Well sit down with both c. E. O. s. Flying into the future. Were going to sit down for an interview with Virgin Atlantic and delta on the next steps in aviation. From new york, im alix steel with my cohost, guy johnson, joining me in new york. Welcome, everyone, to Bloomberg Markets. Guy you did really well. I thought we were going to say london. So nice to see you. Guy im a little discombobulated by sitting down, finding that whole thing weird. But side by side. Alix and chairs are squishy. Guy oh, yeah, i can lean back. All kinds of stuff. At some point if i keel over backwards, its not because im completely jet lagged, its because the chair doesnt work. Alix please dont do that. Guy we got a great show. So i come to new york, and it looks like things happen. Alix theres an oil deal, and then airline c. E. O. s, the best of both worlds on both ends. Well be talking to chevron and hess in the next 45 minutes on this deal. The number one question im getting from this is are those toy hess trucks going to be available . Guy this is the thing you get for christmas in america, right . You get like an oil truck. Alix you get an oil truck, yeah. An oil truck that, like, is cool and everyone loves it. Do they still exist now . Guy how big are they . Alix i dont know, really, really large. Guy you dont have one . Alix no, i dont know. So you get a toy tanker or you get a toy plane. Guy ok, we can do both of those. Its going to be a great show. The airline thing i think is fascinating. So i got this whole theory were going to talk about. If you want to know whats happening in the global economy, dont talk to an economist, you talk to an airline c. E. O. , because they see everything. They see consumer confidence, they see the oil story. They see cost, labor, everything. These fight are going to tell us whether they get a hard or soft landing. Alix as we see with some of the numbers, earnings really are mattering. Like, if you miss, you get hit really hard. Guy is that the nice segue . Shes done well. Ok, so what matters more this week . Is it yields or earnings . Also throw in the geo politics as well, which i think is going to be the wild card that were going to have to continue to factor in. May not go away any time soon. Joining us in the studio is an analyst ive never met liz before. This is a fantastic experience. Weave met in london. I feel like i spoke to liz so many times. I knew you were coming. Alix hes like a local celebrity. Guy coming in on a monday. I want to see guy [laughter] alix im serious. Guy dont be upset about this. Ok, so lets talk about what were meant to be talking about. Liz, what do you think . We come in on a monday. Mondays have recently been higher for equities. We come in on monday, im looking at a down market so far. Yields touching 5 . Its never a straight line, but looks like thats the direction. Tentacles dont look too good either. You got the hamasisraeli conflict we need to talk about. Bring it together. What do you think the market is going to focus . So we come in, we were joking, it was going to happen overnight that we finally hit the 5 , which is just psychological, right . Its not a huge technical level. But i think right now theres a lot of people in the market who lean more in equities that hope that maybe the tech earnings this week will kind of push to the front, and well have some great earnings and projections, and we can kind of stop worrying as much about the rise in yields. But thats like maybe, right . Because this rise in yields, i think the risky part is its not set to stop in the sense, youre not getting all these massive, you know, people coming in and buying. We have come off 5 . We were above that. But i think until the momentum for higher yields, which the fed is not doing a lot to help that. Theyre kind of leaning into higher for longer, the tech earnings and other earnings will kill it. Thats my two cents. Alix if you dont kill it, you wind of getting punished quite a bit. What do you think . Earnings, yields . Yeah, so obviously the losers are being punished quite a bit, but the interesting thing were seeing so far is the up winners are also being punished. Weve seen them lagging. Of course, were very early in the earnings season, only 1 5 of the names have reported so far. But this is definitely a sign that macro forces are being important. There is obviously, if you look at the complied correlation, weve seen a little bit of increase. They were pretty much the lowest since 2018, quite recently. But since its been heightening, weve seen the comovements being more and more open, which is another sign that really macro forces have become more important the last few weeks. Guy this is the week, isnt it . This is where everything gets exciting. You have the tech stocks have held up. Theyve done really well. Theyre coming face to face with a 5 yield. This is kind of this is everything. If tech doesnt hold up this week, if earnings dont hold up this week and the 5 story becomes the dominant narrative, theres a great piece talking about apple and its earnings yield, the fact that its beginning to struggle, even apple is beginning to struggle against the 5 yield. This is the game. Tech has held up, supported the equity market. Alix but tech is rolling over. Its back to the lowest level since june. Guy but it has held up this year, and its been the thing that supported equities. So we finally get to the point where tech doesnt hold up, is this the point to which equities start to crack . Are we finally getting to that moment where were going to be able to answer that question . Yeah, i think this is definitely going to be a very, very important point, and you see, even now the earnings is just waiting for big tech and this is the big thing, and of course, that competition as you said has been really increasing in terms of if we look at equity risk premium, its really attractive to treasuries against stocks. Its really attractive to cash. Weve been talking about this a lot. And yes, earlier this year, higher bond yields werent putting that much pressure on tech. That has kind of changed. The target is different now. So thats kind of the focus back to fundamentals the next few weeks. Really change the picture, and obviously previously tech has been the few companies that have been dragging the index up. And you can imagine if there is a disappointment, we can see the opposite reaction. Alix i wonder, guy, have we already seen some of the damage of 5 yield on tech . I was looking at clean Energy Stocks, we talk about solar edge on friday. That group, which can also be techy, is getting really hammered because of the yields. Its a different sector that we need to look at. Guy im still waiting for big tech. Those big tech guys that have held the market up, and if theres any indication that that story, that narrative isnt going to work anymore, and the tentacles to your point, they dont look particularly good either. Alix no, very bad. Guy all of that comes together. Liz, how do we fold in all the other stuff into that story . You got the conflict thats happening in israel. You still got conflicts that are happening elsewhere around the world, plus weve got the ongoing situation in d. C. As well, which weve got to think about as well. Whats the bond market looking at this week . Whats going to focus minds there . Is this going to be the e. C. B. Meeting . Is this going to be whats happening in geo politics . If yields are leading, then what is leading yields . Liz i think its everything. We have Third Quarter g. D. P. Later this week, which that may be a lagged indicator, because were in the Fourth Quarter already. But those g. D. P. Now forecasts have been running really strong, and i was reading steven stan live saying its going to be soft, but forecasters have been so wrong, right . What happens if Fourth Quarter starts looking good . Thats keeping the bonds yields high. And remember, i think the market still has some more room to go as far as pain in the bond market, because were not fully priced, way below 50 for one more hike. What if the he fed sees more strong data and hikes again and were priceddedded and were priced for cuts by june . I dont think you can write off that pain. Were looking at the economic data, the mayhem in d. C. Is not going away. And you know, we do have off and on again flight to quality bids, but lets hope officials are trying to contain a broader conflict happening. So, you know, the bond market just cannot kind of be at ease, and theyre on tender hooks. But i think the dataing is going to be key this week. Alix funds alone with throwing off 22 billion. Its a lot of money sticking around. Thats in part why its held up. Really appreciate it. Denise, not cool, and liz, thank you both very much. Coming up, more insight into the question of the day. What matters more, yields, earnings, geo politics, technicals . The Portfolio Manager at Advisors Capital managers joins us next. This is bloomberg. Ameritrade is now part of schwab. Bringing you an elevated experience, tailormade for trader minds. Go deeper with thinkorswim our awardwining trading platforms. Unlock support from the schwab trade desk, our team of passionate traders who live and breathe trading. And sharpen your skills with an immersive Online Education crafted just for traders. All so you can trade brilliantly. In the u. S. We see millions of Cyber Threats each year. That rate is increasing as more and more businesses move to the cloud. So, the question is. Cyber attack as cyber criminals expand their toolkit, we must expand as well. We need to rethink. Next level moments, need the next level network. [speaker continues in the background] the network with 24 7 builtin security. Chip . At t business. This is incredibly important week from an earnings perspective. The big cap. Were going to be looking for big tech to produce good results. Theres opportunity in technology companies. Weve seen some Pricing Power in some of the companies. Theyre experiencing an improvement in financial conditions as Interest Rates rise. We think about the tech group as a whole, a. I. Has been a big driver. Those companies are extraordinary. Most of them are extraordinary in terms of quality of their operations, the amount of cash they have. When you think about future of stock upside from here, we are very much focused on that earnings picture. Were going to be counting on big cap tech and communications to do the heavy lifting. The economy isnt necessarily the equity market. We need to be sensitive to valuation. Its important to focus on reasonably priced technology. We need to be very careful about stuff that is sensitive. Its not so much whats happened, but its the outlook statements and what consumers are going to be doing. Its absolutely about the guidance. Alix those are some of the guests previewing this week in big tech earnings, which nicely leads us to the question of the day. What does matter more right now for investors . Is it yields or is it earnings . Were also talking about technicals as well. Joining us now is a partner and Portfolio Manager at Advisors Capital management. Good to see you. What matters, yields or earnings . Well, alix, its earnings at this point. Yield is baked in. In fact, i think there are three words that characterize the market right now and probably for the foreseeable future, and thats the fed, fundamentals, and fear. And so were going to get a lot of information on the fundamentals over the next couple of weeks, particularly this week with some of the big Tech Companies reporting, and i think its important for investors to remember at this point where do they want to be in a year or two . Its important right now, given all thats going on, to look to the longer term, and thats why i think the big Tech Companies have been holding up so well. Guy joanne, good morning, its guy. Yields are continuing to rise though. And as they move incrementally up, up, up, how good do the tech earnings need to be to compete with that . Joanne right, the yields have his an lot, and guy, they may end up going up a little bit more. I agree thats still a risk. But that increase is still now taken out of those valuations. So anything thats good from here is pure gravy for the tech guys. I dont think theres a lot built in right now to near term expectations. In fact, i think theres a lot of caution about what the end of the year is shaping up to be. Theres a lot of concerns that the consumer strength could peter out, a lot of questions about what the Holiday Season brings. And also, theres a lot of questions around the u. S. China trade situation with those new restrictions coming into place last week. Alix you bring up a good point in terms of already being beaten up in some ways. The s p is trading below its 200day moving average at this point. Im wondering if the bar for clearing and getting a bounce after earnings is low enough that we can kind of take a little sigh of relief or not yet . Joanne yeah, i think its going to be companyspecific, alix, and thats what we saw last week. We saw some of the equipment guys report, and they had good numbers. But the conclusion was because china pulled forward a lot of the spending they want to do to get ahead of new restrictions, so they didnt get credit. I think its going to be company by company. And so when we see microsoft, amazon, google report this week, theyre going to probably be given more credit or more, you know, scrutiny on what they say for the longer term. Are they seeing the demand from a. I. . Are they seeing advertising bounce back . Microsoft announced a new arrangement, for example, with australia in a. I. This week. How much might they see in Revenue Generation over the next, not just quarter, and not just single year, but a few years . I think the big guys are going to speak to that. Guy joanne, can these tech stocks keep equity markets in positive territory . Can they stop the huge down drop that were seeing in other sectors . Are they big enough, Strong Enough with all of the forces that are competing with them right now to keep equities on track . Joanne you know, guys, you point to a really important question, which is what do investors care about . Do they care what the s p index does . To your point, do they care whether the s p continues to move higher . Not really. What they care about is what they own in their portfolios. And so if they dont own the market, if they dont own just the magnificent seven, theyre looking at what they do own. And so, you know, if youre selecting stocks to be diversified and not on the whole market, which because the whole market is basically the magnificent seven, then youre asking a different question, which is, you know, might healthcare recover . What are the fund meants driving industrials . How much u. S. Spending is going to happen to boost the industrials over the next year . I think we need to ask a different question, not what is the s p going to do, but what are specific Companies Going to do . And i think thats what investors ultimately should care about. Alix so what should we care about, oil and big oil buying hess and Energy Stocks . Joanne yes, absolutely. Right now, remember the third world i mentioned, the fed, fundamentals, and fear. Fear is an important consideration. Diversification being a big part of that. Energy stocks i think right now, given the geopolitical turmoil that were seeing, is a very good thing to have in a portfolio, particularly because of the income that it also generates, to help investors get through these tough times when the stocks themselves might be volatile. The m a in this space, consolidation, Large Capital costs type industries with large economies of scale, makes a lot of sense from an efficiency perspective. Generally these are good things, and we like the combination of chevron and hess here. Guy this sounds like stock picking. Alix it does, whats that . Guy yes, and it continues to be difficult. Investors are whipping around the stocks, trying to stay in a stock for a long time, or even in a medium term is really difficult. Alix yeah, also, how do you stock pick and not Pay Attention to the macro and yield at the same time . How do you do both in this environment . Guy its tough, but the market is almost forcing you to do that right now because of the magnificent seven. Its kind of making you do, its making you, forcing you down an alleyway, which i think a lot of investors dont want to go down. And its really difficult. And were relying more and more on these tech stocks to keep the index going. Thanks for stopping by, joanne. Were going to carry on talking about the big oil story that alix just alluded to. It is a huge week for the earnings story. Were going to talk more about oil, were going to talk about tech, were going to talk about yields. Our question of the day, what matters more this week, yields or earnings . Mark lehman, c. E. O. Of j. P. M. Security, joining us next. Security, joining us next. adventurous music be ready for any market with a liquid etf. Get in and out with dia. Todays the day you graduate from Southern New Hampshire university. Ive been waiting for this day my whole life. The fact that i get to walk across the stage and get my degree, its honestly unreal. Dont ever stop. Keep on believing in yourself. It is never too late. If youre out there to wonder if you could be an snhu graduate today is the day to find out. Visit snhu. Edu. Was also the first time you heard of a town named dinosaur, colorado. We just got an order from dinosaur, colorado. Start an easy to build, powerful website for free with a partner that always puts you first. Start for free at godaddy. Com guy were getting an update from the u. A. W. , theyre saying that 6,800 members at the stellantis sterling plant will now join the strike. Theyre saying that brings the walkout total on strike now to over 40,000. This from the u. A. W. The plant, stellantis is the biggest money maker, now being targeted. What is the standout line from the u. A. W. , currently they have the worst proposal on the table. The share price isnt reacting that much. Alix no, we didnt really get that much on friday, i dont think. I wonder where the auto talks are. Clearly this is how were going to go until something is resolved. Guy thats another head wind the market has to deal with, and you wonder when thats going to show up in the data. Lets talk about the week we got coming up, a massi