>> stocks and bonds are selling off, opposite of how we started the day. bloomberg markets starts now. let us get a quick check of the markets, we are seeing red on the screen. not by much, it is. what we saw earlier, s&p 500 down 1/10 of a percent, take a look at the bond market. similar reaction, yields down lower on the day, now they are higher. 10 year yield at 360, unchanged. look at the front end of the curve, absolute selloff.

bloomberg dollar index is weaker, these cross asset indications and on the same page crude down 9/10 of 1%. the highlight of today is not the equity market, it is the bond market specifically. 2/10 curve, this is the indicator a lot of people look at when it comes to that potential inversion. you can kind of see at the back end of the start, -86, lowest going back to the 80's. in the past, we only get to -50 basis points of inversion, that signals recessionary territory. what is -85 mean when talking about the depths of the recession? that is the topic today and earlier, we asked about the inversion. she was focused on a different indicator. >> the chances of a recession have gone down a little bit. that being said, i think we will see it as the fed continues to ratchet up rates and continues

to shrink the balance sheet, which most people have forgotten is happening in the background. that is significant tightening. i would not worry so much about the yield curve, i would worry more about the labor market. kriti: the yield curve inversion perhaps not the scary thing we are making it out to be. what are investors focusing on? maybe more on corporate earnings, you got a taste of that with megan greene. a wrap up of some of the biggest stocks, i want to start with pepsico. that was my favorite indicator, the snack to drink ratio. >> you are seeing the stock boosting higher today, especially because sales came in better than projected, especially given the dynamic you were talking about when it comes to the inflation picture. it had to raise prices, but still, customers were snatching up snacks and beverages. when it came to volume, that was a weak spot, which did show how

consumers in some corners of their markets were pulling back a bit. they were able to mitigate that, but analysts at bloomberg intelligence question whether or not and how long pepsi can sustain that. organic sales growth is still staying pretty strong for the last quarter. kriti: something that stood out to me, they had a deal with the commodity pressures of 2022, higher food prices. people do not seem to care, they will still pay three dollars for gatorade. i told my parents that the other day. three dollars for gatorade, we can get in bulk. that is not the other -- only earnings story, mattel is reporting earnings. jess: that is the other side, the stock is down more than 10% today on pace toward decline since march 2020, this is echoing when you look at the outlook. we did hear from hasbro just a couple weeks ago, the issued preliminary earnings results where they thought they were

going to see weakness in the holiday quarter, which is crucial. we heard that from mattel, so we will hear from hasbro next week. that is the key focus. at bloomberg intelligence, lindsay dutch is thinking when you are looking at mattel in the market share, they have disney princess, frozen. she thinks that is going to help mattel extend. if you look past the 12 months, if you are comparing mattel to what is happening with hasbro, hasbro is down about 40% the past 12 months. the tell is down about half of that. that is a key factor when you look at how mattel is able to mitigate challenges compared with rivals. kriti: looks like people are not buying as many toys, but buying plenty of chips and soda. that is the take away jess menton am getting. jess menton-- that is the takeaway i am getting. jess menton, thank you as always. what does this mean for the

economy and market trade? who better to evan brown ask then -- who better to ask than evan brown? mixed messages on the consumer, they seem to be weathering this ok. is the no landing scenario a fair assessment to make? evan: i think so. we have enough evidence from the labor market, whether it is the payroll report, unemployment and jobless claims that we are not going to fall off of a cliff anytime soon, as much as the fed has raised rates. the u.s. consumer is not that interest rate sensitive. we had the chance to lock in very low rates for a while. that tells me the consumer can hang in, is resilient and ready to spend. we have to remember, with gasoline prices coming down so much over the last six months or so, that is a form of stimulus.

that boosts disposable income and supports consumer spending. kriti: let us translate that to the market trade, it almost feels like equity investors when it comes to tech companies has had the armorer up when it comes to sensitivity to what the fed is doing. is the green we've seen the past couple of weeks the correct move to make? evan: we think that move in tech is coming to an end, we will see some reversal relative to other sectors, like energy and financials. typical value sectors. the reason is, you had a lot of good disinflationary news that has been priced in. now, we have to price and the fact it is going to be a little more difficult to get to 2%. we can get down to 3%, sure. rent is coming down. if the labor market is staying tight, that means core services

and shelter, which the fed is focused on, will stay elevated. that will keep the fed keeping rates higher for longer. that is an environment that is less good for secular growth. kriti: could we start to see the paradigm shift? a couple months ago, bloomberg economics came out ahead of the streets at 5% terminal rate, everyone laughed at it. now, are we in a deja vu moment where 6% is the new 5%? evan: it could be. i would not rule out a move to 6% federal funds rate. as much as the fed has raised rates and with the speed that they raised rates, there is no dent at all in the labor market, nothing. the fact that even just rates coming off a little bit, housing market now looks to be getting a lot less bad. mortgage rates coming down

somewhat, a surgeon mortgage applications, that tells you how much gas -- surge on mortgage rate applications, that tells you how much. until the fed sees the labor market softening, they are going to feel the pressure to keep ratcheting up, the very least getting the message across that rates will stay higher for longer and all the cuts priced in the next year or so, starting this summer, need to be taken out. kriti: we talk about the sensitivity the equity market seems to have to the federal reserve. if you go back to 2020, the previous administration, geopolitics ruled the trade when it came to wall street. are we reentering an era geopolitics with china and russia are going to have a bigger dent in the equity market, or is this something to shrug off? evan: geopolitical stresses are

going to ebb and flow. the world is getting a little more tense, obviously, since the russia-ukraine war and the structural, strategic competition between the u.s. and china is not going away anytime soon. that said, i think the broad signals are that both the china and u.s. want to move toward at least a temporary de-escalation of tensions. overnight, there is talk about janet yellen potentially going over to china, china approved relations on the economic front. their policy makers -- they have enough to deal with with the domestic economy and managing china's reopening, property sector. at this stage, it suits neither to ramp up stress on the geopolitical side. that is something we are not as concerned about over the coming quarters. kriti: armor up across equity

investors, i wonder to what extent that creates a level of complacency. that is what we will ask you next. thank you for your time and insight. time for first word news. >> ukraine's president says he will ask new leaders to send him fighter planes to fight against russia. he is in belgium for an eu summit and is urging expanded sanctions against russia, against missile and drone production. thousands of foreign aid workers have arrived in turkiye and the first convoy entered syria after this week's earthquakes. more than 20,000 people are confirmed dead with thousands more missing. turkiye passed a three-month state of emergency in the affected regions. the state department says the alleged chinese spy balloon that flew over the u.s. was capable of collecting communication signals. an official says it was part of a broader chinese intelligence gathering operation covering more than 40 countries. planes detected an array of surveillance equipment.

house republicans are stepping up the investigation into president biden's family and financial dealings. the committee is demanding banking, travel and other records from hunter, james and his business partner. the chairman says they want to know who peddled influence to generate millions of dollars for the biden family. enter biden's lawyers say the requests have no valid legislative purpose. an oscar-winning composer has died. he scored big hits for the 50's all the way to the 21st century with songs like i'll never fall in love again and this guy is in love with you. they were recorded by stars such as tom jones and the beatles. he was 94 years old. global news powered by more than 2700 journalists and analysts in more than 120 countries. i am john hyland, this is bloomberg. ♪

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kriti: this is bloomberg markets. group stocks fell today, ending a two day rebound after they said they were reviewing the amount of shares linked to the group that are freely tradable in public markets. it is the cover story for the most recent edition of bloomberg businessweek. part of the issue focuses on nathan anderson. the article reads quote to the companies he attacks, what anderson does for a living is unethical, even him oracle. -- immoral. ed ludlow helped to write the piece and joins me now from san francisco. a fascinating topic, you focused on the story from both sides of the saga.

hindenburg research is a company you focused on. walk us through the take away from your piece. ed: the short seller is the blanket term we apply to a firm like hindenburg research. they are a short seller and that they are set to gain when the securities relating to the companies they research targets drops, they profit. that is the business model, or part of the business model for hindenburg. if you take a step back to consider the broader goals of activist short-sellers, it becomes a pretty interesting debate about how important they are to healthy, functioning markets globally. if you forget the idea they are in it to make money, the other goal is to expose fraud. basically, point regulators in the media -- one aim is to generate news coverage -- in the right direction to continue

the search. kriti: let us get the latest update on adani specifically, we know the carnage that has happened with share prices, he scrapped deals. it is the latest from the adani side? ed: we snapped two days of gains on publicly traded stocks associated with the adani group. you flagged the reviewing your intro, that is critically important. what they are reviewing is the publicly tradable shares that are out there. this goes back to one of the key points that hindenburg has raised. review the level of volume of publicly tradable shares, many of the entities that hold them are the same offshore entities that hindenburg flags in its report. the risk further down the line, hypothetical risk, is a delisting if msci comes to that conclusion. this is the next step in the story. part of the engagement around the business we cover in the

story i wrote is questions from investors. what is the end goal? we do not know the end goal, we have no idea of hindenburg still holds its short position or if it has closed it. when we spoke to academics, they make the same point. headlines continue to come, the market moves. the market has no idea whether the short position is still open. that is one of the negative size of the activist short-sellers model. kriti: about 30 seconds, i want to add numbers. is there any indication -- he mentioned the short position. if the selloff is enough to justify pulling out, with your history covering hindenburg research, what does it tell you? ed: that is the mystery. hypothetically, the most profit is achieved if you hold until zero. we do not know if that is the case or not. remember, part of what hindenburg has done in the past his take on a single group of passive investors who take the shore position.

then, hindenburg it's a share of the prophets, because they sure the research in advance with that passive investor. we do not know for certain if that is the case with the adani dollar bonds or non-india listed derivatives. that is what we know in terms of mechanics. it could affect the trajectory of markets either way. kriti: certainly something to keep an eye on, ed ludlow is covering the story. you can catch him as cohost of bloomberg technology at 5:00 p.m. eastern, and his piece that he wrote in the latest issue of bloomberg businessweek and on bloomberg.com and the terminal. we go to the credits we story, shares are plummeting after they posted bigger than expected loss for the fourth quarter and disclosed unprecedented client outflows. a fascinating story. the ceo caught up with bloomberg and voiced his displeasure with the results. >> the results are unacceptable, obviously. that is why we created the

transformation program, which we communicated end of october. much more focused, simpler, built around client needs. in the midterm, very profitable. kriti: we are going to discuss the latest. we were talking earlier about the history behind the credit suisse story, so much pain in the shares, below three swiss francs. what are the next steps? sonali: you are hearing ulrich koerner talk about the restructuring happening at pace, that is a multiyear pace, it is quite slow. you have them cutting about 4% of the staff at of the 17 planned, you are having them close the sale that secures the group to apollo. you also have credit suisse's

first boston plan starting to take shape. it is not cheap. the cost is a deal valued at 210 million dollars for the investment bank run by michael klein, a well-known wall street veteran around the world. there are a lot of things to watch as they seek to turn to profitability next year and regain inflows. even though the outflows are concentrated in october, they were deeper than expected. if anything could happen this year that could complicate a restructuring plan like this. kriti: you also mention the apollo story shares are off today. earnings miss the estimates. i want to take a listen to what they had to say earlier. he was upbeat on private credit. >> this is the golden era for private credit, rates have been rising, the economy is doing well. you can get double digit yields, it is the best time to be an investor in new issue credit. i've been here 17, 18 years.

you are double-digit returns by lending at the top of the capital structure. kriti: sonali, your take. john: apollo -- sonali: apollo has the biggest percentage of assets dedicated to yield strategies, almost three fourths of the firm. i talked about credit suisse, they launched a new company with about 200 people with the securitized product group as part of the new company, atlas sp. you take a look at the shares today, off about 7.4%, really the reason they missed estimates and it came to earnings had a lot to do with principal investing. this is classic private equity, the challenge of selling companies and monetizing investments and a time when markets are rough. they spoke to that and said principal investing is below the multiyear target, but it could

come back at the end of the year. private credit is not an easy game, either. there is another person i talked to, aries reported earnings. they have been a quick growing, private credit company. in a conversation with the ceo, he told me the markets are fine and you will see them have willingness to write larger tax -- checks. aries and apollo are both in the market, talking to investors at scale. they are within striking distance of a $25 million goal and on track to raise $15 billion fund through january. fund raising, while challenging, you're hearing the big firms talk about their play owns and a little bit of optimism, back to that conversation. another thing he told me is this is less about the earnings problems you are seeing within the companies. the bigger question in a rising rate environment is liquidity.

he says to me, everyone here is appropriately playing defense, but liquidity is the big question mark. kriti: a fascinating saga. catch her weekly disney's weekly newsletter, something to watch on businessweek. apollo shares down about 7%, some real pain when it comes to wall street players. as the death toll in turkiye in syria grows following earthquakes, the stock market remains closed until at least wednesday. we will dive into the market impact next, stick with us. this is bloomberg. ♪

kriti: this is bloomberg markets. i went to get to something that caught my eye, we had about the devastating earthquakes in turkiye and on the southeastern

border with syria, a death toll is hitting about 14,000 people. this is bloomberg television, financial network. we have to talk about the financial expert which is turkish stocks. you can see the slump in the last two days, this is important. this is the biggest today slump back to december 20 of 2021, what happened? president erdogan introduced pressures, he said we are going to step in and essentially protect a lot of our citizens savings. doing that, you saw more inflation introduced to the economy and more outflows coming out of the turkish stock market. that is something we are seeing again, we will see if there are inflows after we get more government aid in the country. something to keep an eye on. coming up, the hot buzz word in economic circles. immaculate disinflation. we will discuss that with thomas

simons, a money market economist. this is bloomberg. ♪ les tax automatically. avalarahhhhhh what if tax rates change? ahhhhhh filing sales tax returns? ahhhhhh business license guidance? ahhhhhh -cross-border sales? -ahhhhhh -item classification? -ahhhhhh does it connect with acc...? ahhhhhh ahhhhhh ahhhhhh three nights, esg... the broker will take your bonds. -diversification, futures, options. fiduciary. leverage. [whispering] -frothy markets. psst. virtual real estate is a lock. ♪ cold hard cash ♪ j.p. morgan wealth management knows the world is full of financial noise. i'm looking at your asset mix and plan. you are right on track. great, thanks. our easy-to-use app and local advisors are here to help you figure out what's right for your investments. j.p. morgan wealth management.

>> welcome to bloomberg markets. kriti: we are seeing a softened market, this is a complete turnaround. i would argue to bond market as well, s&p 500 down 2/10 of 1%. there is a selloff, perhaps not as brutal as the reversal in the equity market. 364 for the 10 year yield, higher by three basis points. nothing to write home about, something to watch. yields higher, the dollar is not following ensued, down 2/10 of 1%.

intraday basis, directionally, going in the same direction. jon: let us go through some individual movers today. to your point about coming off the early start, disney shares are up about 2%, second best performer today. the cost-cutting focus after better-than-expected quarterly results. the stop was touching 6% higher on the day. tesla, what a story we have been tracking. up another 5%, $211. round-trip come up about 100 percent from lowes in early january for a host of reasons. -- lows in early january for a host of reasons. mattel, a challenging holiday period and we are seeing markets push that narrative being negative, stocks up about 10%. pepsico is higher, there is an example of a company with a lot of big brands and pricing power

that help them offset inflation concerns we talk about everyday. kriti: something we are keeping an eye on. i want to talk about earnings pictures, there are a lot, coming up fast and furious. one is hilton, what does it say about the consumer? abigail doolittle is breaking it all down. abigail: coming into the year, we were talking about a recession, move a bad recession. now, it is a soft recession. elton's results would not point to a recession, at least in my mind. they put up a strong quarter, they beat adjusted earnings of $1.59 by 31%, a big beat. we had a modest revenue beat by 3%, up about 2.4 billion dollars in revenue. looking forward to this year, they are saying the revenue they get per room is going to increase 4% to 8%.

not only is there demand, but consumers are willing to pay more. similar for mgm, and another good quarter. narrower loss, 7% revenue beat. not only was las vegas very strong, but they are also seeing a rebound suggesting this year could be great for the gamers in both areas. now that china's shutdown has come off. >> the china reopening is obviously evidenced in the mgm properties. it is interesting, we talk about the jobs market where in some parts of the economy, things are still relatively tight. this is maybe the complicated part of the job story, the fact these businesses are busy right now. it is not like they are in the same position as the technology companies that have been paring back on the employment front. abigail: it is interesting.

we have this idea there are certain areas of the economy that are hot, certain areas are cold or may be and cool. this is one that seems to be hot. it is not just 2023, we are looking at year-over-year increases for some of these companies. the occupancy in las vegas, for instance, increased 91% in the fourth quarter. that was after being up 86% the year before. we had this pandemic rebound, but it is sticking around. that could be great for service hiring. it is interesting to think of what is behind it. we are coming out of the pandemic, all of us want to get out there and experience life again. we keep hearing report after report of the savings rate going down. it may be that some of the savings people put together during the pandemic, they are now spending on gambling, traveling and living life. jon: really helpful context.

abigail doolittle on some of those economic snapshots seen through earnings today. economists may disagree on the prospects for avoiding a recession, but according to a story today that bloomberg news has published, there is one thing they do agree on. immaculate disinflation is now the preferred term to describe the possibility that the fed can engineer a soft landing. tracy alloway writing put simply , describes the idea that disinflation can happen without a substantial slowdown in economic growth or a major hit to the job market. let us talk about the potential for immaculate disinflation, thomas simons is joining us. thanks for being with us. are you finding disinflation part of your daily dialogue in 2023? thomas: i would absolutely say

that disinflation is something that pops up more and more over the last several months. basically since october, november, everyone i talk to seems to feel like the fed has made the progress they need to, gotten the inflation trend to rollover into disinflation. we heard that a couple times from chairman powell earlier this week, as he mentioned it and last week after the meeting. there is evidence that we have pete in inflation, starting to come down -- peaked in inflation and starting to come down on the others. where do we go from here, how sustainable is this and will it lead to inflation that gets down to the 2% target? we are skeptical of that, i think when you are talking about conditions of inflation and you are starting to invoke miracles as possible explanations for why it is happening, you should take a step back and think about why you are in that position. kriti: you are a money market economist, i would be wrong to

not ask you about the money supply at the moment. something i feel like has been in the conversation a lot. when we talk about the massive deceleration, put this into context. how big of a deal as it? on a chart, it feels like it is much more dramatic than the plateau you saw and 94n95. thomas: it certainly looks very dramatic, we are talking about coming from an excessively high peak in money supply after the fed intervention and the pandemic began. i think we are on the way down, quite a bit we had the fed's quantitative tightening -- bit. the fed's quantitative tightening will push it down over time. cash has to come out of bank accounts, whether that is a person or business. it ends up being sucked up by government debt, essentially. as the fed winds down the balance sheet, they need more support from the public -- the

treasury needs more from the public to make them whole. as powell said, that is going to continue well through the point where interest rates peak and probably even after they start to come down, as well. it could be a couple of years before we see qt end. in terms of how that impacts the economy, you have to think about it in terms of last in, first out. the tail end of qe did not have a tremendous impact on spending, maybe on the markets. as you are taking down the huge excess down to levels closer to the frictional level for reserves, that is where we start to see more of an impact. i think we are a couple years away, maybe 18 months. jon: as we watch that unfold, for those trying to figure out where the economy lands -- we often hear about the soft landing scenario. what are you keying in on from that perspective? thomas: we are not particularly

supportive of the soft landing narrative, we are still looking for more of a hard landing, quite frankly. the labor market is still very hot. we saw the jobs number last friday, i think a lot of people looked at that and said he started to see disinflation from the end of last year, the labor market is holding up well, especially after the tightening from the fed. immaculate disinflation, everything is going fine. the issue is, all these things operate on different timelines with different legs. we expect we will see continued strength in the labor market for a couple more months. past a certain point, they are not that many more people to hire. we are going to start to see slower drop growth -- job growth, continued pressure on wages. that would lead the fed to keep going. we think there will be at least two more hikes in the fed will have to maintain 5% funds rate for the remainder of the year.

i do not think that is necessarily the base case for those looking for the soft landing. i think with tighter monetary conditions and margin compression for most major companies, it is going to be a much slower second half of the year, nothing like what we are seeing in the first 10% of 2023. kriti: thomas simons, a true pleasure to have you. coming up, paypal's quarterly report comes out after the market closed. we will get lisa ellis of moffettnathanson to tell us if the moves to cut costs will pay off. this is bloomberg. ♪

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kriti: this is bloomberg markets, iam-- i am kriti gupta . investors are looking to see how much progress paypal has made when it comes to cost-cutting. they announced a job cuts last week. joining us for more analysis is lisa ellis, senior managing director at moffettnathanson. i think a $115 price target, thank you for joining us.

it feels like the story this earnings season is about margin expansion, at least not margin compression. where does paypal lay on? lisa: paypal announced a cost program last summer, because they have activist elliot management involved in their stock and agitating a bit for some cost cuts and accelerated share purchases. they guided to at least 15% growth next year on the back of about a $900 million cost program. they announced that last quarter investors will be looking to see if they follow through this quarter when they give the official guidance. jon: i am glad you brought that up, it feels like one of the underlying themes within tech, which has been supportive of some tech stocks this year, the fact the activists are shirking around -- elliott is a great example of a company that looked at paypal's aaron -- paypal and

salesforce. i am sure a lot of people are looking for more clarity on the competitive dynamic. apple just had their quarterly results, they talked about the rapid rise around the world of apple pay. how closely are you watching that dynamic? lisa: that is the number one dynamic with paypal right now. you cannot cut costs out of a growth problem. [laughter] that is a little bit of what paypal has had. the last few quarters, topline growth has been steadily decelerating, they cut the outlook for 4q in the high single digits. they've been stating it is largely agro related. investors are increasingly worried we are seeing the effect of apple pay chipping away at their huge u.s. checkout franchise. paypal has almost 30% share of checkout of retail in the united

states, but coming out of the pandemic, apple pay has gained a lot more traction. used in-store and online. while they are significantly smaller than paypal, we are starting to wonder if we are seeing the effect of apple pay chip away into that core, lucrative main business of paypal. kriti: it feels like that almost applies to the blocks cash app. when i'm interested in is the buy now, pay later dynamic. or might be growth there, as well. lisa: that is one area that has been a positive. they came in as 800 pound gorilla into the buy now, pay later space because they have such a large user base. that quickly leapt to a comparable scale to affirm these other hot fintech start ups and they are certain to squeeze

those out of the market. that has been one point of strength for paypal. within the scope of overall business, it is relatively small. jon: we just finished a segment on how the money supply grew during the pandemic. during the pandemic, we saw a lot of e-commerce activity, as well. that is something that was helpful to a businesslike paypal. where are the trends taking us on something like e-commerce when it comes to payments? lisa: you are absolutely right, paypal was definitely a pandemic darling. they sought an warmest surgeon business-- surge in business during the early days of the pandemic. e-retail of goods in the united states has been quite anemic, mid to high single digit. visa and mastercard report very good, comprehensive data on those figures. they have been running somewhere in the mid to high single digits

in the united states, which is a far cry from where we were pre-pandemic when u.s. e-retail was growing close to 20% on a consistent basis. they no longer have the same secular boost that they used to enjoy. kriti: let us talk about the stock price, you have a price target of $115 per share. what would it take to get you to change a price target to $140? lisa: we would have to see a couple of things. one, a big recovery outside the u.s.. paypal's ex u.s. business has been practically flat for most of 2022 because of weakness in areas like u.k. and china. china reopening should help. we would have to say big boost, then more definitive evidence that they are holding their ground relative to apple pay in the u.s., those are the two areas. there in the midst of a number

of leadership changes at the top, they brought in a new head of product earlier this year. we would like to see some reinvigoration on the technology side, feature functionality rollouts coming in at a faster pace from paypal. jon: really helpful context, thank you for your time. lisa ellis of moffettnathanson, we will be watching paypal numbers tonight. coming up, paypal is not the only company cutting costs. canopy growth announcing a huge cut to its workforce, we will dive deeper into that story. this is bloomberg. ♪

lomita feed is 101 years old. when covid hit, we had some challenges. i heard about the payroll tax refund that allowed us to keep the people that have been here taking care of us. learn more at getrefunds.com. the first time you connected your website and your store was also the first time you realized... we can do anything. cheesecake cookies? [together] the chookie! manage all your sales from one place with a partner that always puts you first. godaddy. tools and support for every small business first. jon: this is bloomberg markets, i am jon erlichman with kriti gupta. canopy growth is cutting costs

and headcount across the business will fall by upwards of 60%, a huge shakeup for a company that led the charge in the cannabis sector after justin trudeau's government legalize recreational marijuana. these are big changes for this company. >> five years later, i do not think canopy growth could expected being the leader in canada with roughly a quarter of the market share now dwindling to the low single-digit, necessary to take restructuring announcements today, given the fact the company has too much competition in the canadian market. as the ceo alluded to earlier today, the illicit market still accounts for 40% of sales in canada. there is no enforcement or virtually little enforcement in canada to get the 40% down to zero. it is an onerous environment for

companies like canopy growth and other canadian operators to deal with. we have seen moves in the past that are similar. it will be interesting to see whether the canopy decision comes too little too late. kriti: bringing it to the u.s., what do the plans look like stateside? david: canopy has plans to launch a canopy u.s. venture, it will take all of the u.s. assets under one umbrella. acreage holdings, extracts, edibles maker. going forward, the need to shareholder vote to approve that in april. what is interesting is, the nasdaq, which canopy is dual listed under, may not approve this particular arrangement. canopy is suggesting modifications to the plan, that includes possible change in control of the board as well as lowering actual equity control of the canopy usa venture.

it remains to be seen whether or not they will be allowed to go through with this. doing so would turn canopy from a loss leader to a profitable company. jon: the comment about the size of the illegal market several years after legalization, you have to think of the u.s. is continuing to push toward that at a federal level, that is the kind of thing we have to watch with a sector that has been so hot in its infancy. then, you see the growing pains in canada. david: the devils are in the details in terms of rules and regulations that impact these companies, both in canada and the u.s. if canopy thinks they can make no of it in the u.s. and be profitable rather than in canada, that is their prerogative. the details on what federal legalization will look like in the states remains to be seen. there is certain legislations that have a variety of different rules. in terms of what that actually looks like, i think right now a lot of cannabis players in the

u.s. are trying to get their ducks in a row to better understand the markets to win the legalization date does come in the future, they are best prepared. jon: almost out of time, we spend so much time talking about technology stocks in the roller coaster ride, this sector has had a roller coaster ride. david: canopy stock has fallen from about 95 percent since highs in october of 2018, you can attribute that to other companies. there is a lot of froth five years ago, that has diminished significantly. it will be interesting to see how u.s. players react to that, but also the future of canadian companies that have come down significantly from all-time highs. kriti: david george-cosh, thank you. canopy growth shares down 15% as we speak, in line with a market that is falling. s&p 500 down 3/10 of 1%, nasdaq down by about the same.

selloff in the bond market, more markets coverage is ahead for jon erlichman i am kriti gupta, this is bloomberg. ♪ i screwed up. mhm. i got us t-mobile home internet. now cell phone users have priority over us. and your marriage survived that?

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>> here's the first word. south africa's government has declared a state of disaster over the country's electricity crisis. the president made the announcement during his state of the union address, which was heavily disrupted by protesting lawmakers before hand. >> our most dramatic task is to reduce -- altogether. under these conditions, we cannot proceed as we usually would. >> south africa is willing for

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