  after 10th street meetings with 10 hikes the fed finally hitting pause the count onto the close begins im romaine bostick katie and im katie greifeld what we saw out of that press conference at 230 putting it all together in market having to digest the future of future that might be less certain than what it had been pricing before take a look at some of the individual movers we still see strength in chip stocks and tech as well as some of the discretionary names you see citigroup down 1 you see the homebuilders also down a lot of the rate centered incentives down for the day and a complete collapse we saw in the oil space the moves we have been saying like unitedhealth concerned about higher medical costs katie this comes after we heard from the man himself chair powell spoke about the challenges of bringing down inflation chair powell inflation powers  pressures continue to run high despite elevated inflation longerterm inflation expectations appear to remain well anchored in a broad range of surveys of households businesses forecasters as well as measures from financial markets we are strongly committed to returning inflation to our 2 objective katie we have chief economist here on set with us the mood going into this meeting was that the fed was basically going to give us a hawkish hold when you think about what we got in the dot plot what we heard from jerome powell in the press conference did they achieve that   i think they succeeded in what we expected delivering a hawkish skip it did signal were rate hikes are coming during the press conference reversed a good deal of that they for sure are trying to tell us that core inflation is too high and it was emphasized that core inflation has been too high for the last six months the markets are still chewing on that measure romaine lets take a step back we are five to 525 everyone is focused on the dot plot 18 policymakers 12 of them penciling in rates to be up up with the market had already priced in if that is the case if those 12 members believe that why pause   it is a bit of a puzzle and why call the next meeting a live meeting he could have said we expect to hike rates at the next meeting but this whole idea that time has to be straightened out before we can think about when we want to hike in particular with all of the height  rate hike it seems very odd from a perspective that hikes are already having a negative impact on interest rates romaine when you heard his comment about the idea that they had to be speedy and starting this rate hiking cycle the argument seems to be making now is you can downshift maybe you do something at a slower pace but  doesnt that belie the whole idea   as you just said if you think inflation is too high today you should be hiking rates today i think the challenge is to say we will get a lot more rate hikes theres a lot of disagreement in terms of how many more we will get everyone says we will have a lot more rate hikes and if we do get 2 3 even for more if there is so much worry today why not just hike rates today katie lets talk about why they might have to keep going on this path if you want to call today escape or apposite think it was interesting the key to get wage inflation dont is the looser labor market the labor market resilience has been one of the mysteries one of the interesting parts of this cycle when you look at that do you see evidence that we are in a wage price spiral   the surprise has been up to this point that the labor market is still so strong the main reason as there is still a lot of savings left we were accumulated during the pandemic 5 trillion expansion and that 10 trillion is out there supporting consumption there supporting how many fly on airplanes go to restaurants and supporting inflation they did emphasized repeatedly that services inflation remains to elevated i think the risk going forward is the are simply not raising rates enough compared to the stickiness in inflation that they are worried about therefore the timing issue of if youre not so worried about inflation today they should be rate  hiking rates today katie lets talk about the other side of that which is the possibility of cuts we heard from powell himself saying that talking about a couple years out for rate cuts there was some potential confusion over that comment versus the dot plot but in terms of the catalyst for a rate cut does it have to be the us entering a recession   i think hes trying to say because you asked how much would be needed to do to come down what was really interesting about his comment was he is basically saying the cost of capital is going to stay high and potentially fall if thats the case that means that tech growth venture capital is under more pressure if the cost of financing is going to stay high that soy the market reaction today is quite surprising in my view because markets should be worried that rates are going to stay more elevated for longer as a result of purely saying we are not going to cut rates definitely not this year and maybe not even before we get to the middle of next her romaine there is a question about whether the rates stay elevated that in i guess we drive that here when you look at the projections for gdp etc set in line with your view are you comfortable with that   they change their view today saying a tailwind from excess savings are still here thats what is youre saying they forward the unemployment rate and raise the gdp forecast and saying we have to keep rates higher for longer i think thats the right way of looking at it we have not got the recession remember the reception is the goal weve been waiting for the wolf is coming and the wolf hasnt still arrived it was to say you know what the wolf still hasnt over of some maybe we do need to signal very strongly that rates are going to stay high romaine are you still thinking that position   i think we will have a recession this year and that will be enough how sticky is inflation i think the recession is coming romaine always great to catch up with you helping as to wrap up what has been a very historic day here 10th street rate hikes we have gotten over the past year at least for now that is on pause we are counting you dont to the closing bell full market coverage as we take you to the belt and beyond announcer beyond the bell bloombergs comprehensive crossplatform coverage starts right now ♪ romaine we are two minutes away from the end of the trading day romaine bostick and katie greifeld counting you down to the closing bell here to help us matt miller and carol massar welcome to our audiences across bloomberg we came into today knowing that this was going to be a pivotal day when it comes to monetary policy we expected a pause we got it appeared now is a lot of debate carol you kind of could have made the argument for pause cut rate increase for a lot of things at this point i am thinking about july i am concerned about what jay powell said in terms of rate cuts that it is a few years in the making that says an awful lot about the fed outlook matt it seems strange they were not to datadependent at this meeting because the data was hot if they had been it would have been a hike they do say they are continuing to be datadependent but when asked which data they said we will know it when we see it which is worrisome that the federal reserve cant clarify the data points they are watching or at least they dont want to they are still saying the risk is to the upside for inflation even though they added two hikes to the dot plot for this year they raised their inflation forecasts added two hikes and they are still concerned about risk to the upside carol just because they say skip does not mean it is a skip romaine they made that clear they did raise economic projections for gdp there may be a case if you want to play devils advocate that this economy can withstand yet another rate increase later this year meanwhile the markets appeared to take it in stride a lot of oscillations throughout the day the dow jones industrial average lower by 7 s  p 500 is effectively going to close unchanged the nasdaq composite up by 4 the russell 2000 that was a laggard all day and remains a laggard at the close carol i wonder if that is telling in terms of small caps and what it says about nervousness in the domestic economy that is an important data point the s  p like you said we almost ended where we were prior to the fed decision we have had just about half of the names higher that is where we ended matt we also ended above where the s  p was before the fed started hiking rates which i think is fascinating that we have come full circle when we look at industry groups it is interesting that tech continues to climb even though we got an extra hike on the dot plot it was the biggest gainer consumer staples makes sense because if you are worried about the market in the face of higher rates you will buy defensive stocks and real estate everything else was down carol lets get to the names that showed gains nike number one on the s  p 500 that stock ending up just about 57 below its highs of the session there was reporting that the softer ppi report the prices of imports may be coming down for nike that means material costs are lower end that is going to improve margins and their overall profitability maybe that is why you saw nike higher today coherent we continue to watch everything in the semi space looking for an intraday basis its biggest gain in two years trading volume surging the stock finishing up 14 the company unveiled new  that are primed for electric vehicle manufacturers next decade went up 51 this is after total energies agreed to buy 705 they are developing a terminal to export liquefied natural gas in texas an energy play continues romaine i want to add more apple closing on a fresh record high the i know  i know you travel delta airlines and most of the travel sector was up again delta is on a 14 day run you see a lot of strengths in services and discretionary names carol people are still flying whos next katie me there has been love her cruise liners but lets talk decliners united health obviously a lot of interesting moves in the insurance space spurred by united health their ceo came out at an investor conference and said seniors are catching up on surgeries that maybe they had deferred the cfo warned that secondquarter premium revenues spent on care may be at the upper end or moderately above expectations knighted healths worst day since 2020 as a result romaine i thought it was interesting some of the big gainers on the day were medical device companies who would benefit from some price increases katie may be a pair trade cinemark got a downgrade from a buy saying basically the film slate for 20242020 five is looking increasingly uncertain amid the writers strike off by 6 finally  go on romaine you saw disney pushing a lot of movie franchise dates back it is interesting katie it is getting serious matt i cant believe how big avatar two was did anyone you know see that katie i didnt matt a huge draw it is worrisome that star wars has been pushed back to 2027 romaine some of those dates were out in 2030 thats longterm planning even the fed doesnt project that far katie i am holding out for cats two romaine did you see cats katie it was the last movie i saw before the pandemic it was great anyway regional banks one of several regional banks coming out this week warning about net interest income saying today it is reducing guidance for fullyear net interest income we also heard from the bank saying it is no longer pursuing new office cre originations that is marrying two concerns regional banks consumer real estate romaine a quick check on the treasury markets a lot of volatility on any day where the fed makes a big rate decision your two year yield drifting higher only by three basis points at one point it was up 13 basis points third  the rest of the curve lower slightly on the day we should point out we continue to see a deeper reinversion of the curve we saw it get back to positive territory but now sinking much deeper carol while we look at rates and you talk about that it is important coming off a fed meeting but i think about what jay powell said about being strongly committed to bringing inflation to goal is that wavering like we are going to do it i do wonder is 2 realistic romaine you are still hung up on 2 carol im  i am if the fed is matt they had better be romaine they are not seeing to percent this year what was it three something this year matt you remember when ben bernanke went on 60 minutes he said we could crush inflation at the drop of a hat no problem we are worried about deflation now we see that isnt true unless they are fully committed if they really want to beat inflation they have to raise rates romaine havent they beaten it and i know they are nowhere near 2 but when you look at 4 cpi the headline number from wherever we were there is an argument to be made that what they have done whether it is directly attributable to rate hikes has had an effect carol they are forecasting for core inflation higher numbers for 2023 my point is that we know it was not going to be a straight drop as you get closer to the target  matt i want to get to the target i dont need a straight drop but we need to bring inflation down over time to a more reasonable level for people who lived on fixed income katie and i talk to somebody today who said fiscal spending could pick up next year that is upward pressure on inflation romaine no matt  told us she thinks fiscal spending could pick up into 2024 carol alright kids we are going to take this outside romaine we spent months talking about this remember the debt ceiling matt asked katie katie i was there we can roll back the tape romaine did i just wake up in another dimension carol did anybody ask jay powell what his favorite dead song is matt i think it may be not fade away carol nicely done we will continue with romaine and matt may be offline that is going to do it for our crossplatform coverage romaine whats your phone number carol we will see you at the same time same place at 300 and 400 tomorrow romaine we continue our coverage on bloomberg television we know what the fed did and we have seen market reaction a lot of repricing in the rate space jay barry joins us after the break this is bloomberg ♪ romaine  have spoken making clear what the fed said and with the market now needs to price in a lot of volatility today as is normal on fed decision day it looked like the s  p was headed for a fifth straight day of gains it oscillated back and forth until we got to 400 managing to squeak out a modest gain i guess some people will take it that is called a trend line it is momentum for now the momentum remains in place the nasdaq doing its best to stay afloat dow transports this wasnt all just big tech leading the charge we did see cyclical names and discretionary names like the travel stocks even some apparel companies like nike also doing its own some optimism when it comes to consumer spending some optimism on that comes to what the market can do next with apple at a record high and has slick continuing to hold onto one of the best streaks all year and also artificial intelligence and how that may continue to power the rally macro concerns ahead you see that reflected in the yield curve sort of a reinversion of the reinversion we had started to bounce back in march and april it looked like we were going back into positive territory but now we are stuck at 90 basis points a big question going forward is what the market is ready to price back in katie for more analysis on with this market is pricing in on what the future might look like jay barry jp morgan cohead of us rate strategy joins us lets talk about the yield curve its continuing to invert the reason we care so much is for its recession signaling but the yield curve inverted over a year ago you could say it seems like everyone is starting to push back recession forecasts you heard what powell said today did not sound like he is too concerned about that possibility when you look at the dot plot is the yield curve wrong   i dont know if the yield curve is wrong we have made the case for a while that the yield curve certainly reflects that there is little that has changed but the fundamental nature of the economy you saw that in the projections today the dots for 2023 through 2020 five increase the longer run didnt move which makes you think trend growth rates probably havent moved the fed is saying we need to be more restrictive naturally if that is the case that is going to affect the front end more i am not surprised that we have necessarily inverted further if the fed is saying they have got to go more restrictive and stay there there is to make us think the neutral interest rates are actually higher romaine you hear that partly out of the language when he was asked about rate cuts and he made it clear he did not see that happening for a couple of years do you buy into the idea that they will resume rate hikes this year   we have been in the camp that the fed is done we have been saying there is a probability of another hike at the july meeting we would like to look at the employment data and see what it tells us if we get another report with the plate  that may raise that risk but we are of the mind that the fed thinks that monetary policy operates with long legs if that is the case it should be going on hold but we also think inflation is not going to moderate quickly we see the fed remaining on hold until next year romaine i will cherry pick the headline number 4 or whatever suppose we linger around that number for investors in the fixed income space is that something they can live with the equity market has made their peace with that for now   the way we are priced with the peak into the curve coming out in september with basically another rate hike priced in the market is saying the fed will be restrictive through this year and into next but not as much as the fed is saying if those expectations have to price higher it is going to mean yields probably need to move higher i think we are going to have to see exactly how the data people spirit  detail evolveds katie where do you position around that inside the curve do you stay in the front end where if the fed is on hold i have heard people say that makes more sense just click coupons when it is  when is it time to move into duration   rates peak months after the latest if we push out that peak the timeline is moving out as well we have been approaching it from a more tactical perspective and saying how we are priced for the next couple of meetings with yields that have held since regional bank failures that there is an opportunity to add we would rather be tactical there is still a negative carry trade to be long if the fed risk keeps going this may be shortlived instead we think probably if you are going to focus your duration longs anywhere the best place to go is the fiveyear sector it is pretty consistent and tends to be the anchor in any direction katie we have had heard a lot of love for the belly that is the technical  tactical walk us through what the structural trade will look like   structurally it is steeper that is something we have been positioned for we saw the curve steepen out now it has flattened it has been more painful consistently when you were at the end of a tightening cycle the long end of the curve doesnt do much but then it consistently steepens we think there is a case there is asymmetry but beyond that if we consider things away from rate policy the shrinkage on the balance sheets but there is a stock effect and every percentage point decrease relative to the size of the market should steepen the curve by a handful of basis points and because inflation expectations are higher that supports a steeper curve perhaps the fact we are moving out the timing to the last expected rate hike may make it more challenging but for mediumterm we think it is the next big trade romaine i have to ask you about the treasury refunding and whether that is material   we are about 200 billion dollars of net issuance into this flood we are of the mind that it really shouldnt be impactful on rates if you go back over the last 10 to 20 years and a large changes in tbill outstanding subsea and minimal changes today we are talking  so there is not evidence that when the treasury has been forced to ramp up that it has an impact on rate levels i think that is because demand is elastic while pricing is inelastic it should be well absorbed but the bigger story is as the fed balance sheet comes down depending on the mix between reserves and rop if reserves continue to come down banks are going to be more cautious their stance is to try to remain liquid romaine we have heard anecdotally from a lot of banks that have talked about doing that i know we havent gotten to bigger banks but when we talk about super regional banks saying they are pulling back on certain types of mortgages is there a fear that that becomes broader that that broadens out to more loans   our base case is just a tightening of credit conditions which will ultimately lead us to a point where the economy is contracting at a modest rate but it is not linear the consumer is still relatively healthy corporate balance sheets are healthy corporates been turning out debt state local governments are in good shape there is room for the economy to accelerate but we do not see nonlinearity romaine we appreciate you taking the time jay barry cohead of us rate strategy helping us break down market reaction in market pricing as we wait to find out if this truly was a skip or the end of the rate tightening cycle we will focus on the homebuilding sector as some resiliency we are seeing from that space expecting earnings to drop from lennar a full breakdown after the break this is bloomberg romaine at his news conference jerome powell here is what he had to say the housing market is moving up we heard from analysts saying there are several catalysts that could drive homebuilding stocks higher through the second half of the year we are waiting right now to get earnings out of lennar joining us is nora melinda lets talk about the sector overall we havent gotten the lennar earnings but one of the better performing stocks excluding outliers like nvidia and one of the better performing sectors in this is in the face of 5 rate hikes in 15 months what gives   it is a great place to be with homebuilders they are in an optimal position the sector is up 37 year to date outperforming the broader market outperforming the s  p 500 that is supported by multiple factors we had the fed decision earlier where the fed decided to pause and that is a deciding  for stocks but they are taking share from a lot of existing home sales we are seeing a lack of inventory it is a prime time for homebuilders and they are running off with that romaine if you are looking for a home you shouldnt be looking at the existing homes old homes we call those used homes if you want a new home you have to pay through the nose katie i am taking notes i gave up on the dream of being a homeowner for now we are heading into earnings season we are awaiting lennar what are the key themes that are going to be in focus when we do get these numbers   two things investors are looking at this season orders and gross margin those are the places that investors will be analyzing to see if these companies are actually beating metrics lennar which will be reporting today actually said that quarter one would be the lowest gross margin they would have for the year people are looking trying to see what they will save what the results will show and what that will save for the broader sector kb homes reports next week lots to look at romaine so their first quarter runs until the end of february there has been anecdotal evidence that since that quarter ended they have had a little more pricing power the idea was that they had to offer concessions because mortgage rates were high and people who needed the mortgage just couldnt do it are they not offering incentives   they are pulling back on incentives and a lot of markets they are gaining pricing power and data supports homebuilders they have more leverage than they did before looking into this quarter this season it will be interesting to see how they actually perform katie with the housing market tentatively thought as seasonable do we see that seasonality play out   it is a very that respect lennar is actually trading near record highs that is an interesting nugget to see if they will close near that high shortly the seasonality aspect is something that has been varying stock to stock romaine we brought you here to talk about the lennar earnings they didnt cooperate i am sure as you jump off they will cross the wire the housing sector when it comes to homebuilders has been more resilient than i think a lot of folks had been expecting we will get you earnings as they cross in the meantime a conversation with ethan harris bank of americas head of global economic research we get his thoughts here some of those economic projections going forward this is bloomberg ♪ katie lets look at how markets performed after the fed delivered that hawkish hold interesting market reaction masked by the numbers we ended on two year yield up three basis points that number had been north of 10 basis points but those moves were retraced and it turned into a bid yields down about two basis points the 30 year yield down four basis points the stock market you wouldnt know it but the s  p 500 finished the day 1 higher it had initially plunged after we got that decision but managed to fight big tech fared better come arising 7 the chips also caught a bid that index finishing 15 all the while the vix continuing to grind lower despite intraday volatility weve got the vix now below 14 i want to end on crude back below 70 a barrel now below 69 romaine lets continue this conversation with abigail doolittle i know you are watching as we got the fed decision a lot of volatility   indeed what stood out to a lot of folks was the idea the policy statement was taken as hawkish but then jay powell was taken as more dovish i dont agree with that last part i thought he was as hawkish as the statement the big attention here either way the fed median rate for 2023 5 6 the markets are pricing in more than two hikes worth of difference it will be interesting to see how that goes over the last year bond traders have been wrong who knows maybe the fed is going to be right also jay powell saying no cuts in 2023 not only that but for a few years i do not think he was as dovish as the markets took him to be but the s  p 500 is higher slightly the vix lower even though you now have a 13 handle that suggests a dovish read for sure the two year yield up just three basis all over the map at one point 10 basis points the bloomberg dollar index up 2 at one point up 5 then almost even than there you go this is the volatility katie was talking about the s  p 500 had been higher by 3 then down 6 at the end of the day folks tried to figure out what it means but it is not just the fed tomorrow we have the ecb widely expected to hike ahead of a potential pause and then the boj that is the one outlier central bank that has not gotten hawkish these are the inflation rates around the world and you can see we are basically coming down japan is lower than everyone else but still higher it will be interesting to see what other central banks do and how it influences assets in the us romaine lets keep the conversation going with ethan harris bank of america ahead of global economics research i want to get the ecb in a moment but i want to get your thoughts on what the fed did the increase in some of their forecast for gdp growth taking it up to 1 which seems to be bolstered partly by the strength of the labor market and more importantly maybe bolstering the idea of why the fed can keep rates higher for longer   i agree with abigail this is a hawkish statement by the fed they are backing up their forecast for two more rate hikes with a stronger forecasts both higher inflation and higher growth the bond market doesnt want to believe it they think the fed is bluffing and this is an attempt to jawbone the markets i think the fed is going to deliver the economy of warrants it it is resilient ultimately i think the  is too dovish romaine we talked about looking forward to the other central banks come with the ecb tomorrow the expectation based on market pricing is that they will continue their hikes we have seen resiliency in some of the economy is over there that fall under their purview   the global economy has done better than expected this year we came into the year with europe looking extremely horrible due to highenergy costs and uncertainty out of ukraine europe has outperformed and basically been flat europe still looks ok not great this is an economy growing below 1 never quite recovered from covid but europe has done better than expected this is what is forcing central banks to continue in their hiking paths katie talk to us about what type of christine lagarde we might hear tomorrow it seems we heard a hawkish jerome powell maybe they didnt agree but as abigail said we we pretty much stuck to what we saw in the statement what might we hear from christine lagarde   i would guess it is slightly hawkish they are likely to hike when you do that you have to explain why that means having a hawkish tone about still being concerned about high inflation europe doesnt have the same type of overheating labor market the inflation picture is worse i think it will be similar to what we had today with the fed that doesnt sound like they are done katie i also want to talk about china we saw supportive measures coming out of china when it comes to the reopening story the rebound of their economy maybe it is not playing out as bullish as it was coming into the year when you think about supportive measures entering the chinese economy right now what could that mean for the global economy   china has been hard to forecast they had a fantastic first quarter came roaring out of covid zero policies and then they had a disappointing second quarter they kind of stumbled i think it is going to matter a lot people are worried that the recovery in china may not be there but this is the tip of the iceberg on policy easing they are going to do more the most important thing is what is the attitude toward the state and local governments local government spending and credit revision in the economy those are the two main drivers of growth and they are going to try to turn the caps on again romaine circle back to the us i want to ask you more of a personal question about how you rate the communication we have gotten out of jay powell since the hiking cycle started there was a question posed earlier about a wage spiral the reporter sort of referenced the paper that ben bernanke put out questioning the correlation and causation of wages and inflation here i am curious as to the style that powell brought to the job the expertise he brought which was much different than the expertise that bernanke and greenspan brought how do you rate it so far now that we have seen the dust settle a little bit   he has had a challenge in the press conference sometimes the message feels a little different from the statement the opening statement he makes and the official directive from the fed part of the problem as i see it is he has the tendency to want to soft paddle things saying if this could happen that could happen therefore dont get too confident on exactly where things are headed but if you are trying to send a message that is hawkish where you are trying to say we will have probably more work to do then saying this could happen in that could happen undercuts the message the markets do not believe that the fed is going to hike their the market has always been below the fed part of that i think is the tendency to be honest about the uncertainties and outlook at a time in the market is looking for a more strong statement katie you think about why the fed is going to have to hike it was interesting on getting comments on core inflation he says there has not been much progress on core pce inflation he also said they are not seeing the kind of progress the fomc wants to see and then you think about the cpi numbers the yearoveryear numbers went up how troubling could that dynamic become for the fed as we get deeper into this year   at this stage everything is ok we are getting help from including surprised  we have not had much of a cooling off of the labor market which i do not think the fed is out to get the labor market but that is where the inflation risk sorry there is a risk year that we kind of get stuck on the weighted down we really do not want to be deceived by some of the weird stuff on the cpi these days i think you completely throw out a used car prices gasoline all of the stuff that goes up or down 3 or 4 you strip that out the true core rate of inflation is running at about 3 or 4 and that is too high it should be 2 or less they still have work to do romaine great stuff ethan harris bank of america a nice breakdown of what we saw on the day we want to get back to earnings some of the biggest movers after hours belong so home lennar shares up 3 those earnings just now crossing the wire fiscal second quarter eps came in at two dollars 94 cents that is a beach for the fiscal second quarter revenue came in at 8 billion that is also a beach the real headline the company expects to deliver more homes this year than previously estimated 60000 to 70000 homes the estimate was 62000 to 66000 beat all around it gets back to the resiliency when it comes to homebuilders we are going to continue our coverage on what is going on in the interest rate space as homebuilders grappled with interest rates while other businesses grapple with them and not in the best way supply chain issues and inflation pushing the number of corporate bankruptcies higher we speak with a restructuring expert after the break ♪ romaine interest calls for companies continue to rise 2023 shaping up to be one of the biggest years for chapter 11 bankruptcy according to the latest data inflation and high interest rates we have been talking about really driving a lot of corporate restructuring amelia pollard joins us bloomberg bankruptcy reporter to talk about what we know when it comes to the number of companies we have seen go down chapter 11   there have been 100 six major companies that have filed for bankruptcy this year that is the highest number since 2009 we have been neck and neck with 2020 figures the fact that we are even matching 2020 is surprising i think it is a sign that the economy and interest rates are hurting companies katie among those companies who have filed this year what is the common denominator   we have seen a couple of companies site supply chain issues still i think that most companies were hoping they had survived that era back in 2021 and obviously interest rates every single petition is mentioning interest rates romaine i saw data on interest costs up 22 on average the more you go into individual names it gets worse when we talk about the debt that is out there already particularly in secondary markets distressed debt we have seen some moderation in the amount of distressed debt outstanding is that a good sign or is it that companies have gone away   probably the fact that some companies have gone away it has been hovering around 300 million of distressed debt just in the us and that is huge if we see that number continue to take up there are big names that have started to surface as having distressed debt dish and carvana have become interesting i think we will see what shakes out for the rest of the year as well romaine amelia pollard a nice look at some of the data here that has been driving what we are seeing when it comes to the distressed space jonathan carson corporate restructuring expert and coceo of of firm in your business this is probably more opportunity than fear but when we talk about this uptick we have seen in the number of companies in distress is it more abnormal is there an abnormality   it feels different it feels like weve got a variety of macroeconomic factors that are driving the increased activity in the space as a result we are probably going to see a longerlasting dynamic and a broader swath of the economy get swept up we kind of referenced the s  p report consistent with what they are seeing we have seen something similar a broad range of industries affected in these rising numbers consumer discretionary industrial healthcare financial and energy it feels like this is more of a steady stream with a strong cadence of regular increased activity as opposed to a significant wave like we saw in 2020 romaine does that matter i have heard the argument before that this is going to be a slow burn compared to what we saw in 2011 or 2012 does that make a difference   it mainstream america it does you talk about corporate debt companies that have debt they borrow a lot of that is floatingrate debt it moves up and down with certain concessions such as fed funds a lot of those companies are going to have to deal with increased debt service costs that means less money available to operate the actual business that scenario can be really difficult we talk about interest rates in that same vein it was just mentioned a minute ago the highyield debt market companies that have significant debt maturities coming in 2024 or 2025 they are worried about the rising rate dynamic because refinancing debt will be difficult and costly compared to where they came from when they put it in place to begin with it is going to be here for a while and there will be an increase in the space for some time to come katie we hear about the maturity wall every once in a while it sounds scary when you look at the potential maturity wall that is approaching that space you say so far it has not been a wave like maybe we saw a couple of years ago do you think activity could spike from here what is the outlook   i think the outlook is a continued challenge for companies who have to refinance significant debt maturities whether they are large or small that dynamic is going to result in continued increase of activity in the corporate restructuring market whether by way of chapter 11 filings or even smaller filings that more effect to the main street of america as opposed to larger tier corporate space katie you spoke about macroeconomic factors rising interest rates supply chain issues what role did what we saw in march play in some of this activity we have seen specifically in the financial sector among regional names   volatility in the financial sector has also contributed to an increase in corporate restructuring activity without a doubt challenges confronted by regional banks spurred a handful of significant chapter 11 filings earlier this year we also see continued fallout and uncertainty from the cryptocurrency space and how that will shape out it seemed like that part of the market will still be going on for a bit as some of those issues get resolved in washington and other places romaine we talk about the bankruptcy process and the idea of how companies sort things out and how stakeholders sort things out is the process now going to be messy there has been discussion as to whether bondholders are on the same page that they would have been on past cycles partly because of the way debt had been issued over the last few years that may be favored others   there is a lot of interest  a lot of intricacy and that market corporate restructuring can result in drama that said this is the best system of its kind anywhere in the world our  allows for a fresh start whether for consumers or businesses if they confront the situation in a way they can navigate which not only provides opportunity for the business but transparency and expectation boundaries for those players in the space such as the distressed investor i am bullish that this path will continue to be a strategy a lot of companies will use that the betterment of their businesses in general romaine let me put a fine point on that because some of the companies there will be a big question on whether they are worth saving when we talk about success stories on companies that emerge from bankruptcy airlines general motors and then you have hostess i do not know if carvana falls into that were dish   our corporate restructuring system involves businesses that are stronger in businesses that are weaker this is going to have to prove its competitive value to creditors the court and other stakeholders if it is going to emerge as a stronger and better business that does happen on a regular basis sometimes it does not happen and the result is the business gets liquidated or sold as that is the right result for the office romaine jonathan carson coceo at stretto this is bloomberg romaine markets thursday we got the fed skin do you think the ecb will do the same katie theyve got a decision tomorrow and we will hear from christine lagarde herself romaine they have a much different situation there their situation is seeing resiliency but their issues may be harder to get under control in the us retail sales katie and very quickly we get empire manufacturing it will be interesting to weigh those numbers romaine consumer spending versus manufacturing numbers we may see that reflected in earnings we get earnings out of adobe and kroger katie two interesting results there maybe we will hear kroger bring up ai romaine that would be something balance of power is next this is bloomberg