>> president biden head back at president putin today saying he will never win his were in ukraine. he spoke at a warsaw speech marking one year since his invasion. >> one year ago, the war was bracing for the fall of kyiv. i've just come from a visit to kyiv and i report that kyiv stands strong. [cheering] kyiv stands proud. it stands tall. and most important, it stands for you. >> biden warned there will be hard and bitter days ahead as russia prepares a counteroffensive against

ukrainian forces, but that the u.s. will continue to support kyiv. during his first date of the nation address in nearly two years, but he says he is suspending russia's observation of the new start treaty with the u.s., a blow to the lesser cord limiting their nuclear arsenals. putin also warned the u.s. and allies not to provide ukraine with long-range missiles. china's president will reportedly had to beijing in the coming months to meet with putin. xi's trip will be part of a push for a multiparty peace talk. democratic governors in 20 states are launching a coalition to strengthen abortion access following the supreme court's decision last year to overturn the constitutional right to the procedure. so far, only democratic governors have joined despite the group being labeled bipartisan. 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. ♪ >> welcome to bloomberg markets. >> let's dive right into the price action. we have a selloff on her hands, it is accelerating. green on the screen. the s&p 500, crossing below that 4000 level. a key technical level. 1.8% lower on the day. looking at the nasdaq, more pain concentrated in the big tech names. the 10 year yield, also approaching 4%. this is a yield story. higher by 12 basis points on the day. you are seeing the dollar follow, up .3% on the day, rippling back into the commodity market, brent crude trading at

the 83 handle. >> and rate sensitive socks, tech, discretionary for example, real estate under pressure. we continue to digest earnings stories, we've got general mills higher, organic sales helping lift the outlook for that company, also coors higher today, volumes have been hit but higher pricing has been helping out. different messaging on the year ahead from those consumer plays. caesars will be an interesting stop to watch after the bell. we will watch for quarterly results. then of course we've got the big retail themes, home depot up about 6%. not just with concerns about the demand side but also the which picture, infecting potentially the performance for home depot. >> we are seeing home depot as the poster child, proxy child. let's dive into the home depot story. $1 billion sideline for just

wages -- sidelined for just wages. tell us more. is this a one-off? >> i don't think it's going to be a one-off. all of these retailers are responding to a tightening labor environment. home depot said that's going to be an extra $1 billion and costs -- in costs. walmart unveiled a pretty similar move a couple of weeks ago. ubs said that walmart's decision to raise the starting wage to $14 from $12 is also going to be about a billion dollars in extra costs. if we do end up in a recession and unemployment rises, that is different. but for now, the picture for the labor market is pretty tight. >> and for companies who have a pretty generally good handle on navigating consumer trends, to have reports where the outlooks were poorly received, what does that say about the outlook for

retail? >> it speaks to the uncertainty. if you look at walmart, there are two big messages -- the fourth quarter results were excellent, very robust, business doing great. but their unwillingness to come out with a stronger outlook certainly speaks to all the uncertainty out there. was going to happen with the fed, with higher interest rates, the future for the economy. there are already signs of weakening in consumer spending and consumer sentiment. then for home depot i think you have all of that but you also have the question about what is going to be happening in the housing market. obviously home sales coming down. home depot has always said that they can thrive in this can of environment because of people staying put and doing remodels of their house. this is a real test for that and it is not clear that that narrative is going to hold up this year. >> it feels like one of the cases -- i think you can throw this under the same belt, the

idea that the momentum you've seen the last couple of years, was that covid or inflation driven, is going to dissipate. it is coming from higher income earners not needing to bargain hunt. how much of this is a micro story? -- a macro story. >> certainly for higher income people, do they need more of the discretionary goods? that is where walmart is seeing lower demand. for discretionary goods. we will get more information on that from target and costco. from a macro standpoint, up and down the income scale, walmart is talking about consumer balance sheets being under pressure, talking about people responding to a higher interest rate environment. and again being very cautious. it's a pretty uncertain market. pretty uncertain outlook. we will probably know more in a few months but walmart is

clearly preparing itself a pretty wide range of economic outcomes. >> thanks very much for the breakdown on the home depot and walmart stories, brendan case. the market is paying close attention to them. investors worry about the fed being more aggressive than anticipated this year. earlier the goldman sachs global macro conference in hong kong affirmed the chief economist spoke to bloomberg exclusively about the changing expectations. >> we have seen some higher inflation numbers. i don't necessarily think that breaks the trend towards disinflation. but it reinforces the idea the fed still has work to do. we think another 75 basis points from here with no cuts until 2024 seems like a more likely outcome. >> let's get some reaction to those comments now from portfolio manager steve s.

the idea that they are putting forward basically 75 additional basis points of hikes, getting us into the summer, how does that align with your own thinking right now? >> it is generally in line. it's one of the things that we have pushed back against. most of the market has been wrong at inflation for two years. and wrong an interest rates for one. -- on interest rates for one. yet you had this consensus it was going to be five or five and a quarter, we knew when the fed was going to pause, we were pricing and 75 basis points of rate cuts. we thought that was nice and neat. what we are seeing is the revenge of the data, a little bit of soft ending and financial conditions, can we have sorted to's economic data be accelerated whether it is nft, inflation,. readings. . and the data is forcing the head into a more hawkish positioning and you are seeing that get priced in today. that is about what we think is right.

but would it shock unsafe it's more than 75 basis points? no. it would not shock us. >> but this into the context of what we are seeing on the pmi front as well as the retail sales number -- or retail numbers i should say from the retailers like home depot and walmart. how much of the earnings and the eco-data is ultimately telling us that the economy is going down and the fed's approach is working? >> i think we are headed that way. the problem is a labor market at this point -- that's really at the center of this -- the labor market is the center. there's no peace here until the labor market reaches something that looks like an equilibrium. equilibrium is 3%, 3.5% which growth. a better balance between the number of unemployed people and jobs that are available. if anything in the last couple of months, that data's gotten worse, not better. so you really need to get back to an equilibrium labor force before you think that inflation is crushed.

are there signs the consumer has some real struggles ahead of it? yes. the balance sheets are not where they were a year ago. credit card balances have seen the biggest 18 month increase ever times two. we think what will happen is, as the rate hikes have gone through the system really start to hit at some point later this year, you will start to see the consumer crack and corporate earnings really come down towards our $200 number for 2023. we think that will take a while. in the meantime, the consumer's resilient, the economy is resilient and inflation pressures remain. the fed has done a lot but it doesn't look like it is a lot you -- like it is enough yet. >> how is this impacting your portfolio strategy? with the weakness we have sent on the s&p on then intraday basis, we have these rate sensitive sectors. technology or real estate or those broadly lagging.

how do you feel about the potential for the performance given this environment? >> we have what we call our defense -- within our equities, we have been most overweight defensive dividend. we have had some cyclical exposure but have stayed away from growth. that was certainly painful at certain points in january. we think that is the right call. the earnings trends have been most acutely negative in the growth stocks space. we had a lot of the rally was a reversal of tax loss selling that happened last year. without the idea of a quick fed pivot was unlikely to materialize. we think when you see that eventually comic slow down, growth stocks -- i would also put high-yield bonds in this area, those are the two areas that seem to have unreasonable prices for us and would lead the market on the

downside. we have avoided those areas. we are happy with our value. overweight. we were worried when that overweight was under pressure last month. >> we are out of time. thank you as always for joining the show. coming up, we continue the stock conversation. we will look at the most recent report of his firm and take a look at the equity market. stick with us. this is bloomberg. ♪ [office sounds] ♪upbeat music♪ ♪♪ ♪when the day that lies ahead of me♪ ♪♪ ♪seems impossible to face♪ ♪a lovely day (lovely day)♪

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take -- jess menton on the take. how are people thinking about the market? >> if you look at goldman sach'' basket of the most shorted stocks, it is down more than 5% today. that will put it on pace for its biggest early decline since early november. if you think about its upper performance this year, it is up about told percent year-to-date. basically more than double what the s&p 500 is. showing you basically january how the majority of the gains came in when a lot of traders were caught offside on that positioning. you've begun to see that catalyst wayne. chris murphy was thinking basically when you're looking at that particular basket, it ran its course and you don't have that as a catalyst for the broader market anymore and you won't see that support for the s&p 500 anymore. >> the earnings season we have gone too is an interesting data point as well. you've been crunching the numbers and looking with the

bloomberg intelligence team that's been putting together things on sectors like tech which had all that momentum we just talked about in january. but i'm terms of the magnitudes of beating expectations, there were certain sectors that have really stood out. >> there definitely are. when thinking about technology, we had interesting data recently about this talking about how the bets have proved to be pretty expensive this year, especially when it comes to hedge funds. 10 of the most shorted stocks have delivered almost $17 billion in combined market to market losses for bears to actually last thursday, but not surprisingly tesla is among the big gains when it comes to those leading short seller losses. looking at paper losses, more than $7 billion. not surprisingly, it was typically the most shorted stock last year but even beyond that company, apple, meta, amazon, those rallies have also begun to weigh on short-sellers. when i was talking to chris

murphy, he was talking about how these valued stocks, they could still be attracted to short-sellers eventually. he think there's more of a buyer strike right now but if we begin to see this brought a rally continue to win, short sellers could step in again. >> thank you as always to our bloomberg equity team. this report has apple and tesla, those high-growth names just was referring to come are among the least profitable short positions held by hedge funds. apple is one of the biggest drags on the s&p 500 today. joining us as the managing partner and founder at s3 partners. i was a pleasure to have you on the phone. let's start with the apples and teslas. those big growth names. how's the market positioned? >> the last of my was on, we talked about short selling, -- last time i was on, we talked about short selling. we were right. when he was asleep.

short-sellers were protecting a lot of fed activity, which has happened. now we want to talk about what's going on on the long side. that's really where the action is. it's on the long side of the market. where's the buying pressure? where's the concentration risk? where is the crowded nest on the long side? what we have seen over the last couple of months is that both passive and active investors -- active investors that trade and passive investors that don't trade a lot -- both have increased their exposure to growth stocks. perhaps they are all sides. >> we alluded to the tesla apple story. let's talk about the long specifically profitable -- the most profitable based on your analysis the last 30 days. you've got companies like uber on that list. is that correct? >> uber, snowflake, avis --

growth names. this is where passive investors have increased their positioning as will -- as well as active investors. there might be a little profit taking over the last couple of days but there is concentration. and oversized draw done risk in those names -- draw down risk in those names. >> talk to us about the other side of the question, the cyclical names. >> they are under weighted. they are underweight health care. they are underweight energy. they are short energy. i think what we are seeing is maybe the market got ahead of itself. long investors were either underweight health care. passive investors were underweight eli -- lily eli

lilly, -- passive investors were underweight eli lilly. energy and health care, underweight. they have been long on growth names. maybe china predicted the end of the fed cycle incorrectly. >> a stock that you see almost as a battleground name is wayfair. , bob -- how come, bob? >> we love this story. the shorts are dug in. they don't believe the management has right size the company. passive investors that supply the stock to short have decreased their ownership over time. however, active managers have stepped in and now they are starting to buy the stock after years and you are seeing this battle between short-sellers who don't believe management, active investors deploying capital on the name, you have earnings coming upin 2023. we will see what happens.

we think this is a microcosm for what's happening in the rest of the marketplace. >> good to get your perspective as always helpful context. joining us with some of the moving parts of the market right now. coming up, it may have been a hot inflation prints for the u.s., but the same can't be said for canada. we will break down the latest numbers, next. this is bloomberg. ♪

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>> time now for today is for what it's worth. our data point today is 5.9%. canadian inflation in january rose by that amount over the past year. that was slower than what economists expected given there are signs of price pressures easing. the market including the bank of canada might be able to stick with this plan they have in place to hold the line on rates for now.

their next policy meeting is early march. obviously a different picture being painted here in canada versus the u.s. >> it's all about the margin of deceleration. you're starting to see that show up in canada. there's been a couple of months with pretty good declines. the fear here involves both sides of the border, the idea of what you are seeing in spain and brazil and other emerging markets show up in the developed part of the economy. that inflation could take backup and that seems to be one of the risks involved in the scenario apollo had coined and a lot of people are talking about, with a dissolution in the economy, where does that lead the deceleration inflation? >> we had a conversation earlier this hour with a longtime economist that spoke to that possibility, inflation creeping back up again. there were differences between canada and the u.s. perhaps not as significant as a

u.s., the deceleration. also the fact that so many canadians have taken on debt. that is another consideration the bank of canada's looking at when they decide for each new interest rate hike, what does that mean to the housing market? which for better or worse is now a huge component of canada's economy. >> that is the last shoe to drop. many people are saying once you have those shelter costs come down, that's when you will see a more meaningful and sustainable decline in inflation, but we are not really the area qamar we? >> not there yet. we are watching how much road banks have. we had comments highlighting we could see 75 basis points getting into the summer, in hikes. >> where's all the cut narrative? it looks like that is being completely priced out of the market. the s&p 500 -- session lows,

down 1.9% on the day. the nasdaq, down 2.2%. , the 10 year yield, 395 on that note. stick with us. four markets coverage -- more markets coverage, ahead. this is bloomberg. ♪ go. go scientist. go software. go cure. go production. go faster and safer. emerson automation software helps breakthrough medicines get to market at warp speed. go human go. go boldly. emerson.

>> this is your countdown to the close. pessimism across asset classes today, the idea that the fed is going to hike more and stay there longer and not come back down this year. consumer caution, there. retailers are having a difficult time. we also have tensions bubbling up again. >> there's a ton that we will be watching throughout the trading day. ju