sonali: welcome to "bloomberg markets," i'm sonali basak. let's take a look at where markets are trading. after a record high in the s&p 500, we are lower today by .2% on the s&p 500, really holding the 5700 line. looking at a decline of .3% in the nasdaq 100 with the two-year yield just a little state --

steadier, flat on the day. the 10 year is at 372. this is where we look like we are generally ending a historic week. some midday movers on the equity side, we are bringing in abigail do little for that. abigail: idiosyncratic movers having to do very little with the fed. nike, bringing in veteran elliott hill to replace john donahue as the ceo and president . wall street analysts a very positive on this. the stock right now having its best day since september of last year. i never know how to interpret that, when a stock rallies when one ceo is out, but clearly it seems investors really like the idea that this elliott hill, who had been with the company before, is coming back. let's turn to a stock not faring quite as well, fedex shares

plunging down 13.7% after they cut the outlook for the full year. it appears that consumers are trending towards lower costs packages. plus, the ceo is talking about a challenging quarter and it sounds as though there are headwinds that have less to do with consumers going for a cheaper package and more to do with the economy, and a week where the fed cut rates, you have to wonder what's going on with the economy. stay tuned, we have that bifurcated consumer going for some products but not others. it is triple witching day. probably a piece of the reason we have had volatility stocks down a little bit recently. bond and currency volatility is a bit higher and there is the

vix, closer to a 16 handle, more in complacent territory, but interesting to note that there is a series of higher lows pointing to the possibility that at some point there could be a move higher for the vix but on the triple witching day it seems more to be about higher volume. sonali: appreciate that look under the hood. we are bringing in alexandra for a look at the stories. you could've of call morning. you said the hefty fed cut is not at all clear and low and behold, we are all records. what are people saying? alexandra: exactly, people finally got the interest rate cuts that they were teased with this week and it bodes well for risk appetite, we saw that with the s&p 500 hitting its 39th closing record and all 11 sectors up across the board,

however today's -- today's price action, if you look at history, frontloading cuts hasn't generally fared well for equities. the last two times they began a cycle with a 50 basis point cut, 2001 and 2007, stocks fell for the next 12 months. that could be fodder for the bears as they assess the economy . but an important caveat is that the economy is doing well in the fed is cutting into strength and accelerating. this is not really a reactionary cut due to signs of a recession and in the past equities have significantly outperformed when cutting against steady conditions as opposed to a recession. at this point, the bottom line is the initial 50 basis points are not saying much, it's about the pace at which they continue. sonali: thank you very much for your time, alexandra. turning to the brighter economy, we are joined by christina

hooper, who leads macro strategists at invesco. pricing is extreme going into next year, but let's talk about the equity reaction on these cuts. there seems to be a lot of confusion or disagreement on whether 50 basis points means the economy is slowing faster than meets the eye. what do you think? kristina: you are absolutely right, there's a lot of confusion right now and markets are fluctuating between excitement over the cut and trepidation that there could be a recession in the offing. the fed knows something the markets don't know yet. i'm of the opinion that it is the former. that we will not see a recession. that we will see a brief, shallow slow down and re-acceleration, perhaps by the end of this year, early next

year, triggered by or helped along by the rate cuts, but also improvement in real wages. that should lift all consumers, even though i understand that lower income households are under significant pressure right now. there is however always the risk, monetary policy has been very restrictive for 14 months now. it's right to hedge that. i think that is why we have seen a significant rise in gold prices. at the same time, i do believe we are likely to see equities performing well, especially cyclicals and small caps that are discounting what is likely to be an economic reacceleration. sonali: i'm glad you brought those up because of things go south, those are areas where we would see the most pain as well. to the extent that you would put money towards those trades, how much risk would you say is out

there in a soft or harder landing? kristina: i have a significant amount of conviction. the economy is in good shape, i believe the fed when they say that this was a preemptive rate cut. to me that means that this is an environment where rate cuts should really benefit the economy and if we go back to 95 and 96, that was the last time the fence was able to tighten without causing recession. once they started easing, six months out from value outperformed growth, they both performed well. small caps underperformed large caps during that time, but i attributed it to the fact that the cycle was so shallow. we have gotten 50 and are looking out on perhaps 200 basis points more in fairly short order. so, i think it sets us up for an environment where we could very well see a significant economic

reacceleration benefiting small caps and cyclicals more. sonali: so, to the end that we are seeing rotation continuing on into cyclicals and small and mid-cap stocks, or even outside of the magnificent seven, before the fed rate cut we saw the s&p equal weight index reach historic heights. so, how much more does that go? do you think that the same trade that existed before the rate cut is true today? that those mega cap tech names could be more or less -- could be a little less favored at this juncture? kristina: i think so. i don't think we will be seeing a significant drop, but it is the time for small caps and cyclicals to shine. valuations really have the wind at their backs. the caveat is that there are

long invariable lags in monetary policy, so again we have to worry about recession risks and i think we will again be seeing significant volatility around every data point relating to the health of the u.s. economy, particularly the labor market. we have to be prepared for that, but i think we will be seeing cyclical small-cap outperformance with legs. sonali: how do you feel about inflation at this time, do you look more to the fixed income or the equity market? kristina: more towards equities, but i wouldn't exclude fixed income as we see the start of a rate cut cycle. there is a lot of opportunity in fixed income. if we go back to the playbook, we saw a performing well once the fed started cutting rates. particularly high yields. i think we will see a suit --

similar scenario this time. sonali: christina -- kristina, thank you so much. breaking headlines when we come back, the ftc suing three prominent drug management firms. we talked to a representative from the ftc, next. this is bloomberg. ♪

[introspective music] recipes. recipes that are more than their ingredients. ♪ [smoke alarm] recipes written by hand and lost to time... can now be analyzed and restored using the power of dell ai. preserving memories and helping to write new ones. ♪

investment opportunities are everywhere you turn.

do you charge forward? freeze in your tracks? (♪♪) or, let curiosity light the way. at t. rowe price, we're asking smart questions about opportunities like clean water. and how clean water advances can help transform our tomorrows. better questions. better outcomes. t. rowe price sonali: this is "bloomberg markets coco i'm sonali basak. time for the stock of the hour. three companies, cvs,

unitedhealth, cigna, news is breaking of an ftc lawsuit against the drug sellers alleging that they engage in illegal drug rebate schemes that drove up the price of insulin in particular. cigna is down two point 1%. unitedhealth down .3%. cvs health down more than four point 6%. we are bringing in the ftc office of public affairs director, douglas farrar. when you think about the way that the ftc has handled this in the response you might see from the companies, can you bring us behind any of the communication you have had with those companies in particular, here? douglas: thank you so much for having me on the show. the ftc conducted an investigation into the three big pbm's that control over 80% of the prescriptions filled in this country. what we discovered is that they, their rebate scheme drove prices

up for insulin. so much so that over the last few decades the price of insulin has risen 1200%. the ftc investigated these practices and today filed a lawsuit alleging that the rebate scheme is in illegal business practice that harms consumers, especially patients. we know that one in four americans with liability -- diabetes have trouble paying for these. sonali: when you saw this, how did you draw the line and what is it exactly that got them there at the end of the day? and frankly, what does it say about the other drugs being sold? douglas: the rebate scheme is complicated and opaque, but simply put, pbm's make a lot of money on the rebates. it means that it pushes the sticker price of the manufacturer drugs higher and higher, they can extract higher and higher rebates. it turns competition on its head. there is a basic tenant of

competition that they should lower prices, but in this case, it was the reverse. these can have a huge impact on patients, especially people with high deductibles and premiums who might be paying the costs on the sticker. you pointed out correctly that this behavior is not exclusive to insulin, though that is where the loss of his focused, this type of allegedly illegal scheme applies to a lot of different drug categories as well. sonali: bring us more behind what we are looking at here. if you had taken a look at insulin prices, certainly a very important medication for many americans, how far can your scope go here as you take a look at pharmacy benefit managers? douglas: you are right, the lawsuit is focused on insulin and we will seek to make the case that it has anticompetitive effects, but it could be made as

a case against other anti-competitive drugs, so we may be suggesting or going for an injunctive red -- remedy that could be applied across a wider category. sonali: are there implications for the lawsuit that go beyond the broader pbm industry and into the broader industry of health care? douglas: you are right about the loss focus, but our staff has also seen fit to issue a statement that ensured that the manufacturers were also on notice that their role in this marketplace is of concern and deeply troubling, according to the statement from staff. so, certainly pbm's play an important role in the rebate scheme, but they are not alone, according to ftc staff. sonali: it's interesting, when we think about the moves of the ftc this year, there have been a

lot of questions about not only pricing and what pricing has looked like four americans across different industries, but also in terms of mergers and acquisitions. i'm really curious, douglas, if you saw mergers and acquisitions of the health care industry really playing a role in the way that douglas: -- the way that pbm's were able to extract prices, in your analysis. douglas: it's true that there has been a huge amount of consolidation in this part of the pharmaceutical supply chain. pbm's are vertically integrated. together, they owned things like cvs and pharmacies. they also create the lists of drugs available to insurance companies, payers, and patients. we saw a big increase that started in 2012 that accelerated and created a market that has a host of concerning problems with

respect to competition. sonali: how do you expect pharmacies to continue to respond to this? this is at the heart of what they do. the rebate programs have become massive. you talked a bit about the price of insulin and how much it rose in the wake of what you're looking at, but what about the rebates themselves? how much money has this returned to the companies? douglas: you are right that this is core to their business models and at this point they get something close to half of the revenue from these rebate models. the problem, they are not providing much value to patients, payers, or insurers with the rebates. one effect as they are basically just forcing the price of drugs up through a kind of reverse polarizing competition, from being a good force in the market to a bad one. on behalf of patients in particular, we filed a lawsuit

to make sure there is more competitive balance in the marketplace. sonali: it's interesting, when you think about certain things being filed against large corporations, there has been a lot of politicization, but when it comes to drug pricing this has had a little bit more bipartisan, bipartisan really affection, here, if you will. on both sides. what type of support are you getting from lawmakers? douglas: certainly when we issue the interim pbm report a while ago, we got bipartisan support on the hill. at the end of the day, americans living not just in the pharmaceutical industry but in an economy where consolidation is so rampant, they feel the effects of that every day, whether it is customer service calls that take hours, never speaking to an agent, high prices at the grocery store, and

elsewhere. we have felt a lot of bipartisan support from congress and from the american people. certainly around health care, which is near and dear to people's hearts. sonali: what about the pharmacy retail side of the equation? how might that be impacted? douglas: independent pharmacies in particular have struggled and many have been forced to close, leaving sort of pharmacy deserts in various communities where they are not served well by the big pharmacy outlets. this lawsuit is very focused on the price of drugs and what patients are paying, less so on pharmacies themselves. certainly, we want to make sure we have a healthy pharmacy supply chain and that pharmacies are delivering reasonable prices for drugs. sonali: thank you for joining us on the heels of this news,

douglas. coming up, we are going to talk about an all new wall street week. it is going to debut tonight. this week we heard from larry summers. he gave his take on the fed's rate cut. >> the risks of going as far with monetary policy as the fed seems to think that it will are pretty significant in terms of having an increase in inflation. ♪

(♪♪) something amazing is happening here. teams have more power to withstand outages. that's because cdw solutions architects are building more resilient it and electrical infrastructures with schneider electric. with eco care remote monitoring services, and 24/7 support, your organization has the power to do more than keep the lights on. make amazing happen schneider electric and cdw. you founded your kayak company because you love the ocean. not spreadsheets... you need to hire. i need indeed. indeed you do. our matching platform lets you spend less time searching and more time connecting with candidates. visit indeed.com/hire

sonali: this is "bloomberg markets," i'm sonali basak, wall street week is relaunching tonight on bloomberg, the destination for investors looking to think more deeply about business, the economy, and financial markets. david westin speaks with some of the best minds in the industry. he joins us now for a sneak peek. david, we think about what we have had. can you tell us about some of

the luminaries you are speaking to? david: we've got danny meyer, famous in the restaurant business, but we also have melva wilson, who has a small restaurant often harlem. some of them are really big businesses. sonali: how are they feeling about local account -- about the right now? i'm glad you brought up melva's, it's a staple. david: it is and fun fact, it's in the piece, she started when her neighborhood was really in decline and she decided to do something about it by starting a whip -- restaurant. she went home and realized she'd been saving up 300 $12,000 in cash under her mattress, that is how she started her restaurant in harlem. now as you say, it's a mainstay. danny meyer thinks that particularly since the pandemic, because restaurants took awfully hard it, the restaurants that came back are more vibrant and interesting than ever. sonali: let's take a look at one

of the interviews you had with the ceo of dynex, shall we? >> commercial real estate, one of the big name players, one of our partners, they have those spectacular buildings like one vanderbilt, one madison. they try to get talent in. they try to bring people back to work in the office. it's the whole business. and then they come to people like us to say hey, what can we do here? sonali: david, i love that interview. david: as you know, dynex is very large, restaurants across the world, singapore and new york. i hadn't thought of the restaurant business is a stretch for return to office, which is what they are doing down at one vanderbilt. sonali: it's funny, when i return to this office i'm appreciating the kind of renaissance we are seeing a restaurants. david: it's fascinating, we have lost a lot, but no new ones are

coming in and danny meyer says he thinks that some of the most interesting and creative we have had. sonali: catch the relaunch of "wall street week," tonight. i'm sonali basak. that does it for bloomberg markets. -- "bloomberg markets." we are still holding above the 5709. let's see if we stay there. this is bloomberg. ♪ ♪ ♪ with so much great entertainment out there... wouldn't it be easier if you could find what you want, all in one place? my favorites. get xfinity streamsaver with netflix, apple tv+, and peacock included, for only $15 a month.

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

." live from washington, d.c. joe: president biden says he is still committed to a cease-fire between israel and hamas despite the fighting at the northern border. welcome to the fastest show in politics as we turn our attention back to the middle east. i'm joe mathieu alongsiley leinz in washington. another dangerous moment, the biden administration refuting report that this white house is giving up on a cease-fire. kailey: still pushing for it as they have been four months but the negotiations between israel and hamas complicated currently by the state of relations between israel and hezbollah. we have seen, according to the lebanese health ministry, an israeli strike today killed eight people. israeli defense