>> welcome, more than 30 u.s. lawmakers are pressuring president biden to appoint a latino to the fed. they sent a letter today to call for what would be the first appointment of a latino to a top leadership position at the central bank in congress members say latinos have been consistently underrepresented at the bed. russia has avoided an economic collapse. the country logged its third straight quarter contract dish of contraction and the downturn was a fraction of the almost 10% downturn that was addicted a

month after the invasion. the central bank put lester's drop at 2.5%. eight people are dead and thousands of others are missing following a deadly cyclone in new zealand, the nation's most destructive weather event in decades. officials say communications are out at multiple new zealand regions. the extent of the damage is unknown. how does a 16 year -- a 16 hour flight and or sound? that happened on a flight from auckland to new york at a power outage at jfk through operations into disarray affecting at least 135 flights. in air new zealand flight made a u-turn after its 9000 mile journey. global news, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪

jon: welcome to bloomberg markets. kriti: let's dive into the price action because we are seeing a selloff. this feels like cashing out ahead of the long weekend. one of the big stories is fundamentals, if 50 basis are back on the table from a hawkish federal reserve, we will talk about what we will see next week in terms of data but that selloff is on our hands. the s&p 500 is down 0.1%. you are seeing the dollar unchanged. tick by tick, it matters especially looking at the commodity market. 75 handle on nymex crude, about three -- down about 3.6%.

jon: we are watching weakness in energy stocks in canada. this slide for oil is something that we haven't seen to this extent going back to late last year. we are watching developments with moderna tied to final stage trials with the flu vaccine. yesterday, we were previewing doordash and those numbers were out overnight. different data points within that you can point to as positive and negative but as we head to the final hours of trading, investors have been selling it but they are buying draftkings shares after better than expected results with that stock up almost 15%. kriti: the markets were sure of a hard landing and now we are

talking about no landing at all. it was called a mini reflation. >> what we are seeing now kind of a mini reflation. everyone expected recession coming into the year and is not just a soft landing, we are getting a reaction or a in the global economy. it started to come through in q4 with europe looking better and trying to reopen and now we have strong u.s. data. jon: one company that has benefited from sustained high prices is john deere. it's helping farmers to spend more. let's take a deeper dive. you been writing recently about some relatively encouraging data points and spending trends with a number of industrial companies a walk us through what you are seeing. >> the john deere results reinforce that point. we've been talking about a

potential industrial slow down the better part of six months or more. we are not really seeing it materialize. there is still strong numbers coming out of the industrial sector and we are seeing order rate dip a little. we are not seeing widespread evidence of cancellations. companies feel cautiously optimistic about the demand forecast. i think it was interesting the john deere feels pretty good about the construction market. even with the weakness in the housing market, they expect to see infrastructure spending and on commercial type of projects to benefit the construction business. kriti: it feels like it comes down to commodity prices. some of the farmers have so much cash in or upgrading the equipment. wasn't that an issue about two years ago? >> it was in the farming community has very old equipment on average. we've been talking about this wave of replacement demand.

john deere is saying they expect that to continue. we are probably looking at a dip in net income for farmers in 2023 and john deere expects to stay healthy and will support that replacement demand and it will help their business. their pricing power didn't used to be off the charts for john deere and caterpillar. these are large companies with deep networks as far as dealers and services in the have the ability to flex their pricing power and they are doing so. jon: everybody has been talking about ai and chat gpe, but when you have these cycles of buying farm equipment, technology has changed and you are hearing from industry analyst that the equipment you're buying in 2023 is more sophisticated than a decade ago. > it's all kinds of industrial machinery. we had the semiconductor crunch

and the extent to which it affected these industrial companies. you don't always think of that is an obvious demand vector for the semiconductor industry. as companies push the limits of technology, they need a lot of semiconductors and there is a lot of productivity from these technology investments. kriti: brooke sutherland, we thank you. for more insight on the broader markets, let's welcome kristin biddferley. brooke was talking about that there are so many and customers that are flush with cash which is an argument reminiscent of the idea that consumers are still lush with cash. should the equity market worry about the health of the consumer? >> absolutely, the thing we have to keep in mind is coming into this year, consumers were in

relatively strong shape. when we look at some of the underlying trends we are seeing in broad-based consumer spending which is 70% of gdp, one of the trends is credit card balances. what was savings fueled spending is now credit fueled spending. we are seeing the credit card balances rise to eclipse pre-pandemic levels and when you get into the nitty-gritty of earnings and how consumers are spending, there is a lot of trading down just to counterbalance some of the inflationary pressures. all of those things are starting to show some cracks and we believe it will continue in these tight financial conditions. jon: how does that influence how you think about the broader equity landscape? we saw such a strong start to the year with that january performance. >> when we break down the rally

we have seen year to date, the strong january, the interesting thing is when you look at the composition of that rally, there is about 10 names that depending what date you were using, account from 45-50 percent of that gain in u.s. equities. this is very concentrated and a lot of the winners were some of the losers in 2022. some of the most shorted stocks are up almost 50%. we think of that rally, we are not buying into that and from an earnings standpoint we could actually see in ernie's contraction in 2023 of upwards of about 10% which is below consensus but we believe the impact of this tightening is not only could i go through to the consumer but that will ultimately flow through into corporate earnings. you need need to be invested in parts of the equity market in companies that can withstand these tight financial conditions. kriti: doesn't that ring is back

to buy tech, maybe the growth story is not as affected by the rate story? >> when you think of what companies can withstand this, there is the traditional defensive sectors. health care is when we talk about and we been invest in that for a while and expanding that into global pharmaceuticals. those areas have resiliency and could consistently grow with dividends and earnings throughout the recessionary environment so i think that is more straightforward and clear and that was the part of the market that outperformed last year. the thing about technology is this is a delineation in terms of thinking in this higher cost of capital structure, which companies can perform well. there is a difference between profitable tech and unprofitable and you see that in the market performance and in terms of earnings. it will be tough for the unprofitable tech to raise capital and beat some of the

through rates this year which is why from a technology perspective, you have to focus on the areas where you see clear pop -- profitability or a path to profitability. kriti: that's been a focus on the margin story. we thank you as always. coming up, autonation climbing to an all-time high after reporting better than results and we will dive into the details next. 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.

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kriti: this is bloomberg markets. let's get to our stock of the hour, autonation, one of the biggest car dealership chains in the united states jumping to an all-time high after fourth-quarter results were driven by better-than-expected new vehicle sales. let's walk through the story. let's start with the idea of what the fourth-quarter earnings told us about the car market. >> if you dig into the autonation earnings, you see that the average gross profit

they made on a per vehicle sale went down. that is because we are still unwinding from those supply shocks of the pandemic and the chip shortage when prices were skyhigh but the autonation ceo said he is offsetting that by growing other parts of the business like more parts and service work. they bought a small bank last year so they have a lending arm. the big picture is that car companies and dealers have been on a sugar high for the past couple of years because car prices were so high and supplies were so tight and that will start to moderate later in the year. jon: in your story, you talked about the trends happening with leasing, what's going on there? >> i cannot stress how distorted and weird the past couple of years were. there was such a shortage of cars so resale didn't happen, it

dried up. they were selling top dollar cars but things are getting more expensive now. you buy a two-year lease on the car, you are paying three years of the car and not a lifetime so it's cheaper and it's good for automakers to stop in more incentives or ways to make the cars more affordable. they realize that cars are expensive and if they want to protect their margins, they got to come back down to the little bit. carmakers are looking to make cars more affordable for people again. kriti: we know the used car prices have been such a big chunk of inflation around the world but specifically in the united states. you mentioned the autonation ceo talked about lower prices and cars in the back half of the year so why is that? >> it's been interesting to see

the whole country hone in on car prices as the cpi driver. it goes back to unwinding those supply shocks. he says the carmakers, as they get more semiconductor chips, production is getting back to normal. last year, we have the annual adjusted rate of car sales for the year which was only 13.7 million. before the pandemic it was 17 million. he says this year we should get back close to 15 million which is still not where was before the pandemic but it's better than last year. it's simple supply and demand where supplies will grow so that will meet some of that demand then carmakers will lose some of their pricing power and that's already starting to happen. jon: thanks for putting the puzzle pieces together. that's the autonation story. staying with the auto sector,

driving a new mercedes-benz may become a distant dream for many outside of the most affluent. the average price of a mercedes reaching more than $76,000 last year, a 43% increase over 2019 levels. there is this growing trend of certain carmakers going for fewer -- fewer overall sales but higher overall price tags. kriti: it's almost the opposite of what these other car companies are doing. ford and gm say they have to amp up their volume to decrease the prices but there is something to creating an elite demand for high-priced vehicles. jon: i know you are in that 1% group but it's something we have to watch. those batteries are pretty expensive for the electric vehicle market as well. in the airline industry, we will talk more about what's happening on that front coming up. air canada is out with results

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jon: this is bloomberg markets. time for today's for what it's worth. our data point is 15% and air canada set its costs for available seat mile this year will be as 15% above what they were before the pandemic. the shares have been under pressure today as a result. it is benefiting from strong travel demand but cost pressures remain a challenge for the airline industry. jet blue ceo says the faa must get further ahead on technology upgrades including with respect to air traffic controllers being fully staffed.

he spoke with alix steel on the companies challenges to work with the merger with spirit airlines. >> we've got to get controlled and fully staffed and the faa has a multiyear technology rate program. we got to get that finished. you get on a jetblue airplane and we got satellite communication and everyone strange to use it but we need to get the faa further forward with this technology upgrade. >> what is this costing you? are you talking about this being your own construction plans and what does that mean for your margins? >> it has an added cost definitely. last year, we had to hire a significant number of extra members to just make our schedule more robust and make sure we could fly people to

where they wanted to go and it comes with a cost. there were more constraints in the system now than there were in 2019 and all airlines have to do this. we are flying airplanes more than before and we are doing that because we want to make sure the u.s. system is more robust. it comes at a cost it's a much longer term cost if we cannot fly people reliably to where they want to go. >> does that mean you are talking about passengers paying more? >> fares have gone up in many cases but the biggest factor is fuel. if i compare what we are paying for fuel to 2019, there's been a significant increase in its the largest cost any airline has. as capacity comes back, hopefully fuel will start to come down and you will see fares lower. that's one of the best things

about jetblue as well. we are known for coming across and we will continue to be known for that. alix: the fuel costs should be coming down in theory but let's get to spirit airlines, any clarity on what the doj will do? >> we are working through the process with doj. i don't want to comment on that, i want to be respectable of the process. alix: do you feel more optimistic? >> i will not give a score because i'm wrong with numbers. we agree with a lot of concerns the department of justice has expressed about airline competition and i've been making comments on this for years and years the best thing that we can do to make it more competitive is to enable a bigger jetblue. kriti: we did have the ceo and

it's fascinating we talk about the airlines broadly because they have this massive rally on the back half of last year and then they went backwards. it's important when it comes to dealing with things like technical issues but also the labor issues as well. i want to get to some news we are getting on worldwide entertainment. the stock is moving sharply higher, 3.7%. vince mcmahon is asking for $9 billion for his wrestling empire and that's moving the stock, something to keep. jon: the company has already received offers according to some sources. you are watching that stock definitely pop now. we should look at the broader markets as we wrap things up this hour. kriti: you are seeing a little bit of green on the screen but the broader market, the s&p 500 down and the nasdaq down. the 10 year yield is 3.82.

the dollar is not moving a whole lot anywhere with brent crude at 82. more markets ahead, stick with us, this is bloomberg. ♪ the first time your sales reached 100k was also the first time you hit this note... ( screams in joy) save 20% with the lowest transaction fees and keep more of what you make. with a partner that always puts you first. godaddy. tools and support for every small business first.

romaine: what a difference a month makes. the market clearly moving in the opposite direction bets on what the fed might do. next moving intimate direction as well. i am romaine bostick beside shelley, this is "bloomberg markets: the close." more than just a drop in the numbers is a complete shift in exclusion -- inflation expectations and fed expectations. >> a tough same half of the year, leaving a lot of questions on how you play the