sonali: welcome to bloomberg markets. stocks are sinking as a weak july jobs report is rattling wall street. we are off the lows of the day but still firmly in the red. the s&p 500 down 1.8% almost 1.9. the nasdaq 100 down 2.2%. the russell 2000, the trade that everyone was piling into is now

down almost 3.4%. the vix is stunningly elevated, almost 10 notches higher than when we started the week, above 25. we will look closer in the nasdaq 100 near correction territory. down more than 9% and a hair away from the 10% needed to be called aggression. after the big ten earnings, wary of the moves on another crowded trade. some movers on the -- on the equity side. until shares -- intel shares are plummeting. this comes after the company announced a grim forecast and laid out plans to cut 50% -- 15% of its workforce. it is suspending dividend payments. it has play -- paid a dividend 1992. shares are sliding their biggest intraday drop. amazon told investors that it will prioritize heavy spending

on ai over profits. amazon projecting a range of operating income that all short of estimates and you are looking at a more 9% drop throughout the day. when looking at the market all agility through the lens of credit the north investment -- the north american investment-grade credit has spiked. the benchmark increases as credit risk rise as and that is -- and it is at the highest level since april. they are keeping and i on the fed and market moves. austan goolsbee explained his perspective a little bit earlier. austan: i have been saying for months that what we wanted to see was improvement on inflation and components like housing and services. we have been seeing that. the longer we were restrictive we will have to start thinking about the appointment side of the mandate. sonali: now bringing in daniel pauly, assistant portfolio

manager with oaktree and marlboro comanager james abbvie. you take a look at the jobs data and two words permeated the market, wrote scare. danielle, when you think about the risk to the credit market do you get concerned? danielle: thank you and great to be here with you. we recently published our second quarter performing credit outlook peace and titled it the dual economy owing to the risks we see in a bifurcated economy and i will try to explain it as a tale of two consumers. you have the wealthy that have seen their asset base is row with soaring stock prices that we have seen, a recognized of billion -- a record number of billionaires and that has driven up prices. on the other hand you have lower and middle income consumers really hurting and facing pressures from higher interest rates and prices. their savings are depleted and

we are looking at credit card delinquencies back up at 2011 levels. we are seeing signs that the economy is weakening and companies are having an impact on their earnings. it is important to be an active manager and underwrite those companies that we are lending to a weaker environment going forward. sonali: when you look at the bond market you have seen these very type spread -- tight spreads and people are not concerned about the bond market. you are seeing a severe movement in the stock market. you can ask the question what is riskier, high-yield bond or the stock market that people have been falling into for so long. james: notwithstanding what happened in switzerland. if you are an equity investor you are at the bottom of the stack. i do not think that people are talking about the large-cap

defaults that are a reality if you have been investigating the magnificent seven or the large-cap indices. what has been forgotten recently is the risks that one is running in the compensation and the one that you are receiving. we could see a tenure treasury yield on the s&p 500 telling you that there is no equity risk premium and you are paying through the nose to invest in a riskier security that is not a bad thing if you are at the stage in a cycle where gross romaine robust. all of the conditions that would describe the end of the cycle have been in place for a number of months and unemployment has been steadily rising and investors have continued to choose to believe that a soft landing is likely outcome because it suits the positions but not really because of solid evidence or historical analog for it.

sonali: it is interesting, when you see the morning jobs numbers come out and they become weaker than expected, you have been worrying about the bifurcation of the consumer. how much worse do things get now that we start to see a more significant weakening of the labor market. danielle: the numbers are weaker today but it was not particularly surprising for us because we have seen divergence from the establishment and household surveys. we have seen downward revisions to the establishment data before and this is overall a trend that we have been eyeing for some time. i agree with james, equities need growth to work. today in credit, get such a high income from a quality paper that you are being paid to wait and be conservative. there could be more dislocation. it is a good idea in a portfolio

to have some cash or's short duration paper that you can sell. but generally we are in an environment where we want to wait and see and prioritize credit selection and active management. sonali: to that end, how much cash would you hold at the moment and is it for the purposes of waiting for powder to stay drive for those dislocations to materialize? or, because cash is not that cheap? james: that is true when you are a professional investor you have a mandate that does not allow you to hold significant cash as a person in the streets, cash has been attractive because it is high-yielding and all of the blood rush the government bond curve and it buys you optionality. we passed the moment where cash is the favorite place to be. duration has looked attractive because it has been so cheap

relative to equities and corporate bonds. high-yield spreads have been tight. what we see in these risk off or growth scare bond rallies is not that credit does not participate, but the spreads move wider and so the opportunity cost for risks and securities rather than government securities or the opportunity cost of holding cash has been pretty large over the last month or so because yields have moved down so quickly. i like duration and we continue to like duration and may be debt market is a bit over excused but we will certainly use backups to increase our position. sonali: what is a risk more worthwhile to you? is it taking on more duration risk or more credit risk? danielle: i think it is both. in this type of market it has been overly accommodative to borrowers where you just have not seen the cracks emerge that

we would've expected. but with rates and policies so high, some of them have unsustainable capital structure and it will get worse, especially in cyclical sectors. take a buildings products company that has done quite well coming out of covid because people were home and spending money on their homes to improve them. with rates so high i am not buying new homes. they will not be having the same type of discretionary spend. we have seen that eating into revenues and asking themselves but can she -- but can we withstand a hit to revenues. and as always think that credit selection will drive returns because you are avoiding default to capture higher income. in the market where we feel we are at peak rates and the nice move -- the next move is down and not up, having duration is great.

we do that by having high-yield bonds and investment-grade. when you have a multi-strategy portfolio you have a lot of levers to keep the engine going in order to generate the high income. sonali: we thank you for your time. that is danielle poli with oaktree global credit scribe -- strategy and james of bond income funds. credit markets going wild after the job stated this morning. getting a check on the markets as well because between the earnings story and economic story you are having quite the selloff in the equities market. the s&p 500 dropping 1.9%. the nasdaq flirting with correction territory down 2.3%. that two year yield has been stunning at re-.92%. remember we started the week closer to 4.4%. the 10-year yield is down 15 basis points and we will talk a lot more about it.

coming up we will talk more about earnings because we have the booking president and ceo glenn vogel on the heels of a soft outlook. a big look at how consumers are operating in an industry that people have been excited about a rebound. we talked about that next. this is bloomberg. ♪ ameritrade is now part of schwab. bringing you an elevated experience, tailor-made for trader minds. ♪♪ go deeper with thinkorswim: our award-wining trading platforms ♪♪ unlock support from the schwab trade desk— our team of passionate traders who live and breathe trading. ♪♪ and sharpen your skills with an immersive online education crafted just for traders. ♪♪ all so you can trade brilliantly.

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sonali: this is bloomberg markets and i am sonali basak and it is time for the stock of the hour. like the overall market looking shares are sliding and wiping out gains. this comes after the company announced a lower than expected forecast for the next quarter. looking reported second-quarter -- booking announced

second-quarter that came above the expectations. we were talking near versus long-term and how you talk about volatility and when you think about the current quarter, what was it that really guided you to go forward before we talk about the forward log. glenn: thank you for having me. we were happy with the second-quarter results coming in above expectations of most of the major metrics. the one where we came in line where -- with where we told the street and pretty much hit the middle was because that airline tickets were less than we thought they would be. especially in the u.s. they have dropped. that is not a big deal because we do not make money based on the price of the tickets. that did not affect any of the metrics, revenue or we came in with very even numbers and well above expectations.

sometimes the street takes a look at that and looks forward and looks at what we said about the third quarter and they obviously said not so sure about the future. i do not worry too much about the short run but the long run. the long run is well intact. sonali: let us talk about the medium. you looked at the employment numbers and you have a whole market spooked by the slowdown. it came in below expectations and the real worry is that if you have wage growth moderating or inflation moderating it is a good thing. but you have the pressure of higher interest rates for now that could be an overhang of anyone looking to perhaps buy a trip on a credit card. when you look on the employment numbers in an industry where people are looking to spend the extra dollar you worried that things are slowing down? glenn: there are a couple of things to think about especially at our company. we are extremely global so it is

interesting when you have a discussion about unemployment we are talking the u.s. but not global. for our business it is very global so yes the u.s. is a big market but nowhere near what the full global business is. it is one small part and people are talking about a two speed economy in the u.s. and people are having a harder time at the lower part of the economic spectrum is true. again for travel, a lot of those people are traveling when they were not able to. the fact that they can still travel is not as big of a deal. we said we had not seen globally any real reduction in star rating nor a reduction globally in terms of length of stay. those are two metrics we look at as canary in the coal mine to see if there is a pullback in travel. we mentioned a moderate moderation in europe.

not a big deal. but i think people jump on any sort of news, short-term traders jumping on it and moving quickly. for me long-term is what matters. sonali: what gives you the most confidence that the consumer in the united states will stay strong enough keep the rest of the year going. when we talked to a lot of travel companies there is a sense of confidence that people want to get out there. how do you balance the professor that consumers are under and inclination to get on the road? glenn: here is the important thing and how we look at this as we try to manage the company for the long term. a couple of trends. one, travel over the long want -- over the long run increases over gdp. as long as we believe that gdp will grow travel will grow faster. we are a digital player. half of their people do their travel off-line so it is a

tailwind as those people come online. and then you go into things where you look globally. there is a lot of people around the world who are just beginning to get the economic level where you can travel. that is another positive. then you throw in the great technological changes and ai which will reduce the cost and make it easier to redo think -- to do things like complicated travel and things we would be able to do much better and bring more people to us than our competitors. because we have the experience in doing ai. we have the scale and ai resources. another positive for us. i know that there will be ups and downs in different parts of the world and maybe there might be a little slow down. the long run will not rot -- will not matter and it will average out in terms of volatility and we will do very well. sonali: do you think that anything needs to change through

the end of the year you think about pricing or incentives? is there anything to bring more people out? glenn: one of the great things in our business is that we provide different ways for suppliers, airlines, hotels and car rentals ways for them to get more demand when they need it. it is a little countercyclical. the economy starts going down and if travel starts to pull back we have lots of ways for different suppliers use different ways to get business that they might not be able to get otherwise. one for example is the genius program. more companies are coming into the genius program giving discounts to genius members. another thing is special rates on mobile devices or perhaps certain geographical special prices. lots of different ways for companies to get more demand for services to get more from them. i saw -- i think we saw a little

bit an airline ticket starting to drop because there was not as much demand. sonali: glenn vogel is the president and ceo of looking. thank you for joining us. coming up we will talk about elliott management calling the ai hype a bubble. nvidia shares are under pressure and we will discuss how hedge funds are grappling and we will look at the selloff as we had to the break because we are watching the s&p 500 down 2%. the nasdaq 500 down 3%. we were watching a flood into small caps and the vix at 25. you have to understand that the vix that i could have interesting implication if it holds steady into next week. we will bring you more markets as they come, this is bloomberg. ♪

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visit sandals.com or call 1-800-sandals. sonali: this is bloomberg markets and i am sonali basak. elliott management is reportedly telling clients that nvidia is in a bubble land and it is skeptical of the ai high. take a look at trading volume, the blue line showing average volume. the white line is today. the bloomberg estimates 500 million shares traded by 4:00 p.m. we reported on all of this and i want to touch back on the note that elliott was saying. being kind of one to lean on the fear factor is not strange for paul singer and elliott. how did you read this? >> the report said that elliott came out here really being not

unsurprisingly bearish on nvidia saying that he is skeptical that companies will still be relying on the processing units. he said the applications are not ready, ai is overhyped and it will not be cost-effective. it is not going to work right and will take up too much energy or bn trust rose. bold length -- or be untrustworthy. bold language and that is why the stock made up only a tiny portion of their portfolio. sonali: they were in it but is interesting to see that if they will get any to -- into any of these stocks. i want to talk about the hedge fund industry right now because you had a good report. big tech was pretty decent. how are we seeing companies get burned? hema: a lot of the shows that we talked about are all invested in the biggest companies in the tech companies, amazon,

microsoft. so when you look at them, they posted their worst monthly performance so far last month, down nearly 4%. this brings it down from about nine to about five. and the biggest stakes, meta, amazon and microsoft. you look at that with the other hedge funds, tiger, whale rock and light street. all of these among the biggest positions. we can expect more pain to come from such names as we wait for returns. sonali: he is looking smart for trimming that exposure earlier before the rally. in the midterm we thank you so very much for your time and a lot of crowded names. we will look at more crowded trades and we want to pull up the bond market where we are seeing a ton of moves. the two year down closer to 390 and cross asset moves are crazy. brent crude down to 76 and the

fix higher at 20 --vix higher at 26. the selloff has been intensifying and these, and top of a tough day yesterday. a tough day to end the week but another week ahead. have a great weekend. that does it for bloomberg markets. this is bloomberg. ♪ so i hired body doubles. mountain climbing tina at a cabin. or tree climbing tina at a beach resort. nice! booking.com booking.yeah. (aidyl) hi, i'm aidyl, and i lost 90 pounds on golo. nice! i struggled with weight loss and weight gain my entire life. with all the yo-yo dieting i did in the past, i would lose 20, 30, 50 pounds just to gain them over and over again. in one year, i've lost five sizes, and i'm on my way to lose another three. with golo, i can do it. (announcer) change your life at golo.com. that's golo.com.

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♪ >> from the world of politics to the world of business. this is "balance of power." ♪

live from washington, d.c. ♪ joe: jobs day disciplines. marcus see red. political advertisements could be huge. welcome to the fastest show in politics. it is a new fuel to the heartland and crowd. i am joe mathieu sec. yellen: kailey leinz in washington. that would not be good news for the kamala harris campaign on the day when we would otherwise be celebrating the fundraising numbers for her. , yeah, $310 million. i know finger. you are right. not only is this bad news for the incumbent, it is madness for the equity market. we are looking up at us for the loss of jobs daily rios on the s&p 500 has seen in two years. massive buy rating in the