Announcement. Michael mckee has the details on who will take the job. Michael we have a replacement forecaster, george, he is jeffrey smit jeffrey schmidt, the ceo of the school of banking at Southern Methodist university and will serve out the fiveyear term. He can be reappointed in 2020 six. He will be a Voting Member of the fomc in 2025. Hes a nebraska native, he began his career in 1981 as a field examiner based in the ftse in kansas city and he follows a trend at the Kansas City Fed because Esther George and her predecessor or Bank Examiners, and 1989 he became president of American National and oman moved on to mutual of omaha, the Insurance Company as per german and ceo. He has been running a familyowned bank in dallas, graduated from the university of nebraska, has a Business Administration degree, he is not an economist. He will take office august when he first, two or three days before the Kansas City Feds annual jackson hole symposium begins. So he will be there in time to give the welcoming address. Sonali very interesting timing. If you look at the type of tone he might take, you mentioned he will be a Voting Member eerie what is it mean in terms of the hawkish or dovish stance he might take relative to Esther George . Michael it is too early to tell. The Kansas City Fed is an unusual bank that likes to go with Bank Examiners so they do not have a long record in terms of their Monetary Policy views. We will have to do digging into him and see if he has said anything about it. Otherwise, we will have to see once he starts . Starts talking and joins the fed. Sonali thank you. Lets get a check in the markets because we are near session lows. The nasdaq one hundred taking a bigger dive than s p even as you look at it, 1 drop, more than that of the s p and 2 drop over the nasdaq 100. Dow jones industrial average also down almost 1 ,. 7 on the day. The vix is moving a bit higher at a 15 handle, 16 handle earlier in the day. Turning to yield, treasury refunding announcement was a big deal and had lesser moves in the two years and three years, three years being sold more. Tenure and 30 years seeing more movement here on the back of both of the funding announcements and the downgrade. Looking at the tenure at 4 08 and was at 409, the highest level since november. The king at the 30 year at 4. 18, eight basis move in the 30 year, a quite notable move at the longer end of the curve. The biggest door in markets is finch downgrading the u. S. Government debt, cutting the u. S. Sovereign credit grade one level from aaa to aa plus. The move comes two months after it warned the rating was under threat. Has lawmakers flirted with default by battling over raising the nation debt limit nations debt limit. This sparked criticism from washington and wall street including from lafayette college. Is it totally unjustified . Probably not. Having said that, the likelihood it has any impact on trading levels or the market i think even in the short run away from today or tomorrow, i think the likelihood of any impact is small at this moment. Sonali we welcome in now our Global Television and radio audiences, im sure nelly bessie, joined by richard francis, Fitch Ratings cohead of american sovereigns who made the call on the u. S. Downgrade. Richard, a lot of questions in the market. You got past the debt ceiling dispute. Why now . Richard we did, after the resolution of the debt ceiling with a fiscal responsibility mind you two to three days at the x state where they could possibly begin to not make some kind of obligations. We indicated we would resolve the rating watch in the Third Quarter and wanted to take the time, wanted to look at the impact of the fiscal responsibility act itself and on the debt level and we wanted to update our own numbers and look at where we think the fiscal trajectory of the debt is going and wanted to take stock of the actual debt ceiling debate and its resolution as well. We wanted to take our time and give a thoughtful analysis to both the fiscal picture and the governance issues as well. Sonali it is worth talking about the criteria you set out about a year ago about what it would take to get to a downgrade because some things have changed in terms of the picture. Lets start with the rise in debt to gdp ratio. The significant sustained rise did not be so significant or sustained. So why is that not factored in here in terms of the decision made more recently . Richard well the debt bubble has been rising and quite significantly. If you look at before the great financial crisis in 2007, debt to gdp was at below 60 and now it is 113 . The 113 is almost three times higher than the aaa median, more than twice as high as aa median. So you had sustained deterioration over the years. Debt to gdp during the pandemic at 120 has come down and that is because inflation and high of gdp growth and the withdrawal of the stimulus, especially last year. Now we see data levels starting to rise and we do not see them stabilizing, we see them continuing to rise in the next three years, probably more over the mediumterm. That percent is still 13 Percentage Points higher than where it was before the pandemic. You have had a deterioration on the fiscal debt side. Sonali what about the macroeconomic policy, the performance and prospects moving forward . In theory, this would be improved a lot from where we were a year ago. How is that factored in . Richard honest, obviously the macro picture is important. We are still calling for a recession in the Fourth Quarter and First Quarter of next year, a mild recession. If it turns out for whatever reason the u. S. Is able to urge a recession, that differs a views no doubt but doesnt move the needle in terms of underlying analysis. Deficits will remain high matter what and will continue to rise no matter what. We recognize why the strength of the u. S. , its dynamic economy, it is a large economy, per capita income is high in the United States and that supports the taxpayers. That is one of the key rating strengths. But i dont think it is enough [indiscernible] sonali i would love for you to respond to janet yellen who said she disagrees with your decision and it is based on outdated and arbitrary outdated data, im sorry. If it is indeed based on outdated data, do you agree with that and does it change the way you look at the picture moving forward . Richard i understand why she is not happy with the downgrade, that makes sense. I think what she is referring to specifically our governance indicators we use from the world bank, they come out once per year and tend to be backward looking. We use it because we had that data for every country in the world and it comes out once per year and we are able to use it for comparison sake, coming up with underlying governance, and it is little backward looking, but i think more importantly, over the last two decades, you have seen a deterioration in even these indicators. The United States started at the top of governance, toward the top, 91 percentile and now it is down to 78 percentile. So you see that continuous deterioration over the last two decades. Sonali what does this mean for the riskfree rate here . The idea here is treasuries are not as riskfree as they had been, the Gold Standard aaa rating. What does this mean for broader markets and do other countries, other securities face for the risk of downgrade, given how much the treasury market had underpinned the Financial Markets . Richard i think one of the ratings of the u. S. , the other key rating strength in addition to the dynamic economy i mentioned earlier is the reserve currency status of the United States. It is unparalleled, there is no theres not much of an alternative. The treasury markets are liquid and this gives the u. S. Government tremendous financing flexibility. I think that is a very key rating factor. The other thing i would mention is aa plus is the secondhighest rating we have, it is not a low rating, it is still a very high rating and we are just saying we do not think the underlying fiscal story and the governance is compatible with aaa anymore. Sonali bring us inside the conversation you have been having with the Biden Administration about this, given how heavily they disputed your decision. Richard i think part of the rating process we have across all the stocks, we do have conversations, we obviously take facts and figures and Different Things under consideration when we talk with them. It is not unusual. It is a similar conversation with any government. Sonali we thank you for your time. That is richard francis, the Fitch Ratings cohead of america sovereigns and one of the people behind the big decision on the u. S. Dog grade downgrade. Rendon hayes of guggenheim next on private restructuring and leverage loan markets. The default wave has been ticking higher. This is bloomberg. He snores like an angry rhino. Youve never heard an angry rhino. Baby i hear one every night. Every night. Okay. Ill work on that. Save up to 500 on the new sleep number® smart bed. Plus, free Home Delivery when you add an adjustable base. Shop now only at sleep number®. [mo] if youre thinking about going back to school, this is for you. I ended up spending less money my entire time at snhu than i did in just one year at my other university. [juan] my time at snhu has given me more confidence. Now i can go for that promotion. If youre ready to go back to school. You can do it. Southern New Hampshire university has changed my life. And it can change yours too. [announcer] visit snhu. Edu. Sonali this is Bloomberg Markets and im sure. Lets take a look at private a pretty firms because in the heat of earnings, shares of carlisle are lower after disturbing of all earnings tumbled 26 from a year earlier. This has the firm is under undertaking a review of businesses and working to review discipline on how it grows. We shipped over a little bit because private equity is one space where there have been anchored sees and we are going to talk to Brendan Hayes, that cohead of capital structure advisory at guggenheim securities. If we look at the market here, this is one day we are finally seeing red on the screen, it has been exuberant. If you look at spreads, highyield and Investment Grade sanguine, but you are seeing a different story. What is burning under the surface here . Brendan sure. When you look back over the last 10 to 15 years, prefinancial crisis, back when i was in leverage finance, we used to structure loans in two be Credit Ratings. Over the last five to 10 years, there has been loosening of credit standards and quality so we have seen most of the market moved to accepting be three or be minus credits, lbos or prefinancial prices if they got the ratings were hard to syndicate. The last five to 10 years, they have been syndicated to the point now where they make up roughly 30 of the market. Those lower Credit Ratings essentially lead to more defaults over time. We saw those companies in that Credit Rating spectrum about a year ago have negative cash flow, even before rates increased. Now we are seeing roughly 200 of those companies in the ratings category not be able to cover their interests. So we see strong clouds ahead. Sonali part of this is a function of higher interest rates. I am wondering how much of this is a story about liquidity and liquidity constraints moving forward. Especially with quantitative tightening moving forward, do markets get tighter from here . Is finance harder to come by . . Brendan it is more meaningfully difficult for those Critic Company so we help those come hes access the markets and it requires creativity. We are working a lot with those sponsorbacked companies and other companies on Liability Management. One of the reasons we renamed our group is we are looking at up and down sonali not because it is less scary . [laughter] brendan not at all. We are looking up and down the capital structure including moving assets around and executing Liability Management with supportive lenders. In some cases, that is private credit. Basically taking the place of clos that may not be interested in continuing to lend. Sonali thats an interesting question about the clo market because it is a story we have not doubled down on. How much capacity is there and is there concern you are not going to be able to offload leverage loans into the clo market as we have in the past . Brendan for sure. A cats back to the lower Credit Ratings and the fact that, for those companies, it is tough now to place those in clos. Newer clos are focused on higher credit quality names. In some cases, we see private credit come in and replace that demand. In many, we will have to use that creativity of Liability Management and look to raise capital on the other ways. Sonali we see a jump in the 10 year and 30 year and longer our wing costs longerterm borrowing costs rising. What does this mean for companies borrowing today . You see this downgraded to the United States but the ripple effects, i am wondering if the worst of the worst in the country will feel more pain just because the u. S. Sovereign is not necessarily worth what it was yesterday . Brendan it is not necessarily direct. Those pressures that increase rates lead to higher overall costs for these Leverage Companies and they are struggling. Not all of them but even those that have relatively healthy businesses, when you see raise rise from less than 1 over 5 now, that is a meaningful impact. You may not see the cash flow growth interest increase. Sonali when you see a meaningful takeup in instructions and when does a peak . Brendan we have seen some in 2023 but we expect more into 2024 and 2025. There is meaningful 2025 maturities, and as Companies Continue to operate on a world where they cannot go over their interest costs, they will need liquidity into 2024 and 2025. Sonali thank you for your time, that is Brendan Hayes at guggenheim securities. Still ahead, the u. S. Downgrade and impact on investor sentiment. This is bloomberg. 76 of 23andme Health Customers surveyed reported taking healthier actions. Because they know health isnt just a future state. Health happens now. Start your dnapowered Health Journey today with personalized insights from 23andme. Sonali this is Bloomberg Markets and im sure in today we have seen a meaningful move in credit in reaction to the u. S. Downgrade. The cost to ensure that against default in the United States in europe and asia are rising reflecting a broad risk out move risk move in the markets and treasuries and the longer end of the curve. We bring in Richard Zogheb head of markets at citigroup. The reason i want to talk to you so badly as we have seen Debt Capital Markets open up. It was like all clear, no more recession, everything is fine, borrowing costs are peaking, and now you have this. How does this change the story . Richard i think it only has a marginal impact. I dont think it changes the story dramatically. I dont think this is a complete surprise to anyone. I think fixed head actually signal they were thinking about doing this earlier this year when we had the standoff about debt ceiling, so obviously it has an impact on treasuries, i dont know it is 100 related to this, the fact the treasury came out and said they were increasing the size of the auction had any impact as well. I do not think this is completely surprised. It is clearly a little hick up, people will have to process it, it clearly takes borrowing costs up, but there is so much liquidity out there, there is a real sense that markets continue to be attractive, inflation is under control, that the type of recession we have is going to be modest. I think it is a small hiccup but i do not think it really derails what is white now right now a benign environment for credit. Sonali another part of this is the idea there are number of corporations currently standing that are rated above the United Statess rating by fits. You have a number of them also at the same group of ratings. What does this mean for anything that is rated above or at the same level as the United States, given this idea that can you even be worth more or rated more highly than the sovereign you are housed in . Richard first of all, the bad news is it is a very small group of companies that have ratings at or above the current sovereign rate for the u. S. Government. Italy aaa companies we have now are Johnson Johnson and microsoft. We have a handful of others double the rate. It is a small universe. I think those Companies Benefit because, if you look back a few years ago when we had european sovereign crisis, what you saw was a number of investors were placed replaced sovereigns and portfolio with state corporates. I think you can see that happening as well. The group accompanying this is small enough that there is only so much you can do. Theres only so much of your portfolio that you can replace out of sovereigns into these multinational, highly rated areas. What is interesting is, Even Companies rated higher than the u. S. Government trade at yield spreads above the u. S. Government, even after the downgrade. I do think they will benefit, i wish there were more of them, but the small number that are out there will benefit. I think you could see their spreads tighten to the u. S. Government to u. S. Treasuries, but i think they will continue to trade at a spread, a modest one but a spread. Sonali what about the companies that are riskier . If you are below the u. S. Government and have a perceived riskiness in the United States now that did not exist as much before, does that spell bad news for anything under aa . Richard i think it absolutely axes borrowing costs across the board. Affects his borrowing costs across the board. If the government is not pristine, that will ripple through the entire corporate sector in the u. S. It has to. There is no question about it. But i think this downgrade exacerbates the problem we already had, that treasure needs to raise an enormous amount of money in terms of the size coming up, that is a lot of money that has to be raised, worthen has been raised and that the government will probably have to pay more for the and that will translate into higher costs for Investment Grade corporates even higher costs for nonInvestment Grade corporates. I think the biggest impact is an increase in borrowing costs and the question is are those costs so high some of the more speculative credits are going to have problems covering their interest and staying out of default, maintaining. Sonali Richard Zogheb, thank you for joining us, on a pretty historic day in the bond market. Charles myers joins us to talk about the market and political indications implications of the u. S. Downgrade. It will be a great conversation and we will give you the 360 on what all of this means. This is bloomberg. When you automate sales tax with avalara, you dont have to worry about things like changing tax rates or filing returns. Avalarahhh ahhh welcome. Sonali matt miller is off today. Quick check in the markets. S p not quite at session lows but nearing session lows, down 1. 2 . 10 year yield not rising as high as earlier in the day. Only about four basis points higher today. But the dollar is now getting a lift, 1. 226, a. 32 jump on the day. Dollar strength is reversing the trend we have been seeing. And we are seeing crude at over 79. A bit of a reprieve in oil. Jon quickly heaving into some of those big gains that we saw from Energy Stocks in july. Broadly speaking, a lot of earnings stories. Starbucks, even though the topline performance could have been stronger, they are finding ways, including price hikes, to improve profits. Cbs cbs cvs thirdquarter sales relatively strong. And lets talk tech. Huge gains for chipmakers. A lot of Technology Stocks are getting caught up in the selloff. Amd had some relatively strong numbers but stocks had such a huge move this year, down 6 right now. Shopify also down 6 . We will be watching for the results after the bell today. Sonali the big topic of discussion on wall street is that impact on the u. S. Sovereign debt Charles Myers served on barack obama and Hillary Clintons president ial campaigns. He knows a few things about politics. Charles, if you look at the impact, even if you do not seek shark moves on the treasury market, what are the most significant implications . Charles tate downgrade is not good, but any impact in the shortterm is what we are seeing today. A bit of a riskoff mood. I think the market was overbought in the ai rally has taken the u. S. Equity market to highs that are a little overdone. Anyway, this is an excuse to take some profits, but broadly speaking, i think what fitch is trying to highlight is that the fiscal mismanagement of our economy and the overall debt burden are two medium to longterm structural problems for the u. S. That is the bigger invocation of the call today. Sonali i also should be giving you a victory lap. You really want to mention this would be an issue this year. I said so. Everyone give me a hard time. Then it became an issue. The debt ceiling went to the wayside and we have now this downgrade and budget discussions in october. How much of an issue will not become . Charles we got through the debt ceiling, which was good news, down to the wire but the got through it. Now we have to get to the budgeting process. There is at least a 90 percent or . 95 a 5 chance that well going to shut down in october. It is august. Congress is out of session and it is quiet in washington, but we are headed for a big fight over the budget. I do think we going to a Government Shutdown. Markets tend to be relatively sanguine about a Government Shutdown unless they go to a month or longer. In this instance, the chance of that happening is higher because the Freedom Caucus is upset about the way the debt ceiling was resolved. They have indicated they will act out to the budgeting process and force a shutdown. Jon if we have yet another test right around the corner, what is the reaction in washington if a decoRating Agency is reduced to political squabbling as the reason for a Rating Agency change . Do you think it will change behavior in d. C. . Charles unfortunately not. Numbers of congress do not watch the markets unless they members of congress do not watch the markets unless they are in freefall. It will not change political behavior. A lot of the spotlight is on moodys. If moodys also downgrades, maybe that will catch attention on capitol hill, but fiscal responsibility does it resonate with voters. But in fact issues in the debt ceiling or the deficit the do not play into our elections. I do not see it becoming a major issue in the election next year. I do not see congress finding ways to work collaboratively or better in a bipartisan way to resolve these issues, including the budget right in september and october. Jon but what do you think are the determining factors when you have one debt Rating Agency that makes a change to see more change coming . Charles that is a tough call. You can never predict with the rating agencies are going to do. But fitch was clear, lord the outlook on the sovereign inmate. They were clearly reasons. There downgrade last night was entirely consistent with everything they have been putting out since then. On moodys again, we will have to see what they do, but they are now the lone aaa rating on the sovereign. There will be a lot of attention and people watching closely to see what they do. Sonali the point you are making about the political fallout and whether politicians even pay attention, can this situation get materially worse . Fitch was making their decision off of months and years of behavior, decades of decisions. How does that change the trajectory . It is been bad. Charles i cannot agree more. Forcing the country to the edge of default, which happens newly every time we get close and have to that nearly every time we get close and have to lift the debt ceiling and also forcing the government into a shutdown, both are in no way to manage the largest economy in the world. It is complete fiscal mismanagement, but i do not see the behavior changing. It would take the Government Shutdown for a long period in october and a major Market Correction. Then we will deal with the debt ceiling again in january of 2025. If we go over the x tape, perhaps so change behavior, but washington is a deeply divided, incredibly partisan. I not see behavior changing, even with this downgrade. Sonali you mentioned a major Market Correction that could come in or around october relative to these debt discussions. How that play out . Charles the only time markets get concerned about a shutdown is if they go on for a month or longer. Not only do you have deferral furlough all government employees, but you have to stop paying on government contracts. It starts to have implications for the economy goes on for a month or longer. You need a couple months shutdown before the markets really get concerned. We will see if we actually get there. But i am not optimistic that the two sides can get their act together and attack east heaven to be able to adjust attack what needs to happen. In our debt to gdp is almost three times the average of other aaa rated countries. That is a longterm structural problem. We will all be talking about the deficit going forward. We need to find ways to cut spending and address issues. Jon you talked about the stock Market Reaction today. Perhaps investors were looking for a reason to sell equities or highflying ai related docs stocks. But the timing is interesting. We have been navigating through worries about the economy that have been lessening. You had the chair of the u. S. Federal reserve saying his Economics Team is no longer forecasting a recession. On wall street, bank of america becomes the first big player to say we no longer see a recession. Given the finch itself even though finch itself is pointing to several specific factors for the debt downgrade, it feels like the market was getting around to the idea that maybe this soft landing scenario is reality going forward. Charles markets have absolutely been pricing in a soft landing or increasing the no recession. I think that u. S. Equity market in particular and all u. S. Financial markets are mispricing risk more than any time in the last two years, in part because we have you edit events coming. A previous guest was talking about how it is hard to get financing. We will see some pretty big blocks over the next six blow ups over the next six months. Yes, labor is strong but the consumer is tapped out. They have been taking on record amounts of credit to give their spending. They will have to start making student loan payments starting october 1. We are in for a bit of a bumpy economic ride. The downgrades not help. It does increase borrowing costs at the margin but really for companies who need access to credit the most. Sonali chairman and founder of sigma global, thank you. Next, robinhood reports after the bell. It is our stock of the hour, up next. This is bloomberg. upbeat music awww. Awww. Awww. Nope. Constant Contact delivers the Marketing Tools your Small Business needs to keep up, excel, and grow. Constant contact. Helping the small stand tall. If youre trying to get a view of the whole organizational Financial Health and youre trying to do that through multiple systems, its not just tech, its not just people. That experience to the customer. As a finance organization that is what you want to do. Jon this is Bloomberg Markets. Time for our stock of the hour. Sonali take a look at the current earnings cycle for robinhood. Do you think they will face significant challenges . I think we are good on the others of the challenge. 21 was a record year. First half incredibly strong. That was not the normal environment with people still finishing working home. In the last 18 months, we have been in the opposite environment with subdued activity. Interest rates have moved faster than we have seen before. If you are thinking about investing in that market, people are sitting in the sidelines. Our view is you are starting to see early signs of green shoots in the macro backdrop. Equity markets behaving better as well. That is what todays earnings will be more about. Robinhood under control, now the revenue market is starting to get better and we are cash positive. The next thing will be profitability. We are right on the verge of that and will hear about that tonight. Jon and when you grow from making most of your money based off transactions, the idea of making money off deposits, how would you characterize how that is gone . Devin incredibly well. Revenues this quarter will grow 50 yearoveryear good a lot of that is from interest related revenue. That highlights that there is some diversification of this business model. You see that firms like schwab, but it is good to have a balance and how you make money. You will see that come through this quarter. And because they are a newer fintech firm, they pass along a lot of the benefit of higher interest rates. That has been a big driver of deposit grows. And deposit asset growth is trending at over 20 and it will be again this quarter. You are looking at 20 to 25 in net asset growth, which compares to mid singledigits of the incumbent firms. They are doing fine. It is more of this macro overhang that has been the friction point of the last 18 months. We are starting to get on the others that. And some of these newer initiatives are starting to gain steam. Fully paid securities lending, early withdrawals were bringing up the 50 on revenues. It would be good to get an update there. In retirement accounts are gaining traction. They are starting to do m a as well and Just Announced the acquisition of a small credit card company. Those are things we will care about tonight, less about the earnings. It is more about what is on this path to profitability, which investors are focused on. Sonali how much do you expect a roadmap on profitability and Growth Initiatives . In. , credit cards, young consumers, net interest income, the possibility could be interesting but how fast do they capitalize . Devin two things. One, the expense of the story is huge. That has been the big driver get into that cash profitability. The other piece would be early green shoots of some recovery in retail sentiment. That is the traditional business they have been in from the beginning. Theyre starting to see signs of normalization. This is not a normal environment. And getting some update on these newer initiatives, it will take time to move the needle, but you have to start somewhere. Some of these businesses are going 50 , even in the past couple of quarters, so you will see strong growth. That will catch up and be material. You will get an update on that snake. Jon this stock would have to climb decisively to get back to previously this previous alltime highs. We will suit happens. But i want your perspective on the crackdown on prep no. We have covered it from many angles. What does it mean in terms of this particular business . Devin the big question is around what is a security and what is not . Obviously, everybody pay close attention to the judgment recently. It has an invocation. Robinhood crypto is Single Digits of their business model, not as big of a driver, but we need more clarity around how regulators are thinking. What i am looking for his action out of the sea d. C. What is happening in the courts is driving that momentum. We need lawmakers to drive legislation that is going to help regulators enact regulation. That is what we are looking for year. There have been some promising developments there. Jon helpful context. Thanks, great preview of the results later. When we come back, the 2023 rally in the s p 500 taking a hit today near session lows. We will talk about what some of the data is telling the Bloomberg Intelligence team. Back with more and that. This is bloomberg. The first time your sales reached 100k with godaddy was also the first time your profits left you speechless. 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Well find you a hearing aid that fits your lifestyle and budget at one of our over fifteen hundred locations. Call miracle ear at 1800miracle and schedule your free, no obligation hearing evaluation today. Jon this is Bloomberg Markets. The Bloomberg Intelligence market pulse index has pushed now to what they are describing as manic levels, an early sign the equity rally might be getting overheated, possibly do for consolidation. Lets bring in Gina Martin Adams who has so many ways to slice and dice the market. This is great data. Now that we have seen this big rally, sometimes when youre in the momentum going you can see pullbacks these indicators can help. What are they telling you . Gina we developed the pulse to give us an indicator of sentiment inside the equity market and what that indicates for the near future. Historically, the indicator hits near zero at levels of panic. It hit that in late september. It is now at manic,. 75. It creates a composite on zero to one. Anything nearing 1 or above. 7 we would consider mania or an area of opportunity the of opportunity. Or that may indicate a consolidation phase coming in stocks. As of july, the indicator did hit some version of mania, pending any consolidation phase coming for stocks at large. Sonali the language here place to all my devices, that manic, greedy, weaknesses all around. I am wondering where this idea of overheating really means in terms of how deep any correction might be . Gina good point. It just indicates a period of consolidation. Historically, what we find is your average three months performance after a reading of. 75 or above results in about a 2 gain over the next three months, whereas after panic readings on the index, your average game is closer to 10 . It simply indicates a likely slowdown. I find the is good and indicating complete washout points in the equity market, which is why we developed this survey. Sentiment is harder to use as an indicator for the equity market. As you look at the graph, you see that equity markets tended to concentrate in a more optimistic face as stock prices tend to rise over long periods of time but it can give us a hint that may be conditions have emerged. We set that emerged with rsi. It did hit a critical level of 70 over the course of july. Net does usually indicate that stocks already bent overheated, it may do for consolidation, but it does not give any indication of atopic formation. I cannot give you that degree of precision. Jon helpful context on the broader themes. You are also watching the money that has been potentially flowing to other sectors, like industrials. Before today, we are seeing a consolidation but for today, we are seeing a consolidation. Sonali just a bit of a pullback in the s p and the nasdaq. You wonder how much is pure risk off and how much is that yield story. Jon we will find out as we roll through the week. This is bloomberg. H what if tax rates change . Ahhhhhh filing sales tax returns . 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The idea that we have saved five Million Peoples lives, its overwhelming. Its everything. A surge in yields, sour sentiment for stocks. Katie we are kicking you off to the closing valve. You have markets puking. S p 500 off 513 . Nasdaq 100 off by more than 2 . Big tech leading declines. High adp figures this morning show private hiring remains robust. And yields rising as bondsl