kriti: bloomberg markets starts right now. ♪ let's dive into the section the s&p 500 is down just marginally still, not really seeing that lead into the broader market that you would expect. there is a little bit of sustainability and the idea that the fed will be ending their tightening cycle. it should be good news in theory, but it's not. we will dive into why in just a moment. we are looking at a 10-year yield at 3.53, down five basis

points on the day. at the same time, not seeing that volatility. that is what you are sing across the financial market, stock market, even the vix at a 16 handle tells you volatility is low. your two best performing stocks, biggest contributors to the upside are saying macroeconomic concerns may not be that bad. the micro stories are eating at the broader index, really becoming a sum of all parts trade. one big focus of investors is the american debt ceiling. house speaker mccarthy this week proposing a bill that would raise the u.s. debt limit for about one year and cut federal spending. earlier today, libby cantrell spoke about the importance of the vote next week. >> ultimately, if this bill gets passed, it will not be signed into law. it is dead on arrival in the senate. but it is important from a speaker mccarthy perspective

because it will increase his leverage with the white house. kriti: michael mckee. want to check in with you and really walk through the worst case scenario for you. let's say we trigger that debt ceiling. what happens? michael: that's an interesting question because we have not done and hopefully will not do it, but there has been a lot of thinking about it. that is the question that both the treasury department and fedor going to have to answer. the treasury has to decide whether they will try to do some gimmick, some trillion dollar coin or something like that, or have to decide whether to prioritize paying bondholders first, social security recipients first. a lot of people say that won't work, the computers cannot handle it. but those are decisions that have to be made. then, the fed looking at the operational concerns. are the markets functioning? back in 2013, they had a conference call to discuss what

they might do if the u.s. had to default that year. they came up with a number of plans that basically would look to you like what we saw after the financial crisis, for what we saw during the pandemic, where they provided liquidity to the markets that had seized up. that would be their idea not to get in the middle of the political dispute, but to make sure markets are functioning. kriti: in those scenarios, even in 2011, when we had that triple rating downward for the u.s., the reaction was the exact opposite of what you would expect. people bought american assets, because as christine lagarde, the president of the epc -- ecb said, that will be disastrous and unheard-of for the american economy to default on their debt. in terms of market reaction, do we see a repeat? michael: that's an unknown and something the fed has thought about in their discussion in 2013. two ideas they talk about were

running a repo operation in case interest rates went down too far and running a reverse repo in case interest rates went up if nobody wanted our debt. they could take some of that off people's hands. if everybody wanted our debt, they might have to put liquidity into the markets. they thought about this. they obviously have not made plans this time around, but it is certainly a possibility. kriti: certainly something that hasn't quite struck fear in wall street yet, but it could be there. give it two months. we love to wait until that last-minute deadline. as we talk about the debt ceiling, we are still very concerned about the labor market on wall street. initial jobless claims coming in at about 200 free 5000. are we making improvement when it comes to softening this labor market? nela: it's definitely coming into balance. there are a lot of moving parts here. we are going from the debt ceiling all the way to labor

market. what we are seeing is a market that is finally starting to be in balance with demand. all of that hiring we saw last year, companies are still hiring, but not with as much fervor and urgency to replace headcount. they are hiring because they want to grow businesses. i think that is a crucial change. when you look at the labor market this year, that comes with the fact that yes, companies are still trying to hold onto workers, but not necessarily as tightly as before. you can see that with this drifting upward of the jobless claims. you can see the year-over-year change and growth is starting to head downward. that is on the right track if you are looking at inflation and trying to avoid the wage price spiral, which looks like it is going to be avoidable this year. kriti: as we talk about that

payrolls number, it is interesting to me. marginal move is everything. you emphasized the word "light" improvement. are you worried about a more dramatic drop when it comes to payrolls data or even a dramatic increase when it comes to jobless claims data? the move is inching closer in the bottom direction. but at the end of the day, does that create a little bit of a spring effect? do we say bigger drop triggering a bigger recession? nela: not at 3.5% unemployed it right. i am not in the camp of concern yet. i'm seeing a market that looks a lot like it did in january and february of 2021. if you look at initial jobless claims or even the bump we saw today in continuous claims, they look a lot more like where the economy was at the same unemployment rate in january and february of 2020. this is a market that has kind of gone back to that place,

except for postings. we are still seeing job openings a lot stronger. even though they are lower, stronger than 2020. a tighter labor market, but one that is starting to ease. that is good news for the fed, good news for companies, good news for workers, to see some stabilization in the labor market. of course, what we are watching for is a really big drift up in initial jobless claims. i would put that number closer to 300,000 and what we are seeing today. kriti: mike, hop on in here and translate what she just laid out for us. talk to us what that means -- about what that means for the federal reserve. we are looking at a potential last hike of the tightening cycle in may. that seems to be a no-brainer. there is debate if we see one more hike going into the summer. michael: you are seeing fed officials may be back away from that, may be hawkish ones. they say the words "more needs to be done," but they also say

"prudence is important." they have talked about the idea of moving carefully because they don't want to go too far and cynthia economy into recession. there's a whole bunch of tightening they have done that is only just starting to hit the economy. they are probably going to take a break. then, the question is, do they have to come back? we will see what happens with inflation. that will decide for them. we will also be watching the data on pay because the fed has been watching what's happening with paychex, to see if that will contribute to inflation. there has been a bit of a debate about whether that is a leading indicator or following indicator, people asking for raises after they see prices go up. the one thing i would add to your original question about a very rapid move, that goes back to something that is called the psalm rule -- the som rule.

once it goes up by 0.5% over an average of three months, it goes up much faster and farther. that is one of the things the fed has been looking at. it has not happened. this does seem to be a different kind of set up for the labor market than we have seen prior to previous recessions. kriti: a final question on exactly what mike just laid out. we all want bigger paychecks. that's a no-brainer. one we are looking at wage growth or a price spiral, what kind of numbers are you looking for? nela: we are looking for numbers that go down and not up. we are looking for that not only for pay growth, but also for inflation. the reality is that real wages for the typical worker have been negative over the last couple of years. that's not a good place for the workforce, despite a really tight labor market. what you want is for inflation to go faster and wages are moderating. if we can get that, that's the

sweet spot. wages go up, profitability continues to be stable or go up. and for inflation to go down. that's what i'm looking for and hoping for, for the fed to achieve a soft landing, if that is possible. kriti: that sweet spot is what we are looking for, i would say. the question is, how long do we stay in the sweet spot once we get there. we think you as always, and also mike mckee. the debt ceiling, the labor force. coming up, d.r. horton hits the highest ever. this is bloomberg. ♪ ♪

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kriti: this is bloomberg markets. d.r. horton shares are rising right now, sitting at its highest level ever. this comes as second-quarter results top expectations, as well as the forecast for homes. joining us to discuss is just meant in. walk us through the story. it is something we don't cover often, but maybe we should. jess: not only beating expectations, but also fueling expectations when you look at home builders, off to a strong selling season because there have been questions as far as the health of the housing market, especially when either of mortgage rates since the beginning of last year. basically doubling, but with this particular story, d.r. horton offering more incentives, especially to entry-level buyers who have been priced out of the market. you have really been seeing that rewarded in its earnings report as well as stock price. it is up about 7%, on pace for its best day since november.

you are also seeing other peers also all up about 3% as well. if you are looking at the s&p composite 1500 for the homebuilding index, it is up around 3.5 percent. also its best day since january. kriti: what does that tell you about the broader homebuilding sector? at the core of all of this banking stress and the inflation story is what actually happens to people's mortgages, happens to that credit ability. i think d.r. horton has a very clear correlation. jess: i think what's really important about this, higher mortgage rates are keeping listings low, especially when it comes to existing homes. that could actually be a plus when it comes to home builders. the big question is, how much further, especially when the rate picture as far as the trajectory and federal reserve, what that could actually mean when it comes to the housing sector. but if you listen to an analyst over at berg intelligence, he really think d.r. horton is

really unique and well positioned in this particular environment. the biggest caveat there being the trajectory of the economy and what this means. as far as when it comes to the spring season right now, it is really holding up well for homebuilders. kriti: certainly something to keep an eye on. higher by about 6%. quite the rally on a day you are seeing the s&p 500. a little slower on the day. jess, thank you for walking us through that. another major mover, although to the downside, is at&t, tumbling after its first quarter misses expectations and subscriber adds slump. a senior analyst, john butler. i learned a fun fact today that the reason why at&t's ticker is the t's for telephone. i don't know why i didn't make that connection beforehand. thought it was interesting. nevertheless, walk us through the cash picture for at&t. why is this important? john: it's because the cash flow

at at&t funds the dividend. the estimate for free cash flow for the quarter was $3 billion. the company reported $1 billion. a lot of that had to do with elevating capital spending. it rekindled all of those fears about at&t doing another dividend cut. dividends are everything to income stocks like at&t and some of the other telecoms. kriti: let's talk a little bit before we get into the dividend piece of the equation. i want to talk about what at&t is actually trying to do. they are trying to build out a much bigger audience service. are they succeeding? john: they are actually doing a very good job. they are building networks within their territory and starting to move outside of their home territory. i like to say the real fiber holds. i think there on the right path. data ultimately needs to find its way back to a fiber network,

particularly in a 5g world. i think they are on the right path with that and making good progress there. kriti: let's bring it back to the dividend story. if they are making good progress, how long will it take them to increase that dividend, given that a lot of folks choose to be exposed to the telecom sector? john: they don't really provide specific guidance on dividend growth. i think what will happen be on this year is -- let me wind it back. i think they are really hitting a peak year in terms of their 5g spending this year. that 5g spending, they have to share it with the fiber builds. it really is an elevated number for them, running around 24 billion, which is a big number if you look back at their history. i think we are going to come off of those levels pretty significantly starting next year. that will take a lot of pressure

off of free cash flow and give them much more freedom in terms of making capital allocation decisions, whether it is share buybacks or dividends. kriti: less than 30 seconds here. the broadband subscription you were just outlining, 23,000 broadband users lost in their first quarter. how did they get them back? john: part of those losses are what we call legacy data subscribers. they are on those low-speed lines. if you have ever heard the term dsl, they are very slow speed. but there are a lot of them out there. i think over time, those subscribers are upgrading either with at&t or their carriers and letting go of those older legacy lines. if you strip those out and look at the core fiber business in the broadband additions there, they are doing quite well. but when you mix it in with the

losses on those older data services, you come to a net loss. to me, that is not concerning. my eyes are on how they are doing in the fiber business, and they are doing just fine. kriti: certainly something we are going to be keeping our eye on. john butler there. at&t mobile shares down to the tune of about 2% on the day from last to my check. really, really that juicy dividend yield. several regional banks are reporting results, showing the impact of an industry panicked after the march collapse of silicon valley bank. we will have the latest when we return. this is bloomberg. ♪

kriti: this is bloomberg markets. i am critique of debt. time now for the wall street beat. a host of regional banks are reporting their results. a decline in bank jobs could signal their facing challenges a

mid a tougher outlook for deposits in rates. chris, let's get right to you first. these earnings stories, yes they are coming quickly and we knew they would. at the end of the day, is this something that jamie dimon warned could reverse by the end of the year? chris: thanks for having me. what we are seeing this quarter is really a confirmation that earnings have peaked. we talked about this at the beginning of the year as a risk to the banks. overall, the level of profitability is coming down. we cut estimates into the quarter by about 11%. numbers are coming down again. they are not expensive stocks, but when you're cutting estimates, by definition, that is the risk of a value drop. we have to be careful about finding exposure to banks. kriti: herrmann, hop on in here before we get into the nitty-gritty of the names that

did report. your take on the reversal by the end of the year. herman: things do seem to be stabilizing from a deposit standpoint. first quarter numbers did show about 2% or 3% on average. the hope is that things stabilize from here. i would also say that the contagion fears that occurred after the failures of svb and signature are really put to bed now. it is more of the earnings story that chris mentioned earlier. kriti: here's the part we get to on the nitty-gritty. chris, i know you fall comerica. shares down about 2.7%. they cannot with their earnings. we are looking at a trading of about 45 right now. what is the case for comerica? chris: the bull case is that this is a high-quality mid-cap bank that is trading at discounted valuations. the earnings stream, the company spent a lot of time over the last five or six years trying to

smooth out the earnings stream from rates. they are doing that. what they are really faced with right now is deposit flight. this started in the back half of last year. they were pretty conservative in raising deposit rates, so there is a bit of catch-up with their funding cause. what you are seeing is margins rolling over, estimates coming down. again, inexpensive stock, but without a catalyst. kriti: hermann, your thoughts on comerica? just how dire is their exposure to the svb and signature story? herman: they do have exposure to technology and life sciences, but it is much smaller than their overall deposit franchise. i would say that decline in the first quarter of about 9% did surprise some folks. that is something they will need to address and rebuild their deposit base going forward. kriti: hermann, let's stick with you here. i want to ask about some of the other banks reporting after the bell. outside of the deposit flight or total amount of deposits, which could move by the end of the

year, in terms of instilling confidence in some of these regional banks, how do they do that? herman: you can point to the stability of overall balance sheets. the banks are not really touching the bank funding program. those all point to the fact that the liquidity issues that were initially feared from the failures has really receded. the banks have the ability and flexibility to manage their deposits and balance sheets despite continued attrition. kriti: in our last minutes here, i want to ask about the stocks themselves. we are looking at the price action. they are extremely weak. they are so cheap that people who want to buy at a discount, this feels like the opportunity to do it when looking at their price-to-book ratios. what will it take for these stocks to no longer, from a valuation perspective, look this in expected cash inexpensive? chris: you've had two or three

spots to buy. he had the covid bottom in 2020. what we're debating now is whether this is a third moment. i think it is a little early. i think we are only five weeks removed from the svb collapse. we still need resolution on first republic, for example. but the lack of a catalyst, these are late cycle stocks. valuation can support the stocks. in terms of relative outperformance, the banks are probably going to struggle a bit. perhaps not a ton of downside, but not a ton of upside either. kriti: certainly something we are going to keep an ion. something i could spend a whole day on. chris and hermann, we think you as always. we are going to discuss market moves. michael reinking joins us. some are starting to pair losses. hovering around session highs.

41.46 on the benchmark, down by about 0.2%. more markets coverage ahead. stick with us. this is bloomberg. ♪ hi, i'm jason and i've lost 202 pounds on golo. so the first time i ever seen a golo advertisement, i said, "yeah, whatever. there's no way this works like this."

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>> welcome to our audiences. i am simone foxman with the first word news. the secretary-general made a surprise visit to kyiv today, the first since the start of the war with russia. speaking to reporters, he said ukraine's rightful place is in nato. he pledged more support for the country. ukrainian president urged the nato chief to push for more from the alliance, including warplanes, artillery, and armored equipment. the u.s. and other allies of ukraine may ramp up the economic pressure on russia's president vladimir putin. bloomberg has learned that they are considering a near total ban of most exports to russia. group of seven officials are discussing the idea ahead of the leaders summit in japan in may.

the aim would be to include eu nations in the crackdown. space x's giant new rocket lasted off on its lift off today. it exploded minutes after that. it was called a rapid unscheduled assembly. the mishap complicates seal on -- ceo elon musk's ambition to send humans back to the moon and mars. he will try again in a few months. global news 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. i am simone foxman. this is bloomberg. ♪ >> welcome to bloomberg markets.

let's dive right into the price action here. on the surface, it doesn't look like a great day for the market. the s&p 500 at session highs right now. there were on day, down 0.2%. the move you're starting to see in the s&p 500 intraday begs the question if we are in deposit territory. we're going to have full coverage in the bond market. that is where the one he seems to be going. 3.53 on the 10-year yield. we have not seen a ton of volatility lately. today is starting to take up a little bit higher. the vix and stock market, only a 15 handle. that is taking its cue from the yields pictured down about 0.2%. a quick check on commodities. nymex crude trading at a 1.77 handle. jon: helpful context there. by the way, happy birthday to critique of debt. today, there has been a lot of focus on the regionals. most of the messaging seems to be leaving investors skeptical today, whether it is lie on's,

truest, or key core we have seen some weakness in the regionals. for a bigger player like american express, they have the kind of client base that can handle economic uncertainty. but they are not immune from having to set aside money from potentially bad loans. within the s&p 500, weakness in tesla shares. we just heard from simone on the spacex story of the day. but the story for tesla of the day is that if there is more competition and more price cuts, what does that mean for margins? tesla shares down 9%. the second worst performer in the s&p. the worst right now is at&t, down about 10% as cash flow concerns are front and center after its corley results. kriti: doing some real damage to the benchmark right now. sitting at the highest level of the day. it kind of searches for direction. we going to positive territory? we will find out in a second. earlier, talking about

complacency in the market. take a listen. >> there really has not been any meaningful indication one way or the other. when we think about the economy broadly, markets are anticipating. it is kind of the worst kept secret out there that we are heading toward perhaps a period of economic downturn, this mild recession we've all been talking about. thus far, i think this complacency we have seen in the market is because we have not hit any catalysts that would meaningfully deviate from market expectations. jon: let's go for a deeper dive into complacency in the market. abigail doolittle has been tracking the technical trends for us and joins us now. i was looking at the vix and this general trend lower, which you have been talking about in recent days, walk us through what you're seeing right now. >> looking at the s&p 500, we have had the vix started trend lower. it is out of its longer-term range. for the vix, a five year range.

for the s&p 500, that complacency at small boots we have been seeing, it really equates to the last year, which is interesting. when i think of last year, i think of the big, big selloff. that has been moving into this sideways range. more recently, the s&p 500 has started to break above the top of the range. that is the first move we want to see on a weekly basis. we also wanted to see the rsi momentum indicators stabilize where it is or move into overbought territory on a series of potential higher highs. we have a weekly chart to compare this daily chart two, to see with the messaging is overall. i would say it is possibly bullish. it looks like we are going to see a breakout. perhaps you can even make the case we are seeing one. this is last year's big dig -- big downtrend. those tend to happen in three waves or more. these happen to be in fan lines. the purple line shows the cycle

-- the second wave. we are above the third trendline of selling. it does not mean we will go higher, but we likely go sideways from here, may be back below the blue trend line. it seems pretty likely that this chart, put together with the daily chart, suggests that over the year, we probably go sideways and then higher. the exact timing of all of that, that is less clear. the recession that everybody is waiting for, i don't know. these charts don't really suggest it is going to happen. kriti: perhaps bullish momentum baked in there. thank you, as always, for your expertise in the technical chart. let's head to the new york stock exchange. here's what the view is from down there at the floor. joining us now is michael reinking, senior market strategist. a pleasure to see would get on the show. let's dive into what abby was just talking about, the idea of complacency in the market. is this really a spring coil effect?

do we see upward momentum building? michael: thanks, for having me back on. happy birthday. i do agree with a lot of what abigail has just said. the market has been once again climbing this wall of worry. this week, i think the action has been really, really interesting. i do think part of what we have seen has to do with the options expiration. over the last couple of days, we have seen the opposing gaps higher and ending unchanged, lower for the last two days. once again rallying back to unchanged. one of the things i'm really paying attention to is whether or not, as we move through the expiration cycle at the end of this week, whether that does start to reintroduce some volatility back into the market. with what we have seen over this week, it does suggest that some of the upward momentum has gotten a little bit long in the tooth.

we could see a kind of pullback. i would not be shocked to see a retest of that 200 day here at some point. we are resting just below the year to date highs, around 41.80. that is a pretty big resistance level over the past year. jon: we talk about earnings season and what companies are saying about the profit picture. but because of the flow with which some of the sectors report, we went into earnings season uncertain about what we are going to hear from the biggest banks. it felt like some felt encouraged about what they heard. this week, though, we have been watching some early players in tech report. there seems to be cautiousness. does that play into the ups and downs of the market? michael: absolutely. i think he hit the nail right on the head. coming in earnings season, if you think about where some of the biggest concerns were, that would definitely have been

within the financials. we let out with the big money center banks, who, you could argue, or beneficiaries of what we saw in the march timeframe. but as we have moved through regionals, you could argue that those numbers have been much better than feared. we are not seeing signs that the banking crisis that we had in march has really started to spread. the commentary from the financial sector thus far has not suggested that the economy has really rolled over. it may continue to suggest the consumer remains pretty resilient. it does not sound like they are pulling back from lending. as you mentioned, the tech earnings we have seen have been much more mixed. we have seen more weakness coming from companies lever to the i.t. spending great we heard cdw talking about spending declining in the high single digits this year, in terms of i.t.. the semiconductor names have

also had some pretty mixed results. it looks like the market has really focused in on their guidance, in terms of looking forward. that is why those stocks have held up. next week, you have over one third of the companies in the s&p 500 expecting to report. that includes most mega caps. it is a really big week for the market. kriti: and something that could completely fuel or disprove that this -- that bullish momentum. 30 seconds if i can. the market has been trading off of margins for several months now. layoffs were rewarded for the idea of efficiency, specifically in the tech sector. what are they paying attention to now? is the top line back in focus? michael: i think there is some underappreciated tailwinds for companies that markets have not paid a ton of attention to. we have seen currency back off from where we were last year. we have seen companies moving very much through their inventory issues they have had. supply chains are improving.

that's going to help on the bottom line and in some margins. and then, cost cutting was a big theme in q4. i think that will continue to be a big theme here in q1. kriti: michael reinking nyse's ranking officer paired we will see again no doubt. coming up on the show, what are the stocks -- one of the stocks might guilt was just talking about, stocks continue to fall. art is hit by a slew of price cuts. what happens next year -- next? . this is bloomberg. ♪ ♪

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jon: this is bloomberg markets. i am jon erlichman with critique

up to. time now for our stock of the hour. as we mentioned at the half-hour mark, tesla shares taking a big hit today. company has been cutting prices, the -- but there was fresh indication from elon musk that that will continue as they look to drive demand this year. this company has some lofty vehicle sales goals for the year, upwards of 2 million vehicles, but we don't know where the economy is headed. that was something talked about yesterday on the program, but also the competition in the ev sector right now. kriti: it's a race to the consumer as they are staring down the barrel of a recession here. let's put numbers on that. operating margins shrinking to 11.4% in the first quarter. that is almost a two year low. on top of the margin, you are also getting price cuts to really retain that customer. i think this is best shown in that chart, this decline right here. over on the floor of markets,

margins matter. elon musk pushed back on the reaction to the drop in margins where talking about. take a listen to what he had to say. >> while we reduced prices considerably, it is worth noting that we are remaining the best in the industry. pushing for higher volumes and a larger fleet is the right choice here, both as lower volume and higher margin. jon: let's get more perspective from dana hull, who is covered both elon musk and tesla for a long time. the rate at which rates rose over the last year, in your story about tesla, it is the speed and scale with price cuts that i think people are just trying to get their heads around right now. dana: i think what spooked investors yesterday is that tesla cut prices quite a bit in the first quarter.

they cut again on the eve of the earnings call. then on the call itself, musk and the ceo said they are not done. they are going for the jugular here. they see a real opportunity to gain volume and maintain that lead position that they have. they don't care about the margins. i mean, they care, but long-term, they feel like this is the best strategy. they are going to continue to chase volume over margins. investors have now been put on alert that that will be the strategy going forward. kriti: how much success or progress are they actually making against forbes or gm cv candidates -- ford's or gm's ev candidates? dana: tesla blows everyone out of the water at the sheer number of cars they can deliver. they are a preferable company. what they're saying is they are willing to sacrifice profit to get cars more into the hands of consumers. other companies are not even profitable on ev's yet.

tesla feels like they have room to play here. musk is really competitive. he sees a real opportunity for tesla to leapfrog ahead here. i think the question for consumers is, why buy a tesla now if they're going to continue to cut prices? shouldn't i wait? you saw an inventory buildup in the earnings release as well. jon: what about the spacex component? everyone is watching what happened with starship today. when musk acquired twitter, everybody asked the question, is he going be distracted from his work at tesla? obviously, there is a lot more on the agenda ahead for spacex. is that something tesla investors are talking about as well? dana: no. you have to remember that musk founded spacex over 20 years ago. he has always run both companies simultaneously. he has never been a full-time ceo at tesla. i think tesla investors are more concerned about twitter than they are about spacex.

they share a lot of resources internally. it is the twitter acquisition that freaked everyone out more so than spacex. elon has been focused on spacex forever. jon: helpful context there. thank you very much. bloomberg's danna hall on the bloomberg start -- on the tesla story. canadian prime minister justin trudeau has awarded volkswagen nearly $10 billion u.s. in subsidies over the next decade for new electric vehicle battery planning. bloomberg has been covering the story today. ryan platt has more on the company's first gigafactory outside of europe. brian, this is something that a lot of people were curious about, because it was a huge win for canada to get this business. but at what cost? brian: the story here is that this is what it costs to compete with the u.s. on the inflation

reduction act. they have pledged $13 billion canadian or about $10 billion u.s.. this is by far the biggest subsidies they have given an auto manufacturing plant. this is the biggest they have done for auto subsidizing for one of these factories. they felt they had to roll out this kind of money or else the u.s. was going to get this plant because of the roof -- the inflation reduction act. this is the first time we have seen this for the u.s. trading partners to compete for these factories. kriti: for our global audience and those stateside here, why canada? are they offering that incentive that we know a lot of european politicians and corporate european companies are looking at? why canada? brian: what i was told from our industry minister in an interview today is that canada competes very well with some of these key factors on workforce,

having a clean energy grid, being close to the critical minerals it requires to build these batteries. it has to be competitive on the money. money is huge. this is a big leap for trudeau's government to offer this amount, these subsidies that are this rich. but they see this as a global automaker coming to canada for the first time. it's going to be here for decades. they are betting that the economic value of this plant will more than make up for the amount of government subsidies. jon: very interesting to watch what could be a friendship of sorts between canada and the u.s. on some of the manufacturing. but there is going to be competition all the sub sitting -- subsidy front. thank you for the information on that develop and. coming up, the largest transit system in the u.s. planning to slash in missions. but low ridership is creating a financial nightmare. this is bloomberg. ♪

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kriti: this is bloomberg markets. i am kriti gupta alongside jon erlichman. today, the new york mta is announcing plans to reduce gas -- greenhouse gas emissions by 85% by 2040. but fewer new yorkers are commuting. the mta is the biggest transit system in the united states and has a $600 million budget shortfall, expected to increase to $3 billion in 2025. for more on this, let's bring in scholar woodhouse. walk us through this story. >> basically, the mta is going to announce today that they're going to start reducing their carbon footprint. i think we are seeing this around the country with companies, states, municipalities. they are all coming out with plans to start curbing their carbon foot plant. -- footprints. they are saying, this is what

we're trying to do. they are still trying to bring riders back. this is part of the climate solution. we have to bring riders back to help cut in missions they are also going to be updating facilities and transitioning their bus network to be more electrified. jon: i wonder if they have to make that case because we were just talking out tesla and the big push for electric vehicles. once someone commits to buying a vehicle, they might be commuting on the train a little less as well. skylar: it's a really hard argument to make. right now, what we are seeing is that around the country, they are trying to get riders back on all these transit systems. people have altered their ways and are driving in their cars or just working from home more. it is a really hard argument to make around where this is going to go. but the ev market is really hot right now. a lot of transit advocates are

saying that ev's are great, but we still need less cars on the road. jon: helpful context. obviously a big commitment by the mta. skyler woodhouse joining us on that reporting. in other news, as we referenced just a few minutes ago, it is creaky's birthday. this is a very exciting moment. what are you doing for your birthday, kriti gupta? kriti: i'm not much of a party person, some going to finish work, yet a takeout -- get takeout, and watch a movie with my dog. not only is it my birthday, it is also the inverse of this show. one year of you and me hosting together. jon: this is exciting. we have been doing this for 12 months. i am looking forward to continuing the journey. great to be with you as always. we are going to take a quick write. we will be right back with more bloomberg programming. for cree tea and myself, this is bloomberg. ♪

>> spacex's your rocket exploded after lift off in what it called a rabbit scheduled this assembly. the goal is to send humans back to the moon and deep space destinations including mars. elon musk tweeted he will try again in a few months. joe manchin is praising house speaker kevin mccarthy for putting forward a plan to cut federal spending tied to a boost in the nation's debt limit and