>> welcome. i am john hyland the first word news. russia is blaming ukraine for drone attacks. moscow says the attacks were repelled. ukraine has not claimed responsibility for incursions into russian territory, which have become more common. in the u.k., rishi sunak's government has a hard-sell convincing politicians in northern ireland to backup post-brexit deal. he spoke with reporters in belfast. >> i would like to engage with the policies. it is one of the key parts of this deal, sovereignty for the people of this region. it is what people are asking for. i think it is more than anyone expected. i hope that is what people can

see it's a positive step forward. john: the agreement is aimed at fixing the brexit treaty that imposed a customs border in the irish sea. house speaker kevin mccarthy is taking the unique approach to keeping republicans in power. he has given five competing gop groups a seat in leadership. he called the five families. it's a contrast to nancy pelosi who kept a tight grip on power and was heavily involved in the agenda. ron desantis is stoking where presidential speculation. he is planning to visit three early primary states in the next few weeks as part of a tour for his new book. he will stop in iowa, nevada and new hampshire. he's planning to go to the reagan presidential library in california on sunday. that's been a launching pad for republican candidates in the past. global news 24 hours a day powered by more than 2700 journalists and analysts and more than 120 countries. i'm john hyland. this is bloomberg.

♪ >> welcome to bloomberg markets. kriti: all the action has really been in the bond market. stronger on the day by three tents of 1%. getting closer to 4000 on the s&p 500. let's see if that serves as a key technical barrier. when it comes to round numbers for the 10-year yield, inching closer to the 4% level. further to the front end of the curve. what is that mean for hawkish fed policy? how does that show up in the bond market today? only up about two or three basis points. nothing to write home about. the bloomberg dollar index flat on the day.

taking its cue from the bond market. let's see what moves that. something tells me it will be the european data. nymex crude trading at a $77 handle, up by 2%. amber: let's look at sectors in the u.s. market. target and chico's living up. the move at chico's is more enthusiastic after profit and sales beat expectations. 10% of shares outstanding are short. it may be a little bit of a squeeze. norwegian, the worst performing stock on the s&p 500, a bigger loss and expected but also a dismal forecast. goldman sachs hosting an investor day. you can call this a real-time report card on how it is going. the stock is the biggest drag on the dow. kriti: you are seeing it come back slowly and drive the trade. this pivot from the macro. the micro coming in a little bit as well. the euro hotter than expected.

inflation data from france and spain. who better to ask than michael mckee. there's is a lot to digest here. specifically when we talk about what the european inflation data is telling us. to what extent is this record french inflation data and spanish data that had ticked backup some sort of crystal ball or signal inflation is not a done deal when it comes to the u.s.? michael: it's a signal that inflation is not a done deal. there situation is a little different. much of what drove the price levels in those countries where food prices. it is not as directly translatable here were the wholesale food prices have been going down. we are waiting for that to transfer into the cpi. it did have a major affect on the bond markets today. it is the wrong direction for inflation. that has everybody in the markets suggesting what we will see is an ecb that has to do

more, go higher for longer. does that sound familiar? we are up to basically bets that we will see the ecb had 4%. they started the year at -50 basis points. there is a long way for them to go. it is a surprise to a lot of people inflation has been as sticky as it is considering energy prices have come down in europe. kriti: i wonder if it is an endorsement of credibility for the central banks lacking at the beginning of the year. you had market pricing totally different from what central bankers were telling you. christine lagarde was chief among them, saying don't bet against us. the fight on ablation -- inflation is not won. michael: we are seeing the reaction that the central banks want. we get some economic news that

suggests the central bank has to do something and the markets price it immediately, which should give the european central bank more help getting the economy slowed enough to get inflation debt. amber: thanks so much for that perspective. that is mike mckee joining us. for more market reaction, let's bring in, credit suisse -- let's bring in mandy xu, credit suisse head of strategy. is this the last we will see of the volatility in rate pricing? mandy: what is interesting so far this month we have seen very much of return to macro dynamics and macro drivers. last year there was a focus on higher inflation, higher rates, increasing the rate volatility and a focus on the hawkish fed being negative for equities. it's interesting this year we are seeing a little bit of a shift in terms of dynamics and

how equity investors are hedging against higher rates. for all of last year as rates were going hi what we saw with the hedging interest was very muted and it was very much focused on modest pullbacks in the market, like 5% to 10% lower. this year we are starting to see a notable uptick in investors looking for work convex hedges against a market crash, sending volatility much higher. if you look in the vix options market, what we are seeing is a very notable uptick in demand for upside calls in the vix. playing for higher levels of equity volatility this year on the back of these macro drivers. amber: we talked about these macro drivers. the fed is driving the story. to what extent is the market prepared for a no landing scenario? it's almost priced as less

carnage for the equity market. in the long-term it just means more inflation. are the markets ready for that kind of news? mandy: a no landing increases the risk of hard landing in the long-term. the federal have to actually be more aggressive to tame inflation. if you look at the underlying equity market price action, you are seeing this year more of a traditional environment where markets are reacting more on the back of fears of a recession that inflation. last year on the back of higher rates and high inflation we saw very robust sector dispersion. correlation levels were very low. on days where the market with selloff you would have tech down 3%, energy up to percent. a lot of dispersion. this year we are seeing more and more every sector selling off together, a more traditional environment and what you would

expect. the options market, we are seeing pricing for higher correlation. s&p for example. implied correlation of what the market expects going forward. it is trading at 20 -- that is trading at a one-your hot. amber: we hear so much from the portfolio managers that this year will be a stock pickers market. it seems like what you are saying is assets are once again moving together. mandy: exactly. last year was a stock pickers market. last year was very atypical in the since we had a 20% pullback in the market. a lot of dispersion and single sector dispersion. this year will be a more challenging environment. we are still seeing a lot of interest in that dispersion theme. this year, because of potential for recession, i think

correlation levels will end up being higher than last year in the equity market. the other thing to watch for is equity bond correlation to normalize later this year as we go into more of a growth environment. right now it is focused on inflation but if that shifts there's value in owning bonds from a diversification perspective. kriti: i want to go to the argument that the macro trade is important when it comes to the all sectors trading together. is that is the signal you are looking for, for things to fall apart a little bit? mandy: certainly a signal we watch for. in the derivative markets the levels of correlation, skew, and all of that has started normalizing and increasing to start the year. if you want to talk about what is different this year versus last year, we are seeing more downside risk priced into the

derivatives market. amber: mandy xu always --mandy xu, always a pleasure to have you on the show. comp sales and earnings topping wall street's estimates. we will dive into the story next as our stock of the hour. this is bloomberg. ♪

amber: this is "bloomberg markets." target turned in a strong fourth quarter performance became with a cautious financial forecast for the year ahead, grappling with an inventory story that is not over. joining us now is brandon case to break it all down.

the stock market reaction this morning to these earnings at about 630 was wild. what is going on and what is target telling us? brendan: it really see sought early on -- see-sawed early on. the results were better than feared. the outlook was better than feared. it is not great. the company has a lot of challenges to work through. profitability is not going to be anywhere near its long-term goals for at least a couple of years. it is still dealing with some of last year's problems. the inventory search is over and they have gotten that largely under control. they still expect a little weakness in certain categories, including higher-margin items. amber: this reminds me of when walmart reported quarterly results. an outlook that was weak. a choice by investors to look

through that because it seemed like for the case of walmart they were being cautious. not necessarily actually seeing signs of a slowdown but wanted to maybe prepare for it or worn investors. is that a similar case for target when it comes to their outlook? brendan: i think it is very similar. both companies are taking a very cautious outlook. last year both came out a year ago with pretty rosy forecasts 422. a few months after that, they had to walk those back dramatically. neither one wants to get too far out ahead of its skis this year. it's a little dicier for target. walmart knows given its grocery it will get a lot of customers in the door. target is still doing that, still getting customer traffic. the risk is that there could be demand for some discretionary items that all of a sudden evaporates again if the economy heads south.

amber: it's interesting that walmart outperformed on those fears of inflation, the fears of your everyday low prices means that walmart is the go to for a lot of consumers. how much of that market share is returning to target given there is this no landing scenario? maybe there is not a recession in the future. brendan: the market says it is confident it is gaining market share in terms of units sold as opposed to dollars. it is making a lot of progress with its food and beverage offering. that only amounts to about 20% of the company's sales. whether it can keep up steady demand for discretionary items, a lot of that depends on intimation, what is hot. it could end up being more femoral if consumers pullback. amber: certainly something we can keep an eye on. you can throw anything at him and he will answer beautifully.

brandon case, we will have you back on tomorrow. thank you for joining the show. let's look at some of the banking stories. goldman sachs holding its investor day. sonali basak is live with the latest. what's going on on the ground? put it in the context for the global audience how big of a deal this is. sonali: this is only the second investor day they've ever had in their history. it's in the year five of david solomon's tenure as ceo. after that big move to consumer banking, it's been reorganized into a business called platform solutions. we have learned that business would take another two years to break even. there are questions around that business and work ahead. executives are considering strategic alternatives for the business. when you look forward, what is goldman sachs tomorrow? one thing that struck me in an interview with the president of goldman is, is there a goldman

to point out? the answer to -- goldman 2.0? it is asset management as well as investment banking. they have a large asset manager. the extent to which they can grow that top line and make that a part of the business, the more steady recurring revenue is the story that goldman sachs is giving you today. amber: maybe they will not have another investor day if the stock reaction is any indication. it's a real-time report card on how investors are viewing what they are talking about. it seems like with goldman it's a strategy. are you into consumer or not into consumer? do you feel like you're doing a good job clarifying their laser focus areas? sonali: the laser focus is a much clear -- is much clearer now when they talk about asset and wealth. to the point you are making, the

consumer used to be that story. the consumer being the stable revenue in the future. fast-forward to 2022, you have to look at the tougher economic environment we are heading into. part of this is a series of missteps. management said they are stumbles. some of it is environment itself. the deposit base you have a goldman sachs has given goldman something to work with and it lowers the cost of funding. when you look at the move in asset and wealth management, it's a me to story because you have so many banks doing the same thing. citigroup is looking at assets and wealth. morgan stanley looking at asset and wealth. jp morgan looking at asset and wealth. it is a competitive environment. they did a really good job fundraising last year. the fundraising environment is getting very tough out there. can goldman bring their calling card around the world to raise money and reduce reliance on its balance sheet?

they have given specific targets. is that enough for investors to be convinced the volatility can be reduced in the future? kriti: we will put you on the spot as we see them make that payment to the wealth business, to the asset management business as well, or put more focus on it. bring us back to the investment banking and trading platforms. what are the challenges there? to what extent are they at the whims of the market? sonali: great question. trading is a volatile business. i would also say volatility in some instances can very much be their friend. they had record numbers in so many areas and have gained a lot of market share. that is what goldman is winning on in the down market. amber: thanks so much for providing that on the ground perspective. coming up, we will hear from the

president and ceo of the alliance for automotive innovation on the challenge behind the federal ev tax credits. this is bloomberg. ♪ ♪

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amber: this is "bloomberg markets." our number today is $7500, the ev tax credit. consumers are confused over whether or not they qualified. john was alone -- spoke about the challenges earlier today. >> the tax credits are already available to customers. if you go on to the -- of a

customer goes to the treasury website, irs.gov, they can see by manufacturer and product what vehicles might be available cre. it has to be made in north america. only vehicles at a certain price when qualified. only customers with a certain adjusted gross income qualified. where it gets challenging is there is a new set of guidance coming out of treasury that will speak to content. where are the battery components made? where do the critical minerals and raw materials come from? things will get a little bit more confusing as manufacturers work through those rules and customers can ultimately figure out which vehicles would qualify for tax credits. kriti: speaking with our very

own kailey leinz in washington, d.c. this is the part of the show will recheck on the markets but we will get a little moshe. we have two shout outs for our team the make the show possible. our line producer kay hurley. today is her birthday. we sent her flowers and gutter cupcakes. we need to give her a public shout out from myself and you and from jon erlichman who is out this week. they help with the show together. we wish her the happiest birthday. i'm told she's taking a spin class or something, which i think is horrible on your birthday. kriti: she missed being a lead baby by one day. she gets to celebrate all of her birthdays. amber: we also have good news. kriti: retirement to the markets producer behind-the-scenes. i wish he could come unsaid but we are out of time. you can hear the applause in the background. d is the real deal. every chart you see, every banner, every reaction, pete has a hand in it and wish him a very

happy retirement. more markets covered ahead. ramaine will take it from here. this is bloomberg. ♪

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romaine: what a difference a month makes. a resurgence in the dollar and a big flip-flop and inflation expectations. we wrap up february and welcome to "bloomberg markets: the close ." romaine bostick alongside katie greifeld. we invited your twin but she could not make it here. katie: we both have brown hair and similar sounding names. romaine: sometimes she curls it. katie: stocks are rallying today. romaine: is this a rally? katie: it was a pivot in conversation. you have a little green on the s