>> welcome to bloomberg markets. i am matt miller. a quick check on the markets as we wrap up the week, the month, the quarter and the first half. we are looking at big gains on the s&p, up at a session high, 44.5 the level.

they are buying it today and they are buying oil as well. >> 7023 on the petsmart basic, we look at the contract it is all four quarters in a row. longest losing streak in over 30 years. we have been watching the market cap move higher today. a cross through the $3 trillion mark, and it is still holding well above that level in terms of market cap shares sharing of $193 apiece. >> we heard from tom forte who said there will be challenges ahead for apple.

>> me think about the 3 trillion, it's mainly on the back of the iphone. they continue to perform very well. when you think of the next trillion, you think of is in pro, the augmented reality and virtual reality, there are a lot of structural challenges for apple. >> let's talk more about apple. the large impact that tech is having on the stock rally in 2020 three. christina hooper joins us. she is the chief global market strategist at invesco as well as bloomberg technology cohost. let me welcome you to the show. thank you for joining us. let me ask what you think about this. number isn't incredibly important in itself, but no company has ever been worth $3 trillion. how do you view this performance of apple? what it is a number of make a cap tech companies that have tonics really well, and

certainly, excitement around ai has helped fuel this. but really this is a story of expectations. this is driven to make a cap tech phenomenon we've seen. >> we've talked about this earlier. it is interesting to see apple in the spotlight as the nasdaq 100 has the best first have ever, even though they haven't really gone big on ai. >> the lead of the bloomberg market wrap this friday is the big seven. you see them on your screen there. it is such a big contributor to the year-to-date rally. it was the big five, apple microsoft, nvidia and alphabet. a lot of that was ai focus. you distinguish apple because they resisted a temptation to jump into the ai hype. we have been writing a how this

sustained rally isn't actually much of a visual pro for the vr headset. if he saw the city, there is a street high-priced target, and i like to look at technicals. this is an overall stock. 30% upside is able to expand the margins. people tilt towards the higher end iphone. higher-margin product. it also unlocks more services and software revenues. it is just being a juggernaut at the moment. >> a lot of people are talking about rsis. when we talk about the tech stocks or broader market, how much to technicals like that matter to you? >> we want to think tactically as well, but there are a lot of different pieces of data you want to look at. i think the bigger story here is the expectation is increasing

with a slow down. perhaps not the recession, but certainly the slowdown. i think that has driven a lot of this excitement around technology, particularly the magnificent seven cohort of technology stocks. it is a story about the economy and expectations around it. >> this is a really interesting part -- point from this money. we say who cares about this three chilean dollar milestone, one group is thinking of employees who have an important percentage of conversation being stock based and tied to performance, so want to throw that out there. there are loads of people after the drop that might have thought when is apple going to scale those heights. they have read my question is, do we treat apple like a haven? we think about this macro picture, we look at the balance sheet and the productive ability of its earnings. that is a longer term view on a stock read certainly, this is not alone. they are the poster child right now, but there is a small cohort

of stocks that are treated similarly. certainly, they been helped by lower yield. i think this is a bigger story about long-term excitement and changing perceptions. you are right. there is a perception that these mega cap tech stocks are safe haven stocks. thus far, that has proven to be the case this year. but we have to recognize that there is significant volatility that we seen, historically, and there could be a significant ship in markets when they start to anticipate an economic recovery. that could cause a rotation to smaller caps and cyclicals. while i certainly believe there are long-term opportunities for a lot of these tech names, we could see a rotation later in the year that leaves tech behind. >> i have a viewer who is

writing in with essentially this question. after and showed the big seven cap stocks that have led the rally, this viewer wants to know if we see equities stole. is that what you are hearing from clients or advising them? >> it is amazing how much money is in cash on the sidelines. we are encouraging deployment into diversified portfolios. that includes equities and fixed incomes, but in both, if one wants to be tactical, they should be positioned defensively. that seems prudent given where the economy is heading and where the stock seem to be anticipating. but again, we have to recognize tactical is short-term. we could see a rotation to a more risk environment.

both within equities and fixed income and commodities. >> i know you are going to take a long-term view, but i found the last two weeks fashioning. last week, the biggest weekly drop since march. this week, a big spike in yields with a pullback today. a focus on the fed at the end of the year with potential of traders. and jay powell with a recession. how does that impact the technology sector. it is a haven in certain parts. >> it can be problematic, especially with the 10 year yield going up, if we see longer-term yields going up. i think that will have exerted some downward pressure on technology. but i am going to argue that i am not certain the fed will hike again. i think this is very important to recognize that if we look holistically at the data we've

seen, really, the concern is around wage growth, believe that other data that suggests that the fed could sit on his hands, including pce this morning for it we are moving in the right direction, as well as michigan inflation expectations, but one year ahead number went down significantly from last month, and i think that is an important part of the calculus for the fed. last june, this was inflation and inflation expectations that cause the fed to move from 50 basis points to 25. it also can cause the fed to sit on his hands. >> passive tightening is what we are seeing as inflation comes down, if the fed holds higher for longer. that is the message that has being be into our heads for the last couple of weeks. do you expect cuts any time soon, because that could show a cut next year. >> i wouldn't be surprised if we see a cut, but i would expect to see one before march. i think it is important to

recognize that the fed wants to keep rates higher. this is been the opportunity to get out of the artificial lower rate environment. this will not have a trigger finger in terms of cutting rates quickly. there would have to be very significant economic damage for the fed to start cutting rates quickly. i think the catalysts is inflation data. the catalyst for cutting rates is not improved. it is economic damage that is significant. >> thank you so much for joining us. christina cooper and bloomberg tech cohost ed ludlow. thank you so much to both of you for joining us. coming up in our stock of the hour, we will look at how the supreme court decision on student loans of x companies in the refinancing business is like so five. that is next. this is bloomberg. this is bloomberg.

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>> joining us to silvio to boris, from the advanta store which develops consumer reddit scoring models. to have you on the program. thank you for joining us. let me get your take on supreme court decision and the idea that many americans are going to start having hundreds of dollars in loans a month to pay back now. >> is a big deal.

400 $30 billion deal that just is from the supreme court making a decision on. this is bigger than the federal reserve interest rate hike. the reason is that it directly impacts consumers, as you mention. lots of consumers are going to have to pay an additional monthly bill. in addition to that, it will impact their credit scores. we just published an analysis that shows that on average, the national average credit score is 702. it could take a hit or decline as much as nine points. that is a big deal. >> how much are you worried about default. a lot of consumers, about 8% are already looking at the balls on other loans, and now that you bring this in, they have to bring in more, and that could rise. what do you see in terms of defaults. >> overall, there is not much to

worry about. the average consumer is actually doing quite well. the average vantage score is seven or two. prime starts at 660. the average consumer actually has a prime credit score doing quite well. there are storm clouds on the horizon. consumers will have to spend more money every month they may not have budgeted for. it is a one-two punch. first, you have a student loan forbearance ending, and then, when consumers thought they will get their loan forgiven and they found out that it is not forgiven. the impact in terms of delinquencies could increase or seem to have already done that through may with the advantage of the credit game. late payments increase across all credit categories. but there is still a relatively low historical level. the only exception is auto loans were we see auto loans and think -- the link with these near

prepend, level spread the headline is healthy, but obviously, there is some great clouds on the rise in. >> what about people who are getting credit. cars for example. how much of them or how many of them use vantage score, and how important is it for them to keep things at a certain level, say 740. >> over 3000 banks, including the top banks, the top fintechs, the use vantage scores, so that is one of the most broadly use credit scores for consumer lending in the united states grid we are going at 30% a year, which is two to three x, the overall market. it is important for consumers to keep their credit scores up. what we are seeing is lenders are becoming more cautious. in the most recent credit score, that showed that they were

actually across all credit categories, auto loans, credit cards, mortgages, lenders were pulling back and reducing the account openings. there is a trend we have to watch. obviously, that is what the federal reserve wants to see. pulling back on credit, and this decision by the supreme court is actually going to accelerate that and reduce that going forward. consumers, particularly consumers of student loans, they should take this opportunity to resume payments because the silver lining here is consumers that resume payments of their federal student loan will actually give them a chance to bump up the vantage score critical -- credit score pray that is the silverlining. >> much does it hurt if you are delinquent on one month or two month payment of your student loan in terms of your vantage score? what is the effect? >> we modeled this and publish this analysis.

we estimated 34 to 76 million consumers will have a difficulty resuming a federal student loan. that equates on an individual basis with a drop of a credit score by 80 points in the worst case scenario. the average across the national average, we expect to see with this decision a decline of the average vantage score of about nine points. overall. but that is the worst case scenario. we are going to hear from president biden later today. i think his admh been planning for this but they are not surprised by this. there may be some additional steps that the presence of the united department of education takes to soften the blow today. >> let's bring this graph up today. in terms of what consumers borrow, mortgages make up the biggest slice of this. obviously, student loans are a bigger slice than cars. are they more likely to skip a

student loan payment and they are to skip a car payment? >> that is what we refer to in the industry as the priority of payment. the reality is, a lot has changed in the pandemic. what consumers value in terms of paying back, versus has changed significantly. it used to be that a credit card was worth the bottom of the stack of payments. now they are back towards the top because of course, we use credit cards for travel like uber or television and streaming. so it is difficult to know what to expect next, but i do anticipate that federal student loans will be near the bottom of the stack. at the same time, as consumers see the impact on their vantage score and credit score, they will put away some cash to make sure they can make payments on time. as your viewers are aware of in this industry, they will be

monitoring things very closely because of course, the lower credit score means often, more frequently, no. there is a higher price on the credit product. >> great spinning time with you. i hope we get you back on the program. the ceo of vantage score. coming up, reports that the sec is already throwing cold water on applications for a spot in bitcoin. we have seen that from fidelity and from blackrock. that is a result of the price of bitcoin coming off of its high. this is bloomberg. this is bloomberg. ♪ (upbeat music) ♪ ( ♪♪ ) woah. ( ♪♪ ) ( ♪♪ )

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for the next iteration of the filing, the cv has confirmed that they will refile on behalf of fidelity, so they will keep pushing for it, but why is the sec fighting this so hard. bitcoin is a commodity.

it might not work out for them. there is a lot of caution on the sec, and they have that under their watch. the future etf is already in full force, including leverage future etf. the future is really under the purview of a different agency here. the cftc. it would be much kinder to the crypto industry than the sec has in the last several years. not even the last year, but to the point you're making, but there is a push for an etf. it is different bitcoin. >> sonali basak. have a fantastic holiday weekend. i matt miller. for jon erlichman, this is bloomberg.

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romaine: six months later and seven stocks higher equals the best first half in a year in the history of the nasdaq 100. live from bloomberg world headquarters in new york, romaine bostick here kicking you off to the close. the year started off with a bang in u.s. equity markets. it looks like we will finish out the day similar to how we started. we will close out with a more than 1% weekly going for the nasdaq, 2% for the standard of course, 500, 10 of the sectors on the week are higher. treasuries, in a holding pattern. the dollar, relatively unchanged.