matt: welcome to bloomberg markets. let's check what's going on in the markets at this hour. we see the s&p and the nasdaq down, the dow jones actually is up for most of the trading session. tech stocks are weighing heavily especially apple on the s&p and the nasdaq where it is much more heavily weighted then it is on the dow. we see the s&p down 0.4%. we've come down from 4588.

this is the fourth consecutive -- the third consecutive day down this week because monday, there was no trading. the 10 year yield has been climbing and is no coming back down as investors by the debt. the 10 year yield is at 4.2698. the direction i think is significant. the bloomberg dollar index is continuing to gain, it's the highest level we've seen this year, real strength there is the yen falls to $1.47. people are watching this very closely, the dollar strength. nymex crude is coming back down a little bit at $86 $.52 a little bit of a turnaround and a commodity that was gaining.

abigail doolittle joins us now with a quick look. abigail: it looks like the dollar is going to continue to gain strength. let's look at commodities. this is the bloomberg commodity index on the year and it's a pretty firm downtrend.at the lows, down more than 10%. just down 6% now so a 9-10% rally in this range even as the dollar has strengthened. when the dollar goes higher, you usually see commodities go lower because commodities are denominated in dollars we see a little bit of that from the dollar low. when we break it down and take a look at what's driving this strength, a lot of it has to do with oil which is up 20%. you could say oil is in a new bull market but it's within a range so you want to make sure you are looking at a true uptrend. a lot of this has to do with the fact that opec plus is holding

pat on production cuts and natural gas over the last three months is up just slightly. traders are trying to figure out whether we had hot and rainy weather and the black sea and tensions between ukraine and russia. and what that means for supplies. this suggest that traders think supplies are getting out of the black sea. silver is down 3.5% in the dollar strength is starting to weigh on that. we have natural gas in the u.s. up ever so slightly. european natural gas is a different story. this is since a couple of weeks ago, down 31%. this has to do with the possibility that there could be a strike in australia, an lng strike and talks have been delayed another day, apparently unions are saying a deal is unlikely but this suggests that

traders are not that worried. 75% of the supply over this time. , natural gas is down, suggesting this supply may stay on the market. matt: thanks very much. that's a look at oil and gas. let's get more on the natural gas outlook. let's bring in toby rice. his company is the largest producer of natural gas in the u.s.. they rang the opening bell today after closing of $5 billion acquisition. let me ask you to differentiate for our viewers and listeners the european and u.s. natural gas markets. they are two different worlds, aren't they? >> the biggest differentiating factor is the united states is an exporter and we are energy independent and europe has become energy dependent on other countries like the united states and europe.

that independence -- that dependence has compromise their security and put them into a difficult situation. they are not in control of their energy security which means their economy is at risk and thanks to allies like the united states and thanks to american and u.s. natural gas, we have been able to provide their energy security. for the events you mention, the natural gas markets will be extremely volatile. in the past year, we've seen that and it will continue into the future until we get our act together and decrease the amount of pipelines and facilities we have in this world to finally bring the flexibility of energy security that the world so desperately needs. matt: i want to ask about the pipelines and the transmission mechanisms. you are interested in selling what -- gas globally and you're interested in lng. how would you do it and how would you get it from the east coast to the u.s.?

>> we are not only interested in providing lng to the world but we are driven. we know this is the key to providing energy security to the world and the key to lowering local emissions. we have the potential in this country to increase our lng exports to quadruple it. that brings a true mentis peas to europe and a tremendous amount of lower global emissions. we've got the resource, we just need the pipelines and lng facilities and permits to make those happen to make this a reality. this is within our control. getting pipelines built has been the most difficult part of the equation in the past. we built fewer pipelines last year than we have in the prior 30 years. pipelines are getting blocked and the ones that do get through like mountain valley pipeline which is a bright spot, required

an act of congress to get the pipeline constructed. americans should wake up and look at this and ask questions and demanding that leaders in washington take the critical steps needed to get the permits so we can get back to building things in american bringing security and the ability to lower global emissions. matt: it's only possible with an act of congress that than it still difficult. there have been pieces about permitting and how long that process takes. what are you doing to try and move forward? do you have lobbyists working on this or are you working with industry groups? a much you have to spend to make it happen? >> understand we have a real solution and that is scalable. unleashing u.s.lng, the environmental impact to be able to do that would be the equivalent to electrifying every vehicle in america and doubling

the u.s. wind capacity. it's the biggest initiative on the planet and that amount of energy on the world stage will be the equivalent of adding 10 million barrels per day of clean energy. that's like putting another saudi arabia on the world stage. it's the biggest energy security blanket. we need to spread awareness and letting people know that they have been blocking pipelines because of their concern of the environment and they should support pipelines because of their concern for the environment. that's obviously a tall task. it starts with a conversation where we've seen tremendous progress in the last 12 months. it has culminated in the passing in support of valley pipeline. matt: whetherizing your facilities and whether rising gas facilities should maybe be something americans are for. you are among the producers that brought the grid to the brink of

a blackout in december during the winter storm that caused you to shut down. will you be changing or investing to make sure that doesn't happen again? >> absolutely, there's been a true menace amount of controls we put in place to make natural gas the most reliable source of energy. we are going to be hit with storms and there are things we have identified that will improve on the already impressive track record. as much winterization as we do, the one thing that can make this a heck of a lot easier, the one thing that will really drive reliability of the energy ecosystem we control will be having the ability to access capacity and that means more pipelines, more energy flowing through the pipelines and that will give us the flexibility to deal with any adverse events which currently to date with the system of the pipelines maxed out, any shock to the system is

going to be disastrous, just ask europe. unfortunately, we're looking to see ourselves being in the same situation here and getting more infrastructure build will give us the capacity and that will give us the reliability the world demands hundred -- and deserve. matt: thank you for joining us. we have breaking news on uaw negotiations with the big three, ford, general motors and some lantus. the union coming out and saying that general motors proposal doesn't come close to an equitable path. this is the uaw president talking about the latest gm proposal which we know was including a 10% wage increase as well as bonuses. there was $11,000 in inflation protection payments and entry-level workers were offered 56% pay rise over the life of the deal. the top rate workers would have

had a total of 16% pay rise but the deal from gm did not include pension benefits. we know the pension benefits are one of the things the uaw is fighting for as well as what would amount to a 46% pay increase across the board. the uaw saying general motors' proposal does not come close to them equitable deal so we watching these negotiations and they could result in a strike. up next, we will talk to the auto racing legend michael andretti who is targeting ai he will join us next and this is bloomberg. ♪

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matt: this is bloomberg markets. spac was a buzz word on wall street during the pandemic and now it's all about ai. our next guests are doing both, zapata ai out of harvard is going public via a spec following the merger with former indycar driver michael andretti's firm, valuing the company at 200 million dollars. this a software helps racing teams model where cars'tires are sliding on the track which is very important in terms of adjusting certain functions to shave10ths off every lab. i'm joined by michael andretti and christopher savoie. it's great talking to you guys. i have to start with the question about your company f1. when i was teasing this slot coming up, i got a message from a viewer who said a lot of

stories going around that andretti will getfia approval will get team approval. what is the state of that challenge? >> i hope so but we are not there yet. we are waiting for the fia to give their decision on what they will do in that area. we are hoping that we get an answer here soon. we feel pretty good about it. you never know until it's done. if this comes through, it will be very exciting for us. matt: why is it so hard? you have such a legendary brand and name. it just makes sense to pair with f1. it would help to boost your business and there's. >> along with bringing general motors and catalog -- and cadillac in as well to the series is huge.

we are questioning that. overall, i think the support is heavy for us especially public opinion which is very important. we still feel positive but until it's done, we will have to wait and see. matt: christopher, i want to ask you, zapata and what you can do for andretti. why spac? this is something that shareholders have been less excited about recently. in this case, a lot of them have cash back out. why wouldn't you go public this way? >> at the end of the day, this is about becoming a publicly traded entity. there are other mechanisms to go public like a traditional ipo but there are some disadvantages to all the mechanisms. the spac we like from a management perspective because we don't have to go out and raise the money it's already

raised in a trust. it can be a real timesaver and not have to raise the money. there is that advantage. it tends to be cheaper and more expedient to become a publicly traded entity and fours of potter, we believe we are the first publicly traded ai company. it's exciting for us. matt: ai gets everybody listening. i just came back from spain were my daughter spent the last couple of months and she put hurts upon on every day. what do you actually do at supported? >> we use ai to do analytics. we can predict things that you cannot do with sensors on the vehicle. there are lots of sensors on there but there are none for things like the slipping of the tires which feeds into the tire degradation models which tell us

when we should pit a car. in the same numbers can be used for optimization or manufacturing processes, optimization of discovery, to find the right chemicals. these are wide-ranging things and unlike chatgpt and these things contrite it just concentrate on language, we are doing numeric analysis with ai. matt: michael, you and i come from a time from before and now it's all about software. how key is software at winning races? >> it's a very key and has become even more key. to be able to predict when to pit and things like that will win us a lot of races. it's things like that that will be very important. for us to be teamed up with a company like zapata is very exciting because we think it will be a huge advantage for us in the future. matt: christopher, what do you

need in terms of data access for your software to work best? is that the biggest challenge? >> for all machine learning types of applications, you need to start with data. garbage in in garbage out if you don't have the data. they've been collecting data for years in the indycar series. we have over 20 years of historical data to start with. that helps ups with predictive any. companies that have data and have joined in this big data revolution and had digitalized their performance are going to heaven upside advantage in this -- are going to have an upside advantage in this market. matt: people writing code and programmers are difficult to get right now. >> this is the challenge and it's also one of the reasons why going public helps us. we are up against other public companies that access the public

capital markets. there are big tech companies and we are all competing for talent. this is not a dime a dozen, the art -- these are top people to get. we have to do more development in the country to get these people and we are competing not just locally but internationally. that is a challenge and we responded by being globally remote. we hire people from all over the world on several continents. you have to be flexible with your workforce. matt: michael, what do you think about the future of racing? beyond the software technology, it goes to powertrain and we are starting to see new series like formula e for example. it doesn't move the deal for me. i need to feel it and hear it and smell it for it to be exciting. am i a dinosaur? >> i wouldn't say you are a

dinosaur but there are a lot of people feel that way. if you experience formula e it's quite exciting. you just have to go in with a different frame of mind. there are other technologies that are out there that could still be the future of racing. hydrogen is one of them. they just announced the new extreme h series that will come out in 26 which will replace extremee for the electric series and off-road racing. we are looking to be a part of that. i don't know where it's going. biofuels is where formula one is going and indycar is now. there is a lot of different ways to go. i think there's probably going to be two different types of racing. i can see electric staying around and i can see other types of fuels like hydrogen and biotechnology. matt: michael and christopher, thanks for joining us.

still ahead, white bloomberg nef believes tesla is not capitalizing a tv charger network advantage across the u.s.. this is bloomberg. ♪ how can you sleep on such a firm setting? gab, mine is almost the same as yours. almost is just another word for not as good as mine. save 50% on the sleep number limited edition smart bed. plus, free home delivery when you add an adjustable base.

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matt: this is bloomberg markets. time for our weekly green segment. tesla could be missing an opportunity not selling its charging hardware to third-party operators even with 59% share of the public direct charges installed in the u.s. let's bring in ryan fisher out of london to talk about this. what is tesla doing wrong? why aren't they capitalizing on this advantageous position they built up? >> it's an interesting position. tesla has such a big part of the network.

then you think about this hardware that they've done for 10 years and they are their own. they are actually not selling it to others, maybe because they are building their own networks and don't have time or maybe they don't want to do it. by 2030, another 400,000 charges will be needed so that there is a question whether tesla could be one of the biggest providers of hardware itself. matt: they've made agreements with ford and general motors, i guess those companies will be using the tesla ip. our other companies fighting back or are there any other challenging charger networks? >> there is not a great deal in the u.s. in europe, you seen a lot buildup. you got the ira coming in and

this 5 billion grant to put in fresh charges in the automakers are not only waving the white flag. they say we're all going to work with tesla you see the role of the automakers. we are going to build our own network and several of them have joined into a joint venture to roll out 30,000 across the u.s.. that's a little of them fighting back. they did it six years earlier in europe so it shows you the difference in momentum between the u.s. and the european market. there is a change in trajectory and whether they take the u.s. seriously. matt: i'm waiting for you wireless charges to be installed on the highway. coming up, apple shareholders lose hundreds of billions of dollars in value this week as china cracks down on iphone use in government and state run buildings. this is bloomberg. ♪

jon: welcome to bloomberg markets. matt: let's get quick check of the market. we are seeing another day of drops for the s&p 500. the dow jones is gaining today but the benchmark s&p 500 is down three trading days in arroyo. the 10 year yield has turned around, it had been gaining over the last few sessions and we are now seeing it down more than one basis point. we continue to see dollar strength.

bloomberg dollar index is at 1257 so at its high for the year. oil has turned around. nymex crude is trading down $.57. jon: we continue to take the temperature of the consumer on the markets. the markets are selling shares of entertainment play dave and buster's based on sales. company was pushing back a little bit on the fact that consumers are still spending. ai is a huge theme and we previewed c3 ai with big expectations and it just women for investors with the stock off about 13%. some disappointment for investors in blackberry, that's down after essentially a warning , look at the revenue picture. staying with technology, the biggest story that seems to be influencing markets now is apple. we talked about the challenges

for the last couple of days, losing six or 7%. the focus right now is on possible crackdowns within china, specifically within government agencies on the use of iphones. if you look through the ecosystem that is apple, whether it's the chip players or other suppliers, here is a list of companies we been tracking today. we've seen a lot of red within the market because of this apple story. matt: very interesting stuff and a lot of talk about these bands being expanded. i didn't know they were banned in the first place but apparently it already was bad form to bring your iphone into a government building or estate owned company. tom forte told us apple is caught in the middle of political crosshairs. >> their supply chain is heavily dependent on china where they've leveraged foxconn and foxconn

employs more than one million chinese for some of their products. they are clearly caught in the middle between escalating tensions between the chinese and u.s. government and there is risk for apple. jon: kailey leinz is in washington and joins us with more on the politics surrounding the apple story. in the united states, whether it's the state level or some of the conversations within congress around restrictions of apps like tiktok, especially in government devices, technology in many ways work medication devices were social media apps seems to be putting these two countries, battling each other out. kailey: we've seen this back-and-forth before is both country say they are trying to protect her own nationals agree interest but the result is some of these restrictions being put in place on certain technologies. according to our reporting, china would widen a ban on iphones from just certain

sensitive departments to potentially government backed agencies and state companies. it's not clear how many agencies or companies could eventually adopt these restrictions. our understanding is that nothing has been formally put forward or written out regarding this yet but this is a big potential risk to apple given the chinese market is so important to the company from a supply chain perspective in that the majority of iphones are made in china but also from an end market perspective. they need the demand and this is a market that made up about 1/5 of apple revenue in the latest quarter so they are vulnerable to anything going wrong in this market. you are research out we don't expect the financial impact to be huge. it speaks to the risk that companies are facing in doing business in china and having this reliance on the chinese market. it can be difficult lytic leaf for them. jon: analysts have to do the

number crunching and how apple is impacted by this. in terms of some of the conversations that likely will continue in d.c. on a matter like this, what will you be watching for? kailey: any potential retaliatory move from the u.s., this is kind of a tit-for-tat that has been going on in this relationship between the u.s. and china. it's coming at the same time that the biden administration is trying to restore can indication with beijing, to put the relationship on more stable footing which is why you see the likes of gina raimondo, the u.s. commerce secretary, making trips to china within the last week or so. one thing she was expressing was the concern that u.s. businesses have difficulty doing business in and with china because of the uncertainty around the regulatory and policy environment. there is another ongoing conversation in washington about the world of chips and advanced technologies and the likes of huawei getting access to those chips. that's a big focus of conversation for republicans on

capitol hill. jon: thanks very much. we will continue to track this story. earlier today, erik schatzker spoke exclusively to the canadian prime minister justin trudeau who says relations between his country and china have been challenging of late. >> the way it has always been framed for our allies whether it's in europe or elsewhere is the desire of access to markets, particularly the growing and engaged chinese middle class that represents a tremendous benefit for us. over the past many years, there have been lots of friendly and sometimes less than friendly competition between allied countries whether it's canada versus the u.s. or versus australia or versus europe. we hope we get more beef in

china and pork and china has been very thoughtful about making sure they would play us off each other a little bit in strategic ways that has been very effective. for me and certainly for the g7 as we've had conversations around this, the understanding that we cannot simply be trying to elbow each other out of the way for access to the chinese market but we need to be more thoughtful how we move forward. we need to be nuanced in our approaches. it's really the only way to go. i don't think the idea of crossing her arms and turning our backs on any part of the world is something that is good for the canadian economy or canadian people. not being naïve and being very deliberate about how we do it and working in concert with our friends and allies is the right way to do it. erik: you mentioned the chill

that settled onto the canadian- chinese relationship after the two michael's and you made reference to interference in canadian democracy. is there political space in canada for a rapprochement? >> not at this particular moment. china has made decisions over the past year that have made it more difficult not just for canada but for other countries to engage in ways -- i will admit in 2015, conversations we had was about working towards a free-trade deal with china working toward those sorts of things. in real terms, the choices and the actions of china have made that more difficult. like i said, we will continue to look for ways to engage constructively in ways of mutual

benefit and try and rebuild a positive relationship in the interest of canadians, but we will not be naïve about it. jon: the comments coming on a day when canada essentially solidified a plan for public inquiry tied to countries like china on election meddling. this is a story that will get more attention in the capital of ottawa. matt: it will be interesting with those conversations coming up and see if social media has to label any ads with ai content. coming up, the fbi see gives an update on the banking industry which faces a number of challenges. this is bloomberg. ♪

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jon: this is bloomberg markets. time for our stock of the hour. we've been monitoring the regional bank stocks after a key u.s. regulator painted a mixed picture on the sectors health

area the fdic described the group as resilient in the second quarter after a very stressful start to the year which included bank failures. at the same time, the fdic noted there are 43 banks on its so-called problem bank list which is not change since the first quarter. matt: we should note that is a tiny fraction of the total number of banks in the u.s. which numbers in the thousands. stephen bigger is the director of financial institutions research. let me ask about your confidence in this report. is the u.s. banking system still sound and resilient? >> yes, i think today's report card was a bit of a relief for the banking industry. we did see the profitability was flat with the first quarter when you back out some of the accounting items for the failed banks and flat with the fourth were as well. that's not a bad outcome

considering all the industry has been through. some of the highlights, deposit -- deposits were down for the fifth consecutive quarter which is no surprise. clients are very active in seeking out higher yielding to bank deposits. at the same time, the trend there has moderated. we actually so that massive inflow in large banks from small banks in terms of deposits which moderated as well. all in all, it was a decent report card for the bank industry. as was mentioned, it shows the resiliency. jon: when you've got a situation where deposits are down and competition for funding is up, how does that impact the bottom line performance for these regional banks going forward? >> for regionals, there is a bit of margin erosion that's taking place and will probably continue

to take place as people find better alternatives. banks are having to increase deposit rates a bit as they set on the second quarter conference calls so that's expected but not in a huge way. part of the reason is that a lot of deposits that are in place at banks are very steady and stable. they are there for purposes of liquidity for people and individuals and they don't go down to their last dollar and put it somewhere else. for commercial banks, they have to keep so much cash on hand. i'm not ready to declare a bottom in terms of the deposit outflows here but i think the moderation is a positive and that bodes well for margins to at least stop deteriorating at

the same extent they have had these first couple of quarters of the year. matt: are we at a peak in terms of credit? has it gotten as tight as it gets or will it gets or will he continue to tighten? >> banks face a conundrum with that, certainly. we've got a situation where loan growth demand has softened because of higher interest rates and that's natural when you raise the cost of a good, you might get less demand for it. we certainly have that. thanks generally have not taken credit standards with the exception of commercial real estate were clearly, there is some trouble spots on the horizon there in terms of vacancies and refinancing. a lot of that is coming do so on the commercial real estate front and the office space in particular, they have pulled back credit. credit cards and auto loans and residential mortgages to the extent there is demand for that, it doesn't appear there has been much in the way of reining in

the credit availability. jon: with some of the canadian banks recently, they set aside more money for potentially bad loans depending where the economy goes from here. even like with auto delinquency who are -- we are not getting a sense that could be a trouble spot going forward? >> the two areas that worry me most would be auto loans and credit card lending. there was a lot of press when the credit card amounts when over $1 trillion collectively in the u.s.. that's a lot and if you look at the household debt as a percentage of disposable income, it still seems manageable. given the high interest rates for putting debt on credit card, i think there could be another

shoe to drop there. if the consumer weakens a bit here, if we get some backup in the unemployment level which is a hard correlation between unemployment and rising delinquencies. if you have a job, you tend to stay current on your bills and if you don't, you go delinquent. that is a big concern and credit cards is the first thing that people will stop paying on of they run into trouble. they need their car but they can let that go if need be and housing is the last one to be stopped, for people to stop paying on. there are some worry spots and i think the banks are showing those concerns. matt: thank you for joining us about the state of the u.s. banking industry. here is a programming note -- we

have an expose of interview of the new york fed president john williams. this is just after 3:30 p.m. new york time today right here on bloomberg television. coming up next, we will focus on the value investing strategy by hedge funds this year and the rising rate environment. that's next, this is bloomberg. ♪

jon: this is bloomberg markets. aqr capital is seeing losses across the investing sector and

its return fund rose more than 4% in august in the year to date gain is at 9% after record-setting performance of nearly 44% last year. sonali has been crunching the numbers. value was a big story last year. growth was not hot and for those who came into this year expecting more value size returns, it hasn't played out as some would have thought and what is it about a qr that is working this year? sonali: there are a few interesting dynamics. not only did value do well last year but strategies and trend following were among the best performers in the hedge fund universe. this year, they are down more than 2% while almost every strategy in the hedge fund universe is maybe trailing the market but also up more largely. usually when you look at the investing universe and value,

many funds tend to weigh acrosst the entire universe. ed they say we will go cheap across everything but a qr does is they don't say just because you are technology, your expensive or you are a growth stock. they invest in cheap versus value across sectors within sectors. during the summer time when we really saw some of that growth in technology that's associated with it rebound, a lot of funds got caught up at that time. they missed out on the rally. you sought in the russell 2000 growth versus value kind of spread between the two indices. one was up about 30% and the other about 1% so value is really trailed in broad strokes. another trend following strategy that a qr has that i find fun in this regard because i didn't

know they had it is a strategy that's an alternative investment strategy that has more thinly traded and potentially more room for alpha which is bitcoin. there are areas in the market that they employed cheap learning and trend following and beat the market in that regard. it is a little bit of a different play. this fund was only four and five years ago and has expanded to more than $1 billion. in that time matt: it's easy to look at and 9% return and say they are not keeping up with the s&p 500. you could have just invested in the index and done better. on the other hand, you would have lost a lot last year. this is what hedge funds were started for. you won't make as much money in an upmarket but you don't lose as much money in a dom -- in a down market. sonali: we will be looking at

these tail focus funds are trend following funds that try to be hedge funds. this is the moment it counts. the a qr strategies were up meaningfully. this main fund was up almost 44% last year. these are not strategies that had good years every year. . among the hedge funds that are focusing on tail risk and mitigating risk, you are finding them have their moment of truth and fight it out on which strategies are the best. they don't think the cta model works. you and i will follow it and time will tell. matt: thanks very much for joining us. these are hedge funds that win and lose. we are still seeing the dow jones industrial average up of the s&p 500 is down and it's been down every day this week.

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>> quiet summer thursday? not a chance. live from new york, i'm scarlet fu. katie: and i'm katie greifeld. the nasdaq up -- off .7%, china looking to widen an iphone band taking a bite out of apple.

a