>> welcome to bloomberg markets. matt: concerns about the european recession, no word about a u.s. recession as well as flash pmi. s&p 500 down .4%. investors buying bonds, hoping to seek safety from a rate hike recession. bitcoin rising on optimism that big financial institutions will

be able to kick often etf. dirty $1150 is the price -- 31100 and 35 is -- 31,000 is the price. jon: we now have the s&p energy subgroup down 11.5%. individual movers, 3m at this point week or after earlier gains. penguin $10 million over a decade to settle the forever chemicals claims and we are also watching shares of starbucks down 2% as we have seen the strike actions at 150 locations. we will continue to track those stories we know about richard

branson's space travel ambitions and the company is looking to raise cash for those efforts, weighing on shares. a touch of weakness at nike. wells fargo lower the outlook for the company as we get ready for earnings from the shoe maker heading into next week. matt: the stockmarket rally faltering. the trouble in property market persists and real estate has been a huge topic. the fed chair jay powell said the bank is watching commercial real estate closely. chairman powell: it is which banks have high concentrations of real estate, and that is not seen in the large banks but seen in some of the smaller banks. we have identified those banks and there is a supervisory tool, where we work with banks to try helping resolve those issues and

dealing with what is happening. what is happening in the office space, there is an issue from people working from home and there is less demand and a one-time adjustment going on. there are other pockets of commercial real estate where there is softness. we are working with banks to work our way through.

let's discuss the real estate issue with distressed debt. i have a viewer writing and asking, if the big boys are willing to hand over the keys to these properties rather than

continue paying, what does this tell us about the macro view over the next 18 months? >> thank you so much for having me today. that's a great question and i think the macro he is highly uncertain especially in segments of the economy like office space and commercial real estate. they have gone through a fundamental transformation in terms of how workers behave and how much time we spend in offices and at home. i think there is a lot of takeaways we can bring into other parts of the economy into the corporate bond market. it's not a universal bad or universal good. instead, we're looking at this cycle is more of one where we have a series of challenges and headwinds that affect different sectors at different times. jon: walk us through some of the mechanics within the high-yield market. let's say there are those who

need to tap that market right now -- what is -- what does the process look like in what are the investors and what questions are they asking? >> in the high-yield market, we basically saw an issue restraint last year. there were a lot of companies that had afforded themselves the luxury of time and the ability to wait out some of the market volatility and rising borrowing costs because the resume is proactive activity in refinancing, pushing out maturities and raising liquidity and putting cash on balance sheets for a rainy day. now we are getting to the point in the u.s. high-yield market where companies are starting to see 2025 maturities and say if we want to maintain our investor credibility, we will need to start thinking about how we will address these sooner rather than later. i would say the market is generally open and receptive to a wide swath of companies. when you get into the more stressed companies, it's a very different issue. you have a massive delta between

existing borrowing costs and prospective borrowing costs. yields have risen so much and investors are big much more circumspect and saying this is an ok company and a bad capital structure? in which case, i'm not a surly willing to throw more money at the problem. if it's truly just a bad company with the bad capital structure, then investors are just walking away. it's kind of like in commercial real estate. matt: if i look at cmbs i wonder how much longer regular mortgages will be able to hold out? if i look at a chart from a couple of days ago from apollo showing the average new mortgage payment, absolutely bowling. this chart is 20 years old. the average over the last two decades has been somewhere between 500-$1500 and all of a

sudden mortgage payments are $3000. can the american consumer continue to support that? >> so far, we have seen a nice rebound in the housing market. this is one of the markets that really had the most pressure as the fed started to hike mortgage rates. a lot of the expectations for housing slowed down significantly. there are a lot of macro factors at play like the imbalance of supply and demand and the fact that we have the thirty-year mortgage structure in the u.s. which affords a lot of borrowers an awful lot of time to wait for rates to readjust. there is no real need to refinance like in europe or the united kingdom where you have more resetting of mortgages on a fairly regular basis. in terms of demand for new homes, the potential for mortgage rates being so high, it's definitely been something people are concerned about. at this point, we have questions around the momentum of consumer discretionary spending when you have increased things like mortgage expense for anyone who

might be to the home market. we are also now seeing rents are coming down a bit. that has a leading indicator in terms of what the inflation side of things on the housing side of things is and also the ability for the consumer to maintain its base levels of spending. jon: shifting from housing, the stock market was sliced and diced and tried to make assessments and risk tolerance. when it comes back to the issue of distressed debt, sector by sector, are there any themes emerging now? >> there are some themes emerging. the types of themes that are emerging are different from what we saw in much of the post gse era. g --fc

>> meta getting attention at the canadian government passed the online news act. requires digital platform to play -- pay local creditors. meta responded saying it will end news on facebook and instagram for all users in canada. keep an eye on shares as well today. which have been big perform so far this year. tech is losing it was bit of steam. stocks are up 1%.

more perspective on this development. >> mezzo has said if it goes

into law and acted the way it currently is warranted, we are out of here but there still is time and discussions are ongoing including mezzo and google which is a similar position. they could very well back away from the precipice of those roles are more to their favor. >> the shares are up as we saw and maybe analysts or investors think meta is bluffing. it is a big market to walk away from as we were just writing earlier this week, more than 40 million people and climbing. these laws are likely to be enacted around the world. how will they avoid it if the u.s. plays such a law in place? we have seen the laws in european countries and australia. >> these laws are not happen for meta, it is a disaster for the company. date need this. they have beginning the content for free for years. they are not happy they have to

pay for it now and that is why they are speaking as heavily as they -- swinging as heavily as they are. it is an important metric of discovering content for them. driving traffic to media platforms and generating platforms they need as it pivots toward what it thinks is the metaverse. you don't just walk away from an audience and say no to that kind of revenue. if this happens, they devalue the reason people use the platform if i'm using instagram and not getting my media, i will spend less time on it. there is less opportunity for me to use the platform overtime. that leads to audience disengagement. jon: we seem to be focused on meta. matt: will doesn't have any as far as i can see.

if i can link to other news sources, what would? i use google for? carmi: google is under mortal threat, targeting its core advertising business. if this falls under threat and google doesn't figure out how to monetize media based content, it is in a bigger world of hurt then meta would be. threatening the government with nuclear war knowing full well they will get with bigger blowback. canadians and citizens and other countries will easily figure out other ways to get the content they need and will very happily leave the metas and googles behind. jon: you mentioned ai, it is generally true that technology moves faster than legislation or

new laws and that whole ai wrinkle and how that will impact news is another ball of wax. carmi: it will but the difference is the artificial intelligence community is actively calling on governments in canada and the u.s. and around the world to legislate it. they recognize the threads of unmitigated ai are more significant than they sell with social media. the tension for destruction of economic markets is larger than they have seen and they want the guardrails in place. it is unprecedented in the history of technology. it is worth watching and certainly meta and google have the most to lose if they don't figure it out quickly. matt: what do the publishers think? if you can't find news on google or meta, is it going to go

straight to nyt.com or bloomberg.com and binder news that way? carmi: i suspect they are working for alternative channel so that consumers can switch from one to the other. there will always be a strata of consumers who aren't going to make the investment and take the time and unfortunately they could be lost and see a significant increase in media platforms. matt: what a fascinating story. carmi levy talking about this news story. carmax shares surging. we will tell you why. this is bloomberg. ♪

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jon: time for today's for what it's worth. $1600, the average price for a vehicle so that carmax in the latest quarter, a decline of 5.5%. high interest rates impacting demand, user market and impacted by a rebound in the production of new vehicles. carmack shares getting a lift but -- carmax getting a lift a little. trying to take some market share it with that. matt: we talk about the average mortgage rate at $3000, consumers looking at thousand dollar car payments. we are seeing default rates pick up here to a real concern and something to keep an eye on in this economy. jon: this is bloomberg. ♪

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>> after the best week of gain since march, global stocks flip-flopping after the worst weekly loss since march. getting you off to the close on a friday afternoon with investors worldwide shifting into assets at the central bankers from asia to europe to u.s. given hawkish signals on monetary policy. bloomberg dollar index to the best week we have seen since going back to early may. german yield down system most since april. five-week run higher for the s&p