jon erlichman: welcome to bloomberg markets. matt: it was an incredible rally last pushed us up to s&p 4450. we are off a little bit but not by much, looking at 4447 on the benchmark index. yields are coming up seven basis points. the debate ranges between will dudley and morgan stanley. or .5, two or three? bloomberg dollar index gaining, this is one of the calls from the beginning of the year where everybody thought the dollar would decline against major trading orders but that has not

and out. nymex coming out two dollars a barrel. we were close for trading yesterday so nymex will be up. i think the global benchmark is down for the close on tuesday. what are you looking at? jon: lots of different stock movers. meta-in focus, we are waiting on the launch of a twitter clone this weekend we will see how that plays out. let's try to crunch the numbers on house that's what they can. i should note that here in canada you have continued tensions between the government and meta-, the government saying they won't advertise on meta-platforms. two key telco player saying the same thing. shares are up almost 2% today, the company pushing into the chinese market with mrna vaccines at ubs and we will talk about strike worries. right now those stocks are off 2%. of worse now we have been

watching rivian shares today as the company making those electric man's for amazon for the first time getting into the european market with some encouraging analyst commentary helping the stock on an intraday basis right now, up about 2%. matt: rivian, firing on all cylinders, though i'm not sure what the flint phrase would be for ev. ed ludlow will be interviewing this eof rivian in a few hours. looks like the stars are aligning, finally, maybe again, for this company, finally delivering these vans outside the u.s. for the first time. how does it from your vantage point? ed: running on full charge, something like that? as they noted in their up great of the stock, all the headlines recently have been positive. i guess the question for later today is was there a turning wait for production?

they did really ramp up production through expectations. it's a technology focused story. what they did was take the shelf in-house. it required fewer power semi-conductors given flexibility for the base on the semi conductor side. and as jon noted, they went outside the u.s.. 300 units to cities in germany. any news that's positive on that relationship, the market generally regards it as positive. jon: to put more numbers behind the story, for amazon their goal is to see what, 100,000 of these vehicles available by 2030? ed: yes, 100,000 by the end of the decade. i would caution that the original goal was 10,000 by the end of 2022 and so far amazon is running about 3000 nationwide

here in the u.s.. the way the outlined the original schedules, that was their story. [indiscernible] 2022 was a horrible year. they had to reset expectations. they just missed their full-year guidance by 25,000 units in a single factory in norway that on paper is capable of thing so much more. another question, is that 50,000 [indiscernible] matt: looks like we are having technology problems. but telecommunications, not ev, so hopefully we can get that fixed and we will get back to ed ludlow later today. you don't want to miss his one-on-one interview with the ceo of rivian at 4:30 p.m. new york time and we will be broadcasting that on bloomberg television. let's stick with car news here. a growing pile of delinquent car

loans are threatening to deliver losses to a corner of wall street that until now has been a sea of calm. covering auto loans, scott this is fascinating. i didn't even realize, we hadn't seen a default on these kinds of securities since the 90's. we even made it through the great financial crisis without defaults on i guess car loan subprime? >> that's right, these bonds have a reputation for being rocksolid, though they are built on something by definition that is less than perfectly good. subprime is a car loan from someone -- for someone whose credit score is not right but yeah it has been since the 1990's that one of these has essentially taken a loss on their principal and deliver losses for investors.

jon: i guess the 1, 2 compared -- concern, scott, as you indicated on the one hand, there is a worry about people being able to, you know, pay on their loans, but also the fact that we have seen and ask lotion of issuance over the last decade. scott: that's right. yes, they came through the financial crisis and did well. everyone thought that was great. let's do more with these. these are safe, not subprime mortgage bonds. they became popular. the yield well. they are a good thing. investors like them because they deliver good returns and have been very safe. a combination of those two things is a recipe for more issuance. more companies came along in the last 10 years and got more comfortable with them. now this happens. some companies got a little bit carried away. the pandemic through off their models a little bit.

they started making loans people couldn't repay. matt: prices were skyrocketing. making it more difficult as well. a couple of these lenders shut down. so it's not like consumers, i mean a lot of them aren't paying but some can't because it takes months to move that kind of network around a little bit. the other interesting thing i found is that these loans are often incredibly over collateralized, right? habeas, i read 35% over collateralized is not unusual. except now. scott: that's right. investors know that a lot of people are going to default. so they built in what's called over collateralization. there's more loans in the bond then you need to repay investors

. what's extraordinary about this and by the way this reporting is by my colleague, carmen. i'm standing in for her as her voice is worse today. what's extraordinary about these is they have earned through all of the over collateralization. there is no longer any principal left. they are on track to not be able to repay investors and that's pretty rare. matt: it's a great story and i recommend viewers read it all the way to the end because there is so much fascinating detail, including the over collateralization piece and the payment piping in the story. carmen did a great job and you also did a great job standing in for her. thank you very much to scott carpenter. a reminder by the way not to miss the one on one ed ludlow interview with rj's karen at 4:30 p.m. new york time and you

can catch it later on bloomberg television. coming up, hundreds of thousands of ups workers on the verge of a strike after union negotiations fell through. we will talk about what it means for the company, the stock, and the broader economy. this is bloomberg. ♪

jon: this is "bloomberg markets ." time now for our stock of the hour. watching shares of ups under pressure. we learned that more than 300,000 workers potentially close to striking. the company failing to reach an agreement with the teamsters that could threaten supply chain

stores. if you don't get a deal reached here, matt, in british columbia we have seen what happened you get striking workers at the ports with all the supply chain headaches. now in the case of ups, a lot of uncertainty right now on this one as well. matt: yes. they still have a month left, if i'm not mistaken. even if talks have broken down now, i feel like it could still happen. let's bring in simone to talk about this. she's been covering the story for us. what do we know about the state of negotiations? no more meetings but we are at the beginning of july. simone: the people who watch it closely know that there was a lot of incentive for the teamsters to drag it out. they wanted a final offer they could to union members and then they could return to the table when they didn't accept the deal and ultimately put the pressure on ups to give them the best deal possible.

it's notable that some agreements have been reached on various things, for example companies that said yes they will buy air-conditioned vans. they will start doing so in 2024. matt: also? simone: the teamsters want more, they think they have a lot of leverage given the reliance on the package system and we do really expect them to bush this as hard as they possibly can. jon: i guess given that there is this lingering uncertainty for the economy, and in the case of fedex they have been cutting costs. i guess there is a delicate dance that ups has to do when they try to anticipate what their own business is going to look like in six months. simone: the ups ceo got a lot of plaudits from wall street for roosting the margins there opposite the sort of fedex strategy. you know, people have gone back out to shops. they are going out and buying

stuff rather than buying everything online and that has had an obvious impact. that said, ups ships about 24% of overall the shipping in the united states. according to pitney bowels. that shipping carrier going away , fedex, usps, the others wouldn't necessarily be able to make up the volume and then you have sermons about broader supply chain snarls. matt: you know that monday was the hottest day of all time in the world. i would want air-conditioning in my truck, too. simone: i think some of this really is about commonsense benefits which is why ups has given ground there. other things are just wages. wages are putting pressure on all sorts of different companies in terms of competing for talent. whether it is truckdriver talent or other kinds in their. truck drivers can make a $5,000 full-time per year. some, even more. matt: simone fox, thank you very

much. we will continue to watch this story closely, it's so important not only for the stock, for employees, but the broader economy as they make up such a huge art of our postal system. john, the owner of facebook, meta, 20 -- trading at a 52 week high as they are then -- set to launch their twitter rival, thread. when does this start? jon: that's based on what was in the work. that's the station. the intelligence team is putting numbers together on why this could be successful based on other products that instagram has been able to rollout, like reelz. the tensions between mark zuckerberg and elon musk are one thing. you just had the canadian government today saying they will not advertise with instagram or facebook because the company is basically going to be blocking news links in

canada provided through different media players. you have those two stories, let's call them threating together at the same time. matt: absolutely. we knew it was coming in canada is the latest entry where there will be no more news on the unless they pay, right, the publishers, for that. zuckerberg and facebook, meta, have said they are not willing to make those payments. this will be a bit of a standoff until it is somehow resolved. jon: now you have some players here in the business world in canada, a media company based hearing back and a cable company that have said that they will also not be advertising with meta on its various forms. now we will be hearing a bit more from the minister in charge of all of this later on bloomberg. we will see more what he has say but yes, you have a cage matching and it just as we would

at some point c1 between mark zuckerberg and elon musk. matt: no news, no advertising, facebook just be our parents arguing politics. coming up, we learn a lot more about the bed interest rate pause -- fed interest rate pause next month. we get the june fomc minutes and we will go through those. this is bloomberg. ♪ oh booking.com, ♪ i'm going to somewhere, anywhere. ♪ ♪ a beach house, a treehouse, ♪ ♪ honestly i don't care ♪ find the perfect vacation rental for you booking.com, booking. yeah.

jon: we are just a few minutes away from the minute. -- the fed minutes. however you want to describe it. matt: don't want to get it wrong. [laughter] jon: can we settle on hawkish for now? let's ask alexandra barrage, former executive at

davis rights will leave it to you on the language but i'm most curious about what you will be looking for in these minutes. alexandra: first, thanks so much for having me on. as we saw in june, we saw a pause in rate hikes in part because i think the fed wanted more data on the impact of its monetary tightening policy with or data across a longer period.. based on recent statements from chair powell we should expect rate hikes likely across the year with four more meetings where that could occur. as for the minutes from the past june meeting, we could expect a few points of focus from the fed. the first is just understanding they have a dual mandate. that's the mandate of controlling inflation and prices as well as some orting maximum ointment. along the lines of inflation, we

are not close to the 2% inflation goal the fed is committed to accomplishing. you know, that said we do see some signs of economic growth here in the u.s. labor markets are tight but at the same time for the past year or so there has been approximately growth of 283,000 jobs per month. so those are positive signs. housing markets in some respect have gotten weaker because of rising interest rates. at the same time, prices have come down. seller, buyer, you have different things to work -- look for. in addition i think one thing we will see a lot of focus on his credit tight in general. a lot of the midsized banks are facing potential headwinds. back in may the fed did a survey where banks, putting those in the midsized category, were orting a tightening of underwriting standards. taking less risks overall, so

expect the fed to focus on that as the issue of their minutes from the meeting. jon: on the subject of the banking sector, there were those who said did we not see thanking turmoil earlier this year the fed might have an further along in the rate hike path. bearing the question, what is that health of the system right now especially if we are going to see more rate hikes ahead? alexandra: i think in general the fed continues to beat the drum across the board that the system is safe, sound, resilient as a whole. in night of the l years the saw beginning in march. it weighs on the top of the minds of bank regulators, including the fed. what we may see is an increased focus on credit tightening in light of rising interest rates and failures that we saw. one positive note we saw in the minutes from the may meeting is

that it appears deposit out flows have largely stopped and were very limited to a certain number of banks. on the positive side, it seems like out lows are under control. but bank regulators are always going the monitoring or potential future stresses in the banking sector so we will be watching that mostly area -- closely. matt: are they going to have sharper teeth? they were watching the plunge into failure, commenting the whole time to be fair but it didn't really help stop the bank run. do you expect more regulation is going to help these, these regulators do their job better? alexandra: so i think that is a pretty interesting question that pre-much divide on the one hand, supervision, will that be stronger and more robust?

the governor has made a push for that. as opposed to more regulation to try to get at the root cause of the failures we saw. at the end of the day it's pretty clear the root cause of a lot of these failures was poor risk management so it's too early to say what it could look like on that front, but by the same token the largest banks are very focused on basel three. that's what we expect to see in terms of heightened capital requirements in the next few weeks. the largest banks are focused on that because it doesn't look like there will be a capital mutual result anymore. we are in fact expecting more capital requirements from the largest banks with possibly more banks above the $100 billion threshold subject to potential capital regulations. i would say that in terms of regulations, that's where it focuses. jon: -- matt: matt: there is a great -- matt: there's a great debate going on on where the 10

year yield will go and doubly points out new asymmetric monetary policy regime meaning that they will skew on the side of higher inflation since it was below 2% for so long. do you think they will continue to allow that or do you think they really want to bring it down to two? alexandra: the fed has stated many times their firm commitment to getting it down to 2% and the russian is when will we get there and how will we get there? i would expect the fed gradually and cautiously in terms of future rate hikes but at the same time we know from the chairman's testimony that if the economy evolves as projected the appropriate level of federal funds at the end of this year is projected to be 5.6%. those are some data points but again, gradual approaches are what i would expect. matt: great to have you on the program, alexandra barrage there on the fed.

we are just about to get the release here on bloomberg television. i'm matt miller, for jon erlichman, this is bloomberg. ♪ 5-hour energy. think of it as 5-second coffee. for when you wake up too late to make it. or you don't have time to wait in line for it. or you're just too busy for a coffee break. 5-hour energy. the 5-second coffee. is it possible to protect my business from cyber threats? 5-hour energy. it is, with comcast business. helping every connected device stay protected. yours. your employees'. even... susan? -hers, too. safe. secure. and powered by the next generation 10g network.

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>> this is bloomberg markets: the close. romaine bostick is off for the day. we are awaiting the rightists -- latest release of the fomc minutes. let's get to michael mckee who is standing by at the federal reserve. mike: these minutes may raise more questions about where the fed was three weeks ago than they answer. while the decision to leave rates unchanged was unanimous, during the discussion the committee was divided. quote some participants indicated they favored raising the target range for the federal funds rate 25 basis points at this meeting, the minutes say, or that