>> welcome to bloomberg audiences. i'm john hyland with "first word " news. the senate is racing to pass the debt limit deal passed by the house in kevin mccarthy. the legislation would impose restraints on government spending through the 2024 election and avert a destabilizing default. chuck schumer says lawmakers will stay there until the debt limit bill is passed. wildfires in canada have burned an enormous swath of land and never forced thousands from their homes--and have forced thousands from their homes. more than 6.7 million acres have been scorched, the equivalent of 5 million football fields, more than 10 times the average area typically burned this time of year.

british prime minister rishi sunak says his government is considering its next steps ahead of a deadline imposed by the u.k.'s covid-19 inquiry. administration has refused to hand over former prime minister boris johnson's diaries from the pandemic. they argue those are irrelevant to the investigation, leading to accusations he is tried to cover up information. the defense department will by satellite store link communications terminals. the military have praised the role that startlink criminals have played since the russian invasion. the government isn't disclosing the value of the contract. global news 24 hours a day on bloomberg aaron lupica original, powered by 20,000 -- bloomberg care and bloomberg originals, have a 20,000 -- powered by 20,000 journalists and analysts. i'm john hyland.

this is bloomberg. >> welcome to "bloomberg markets ." i'm jon erlichman. matt: and i'm matt miller. that's get a quick check of the markets session highs. s&p 500 up almost 1%. 4217 the level as the tech giants resume their climb. nvidia the biggest gainer, having the most points to the s&p 500 might now. you can see the 10-year yield coming down a little bit less than four basis points. 36064 is what we are looking at . investors are betting on a pause from the federal reserve because every federal reserve speaker has told us that will happen. dollar index at 1238. oil rebounding a bit, 2.64, on the rise to $73 73's -- $70.73 a

barrel. jon: retail has been a huge story today. we are constantly looking to that sector for signs of what is happening with the u.s. consumer. it still depends on which retailer we are talking about. an interesting -- macy's, which started the day as a laggard, has moved into positive territory. still working through inventory issues right now. nordstrom, a report that ultimately was a crowdpleaser, that company's stock up 4% as they are getting consumer headwinds right now. dollar general, obviously not all consumers are ready to spend, even if we are talking about dollar-store locations right now. 19% slide in dg. getting back to the technology story, you are right that nvidia has been a standout stock and a number of technology names are higher. i want to zero in on lucid group. we have the $3 billion stock offering. the company obviously needs more

capital as it advocates the uncertainty with its business. they've got that big backer in the saudi sovereign wealth fund. salesforce a standout with the dow, but unfortunately for those who are bullish, to the downside. the sales outlook pretty lackluster. it is a reminder that not all things in technology are rosie, matt. matt: no, we saw a bunch of software companies come out after the bill yesterday and probably drop, even after cathie wood recommended software is a better way into ai than hardware. credit conditions are continuing to tighten. we are witnessing marconi's on the verge of filing for bankruptcy--more companies on the verge of filing for bankruptcy. one analyst discussed how the trend is likely to continue. >> credit is the canary in the coal mine, and the equity market doesn't seem to be paying attention to it right now. quite frankly, the fixed income and credit markets are not

necessarily paying enough attention to the details. when we look at small private issuers, they are defaulting at an alarming rate at the moment. when we look at repeat filers, they have increased quite a bit as well. these are your weakest links, and your weakest links always go first. jon: and we have seen a wave of bankruptcies in recent weeks. katie greifeld has more on that. i guess if you look at some of the trends with chapter 11 announcements, one of the common thread has been companies with debt issues. katie: exactly. behind me i have the bloomberg bankruptcy index. you go back to 2019, it doesn't look as scary. we had a big spike in 2020. this looks at corporations with more than $50 in reported liability ,and it tracks activity, bankruptcy activity among that subset. kind of distorted -- $500 million, that is -- distorted by the spike in 2020.

if you train your eyes on 2022, it has been increasing quite a bit. we see more committees filing bankruptcy -- more companies filing for bankruptcy. if you break down the performance of the corporate credit market, it is the riskier credits that have been outperforming. up there in purple you have leverage loans leading the way and you have the triple c's, drunkest junk debt out there, posting year to date--junkiest junk debt out there, posting year-to-date returns. over the past year still negative when it comes to returns. matt: thanks very much for that, katie greifeld walking us through the bankruptcy picture. let's bring you the tcw founder and codirector of fixed income. thanks for joining us on the program. great to have you here. what is your take on rising defaults? are we likely to see more, and is it priced in yet to credit

markets? >> we think this is a slow trend that is going to go on for a little while. but i think as we look at it, credit is being withdrawn by the small and midsized banks after the margins with silicon valley bank. we expect this will be a slow bleed to come and as your last guest said, it will start with the smaller companies and work its way up. bankruptcy happens at the intersection of debt rolling over and some sort of calamity within a business or drop in revenues. basically with credit being pulled back but the banking sectors, a lot of these companies are going to be vulnerable. we are below market weight in terms of our credit exposure in the portfolios. jon: does that mean for those -- katie was talking a bit about this -- who have shown a risk appetite in the credit market,

you would anticipate some of the performance would pullback given the credit risk? laird: they made you find -- you showed the charts of returns, ig was doing well -- was coming back, i should say. if you have duration with your credit player in high credit quality, you will probably do ok. we think the major banks are a great place to be investing right now, with spreads 40 over the other credits within that index. however, i like the term "junkiest of junk" -- if you played in that space, you will find the defaults, and you will see systemically spreads go wider to compensate investors for those changes. you could be in and earn some yield over time, but you better get out at the right moment. we don't want to play at that cute. matt: i want to get your take on the federal reserve. it seems like all the speakers

we have seen the last couple weeks are telegraphing either a hold or a skip, because, whatever you want -- skip, pause, whatever you want to call it in this meeting, but the next meeting is priced for a hike, and if we listen to big people like over at blackrock, larry fink said he thinks we could see two hikes. what is the take at tcw? laird: i think unless we get more financial calamities, the fed is not going to be done. it rests on the equation outlook. this morning's number you have to discount highly because it is made up of two extremely volatile series that must economists don't put much weight into, at least in the short term. the inflation picture, i think there is a good chance that they will pause at this meeting. hate to be in consensus, but it sounds like i am. we do think the employment number tomorrow probably kicks in slightly on the strong side based on the diffusion indexes

that came out today and some other data points. our expectation is that absent more banks failing, or problems in the economy, unemployment rising, you will see the fed continue to ratchet up rates. it's the paradox of fixed income, the higher they take rates, the more calamitous the end will be. but they are not going to stop until they see rates -- until they see those calamities right in front of them. that's usually the story. jon: laird, just to tie it back to default activity, what kind of level of default activity would we need to see for the fed to put on the so-called brakes? laird: i'm not sure that the fed is going to be looking so much at default activity. they are going to be looking to systemic problems in the banking system. obviously if you get an '08 type of event were companies finance

themselves at 20%, are policy officials know that is not sustainable. what i don't think we are going to get to that point. what they are really looking at is the employment numbers versus the cpi numbers. our take on the cpi is simply that it is coming down. we've probably squeezed all we can out of goods disinflation at this point. the next thing you are going to see is they are going to get stickier because it will depend on wages, and until we see employment rollover, the wages probably stay in that 4 to 5% sort of range, and that makes it harder for the fed to feel comfortable they have done their job. my guess is they will be hiking again by july, probably another two or three hikes could be on the table. it really just depends -- the markets get petulant and when the markets decide they have had enough, spreads widen and volatility increases, stocks collapse, economic activity begins to slow down. that is when the fed will issue the pause notice. matt: thanks very much, laird,

for joining us. great having your insight. teaching know what tcw things of credit markets. laird landmann, director at tcw. we are seeing a split in the ai rally among stocks, with some like c3.ai falling as nvidia rebounds. this is bloomberg. ♪

>> usually we wait to have to find people. now we have customers calling us every day. >> you say the demand is huge. can you quantify it? >> we've had a number of inbound calls in the year, that we

usually have any year, and like a month. we are offering things so powerful that in reality i'm not sure we should sell some of this to our clients. jon: this is "bloomberg markets ." i'm jon erlichman, with matt miller. that was exclusive sound from the palantir ceo, alex karp. there has been a lot of hype around names like c3.ai, but that stock is falling today after revenue forecast that disappointed investors. analysts want to see more growth drivers that lead to revenue and ultimately help the company in terms of further justification for the stock. we've seen shares of other ai- related companies on the move as well today. i was talking earlier about how nvidia is outperforming. soundhound and bigbear are under pressure, a reminder to the unease that c3 was up last

month. matt: but very different size and scope. we look at nvidia, we are talking about a company that is worth about a trillion dollars. when we look at c3.ai, we are talking about a company that is worth $3 billion. far, far less, exponentially less. if you take a look at the market, bloomberg intelligence is saying that the release of artificial intelligence tools like chatgpt are set to fuel a decade-long boom that grows to about $1.3 trillion in total revenue for generative ai by 2032. for reference, generative ai brought in $40 billion in revenue last year. that is also really exponential growth there, jon, and that is what you have these multiples, 50 or 60 in forward pe's when you look at a company like nvidia. jon: yeah, no, absolutely. and obviously, the enterprise ai

application component is why a lot of people are curious about c3. on that note, the c3.ai ceo is going to be on bloomberg 3:30 eastern time. catch that interview coming up. coming up after this break, we are going to get perspective. the president and ceo of brp, a company that is known for jet skis and snowmobiles, but is also pushing more aggressively into the electric market. we will get the latest next. this is bloomberg. ♪

jon: this is "bloomberg markets ." i'm jon erlichman, along with matt miller. brp, the canadian maker of snowmobiles and other leisure craft, out with its latest earnings, reporting a jump on profit on better-than-expected

sales and improvements to the supply chain. joining us, jose boisjoli, president and ceo of brp. obviously you have had a lot of interest in your product going back to the pandemic, but since then as well. we keep talking about the outlook for consumer demand, a lot of economic headwinds right now. what can you tell us about what you are seeing in the business? jose: it's a bit funny situation, where everyone, many people are pessimistic about the macroeconomic, but when we look at our customers, we always follow unemployment rate. i think it closed at 2.4%. we always a look at the inflation, 4.5%. things are getting better. but we also sell our product to hire household-- higher household income family. the average is 35% of the u.s. american who have household

income above 35%. in our case, 70% of our sales is for people above that percent. all those combination is benefiting in our industry. we have good sign, we have good result for q1, and we are confident for the end of the year. matt: where is the most growth, jose? obviously, the jet skis are famous worldwide. can-am products have grown to that level as well, especially with the spiders we all see on the road now. as jon said earlier, breaking into new areas, specifically electrics. where is the most growth? jose: in this period, watercraft are extremely popular. the sales are well ahead of last year.

last year we had supply chain difficulty. this year, the inventory is out there and customer is there. we have good momentum on off-road. we always gain share in the side-by-side industry, which is the biggest industry in the business. we just launched a new atv platform that is hitting the market in may, june, july. and then we have momentum in about every single product line that we have in the business. jon: and then just building on what matt referenced, at what point in the future -- what is the breakdown of how much of what you offer is electric going forward? jose: we announced two years ago investing a million-dollar to electrify our product line. the fresh product, which is a

snowmobile for rental operator, will hit the market this december. it will be limited volume for the first year. we said publicly that we target to electrify all our existing product line by the end of 2026. also we have announced the launch of a two-we'll electric motorcycle. -- two-wheel electric motorcycle. and all of those products are in development right now, and the first one that will hit retail will be the snowmobile this december. matt: it's interesting, jose, your stock jump from 60 to 120 during the pandemic. we saw companies get a big boost from the extra spending ability and the time on their hands, etc.has it come down too far frm there?

what do you think about that investors have kept faith in your product -- what is driving that? why are they confident you can continue to deliver profits? jose: i think we have a very strong base. i've been doing this for many years now, and to date we have 8 solid product lines. obviously i'm biased. very competitive product in each of our product line. we have 3000 dealers in 130 could countries, very good partner for us. on top of it significantly diversified our manufacturing footprint. when you take all of this, we have a very solid foundation. now that we are entering into the power sport business and we have about one third of the power sport business, we are investigating the electric

mobility segment, then we have good foundation and we targeting to continue our focus on power sport, but also investigating other segment for growing the company. that is why we had a very good last 10 years and we are optimistic about the future. matt: all right, jose, thanks so much for joining us. great to get you want talking about not only the ski-doos, but sea-doos and can-ams and the electric power vehicle you will introduce as well. we want to get to the markets because they continue to rise. s&p 500, gain at 4222, highest level we have been since august of last year. the 10-year yield coming down, 3.6083. the all-important nonfarm payrolls number. jon: laird landmann of tcw saying before, he is not out of

consensus come the idea that the fed may be ready for a pause. one of the reasons tech stocks are getting a second look as we start the month of june. for matt miller, i'm jon erlichman. this is bloomberg. ♪ ange? 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

romaine: big tech doing its job. cyclical trade awakening from its lumber. live from bloomberg headquarters. romaine bostick, kicking you off to the close. nine of the 11 s&p sectors are in the green. about 21 of the 24 subgroups are also higher on the day. chips, banks and media companies higher on the day. no real narrative but big tech is doing its thing. apple had a fresh 52 week high on the rally we