We will discuss. Katie welcome to bloomberg markets. Markets there is some green on the screen behind it. The s p 500 up to the tune of about 3 10 of 1 if that holds that will snap a threeday losing streak so do not hold your breath. Its the same thing if you look at the nasdaq 100. A little bit more tenuous their prating we are just about unchanged when comes to the nasdaq 100. Big tech under a little bit of pressure. Breathing a sigh of relief in the bond market you can see yields are falling right now currently the 10 year yield lower by three basis points compared to recent history that is quite a highyield yield we are looking at. Lets turn and talk about boeing. Their Safety Record under the microsoft dust microscope today. Two congressional hearings with lawmakers set to question Safety Experts and a whistleblower. The global head of aviation joins us now. Set the scene for us. How we got here and what we are expected to hear from lawmakers . A very busy afternoon this day for us here covering these two hearings. One of them kicking off as we speak. This is the one that will explore the finer points of the faa report that came out a couple months ago which was a yearlong effort that looked at the Safety Culture at boeing and what they did wrong, what they should be looking at doing differently. Not very flattering findings. Saying there was a disconnect between management and people in terms of what to do, what sort of Safety Culture the company should have. We got a little bit of testimony ahead of time that sets the scene a little bit. One of the people who will speak to this said he felt in his own words the pendulum had swung too far sort of giving boeing too much authority. Theres a little bit of soulsearching on the faa side as well. The second one is an hour later so they will overlap. That one will probably be spicier. Thats one that looks at the whistleblower claims that came out last week. That one is about the Dreamliner Aircraft and the allegation being boeing was essentially sloppy in the way it assembles its planes. Not really surprising boeing refutes these saying they stand behind the safety of this product and of the products generally. It will be interesting how they respond to this. They will not be on the scene of either panel. This is in absentia. It will be interesting the dynamics that unfold. Im glad you brought up the whistle well whistleblower, weve been paying attention to the 737 which was involved in the january incident but the 787 when you think about boeing and their business thats a critical source of cash. Benedikt its essentially on the civil side a two Product Company and weve written and talked so much about it and in that january 5 incident and now the 787 has come into the spotlight. Its worth reminding people its not the first of the 787s Safety Record or production record has come into under public scrutiny. Boeing taking the plane out of delivery for a couple of years sort of three or four years ago because they did have some issues. They said they fixed them and the plane is safe to fly but the whistleblower claims these issues were not fixed, it boeing rushed these planes out the door and in essence they should be grounded. We will see what else he brings to the table in the hearing. He says he has a lot of documentation, it will be interesting what he can bring that is new and potentially damming for the company. Katie a busy afternoon for bowing. Our thanks to beni. Im thrilled to say we are joined by lauren good men, a new York Life Investments chief Market Strategist and economist. Great to see you in person. Im looking through your notes and you write about this wall of worry that investors have been grappling with. When you think about this at the beginning of the year and where we are now in mid april has it gotten higher . Lauren i think the markets have perceived it have gotten higher because of the rates weve seen in the past couple of days. But investors have taken the wrong message which is why we are seeing a little bit of buoyancy in the markets today mainly rates have been moving higher for the right reasons because u. S. Economic growth has surprised to the upside and earnings are expected to be strong for the first quarter. We wouldnt expect to see real weakness in the rally or the end to a rally. The earnings progress was Earnings Growth moving lower. Or until labor market typically unemployment claim certain to rise. There could be moments of consolidation. Katie just to crystallize that point you are saying when we think about the rates it is for the right reasons. Lauren inflation has been moving higher and overheating the u. S. Economy i believe is one of the key risks to investor positioning but we are not seeing signs the economy is overheating out of the feds control. One of the reactions to inflation moving higher is a tightening in financial conditions and that tightening can help to ease some of the pressures weve been seeing in the real economy and may actually help the fed to cut later on this year. Katie when it comes to this rise in rate it has jump injected volatility over the past couple of weeks but when you talk about the backup in yields being for the right reasons does that logic apply to this stock market evenly or are there certain sectors that will be hammered by this rise in rates even if its for a good reason . Lauren a couple of things we are taking away from market behavior over the past couple of months are the Growth Equity and specifically tech stocks have not been as sensitive to Interest Rates as has been the case. Thats been large part due to the economic logic is that those are long durations equity. They are more reliant on future cash flows that dont exist yet. Major leaders in the equity rally have been those that do have ample free cash flow. The other thing weve been seeing is while the Market Performance has broadened, quality has been a key trait of winners regardless of the sector. We are not seeing the small caps or junkie or segments really participating in the rally which suggest the role of worry for markets it hasnt dominated yet. Talk about free cash flow, to me that sounds like tech. Lauren it is. Lets talk about that a little bit. It is a big part of the quality story although there are quality names in all sectors. But when it comes to broadening the investment theme around technology, Artificial Intelligence, we think theres opportunity in other sectors that leverage this theme just as an example to make Artificial Intelligence really terrible you need not just the chipmakers but also the digital infrastructure, the Energy Infrastructure that will get us to a more durable theme. Thats a small and midcap growth where we see early acquisitions of interesting ai ideas. We think theres a broader participation in that theme. Katie stick with us we will get into more detail on earnings. Maybe some of the small and midcaps. Lets a quick look at whats moving in the markets. We are going to do that with bailey lipschultz. Talk to me about asml. Asml under pressure today worst drop on interest intraday. Results missed expectations. The number of ones that operated is how High Expectations have gotten. Thats why you are seeing shares under pressure, a modest miss compared to where investor analysts had been penciling in. About some of the ongoing issues with sales and demand in china. Those are things investors are pointing out as a reason to take some profits on a pretty massive rally the stock has had. Katie you are looking at their worst day since october of 2022. Talk to us about united. Reporting after the bell yesterday. Bailey up double digits at one point this morning. Keeping an eye on that. I always like to preface the yeartodate performance only up about 10 on a 12 month basis but meeting expectations with the results talking up travel demand despite some of the issues weve been seeing whether it is for bowing or individual airlines in particular they been able to navigate Rising Oil Prices and cost of fuel as well as some of those costs whether they are playing paying flight attendants or pilots. How interested and active they are in the ability to drive profits. Really setting the stage and a strong tone we continue to see earnings coming in from those consumer facing companies. Katie some nice relief as we focus on what is going on with boeing which has been affecting the airlines. Lets talk about whats going on with tapestry. Bailey the ftc preparing to sue tapestry. We did not see a sharp sharp move. You can see three tents of 1 for tapestry. That spread is widening. Look at the way capri has been performing grade there are continued concerns and expectations of what regulators will push back on whether this could impact the deal and how we get through. We heard from management saying they still expect it to be completed by year end. As we talked about the ftc scrutiny is more heightened than it has been in recent years. Theres uncertainty around every deal and thats one of the things we binged we have been seeing. The allcash offer price. Shares continuing to widen since the deal was announced. Katie it got a lot more fun under the ftc dependent on your definition of fun. Bailey lipschultz, thank you so much. Tesla asking shareholders to vote for a second time on elon musks 56 billion dollars pay package after a judge rated the first one this year. This is bloomberg. Hey you, with the small business. Whoa. Youve got all kinds of bright ideas, that your customers need to know about. Constant contact makes it easy. With everything from managing your social posts, and events, to email and sms marketing. Constant contact delivers all the tools you need to help your business grow. Get started today at constantcontact. Com constant contact. Helping the small stand tall. Tesla shareholders are set to vote on a 56 billion pay package for elon musk again. His compensation was avoided by a Delaware Court earlier this year and shareholders will also vote on whether to move tesla state of the corporation from delaware to texas. Ed ludlow has the details. Lets start with the pay package. You look at tesla shares they are down 40 yeartodate. I know the meeting is not until june or so. But if i, tesla shareholder will i vote yes to this pay package . I do think the stock reaction is interesting. We were higher in premarket we are down 2 so youve had significant declines over three days parade you are down for a fourth straight day, longest streak of declines since the beginning of the year. The reason i point that out is if youre confronted with this information from the proxy and the only thing thats come out of the proxy is to vote on the original pay package that the delaware chancery shot down, its not approving a catalyst to the upside and what teslas chair rights in the proxy is that the courts secondguessed investors decision to authorize the pay package in the first place so theres a legality question here which is how mechanically can tesla put the same package before the Shareholder Base if the courts have shot it down. Its an interesting dynamic. Fascinating to see how this shapes out and what the stock does between now and june. Lets talk about the other thing shareholders will vote on. Thats moving the incorporation from delaware to texas. When it comes to the reason why musk would like to do that i believe he would have a little bit more wiggle room when it comes to texas. Musk is upset with delaware because of what happened in the court case. Texas is becoming the center of teslas universe not just because of its technical headquarters the nexgen data center buildout is happening in austin for jojo also happening in buffalo, new york. And it all stems back from the court case so investors again i dont know whether they would see any favorable outcome in either direction. One interesting note from the proxy. Tesla was at pains to point out they ran the process of deciding to reincorporate texas or move to texas in parallel to the pay issue because they did not want to be accused of using incorporation as a leverage in that pay situation. Thats codified in the proxy so if youre a tesla shareholder read the proxy in the language that relates to it. I know you have a busy day ahead of you. I think you will be talking at elon musk it Bloomberg Technology which comes right after the show. I think the bloombergs ed ludlow. Lets get back to these markets. Still with us we have Lauren Goodwin who is the chief Market Strategist and economist. It lets talk about a little bit about what we are seeing going on because it feels like you can make the case that this market has really been driven by the macroeconomic factors, that that is whats fueling these big benchmarks but then you have these idiosyncratic stories such as we seen with tesla. When you look at these markets do you think its those stocks specific catalysts that are moving the markets or is it still the macro. I think it is still the macro. The earnings environment is so very important but when we think about the health of the market rally at the fact earnings on aggregate are expected to post 2 growth quarter over quarter 3 Revenue Growth in a backdrop thats been relatively healthy. Key questions for investors ahead like when and how much will the fed be cutting Interest Rates, what is that mean for the path of the economy in the near term. Katie for a while its been ok, high valuations seeing on the fundamentals it justifies what we are seeing in the price action. Some people have said when it comes to the earnings news its already priced in to the benchmarks. Lauren one thing i am concerned about for cutting corners is Earnings Growth aggregate is expected to be about 11 . Down from expectations of 13 at the beginning of the year but still healthy Earnings Growth. We are seeing that this quarter that when i think about last year last quarter in a year that had hypothetically higher Economic Growth than this year its difficult for me to see how on aggregate we will meet those targets. As the impact of higher Interest Rates impact the more cyclical and smallcap sectors of the economy i think it will be difficult to meet that target. What we are gaining here from an Equity Perspective we may see payback in the second half of the year. Katie i am curious when you add it together, how are you approaching markets at this juncture . Are you on defense or playing offense . Lauren it is difficult to play total defense where we dont expect a meaningful pullback until the employment environment earnings environment deteriorate. We are not seeing any signs of that. Theres been a lot of health in the equity market but in credit markets since the fed pivot. I would say we are taking a balanced approach but more creative on the portfolio construction fund. We are taking some equity risk and deploying it in high yield where there is a similar price action risk but more of a kerry benefit for investors. In terms of credit balancing what is a shortterm position with a longduration position in infrastructure bond. It helps us to keep a neutral duration profile which when we are seeing so much Interest Rate volatility is an interesting way to help balance some of that portfolio risk. Katie taking some of your equity risk and putting it into high yield bonds, that is interesting. Walk me through the logic a little bit. You take a look at high yield yields right now youre earning something for that risk. Thats a big part of it. Of course equity does have some yield. When youre looking at high yield structures eight to 10 is a meaningful carry for investors. Theres a little more to it than that. The high yield Asset Classes changed a lot over the last 10 to 15 years with quality borrowers for the most part staying in the asset class. Lower quality buyers moving to the credit environment. We see a clear bifurcation in quality and high yield so investing in that segment of the highyield structure is one we think is attractive for investors. Something that is really important about the credit markets is public issuers and high and investmentgrade credit have had enormous support from the government over the past couple of years in pandemic era programs. Floatingrate borrowers, consumers and businesses are the ones seeing the impact of higher rates. The fact we have not seen spreads widen in high yield despite the wall of worry is a function of that. Spreads are likely to widen as we see economics risk rise. You get that extra compensation from the yield in that portfolio. It certainly helps cushion the blow. Really enjoyed this conversation. Our thanks to lauren good men Lauren Goodwin. We will look at the Companies Making the most social buzz in our social climbers segment. This is bloomberg. Do you want to close out . Should i . Normally id hold. But. Taking the gains is smart here, right . Feel more confident with stock ratings from j. P. Morgan analysts in the chase app. When youve got a decision to make. The answer is j. P. Morgan wealth management. Godaddy airo. Creates a logo, website, even social posts. In minutes how . A. I. impressed ay i like it who wants to come see the future . get your Business Online in minutes with godaddy airo its time now for social climbers. A look at the stocks making waves on social media. Losing weight and gaining sleep. New study suggest eli lillys weight loss drug also helps improve breathing for patients with sleep apnea. If it were to be approved for the condition it would open the door for more patients to access the drug through insurance. Next up we have Urban Outfitters getting a downgrade to and underperform. The analyst excites a challenging year ahead thanks to steep discounts and weakening traff