are in the 100,000 -- we are in 100,000 markets, 6 million homes, there's going to be variability. but ultimately what we are seeing is hosts made record earnings this past summer and we are expecting a very strong demand coming. even if demand were to moderate,

even in a recession, what we have learned is that airbnb's model is very adaptable, probably the most adaptable model and travel. we have nearly every type of space in every community at nearly every price point around the world, and this is probably why we recovered faster than other travel companies in the midst of the pandemic in 2020. so we are expecting robust travel. part of the reason why is i think while people are pulling back spending, the last thing some people want to do is stop traveling. because that is the way they get out of their house and meet people. when your office is zoom, when the theater is netflix, they want to get out of the house. emily: i know when we talked after earnings, you said airbnb is still hiring -- since then ,meta laying off 11,000 people,, twitter. you have to be strategizing. how are you being disciplined? just in case the economy just keeps going south. >> 2.5 years ago, we lost 80% of our business, we laid off 25% of

our employees, and i said at that time that we are going to be now prepared for anything to come, any storm. we stayed discipline for the last 2.5 years, anticipating difficult times ahead. we said, no matter what happens to the economy, we do not want to change how we run the company, and that is only possible if we stay lean and disciplined. we only have about 6000 employees. we are reallylean. beginning the year, we were only planning to hire 7% more people near before -- than the year before. other companies were going to hire 20 to 30 percent more people. because of the strength of our business, we are not stepping on the brakes. we are stepping on the gas. we are still hiring. we are not freezing or cutting, we are growing. emily: thousands have been laid off at twitter alone. i know you are a twitter user. you have more than a decade of experience managing a community business. what do you think about the loan's -- about elon's move so far? is a good for the twitter

economy on the business? >> i am a fan of verification. that is probably obvious. actions speak louder than words. if i was running twitter, i would want to verify every single person on twitter, whether you charge for them or make it free, if the vision is to be a digital town square and be the most trusted form of information, you want to start by trusting the people sharing that information. so i think verification is at the center of twitter. the only other thing i would say is yes -- i think twitter years ago had a choice, is it a protocol, or is it a community? and i think over the last decade, they've gone the path of a community. so to run twitter is to say you are in the community building business, and to be in that business, you have to be passionate about managing the nitty-gritty of stakeholders and that is what i think he is going to be spending his time doing. i wish him luck and the very best doing that. emily: you tweeted that you heard guests loud and clear about pricing

transparency. you are going to provide that starting next month. looking at the responses to your tweets, they were all over the place. some people think you are not doing enough, some think you are doing too much. can you really make everyone in a community happy? >> you can't make everyone happy, all you have to do is make sure that you can consider all of your stake holders -- that you consider all your stakeholders. people need to know that we are listening. and i'm not just an ivory tower. i'm not just looking at data. i'm engaging with people on twitter. we are also being very systematic in our research, talking to our very best guests and hosts. the most important thing is people see you listen and continue to improve, people see that you are humble enough that if you got something wrong, you are willing to admit it and improve. and we are a company that will never stop improving our product. so whether or not you think we have a great product today, look at the trajectory. i hope people feel it's going to be even better in the future. emily: how are you watching the crypto carnage? does that mean no crypto

payments on airbnb anytime soon or ever? >> never say never. but definitely not anytime soon. not anytime soon has nothing to do with the economy or the market. just that in life, one of the things i learned from the pandemic as you can do anything you want in your life, you just can't do it all at the same time. you have to have prioritization. one of the pitfalls of tech the last five to 10 years is probably a plethora of capital, too much money. and too much money means too many things at the same time. we have to get really disciplined. i said, we need to focus on great customer service and getting enough hosts. those became our priorities. as far as cryptocurrency, the analogy i would make is, we are all in a nightclub and the lights just came on, suddenly i feel that we have to just kind of take a really cold, hard look, have a reality check. i think we have to be careful about this frenetic get in on any technology trend before it is over. i think we have to be very careful about that because that

is when discipline goes down. i think people regret decisions they made when they had this mentality that someone else is making money, i am not. you really have to always focus on fundamentals. you always have to focus on building things for other people of value. the more you learn about something, the less you understand, you just have to slow down and make sure you know what you are doing. emily: time to go to another nightclub, maybe. nancy pelosi just stepped down as house democratic leader, airbnb does its fair share of lobbying, how does a new congress impact or change your plans? >> i guess, first of all, i would congratulate her on this historic run that she's had. i think of this very difficult time as an opportunity for us to really partner together with regulators and policymakers, because i think ultimately people around the world need help, especially in this country.

and the kind of help they need is economic help. so to the extent that we can help, be helpful and be an economic lifeline, that is what we are really going to be focused on. airbnb is also mostly regulated at the city level anyway, but where we can be helpful is where we will be focused on right now. emily: you have such deep provisions and to so many parts of the world -- are there parts where you are expecting more softness than others? we know the americas have been strong. what about latin america? apac? are you expecting more tightness there? >> a little hard to say. north america has been quite strong. asia has not been as strong the last few years, less economically driven, the borders are not freely open for travel, asia is more of a cross-border market whereas north america and the u.s. is very much a primarily domestic market. hard to say, but i will say that our business model is very adaptable.

when borders got shut off and people were not traveling to cities and they were not really traveling for business, we were able to recover, because people got encourage during the pandemic and they were able to stay in airbnb's a couple hundred miles away. however travel demand changes, i think our business is going to be able to adapt, we are probably the most adaptable platform and travel, because we are the most -- in travel, because we have the most amount of spaces and communities all around the world. emily: how does this all play out for airbnb in the next year, between the rise of long-term stays, the bounce back of hotels, customers under pressure, do you see a shift in the mix? >> maybe a little bit. it's probably going to modulate. for example, we had a huge boom in long-term stays in the beginning of the pandemic. people wanted to get out of the house and travel and go to airbnb's with more remote policies, that is now normalized. about 20% of our nights our

first day is longer than a month, nearly half of our nights are first days longer than a week. that will probably continue. i think in the long run, probably more than our business will be longer stays. it is an emerging market. fewer people are going to be tethered to one area and fewer people are going to have one year leases. i think travel is going to remain robust. one possibility is as the economy slows, there might be a mix shift to more domestic travel partly because international flights are expensive and some families say, let's do a vacation nearby, but again airbnb, we could definitely adapt to that, we did during the pandemic, we can do so again. emily: brian chesky, thank you so much for joining us. back to you. , kriti. kriti: thank you both. a really fascinating interview. let's talk about the markets. you are seeing them at session his. the s&p 500 down to tens of a percent and the nasdaq flipping into the green, as is the dow.

crucial in terms of the sustainability of this market rally. the 10 year yield, still at 377, eight basis points higher. stick with us, we have more markets coverage ahead. this is bloomberg. ♪

kriti: stocks hovering at session highs. kind of wavering. i am kriti gupta. bloomberg markets starts right now. ♪ let's dive into the markets. s&p 500 hovering your session highs. down about .2%. at session lows down almost 1.3%. that is crucial paring the losses. the bulls want to see the s&p 500 tip into the green.

let's look at the bond market. volatility is back. higher by eight basis points on the 10-year yield. the two-year yield getting closer to 5%. that is the key metric we will watch. the inversion hits 69 basis points. the dollar stronger as well. .5% on the dollar index. you have brent crude trading at $90 a handle. we have to keep an eye on if it gives to a dollars. something we are watching -- dips to $80. officials hammering home result to remain persistent and the fight against inflation. james bullard saying rates have further to rise. the cleveland fed president also spoke out earlier today. >> today, inflation is on acceptably high in the u.s. it is elevated in many other countries as well. kriti: from our insight let's

bring in james camp at eagle asset management. always a pleasure to have you on our show. a hearty welcome to you. let's start with the volatility you're saying in the bond market. 8 basis point move today. when we look at the front end of the curve we see 11 basis point move in the two-year yield. 4.47%. how long before his 5% -- before it hits 5%? james: we will see another 50 basis points out of the fed in december. until that time where they get the funds rate above the inflation rate. that is a significant milestone. simultaneous with inflation coming down, although it will go nowhere near the long-term trend estimates. they can get the funds rate at 5% or 5.25%, at which time you will see the peak in the two-year with that. kriti: let's talk about this inversion. we are down about 69 basis

points. traditionally we have seen the recession call be about 50 basis points or 40. we will exclude the 1970's we had an inversion of 200 basis points. how much further can echo? dashcam echo? -- how much further cannot go? james: that's gone on about six days. historically, three to 10 is an almost perfect tale for the recession story. the economic activity, the fed has to overtighten. it's a catch up on the inflation issue. inflation is unacceptable. it is a regressive tax that affects everyone. the fed will sacrifice any policy mandate for the next couple of quarters to get that inflation number back down. that means the funds rate is probably above 5%. kriti: is it an accurate signal of recession? we've been in inverted territory

for over a year now. doesn't signal anything about timing? james: qe and other things have muddied the waters of the yield curve configuration. it a not be as related as it has been historically. coincidentally, the long end of the market, the 10-year treasury, longer-term assets are suggestive that filet should -- inflation comes down and the fed orchestrates a hard landing, the earnings slow down, this massive demand pullback to try to allow the economy to catch up in the post-covid era. i don't know if it is a causal indicator. that coupled with every thing else is suggestive of a significant slowdown in the first part of 2023. kriti: does that mean the terminal rate expectations are stalling out? one of the most striking things is the idea that people said the fed stepped down -- step down is here, but there wasn't really a

change in expectations. why not? james: it is remarkable. we are trading off the inflation data. we are conditioned to trade off the fed. this is a regime shift. the market and risk markets don't have the fed at their back anymore. they are a headwind. what i think is happening is the funds rate terminal rate is getting settled. we will have to be above the inflation rate. this idea of a pipit or change in policy thereafter relatively quickly is a misread. the fed will stay high probably through 2023. financial conditions will tighten. a lot of the leverage and capital allocations in the economy that maybe went to unproductive things in the face of low interest rates will have to redeploy. i look at recessions as reordering. this gives the u.s. economy a chance to reorder, recapitalize and be more efficient with capital deployment. kriti: is it conditioned to

trade according to the fed? what changes that? james: inflation is a governor that pushed back accelerating m2. a decade of really repressive interest rate regime. kriti: i have to jump in here. that could take ages. that could take years to get back to a long-term 2% inflation target. is that what we are in for? james: i don't think that's going to happen. i believe this is a reflationary period. earnings will be contingent upon efficiency, productivity gains, capital going back into businesses. i do think covid introduced a massive secular shift in the u.s. economy. i think the fed is a representation of that with their policy going forward. kriti: james camp, we could have you on for the next hour to talk about this.

we think he was always. a pleasure to have you on the show. we hear from cathie wood as she weighs in on shopify. we will show you how one of her funds is still buying crypto. the conversation is next. this is bloomberg. ♪

kriti: this is bloomberg markets. bmo investments and james camp -- cathie wood's ark capital unveiled -- jon erlichman sat down with cathie wood to discuss opportunities in canada. wood says she is betting on shopify. >> lyons that stock -- we

own that stock. it introduced us to this concept of social commerce. that is very interesting. i see my son buying clothes off tiktok and instagram. he doesn't go to stores at all. shopify enabled that. i don't think shopify became the largest part of the index. you might say we have that covered. it is a 3% to 4% position in arkk. we think it will be a spectacular stock going forward. even the facebook might say we are dialing down our social commerce to move into the metaverse, it is going to be social commerce. it has to be almost. we think shopify will be a big part of that. i would agree with tom. the commodity and industrial base canada has historically

had, innovation strategies are great diversifier and pair trade. >> shopify. we know the story relatively well. you talked about some areas of growth over the next decade. for people trying to get a sense on the areas you are most passionate about -- some of it is already on the internet. what would you say to people thinking about investing in the next big thing? cathie: one of the biggest innovations of our generation will be autonomous platforms. right now, cruise automation in the u.s. might have a few million in commercial sales by the end of this year. we think that is going to $9 trillion to $10 trillion in the next eight to 10 years. the cost of transportation will come down as we move away from

drivers. that will increase access. we will get a lot more of it. that is very exciting. curing disease. most people don't think that is possible. what they have come to expect is managing symptoms. instead of that, now that dna sequencing is allowing us to identify mutations in the 6 billion bits of code in our genome, once we identify them we can edit them. this programming ever. we get more them as we age. this programming error potentially can be edited and the disease certainly alleviated, if not cured. we are seeing cures already. the transfer make ins powers -- transformations are astonishing.

people had to go to the hospital 17 times a year for emergency blood transfusions and they don't they go it all now. those are functional cures. the big one is diabetes. if those companies think that disease is possible to cure, i believe it. those management teams are exceptional. that is genomics. i think artificial intelligence is really what is forcing this convergence between and among platforms. we see artificial intelligence costs dropping 60% per year. breakthroughs happening today that we did not think were going to happen for 10 to 20 years. for example, now with dolly 2 and gpt3 and other breakthroughs we are beginning to see the developers can get most of their code written by machine before they take over.

that was not supposed to happen for years. you are also seeing art come about in a way. i see our analysts using dolly2 for artistic and creative reasons. it is astonishing. what used to take $150 as a graphic designer to draw and create, now takes one dollar or less. it is going down to $.30 and five cents. we are seeing this massive compression and costs and technologies that will allow the creator community to explode. kriti: on the back of that interview with cathie wood with jon erlichman, ark management snapped up the bitcoin trust. his position in gbtc is the

first product since july of 2021 essentially that cathie wood is actually buying the dip. it is crucial as we talk about credibility in the industry, which brings us to another major story we have been following. the fallout tied to ftx and the systemic risk not an crypto but beyond as well. let's bring in an expert. sonali basak joins us. what is the latest? sonali: i wanted to review some headlines. the hamas saying ftx's chapter 11 may not be valid. that complicates a lot of what we are seeing today and the days preceding us and days ahead of us were amazing much more information about the structure of ftx and the relationship between ftx, alameda, sam bankman-fried and the customer funds we have been talking about. we have gotten a lot that

chapter 11 filing, including details on loans that were made allegedly due to, as evidenced by this filing, loans made from alameda to sam bankman-fried to the tune of $1 billion, plus millions more made to some of his deputies as well. personal items, homes, bought by corporate funds of ftx. you have a stunning and meta-detail revealed in these chapter 11 filing. as we say, that may not be valid according to the bahamas liquidators. this intercountry debate between how to handle the situation and the dispute among executives is playing out in real time. kriti: if you look at regulation when it comes to the equity markets, the bond markets, there's a reason these prop trading firms are separated from exchanges at the end of the day. that does not necessarily exist in this particular scenario. the wall between the two.

for the second largest crypto exchange, how do you restore the credibility? sonali: the degree to which this happened, the idea that personal items were bought, loans were made to the tune of $1 billion, these are things you have to answer to. the behavior of taking money from a lending desk and using it to find trading had become fairly commonplace in the crypto industry. to the point you are making, visa rules wiped out of the traditional financial system many years ago. the question becomes in this crypto crash, you are not only think ftx go through liquidity issues, other firms also go through issues. there will be questions asked about how the funds were used to find trading activities -- fund trading activities and where are the funds to withdraw for customers. kriti: let's touch on the market impact. we saw solana take a major hit.

what can be expected? sonali: it will take a long time to play out. i keep saying in the coming days the chapter 11 filings will show you more by the means of the creditors and how much they are owed on the back of the ftx debacle. the other firms pausing withdrawals, you have one by one large asset managers in the crypto space in investors tied to them saying what their exposure looks like. calculating that contagion will take time. the tokens themselves, a lot depends on who owns what. who are the whales behind a lot of these tokens that are trading today. kriti: sonali basak all over that story. thank you as always for your time. retail earnings continue to rollout after the bell. gap, ross stores, williams-sonoma coming up. we will dive into what we can expect. this is bloomberg. ♪

kriti: this is bloomberg markets. there is a wave of retail earnings this week. we have heard from home depot, walmart. gap still to come after the closing bell on the backs of macy's better-than-expected third-quarter results. let's bring in john edwards to break down the details. macy's set a high bar for retailers. so did walmart. they are on different sides of the pricing spectrum. where it is gap fall into that? john: gap is going to be a little challenged relative to what we saw from macy's and from walmart. i think gap is stuck in a difficult middle area where they have their high-end banana republic brand, which has been doing well.

they are middle income and lower income consumer with the main gap brand with old navy. they have been struggling. we have seen is that consumers are starting to feel the pinch of inflation now. that will not be good for gap. they have had execution problems. inventory problems. they might see a little bit of relief on the cost side but probably not enough to give them a positive report this afternoon. kriti: on top of that, the broken relationship with kanye west. are we going to hear about that today? john: they might address it briefly but i think they are trying to just move on. they are trying to put it behind them as quickly as possible. it is a bit of a blow. they counted on the easy relationship to -- yeezy relationship to give them more

of a fashion and bring them some younger customers. they are not happy that is over. kriti: we heard about this from adidas as well. i want to talk about ross stores and williams-sonoma, two other sides of the spectrum. talk about the wealth effect. john: i think ross, to start with ross, they have a value conscious consumer. the expectation is that they may come in below expectations. they are in that spot where they are not really appealing enough in the product mix to get customers who are trading down. that is something walmart cited. they are getting people trading down. ross will probably not see that. their core customer is getting more price-sensitive and moving

away from discretionary purchases like apparel and focusing on groceries and fuel and that sort of thing. they are likely to suffer. williams-sonoma has a wealthier client base, which has served them well in recent quarters. we may see more resilience out of the report. kriti: we have about a minute. where are the pain points you are seeing in the retail space when people are getting rid of some of their inventories? john: i think, again, the pain is for anyone who is especially is posed -- exposed to the price conscious customer. people are changing their behavior. we have been impressed with the way the consumer has held up through much of the pandemic, the post-pandemic. -- post-pandemic period.

a lot of that was stimulus and excess savings. people are finally working through that and realizing with a percent inflation they have to cut back somewhere -- 8% inflation they have to come back somewhere. it will be those middle to lower income servicing stores and chains that will see the most pain the season. kriti: something he saw an walmart earnings, the inventory. 70% of those numbers were purely results of inflation. it is interesting to see how skewed the numbers are. john edwards, we thank you for your time and for your insight. let's get a check on the markets. you are seeing them dip a little bit back into negative territory. there was a thought that the nasdaq would stay in the green. it has not. s&p 500 down about .4%. the nasdaq down .2%. the russell down a whopping 1%. the momentum trait i have my eye on. large-cap versus small-cap stocks. is that how the market recovers?

the 10-year yield, 3.78. a move of nine basis points higher which is bolstering the dollar. brent crude trading with a $90 handle. we have more coverage ahead. stick with us. i am kriti gupta. this is bloomberg. ♪

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>> now keeping you up-to-date with news from around the world. here is the first word. i'm john heilemann. oaktree capital co-founder howard burks is gearing up for one of the best bash buying opportunities since the global crisis. the firm is financing companies struggling to repay debt. hired interest rates and the recession has -- looming recession has put stress on the market and he will be looking or rate organs. house speaker nancy pelosi announced she is stepping down as speaker of the house. with great confidence in our