U.S. Stocks Tumble on Debt-Ceiling Concerns

You can also listen to our radio show at two pm Eastern Time on Bloomberg Radio, or watch us on YouTube search Bloomberg Global News. Well, it feels like the market story the past week has been about the bond market. Noticeable news and momentum. Uh, definitely in the tenure of

the past week or so. Shorter end of the note are shorter end, I should say of the yield curve today, as two year treasure yields rose to their highest since March, of traders increasingly pricing in the prospect of the Fed tapering its bond purchases soon. Investors, you all know this. They watched and listen closely. Today's both US Treasury Secretary Janet Yellen and FED Chair J pal both up on Apple Hill testifying before Senate panel. Powell using the opportunity

to once again reiterate specific plans for tapering. We had set a test for beginning to taper those purchases of substantial further progress towards our set story goals. We haven't met that yet, but as I mentioned, I think we've all but met it. Met it. On the path that we're looking at, we would continue to add accommodation not subtracted for until well into the middle of next year.

And we think that's appropriate given the Given the strength of the economy, um the test for raising interest rates is substantially higher and definitely what we heard last week right from FED Chair J. Powell. Right now, you've got the tenure with the yield of one fifty two to your note with the yield of point three zero. Let's get to it and take a look at what's going on in the rate markets. Shooting us right now? Is Ira Jersey, Bloomberg Intelligence Chief US interest rates strategist on

the phone in New Jersey. There's lots of people weighing in, as you know, Ira, when it comes to what's going on in the treasury trade. How do you see it? Why have we seen this move up? Yeah? We it's basically the trend that started after UM last Thursday, when we started to get substantial Fed speak that you know, said basically unequivocably that hey, we're going to be tapering. And then the question becomes how soon after taper will

the FED start to hike interest rates? Now, um, you know, there's a lot of debate around that, and obviously you just heard that snippet from Chair Powell reiterating what he started to say back in in August at Jackson Hole, and that's that they want to wait until they make even way more progress to before they start hiking interest rates.

So so I think the trade that you've been seeing the last couple of days is really saying, Okay, the FED is going to taper and then they're gonna let inflation run a little hot for longer maybe than they have during past cycles because of their new monetary policy framework that they've also been touting. And that means that you should get a steeper yield curve. Now, how steeper guts? That's uh, that's something that we're we're analyzing very closely

right now. Is it just that the Fed got more specific and we can kind of start marking the calendar a little bit, especially when it comes to tapering. That's why. Yeah, that's exactly right. I think that's part of it. The other the other is and this was kind of the big change that kind of was glossed over and not

paid too much attention to. But just the time frame that Chair Powell mentioned, and that's basically that if they start in November, so they'll announce that November meeting, and we think the following week is when they'll actually start to cut purchases. If they do that at fifteen billion dollars a month for UM, that starting in November, they will be done in June. So that means that that maybe that's a little bit faster than some people had anticipated,

including us. I mean, we we thought that the taper a little bit slower than that, UM, But but that means that, you know, basically they're taking out all of this bond buying and and there is a flow effect, right like you can imagine that with the Fed being in there buying a billion, two billion, three billion dollars of treasuries every day, that that has a that flow

has an effect on the market. In particular, it means that that dealers, so you know, the go betweens between different investors, that kind of are the shock absorber of the market. These dealers don't have to hold any inventory right now because they can always just sell that inventory to the Federal Reserve. That won't be the case a year from now when the Fed's done buying, So that is going to have some price effect on the market.

I'm wondering what when you look at rates right now, Ira, is there anything you can say about whether in general investors feel optimistic or pessimistic about the economy. Yeah, generally speaking, I think you can say that they're they're not pessimistic. UM, I wouldn't say that they're necessarily optimistic, but they're not as they're not very pessimistic right now as they were a couple of a couple of weeks ago when everyone

was really worried about Delta. People were worried that there was going to be more significant slowdown than we seem to be getting. You know, it's it's kind of interesting because we're seeing data right now. You know that the Consumer Confident say that they came out that UM, that that might suggest that you're seeing a little bit of a slowing in the economy, but maybe it's not as dramatic as the market was fearing a month ago when we hit those kind of cycle loads of of about

one point one percent on ten year treasury yield. So we're you know, we're almost we're forty two bases points higher than that now and and I think we're going

even a little bit higher than that. Um, So I do think that the market isn't particularly optimistic, but it's also you know, willing to admit that, hey, maybe the economy is going to continue to chug along here, and there's not a lot of reason to buy um, to buy the risk free asset because, um, we're not going to see inflation go down to one and a half percent, We're not going to see a complete rollover in the employment situation, at least not right now. And I are

there are high rates than there are high rates. I mean, everybody remembers when you know people were paying what mortgage rates, you know, several decades ago. So even with this move up, what what kind of move does this have potentially on economic growth or Yeah, And speaking to what Tim said, is that this is really about, Hey, folks, things are

getting quote unquote more normal. Well so from economic activity, probably not a ton and primarily because the household balance sheet is way better today than it was the last time interest rates shot up higher. You know in last year when you wound up seeing interest rates go from about one and a half percent all the way up

to three percent. So now we're we're in a situation where households UM have a lot of savings, they've paid down a lot of debt, so there's not this big impetus to refinance mortgages and to UM and and you know now it's like, hey, can we find a house to buy? So there's even not a lot of UM. You know, there's not a lot of of leveraged activity going on right now. That's going that means that you know, another forty basis points in ten ure yields is going

to slow down, Uh, the economy substantially. A lot of businesses UM had hedge data. Actually a lot of people had bought what's called rate locks, So basically they were saying when we were near one percent, like hey, I want to lock in this tenure yield now because I want to refinance some debt in early two so that economic activity won't feed through. So so it only is over a very long period of time that you know, rates at this level will really have a big economic impact.

I love talking with you, great perspective. Our Jersey chief US Interest Rate Strategies at Bloomberg Intelligence joining us on the phone from New Jersey. Perspective. I like it. I

do too. This is Bloomberg Radio. White House COVID nineteen coordinator saying today the booster campaign is off to a quote strong start, with more than four d thousand Americans getting an additional dose at pharmacies last week, and then Tim Fiser and BioNTech coming a step closer to bringing their vaccine to school age kids in the United States.

That can't come soon enough. Meanwhile, here in New York, New York Governor Kathy Hokel saying a COVID nineteen vaccine mandate for health workers that went into effect this week it actually is working to boost vaccination rates. In Japan is going to lift a state of emergency this week as infections recede. Dare I say a little bit of good news, Yeah, a little bit of good news, And I think that is also playing out. We heard that from think some of our market observers when it comes

to thoughts about the economic outlook. Dr Iman Ubi Abuse aid excuse me, Dr Iman Abuse. She's CEO and co foundering Incredible Health. Uh, someone we've reached out to throughout the pandemic here with our daily check on COVID. Her company, by the way, connects hospitals with nurses and other healthcare workers. So great person to talk to with us once again on the phone in San Francisco. Dr Abuse, Good to

have you back here on Bloomberg. How are you and how are your team's doing and are they all getting vaccinated that booster shot? Yeah, thank you so much for having me today. Uh and yeah, I mean vaccinations are definitely under way. I mean our team, specifically, our our tech team, UH that's running the Incredible Health marketplace is not getting boosters yet. We are not on the on the list, you know. I think it's for over sixty

five first and high risk individuals UM. And you know, from what we're hearing, healthcare workers aren't um, you know, lining up yet to get the booster vaccines. And we can definitely out more about why that is. Well, let's let's talk a little bit about what you're seeing on the platform, because I know that you serve health systems and that make up fift of hospital beds in Texas and California to states with a very large number of hospitals and hospital beds. What are you hearing from the

hospitals in terms of capacity and how it is stretched currently? Yeah, I mean it varies by state. We operate in twenty states right now, and for for our clients that are in Florida in Texas, like, yeah, it's it's a very tough situation right now where they are running out of beds and more importantly running out of staff right. So, uh, these are these are hospitals that are pretty chronically understaffed. They don't have enough nurses and uh this delt recent

delta wave has made things more even more challenging. Um, and so they are scrambling to retain their nurses as as well as hire them. How many people are leaving the industry and just saying I'm done? Um, So what we're seeing isn't so the annual turno. So, so that's nurses leaving, you know, quitting their jobs or changing jobs. Before the pandemic was around eighteen percent, so that one

one in five. That number has now gone up to about twenty one and a half percent during the pandemic, and a big, big portion of that increase from eight percent to twenty one and a half percent has come from nurses that have permanently left the industry. So that includes nurses that took advantage of early retirement or who have just been completely burnt out and fatigue and just

you know, left the profession completely. But you know, at the same time, we do see statistics about healthcare and future healthcare professionals who have been inspired during this time. When will we start to see those folks who enrolled in school hit the workforce because they did see some pretty high numbers last year. Yeah, absolutely, there have been record numbers of applicants. You're absolutely correct. But there's a

there's a critical bottleneck in that. Uh, nursing schools, for example, don't have the faculty or the capacity to train more. So there's a lot lots of applicants on waitlists and and and able waiting to get in. But but but the nursing schools themselves can't handle more capacity. Right now, Yeah, it just feels like we are being squeezed, the labor market, the supply chains, everything. UM. Good to check in with you. Stay safe, uh, and we look forward to talking with

you again. Dr Iman abuse A, she's co founder and chief executive officer of Incredible Health, joining us once again on the phone from San Francisco. And so you know, they're all about connecting hospitals to nursing talents. So she has been on the front line since day one of the pandemic. And you are just looking at me like

there are just constraints everywhere. As soon as she said that they're having trouble getting the actual you know, instructors, the nurse just to teach these students, I just thought to myself, weird, this is a story we were hearing in every part of the supply chain, in every industry. A colleague, give me mind just of ours really just came up and said to that he knows he's talking

about a friend of his works in an industry. And again it's a consumer product, a brand you would know, and they're like they can't find the materials they need to make their products. So we are feeling squeezes and hearing about squee is everywhere. We're talking cars. We're talking cars behind the scenes, having some fun here. Cars. As we know, Tim, they were in big demand during the pandemic, new cars, used cars, any cars, Yeah, they certainly were.

In fact, Kyle Stock found somebody who was able to get a used car and sell it back for more than the person actually bought it for, so making money off buying a car. Car flipping. All right, let's talk more about it. Bloomberg News senior writer Kyle Stock with us on the phone from Hopewell, New Jersey, and aside us business, we get it or Joe Webber Inner Interactive broker Studio. Jill was all that cars during the pandemic.

Still is. It feels like still is. And I thought it was really interesting about the story was just sort of just to see how prevalent um online reselling of cars has become. I mean, obviously it's like you're doing everything on your phone, want to do even more. Also, I don't know if you've ever used Craigslist. Kind of a nightmare. Uh So, so Kyle walk us through how

this uh marketplace fight has evolved during the pandemic. Up. Yeah, yeah, it's a crowd of startups, not unlike you know, what we saw with mattresses and razors and all this other stuff going online. UM. They've figured, let's disrupt cars UM and they've been at it a few years and they've been going strong and growing impressively. But the pandemic was really sort of a shift change in consumer psyche and

behavior that UM really gave them a boost. What's interesting now is that in part they're thriving, and they're still thriving, but now it's about the chip shortage. You know, analog bricks and mortar car dealers are having trouble just getting

vehicles to buy, even use vehicles. They're getting into bidding wars on these auction sites and this crowd of startups because they're so good at selling cars directly to consumers, they're also really good at buying cars directly to consumers, so they haven't had the inventory challenges that much of the industry have. Space this year does do al so Carbona I want to talk specifically about them because they have these amazing like pinball, machine gunball machine style things.

Been with a coin, right, and and there's a big coin. Have you put the coin into the machine col Yeah, a big cartoon coin. I mean it's a gimmick and it's a billboard, and it's you know, basically a parking garage George facility. But you know they need all those things, so they put it all in one thing. And we're talking about it. It's like you wake up with the middle of night, you're hungry, you get some chips, and

you're like, I feel like buying a car. Let me take my big coin and go down to the cravat carbona machine. Um. It is really upending though, how we think about car buying. And I gotta tell you, if we get rid of sorry dealers, if we can kind of squeeze the dealers out, and in some ways you are getting that. Yeah, it's really I mean, I don't

think you're getting a better deal. You might be getting a word steal in some ways, but it's a you know, it's a simple transaction, and you know they've done all this other stuff. You know, you can get your financing, you can get your warranties. You know there's all this other blocking and tackling around the transaction. You know, it

doesn't have to be that difficult. You don't have to be in a crappy waiting room for five hours if you know what you want and and kind of so when you when you think about where this market police could go and like, i mean part of this is driven by chips also, right, Like it's there's just such a shortage. I mean there's a shortage of everything and the shortage of chips. There are shortage of new cars.

What what do you think this marketplace kind of fight ends up looking like you know, once normality returns, whenever that happens, I don't not say. Well, what's really interesting is you know the big dealership groups that have you know, car lots all over the country. You know, during the pandemic, they were like, we're going to go back to normal. We got we can do digital, but people still want to come to the car lot. Now they're saying, hey,

we are digital platform is great. It's really growing. We're buying cars online from people. They're doing the same business model as carbon and they're saying we can do all that as well. Um, and are you abili some of them can do it better because they already have all these dealerships that are full of mechanics and people that can recondition these cars. Um. So it's not going away

it's kind of snowballing. What's interesting is you know the Craigslift transaction which is like twenty million cars a year, or Facebook marketplace, you choose, you choose it. Um, that stuff is going to go away because it's not it's not a great experience anyways. And you know Uncle Jimmy's car lot, That's what I was going to ask about, because yeah, well but that's a that's a in a

lot of parts of America. That's where people do by their use cars and traditional all my siblings like, that's where my dad would go to the the score a lot. Those days coming to a to an end, I think those guys are gonna have a tough time. Um. You know, there are services out there that will you know, sort of stand up and online marketplace for those guys, or you know, they can certainly sell cars online and Cargurus or some of these other sites that the democratizing the

Internet a little bit. But if they don't have the chop um, if they don't have the I t um sort of intelligence to evolve, they're gonna get squeezed out or or acquired. That's what I was going to ask you, Kyle, is there gonna be consolidation. Sounds like there's a lot of players doing similar things and that there might be some power if a few of them line up together.

Should we anticipate that? Yes? Absolutely. Um. You know, the retail auto industry in this country is incredibly fragmented, Like the biggest player has like two or three percent of the market. Um, that's CarMax, um if I if I recall correctly, So there's a ton of room for for M and A and people to tie up. And then again, you know the used car markets forty million cars a year and like I said, about half of those are just peer to peer. Um, so yeah it things are

going to change very quickly. So, Kyle, the little confession since we last spoke, I think, was that I actually happened to use carbona to sell that old Super U

remember that one? Yeah, Yeah, and I went and I went Tesla, I got I got him on the one you did, Okay, Yeah, so I think that, but you made money right it was It basically was a wash where I was able to like buy the super right before the pandemic you and then was like wait a second, I could upgrade and get as much as I paid for it and like why wouldn't you write and like that. And the beauty of these apps is like the carbona thing is like, you know, you just put it in

and that tells you what your number is. And then if you don't like the number, like try again next week and maybe it goes up right because there's a short pitch. They basically it's like a game. They've gamified it. I think in this way that makes you if you know, if you're dreaming about maybe even not having a car, it's like, wow, somebody will show up and take this thing away and give me, give me money. That sounds great. I love it. I love it. I want to deal

with the riff raff from Craigslift. Sign me up. Put the coin in. He put the coin in exactly. Hey, Kyle, great stuff. Always appreciate checking in with you, Kyle Stock. He's senior correspondent Bloomberg News. Check out his story the upcoming issue of Bloomberg Business Week. Joe Webber buying cars cars. Who he's doing this Southside? I'll give you a right that was a no editor of Bloomberg Business Week. You

are listening to Bloomberg right now. This is the big take the best of Bloomberg's in depth original reporting from a run the globe. Well, we actually make sure we do, as the economy covers is what cut the data kind of broken down a bit. It's fun to becoming more and more expensive to be looking at the shipping billion dollars for the re entry levels, ways of immigration that have faced a lot of resistance, a lot of color behind the scenes in a great untold story. How did

Bezos really come out on top? It's the cover, says Jeff Wins. He always seems to win the Big Take on Bloomberg Radio, and it's also among our most read stories on the Bloomberg Today. It is the Bloomberg Big Take. It's one story that you need to have on your radar today. It's about the one country on Earth that puts more breakfasts on kitchen tables tim than any other. Joining us now is Leslie Patton, consumer reporter at Bloomberg News.

Leslie joins us on the phone from Chicago. This is one of those stories less of that I read, and I think to myself, we don't actually know where everything comes from that we consume, and we have to be reminded that we are one. We are one society that is all connected around the world, and what happens in bill kind of serious implications around the world. Yes, that's right.

I think a lot of people really think of coffee when you think of Brazil, right, so you you know, if you're drinking coffee in the morning, there's a decent chance at least some of it came from Brazil. But what about other things we don't We don't even know about orange juice, sugar, corn and soy that's that's used as animal feed. Yeah, it's so much stuff. Orange juice was another one that I was like, really, I didn't know that. I always think of like Florida or I

don't know. They've caught me in here. Um there's a quote in here that really jumped out at me. Um Leslie. The world is on a very dangerous path. And this is from a meteorologist at Brazil's Natural Disaster Monitoring an alert center talked to us a little bit more about what you guys found in this reporting, right, So, I think a lot of it is The scariest part is the unknown. So we're we're dealing with these issues of

rising global temperatures. I don't think you know that that we have hard data on that, and then we're seeing more and more episodes of this extreme weather, drought, bloods um frost in areas that don't normally get that. It's it's wiping out crops, and I think we just don't know yet what the ultimate impact could be if things don't improve with with basically, I think you can boil it down to climate change, but we're already seeing some

of those some of those consequences play out. The cost of coffee, the cost of other raw materials, and the cost of food for many people in the world. It's going up and it hits a lot of people really hard. Yes, absolutely, I've written about this phenomenon to just over the summer, is that globally, food inflation is on the rise. It's you know, it's not only people think of maybe it's driven by the the pandemic and people stocking up ensure.

That may be a part of it, but even before that, you know, we have these issues of rising global temperatures, you know, eliminating some of our food and and that issue. From what I've seen and what you can read in the story, it's getting worse. And like you said, it's it's already, it's already happening. It's here now. So I guess some maybe are listening Leslie, and they're thinking, Okay, yep,

we're having some extreme problems right now. We know about the supply chain disruptions, the pandemic, people not going to work, maybe production levels are down, or we can't get stuff shipped from point A to point b um. But I do hear you loud and clear that you're also talking about climate change. How much, though, is some of that pandemic disruption? How much of it though, is really climate change? And folks, this is where we are today and it's

only going to get worse unless we do something different. Yeah, I mean, I think that's right. It is the pandemic, but it's also this this climate change. I think that's

probably the biggest portion of it. That's been going on for some time and people have been talking about it, But of course the pandemic is a little more top of mind, right because that's newer, So people are maybe a little more quick to blame it on the pandemic and some of these supply chain disruptions that they say are temporary, but you know, with these rising global temperatures that that does not appear to be temporary, right, right.

And it's also if I think about team like producers, maybe they shift or or are buying shifts right because the seasonality. But you know, it's Brazil, it's Chili, it's Argentina, it's the United States, it's Mexico, it's Russia, my home state, which is running out of water. And this is a state that provides so much agricultural output to many parts of the United States and in parts of the world. And I wonder, Leslie, what ends up happening here because

we can't reverse this. It's I mean, I don't want to say we can't, but I'm not optimistic about it. Uh. And but I wonder, do we have to move food production to other parts of the world that haven't hit been hit as hard by climate change yet? Yeah? And I think again, that's something that's already happening. Like I've seen instances of things that used to be farmed in southern or kind of like mid California area moving to northern California or even you know, Oregon or Washington State

because it's it's not as hot there anymore. And maybe the drought situation isn't as bad there, so I think, you know at that point, that's that's happening absolutely in terms of pricing. Are we increasingly seeing producers just have to up pricing because the supplied demand equation is kind of forcing them to and they just can't write it out because it may not change anytime soon unfortunately. Yes, I mean, I think I think the inflation factor is

here at least for a while. Um, maybe the inflation rate starts to decrease, but but we still have this inflation right, and it doesn't appear to be temporary because wages are going up. We can look across the labor market and see that that pay for people has going up. And you can't just, you know, decrease someone's pay after you've raised their wages in a wearer house or a chicken flaughtering plant or wherever it is. That it doesn't work that way. All right, We're gonna leave it on that.

It is the Bloomberg Big Take on this Tuesday, Leslie Patton, thank you so much, consumer reporter at Bloomberg News, talking about what's going on in Brazil. But that is just indicative of the food inflation that we are really increasingly seeing in lots of other places around the world. Check out this story at Bloomberg dot com. Also on the Bloomberg Terminal again, Today's big take ruined Brazil harvest, sparks,

food inflation everywhere. We have been watching and talking about shares of Wells Fargo stockdown about two point three percent today. That's after losing about three quarters of a percent yesterday's trading was down there tim more than five percent. Feels like every day. I shouldn't say that, but it's been several years where there have been problems coming out about Wells Fargo in their operations, and we learned about another

one yesterday. For the second time in a month, Wells fargoes Judy shareholders sold at stock over regulatory and legal troubles after the d o J slapped the firm with a thirty seven million dollar fine on Monday. Joining us now is Hannah Levitt, finance reporter for Bloomberg News. She joins us on the phone from New York City. Hannah, take us into this. This the latest challenge that Wells

Fargo had with with regulators. Yes, so thanks for having me. Um. They settled with the Justice Department yesterday for overcharging clients perform exchange transactions. And um that's a problem that came to light in so a few years ago. It was one of the many things that merged across business lines after the fake accounts revelation. UM So they were find thirty seven million by the DJ and also paid clients

thirty five million to make them whole. UM. So, you know, this is one of the things that's been out there, and it's you know, with the settlement kind of closing the door on it. Um and and it's worth you know, making the distinction between that and the stuff we saw a couple of weeks ago. And is this another one? For give me, I'm quick, just catching up to speed here in terms of just looking at the story. Did

they again? I always find it fascinating, can that when you've got companies come out pay millions of dollars in fine but admit no wrongdoing. Yeah, I mean, and they've they've done you know, they've had various settlements over over the years that of UM gone you know further into that or not UM and so, yeah, but I mean, I think it's important to note that the behavior highlighted in this one took place between UM, and that's before

the current management team was there. So Charlie Sharf, the current CEO, took over in that job in twenty nineteen, and he joined from the outside after two CEOs resigned UM, you know, during these scandals, and has brought in a

management team that largely is also from the outside. Do you get the feeling that they're still coming through operations to see if there's any other surprises out there or other problems with with a firm that, like a lot of financial institutions right are often promoting within, bringing people up through the ranks, and they're sometimes as a result, there's a culture that's created that maybe somehow is permissive of some of these behaviors or or or does it

maybe notice things as quickly. Yeah, So, I mean the biggest, the biggest regulatory thing that UM that Wells has in place as far as investors are concerned, is the asset cap and that is a federal reserve order preventing them from growing beyond their side at the end of UM. So that can be really restrictive, and as part of that, they really have to overhaul UM operations and controls and things like that, and so that's still in placed. UM.

So you know that's definitely worth noting. UM. But what when one really sharp took over he did, um, you know, conduct really deep dives into the business lines, UM, and they sold a couple and he said that he spends you know, almost all of his time on regulatory work. So what do investors need to know? Because it does seem like even though this was telegraphed, they did. It did catch some investors by surprise because we saw shares of Wells Fargo move lower on the day before ultimately

settling down just dis fractionally. They fell as much as three point seven percent yesterday. And what caught him off guard? What do investors need to to kind of be buckled up for? And it is up this year, so it's been on a tear. Yeah, so it took a m We took a quick dip yesterday and then bounced back and then it's down today. I think, as of a few minutes ago, was the second worst performer in the

KBW Bank Index. UM. So you know, I think I think the thing for investors and uh, you know analysts have written notes and said as much in the past twenty four hours is that UM people are a bit jittery when it comes to Wells Fargo when they see UM headline and stories that are related to regulatory things, just because it has been at this point half a decade of you know, it really was UM over five

years ago that the fake account scandal first emerged. There's just been a really long time, right, Exactly does the street in general, do big investors seem to feel like Charlie schaff is doing all the right things that need to be and the necessary things that need to be done at that company? I mean, like you just said, the stock is up fifty some per cents this year, so I think that that is a yes. Yeah, there's

no cells on it either. Fifteen buys, twelve holds. What are you watching out as you continue to cover this company? What are the kind of key metrics that you think investors should be watching maybe over the next six or twelve months. Yeah, that's a great question. So you know, there are a lot of these kind of outstanding UM issues. So you know, as you as you probably recall, when the fake accounts issue came out, then problems multiplied really

flee across the line. So there were problems in auto and mortgage and you know FX as we're seeing a different things. So I'm looking at, um you know the extent which they work through some of these things, and um, you know the extent to which they don't. All right, good stuff. UM, thank you so much, really appreciate it. Hannah Levit, she's our Bloomberg News Finance reporter on the

phone in New York City. The latest on Wells Fargo and as we did talk about shares, Uh, they are lowered down about two point eight percent, but again they have been on a tear up more than so far this year. I'm broc a journal now, but you let me drive, No, no, no, please, I'll do the righting vel. I want to drive, just drives the questions trying to the Globe Bomber radio. We are ten minutes away from the closing bell, and we are seeing the selling pick up.

We've taken another leg down going back to our loads of the session, as you heard Charlie mentioned, down two percent on the S and P five hundred Dow Jones Industrial average, a decline a five hundred eighty three points, down one point seven percent, NASDAC taking the biggest hit on a percentage basis of those three down two point eight percent for decline a four twenty one points. Let's get to it. The Drive to the Close with Jimmy Lee,

founder and CEO at the Wealth Consulting Group. They're an independent wealth management r I, a registered investment advisory firm. They've got about two billion in assets under management. And Jimmy joins us on the phone in Las Vegas. If you were a betting man, Jimmy Lee, would you be betting that we are on our way to a technical correction at this point? More moved down when it comes

to the equity trade or not. Well, thanks for having me on your show, and I am in Las Vegas, but I don't spend too much time on the gambling tables into casinos. So I would say that, Um, from the sell off that we're seeing today, it's broad based. UM. I believe that we're going to see a little bit of buying on this dip. Um could we get to a ten percent range? Possibly, if we don't get some follow through on maybe some buying on this dip, certainly we can get there. But I believe that around the

ten percent range would get heavy, heavy buying. So I still believe that even though that the buying the dip sounds like a tired trading strategy, I still think it's the right thing to do. Why is that, Well, I think that it's really tough to fight to fed. We've got a lot of money out there. I think that certainly, while there's a lot of big ering going on in Congress, we're still we're gonna get some more money, um into the economy, maybe a little bit more through businesses this time.

I think we'll get some sort of infrastructure bill, and when the spending bill finally gets passed, it's going to provide more liquidity. And today I know that the idea of not passing okay a build for the spending budget is in the news and and you know, um, I heard Secretary Yellen talk about how dramatic it would be for the economy and the markets that that didn't happen. And but we've seen this happen before, so I think

the playbook has been written. And um, I think the politicians hopefully will get their stuff together and it will create more, you know, more liquidity to continue this bull market that I believe we're in to move up in rates. How do you see it? And that has certainly been one of our big market stories. Over the past week. We have seen significant moves Right now that tenure yield with the yield of one point fifty three almost one fifty four, just below it shorter end of the yel curve.

We did see some movement on that today right now yielding point three zero. Is it because of inflation concerns? Is it because of optimism over the economy recovering. Is it about more and more central banks around the world learning more hawkish, or all of the above. I think it's a little bit of all the above, But generally inflation is the news of the day, and uh I actually believe that we could see one point seven five or higher before the end of the year. Is that

is that just because of inflation? Are also economic recovery? I think part of it will be, or most of it will be inflation concerns and whether whether or not it truly is transitory or if it's more of a

longer term issue to deal with. I think there are a lot of people that believe it's a longer term issue that we're gonna have to deal it with, and so, but I believe that's a short term I think the rise in interest rates will be more of a short term thing, meaning that the inflation fear is going to be in the news a lot over the next several months.

But I think as uh, you know, hopefully as the supply situation helps out a little bit, and um, you know, we see a little bit more of a balance in the economy and maybe controlling a little bit a little bit better control on on on wages. Um, you know, right now, I think companies still have pricing power, and so in most industries, I think that the consumers end up paying more, and so I truly do believe we

have inflation. But you know, longer term, am I convinced that we've got the phenomentals in place for a lot of growth once we get past this pandemic time arizon. I'm not sure about that. And so there are you know, certain investors out there. Kathy would obviously is very popular to listen to these days, but I've got to give her a little bit of credibility in the sense that I'm not convinced that we're in the super high growth mode forever. I don't. I don't. I'm not sure if

that's the case now. I disagree with buying into maybe you know, valuations of companies that are trading at skyrocket numbers and continuing to bet that they can hit lights out every single quarter. I'm a little cautious of that, but I still believe that liquidity is feeling the markets, especially the equity markets, be very cautious. As a textincom investor, what you're doing going forward, especially for the next few months.

What about you, immy, if you've got some cash on the on the able right now, how would you be positioning portfolios? We're buying and um certainly we're trying to buy more into sectors that we think benefit from rising insrust rates. But the other thing that I believe is that the value trade, in the cyclical trade, I think we've got a leg up more another leg up before the sentence um once the delta variant and COVID situation

continues to improve. And if you think about six months out, you think about, you know, in the developed world, how much of the world's gonna be vaccinated and how that's going to relate to you know, you know, businesses the opening and certain industries benefiting for that. So you know,

like for certain sectors like the airlines. I'm not sure business travel is gonna come back right away, right because a lot of companies are looking at the stavings from not having to spend so many, so much money on business travel. And I think work from home is here to stay to some degree, right, So I think that's going to be affected. But maybe other other industries such as you know, cruise lines and things that might benefit from this resurgence. Again, I think we'll see when consumers

start spending. I truly believe that as we get onto the wintertime, the consumer is gonna lead us to new market highs well. And we're definitely seeing, you know, Carnival. It has been on a tear a little bit lower today, but it's been up I think one to three four five or so four or five days in a row as they're getting more ships out to see. In fact, it was up about three seven yesterday. Hey Jimmy, we've

got to run, but thanks for weighing in. Jimmy Lee, founder and chief executive officer at the Wealth Consulting Group Registered, all right, I should say, and uh an independent wealth management firm joining us on the phone from Las Vegas. Thanks for listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud, or Bloomberg dot com, and you can also listen to our radio show at two pm Eastern on Bloomberg Radio or watch us on YouTube search Bloomberg Global News