We are back down from that for 70 level. 470 level. We pushed back down again. Zach and to be the trend this august as we start to see capitulation from some of the big bears out there that this rally needs to be chased. Good news from hsbc. Returning lots of money to shareholders. The stocks and bonds. This is a big heavyweight stock having a big impact. Bmw down to 4. 4 . We are seeing cost pressure continuing, a chain bottlenecks continuing. Margin pressure as well as consumers shift down the price bracket story. Bmw getting punished for that. Down by 4. 2 . Alix contracting for ninth straight month. You really didnt have a lot of movement. A little bit of a softer equity market. The reason is why earnings related and in some ways zoom infotech for example a software company, of space has been tough. A tough first half of it will be a tough second half. A lot of visibility some analysts are citing. Zoom the worst performing stock within the s p. I wanted to highlight what youre saying in terms of aspirational buys. It says hotels but it also has cruise and Royal Caribbean and norwegian cruise came out today and their guidance was maybe softer than analysts had wanted to see. The stock getting dinged pretty hard. Its a great run so far. Are we really going to see some softness allah jetblue orner ouija and cruise and some of the travel sectors. Are we retrenching or will we have buying different stuff. I want to point out the lack of movement to the two year yield. Kind of just going nowhere. Guy these airlines have dynamic pricing and talking about the fact that u. S. Summer fares are lower than the industry had anticipated. It tells you a lot about whats happening with demand. Shifting demand, changing currents at the moment. Thats the way you Consumer Spending money. I think we can fold this into its happening with the markets as well. Just how whippy they are. When youve got an opportunity and see it the window closes quickly and that seems to be the narrative everyone is being confounded by this part including some of the biggest hedge funds that are out there. Earlier we got an opportunity to talk to a group hitting a record 151. 7 billion during the Second Quarter. For us its a tough environment. The banking crisis caused all sorts of issues. The cfo talking about that earlier. When people talk about this environment the characters a sort of running and youre not quite sure if theres some sort of parachutes will appear and help them. The keyword is uncertainty. Thats what we hear from clients that theyre not sure how markets will react. And what we provide is to firmly address this. Guy i think i coined the phrase wily coyote markets six months ago but im glad everyone is catching up. You see it everywhere. Weve got it everywhere. Look at whats happening with mike wilson. Its not just mike wilson. We talked about it earlier. You got hedge funds to because of the uncertainty in the markets. You had a great july. You coming into august. What do you do now. Thats the question of the day. Should you chase this market. Should you chase other assets. Sophia Bloomberg Markets today in london. Bloomberg news joining us from new york. What do you think. You had an incredible july, a lot of multiple expansion in the equity markets. Now what do you continue . If you are someone whos had a great july. A lot of people missed out. People were underweight equities going into this year and it made a lot of sense. We had a higher Interest Rate environment and that has changed. Yet the s p is near record levels prayed a lot of people missed out in july. If you are lucky enough to chase that in july, i think it makes sense to not chase it now. Youve already locked in those gains. I think if you are chasing youve already messed up. Youre already behind the markets chasing something that doesnt make sense. Yet its kind of the momentum thats sucking you into the market. Its a dangerous place to be. At the same time youve got to show your positioning, you have to show your clients what youre doing. I think when you have that 40 in your underweight and youre underperforming its a difficult place to be. Ultimately you have to make a choice of what you will do. I think this earnings season is supposed to be the bottom so this is the Inflection Point here. So you might be able to get away with chasing for another two or three months but once we get to october, if earnings dont come up youre chasing yourself into a big problem. You make a really good point and thats some of the fundamentals will kick in but this doesnt feel like a market being driven by fundamentals. Its a marginal change in the relative risks of all the risks out there. They are getting in aggregate slightly better. To fundamentals matter at the moment . If your Portfolio Manager and your behind this market, do fundamentals can you afford to focus on fundamentals . Its a great question. It doesnt seem like they do matter. I was looking at the jolt report that came out, of weakest in two years and yet bonds were sold off, yields were going up. It was a soft landing, the fed will keep on hold. I have no idea with the market is trading on not just in the equity market but the bond market for that matter. So no i dont think fundamentals matter as much as they should. Ultimately they do matter over time. Alix everyone knows we will get a slowdown, there will be a landing of some sort and sort of when it comes dictates how you manage the portfolio and the longer it gets pushed out, what happens then . Sofia you are saying everyone knows the slowdown is coming, everyone knew that a recession was coming, that the bubble in u. S. Tech would burst and none of those happened. Its very difficult market to be sure of anything. Again going back to what the cfo was saying. When you see markets go up, a market were fundamentals dont matter its very hard to justify not being in the market just because its expensive. It has been expensive for a long time yet we are continuing to see evaluation the valuation expansion despite Interest Rates being high. I think its a difficult market to be certain anything timing is always. If we do get that hard landing i think markets are going there so excited, this much positive bias in the market that even if we get that that the market will be looking for a positive spin on it. If the fact youve seen bears like mike wilson having to become more circumspect in their bearish outlook is that a buy or sell single . Signal . The bears are beaming to fall by the wayside. Sofia the difficult job of an equity strategist, how do you predict the market. Guy price uncertainty is really hard. Sofia this is very much a sentiment driven market. The more you get, its selffulfilling. You are being left out of a market thats up 40 . You will be getting questions from your clients. The bear capitulation might be a contrarian indicator because its sticking to their views on the market and then changing them when the market has gone against them for so long. Lets see if kalon of itch changes his mind. That might be a stronger. Alix he just had a note out talking about how thats not the case. When ed changes his mind, then its a whole different story. Thanks so much guys. Thank you sofia and ed. More insight into the question of the day. Where should we be chasing the market. Emea markets senior strategist joins us next. This is bloomberg. I need it cool at night. You trying to ice me out of the bed . Baby, only on game nights. You know you are retired right . Am i . Ya 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®. upbeat music woah. 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Let Innovation Refunds help you get started on your erc tax refund. Stop waiting. Go to innovationrefunds. Com you really got the brows. Smaller hedge funds have to be nimble, the hiring of the industrial managers to come in because the top of the house things will be higher for longer validated by what japan jested on monday by expanding and losing that a bit. That battle for capital is happening. The battle for capital goes down. Thats why theyre making that investment. Guy head of Research Speaks to alex and i a little bit earlier on. Takes us back to the question of the day. Should you chase this market. July was fantastic. Will we see a continuation of that. If you are behind do you need to chase this market. We see bears like mike wilson turning more cautious on their bearish outlook. I have to say this is a fantastic chart. Witness whats happening in terms of whats going on with the targets for year end. Weve seen the market basically running ahead of strategist sprayed everybody started the year over here very cautious. As you see the market rally, thats where the forecasts are. The blue line has to tick higher as well but theres still a significant get there and as a result of which you wonder if we will see more capitulation and others coming through saying i got it wrong, we need to be more positive here. Its a key question. Do you chase this market. Emea bank of new york mellon. Jeff great to see you. What do you think . You chase this from here. An incredible start to the year. Now what . First you look at the cash ratios. I still think its pretty clear that there still a lot of cash on the sidelines. Not in the conventional sense. Invested in frontend bills earning 5 cash in dollars. But earnings are there and you have to allocate as long as you can identify markets where theres a good prospect of soft landing. The u. S. In particular there still reason to be positive relative to expectations. We had a conversation about how this is not fundamentally driven. Taking a step back why wouldnt it be fundamentally driven at this point we believe in a soft landing and i dont really see Companies Across some sectors here right now expressing a lot of fears about Margin Expansion thats not going to be in the same way in the past. But consumption is still going. Jobs are still being created. Theres no hard landing you dont want any multiples and thats when the adjustment is going to be. This is a very u. S. Centric story. The focus is on european manufacturers. Guy do this from a european perspective. Im looking at the stoxx 600. Weve been bumping along those kinds of levels if we break through that on a consistent basis do you chase that would he think europe is a different story. We found again are custodial clients that they are buying noneuropean industrials even we think has peaked. Also there is the china element if you are going to seek renewed impetus to the industrial side and the just more in general industrial policy coming through i think markets are trying to stay the past half. Its not a compelling a story as the u. S. Alix where do you play a glass halffull . Where is the best way to do that . Where i see strongest potential is emerging markets. Be cautious in terms of what you want to own. The e. M. Is the most under positioned asset class after last year. Places like brazil, mexico, you want to start low duration. Mexico as well. We like the currencies, valuations looking strong. Crucially for japan that gives local Central Banks a move to allow the currencies to appreciate and again youre pouncing on japan and china. I think risk reward is there but ultimately it hinges on, the u. S. Continue to engineer a soft landing. Guy are we expressing confident in a softer landing or have we just priced out . There two sides of the same coin. Considering if you look at the long end of the curve for example what happens after a few price out the hard landing perhaps you remove some longer data so you remove some duration positions accordingly now the focus is on the market in the earning side of things. And crucially can we ensure that as we understand the tightening credit. That was the fear. We were seeing a lot of outflows and corporate credit. Spreads being well behaved. I think we can actually look at stable cyclically and perhaps reflation globally as well. I think the tail points of stimulus over the last 24 hours. For now is it fair to say large momentum weve seen from the trade guy just outlined is it over or does that have legs. I go back to the cash ratios. This still doesnt feel right but we are about fundamentals. Cash ratios are still relatively strong. A better performance up ahead for the next earnings round takes us. Alix thank you for jumping on. Lets talk about earnings. Bmw shares are down. Bmw the worst performer on the stoxx 600. We will get these details next. This is bloomberg. I did have hearing aids from another company. I was just frustrated. I almost gave up. With miracle ear its all about service. Theyre personable. Theyre friendly. Im very happy with them. We provide you with a free lifetime of aftercare. Meaning free checkups, cleanings, and adjustments. I see someone new. Someone happy. Its really made a difference. Call miracle ear at 1800miracle and schedule your free, no obligation hearing evaluation today. This was a strong set of results. Organic sales of 6 , operating profit of 7 . Both of these within the mediumterm guidance. What im especially excited about is our biggest category, all grew double digits with guinness having its biggest share ever in its history. Guy deborah crew talking to us earlier. Stocks up around half of 1 . Decent day. Nevertheless the stock finishing in positive territory. Other stocks not having quite such a good day. Bmw stands out today. Confusing i think is the best way to describe what we are seeing from bmw today. You could argue in terms of something happening in the second half of the year. Demand outlook looks ok. A lot of people scratching their head trying to figure out whats happening. He oversees coverage in the Auto Industry to help us out. Craig theres a whole bunch of things in bmw that is sort of fit together, talk me through what weve learned today and how its clarity we really have from bmw. It felt like it was all over the place. The stock was down because of the numbers or people were confused. On a bunch of metrics raised. Definitely comes across clearly in the release is some caution on Free Cash Flow for the year before 7 billion euros the expectation roughly. Now its at least six. A bit of a slip there. In terms of the Second Quarter a bit of a slip in margins, we do see higher margins for the full year and how exactly we put all of them together along with these concernsand electrificatin and that sort of being a drag, adding to inventories and building up supply again, does that sort of mean that we are seeing some slackening and demand even if theyre talking about the strong book and taking a step back to we really sort of think about this is the industry going back to the way its long been witches if you can make as many cars as you want you are going to sort of pursue growth even if it means at the expense of profitability longerterm. Does that mean we see some normalization of margins eventually. It feels like we just dont know how thats can a wind up shaking out on the demand side and the supply side. The outlook raised we mention a lot of negatives and them wondering how good does the back half of the year have to be to sort of meet that number. We have not seen indications and i think its been surprising how Strong Demand particularly in europe has been and how its held up in spite of the fact weve seen costofliving issues across europe, weve seen inflation continue to be a real difficult issue. The fact car sales are basically a full year now of yearoveryear increases and sizable ones we havent seen a slowdown in demand. Some of that is definitely the fact that weve had a lot of pentup orders and the fact that these companies have not been able to make as many vehicles as they would like. But this is going to be a messy process of getting back to the way it used to be once we are through the chip supply issue and the crisis weve been through. Guy today, do we get enough detail here, do we get enough, as an analyst, a reporter to cover this stock trying to cover this business didnt feel coordinated, organized enough in terms of the information you got . Craig we have an issue with German Companies where if your results are enough different from what expectations were your sort of required to do a prerelease of earnings. The fact we are seeing that becoming the norm as opposed to the exception and having these prereleases of incomplete Earnings Results in confusion with the companies only saying so much, its sort of hurting the companys because you look at bmws release they lead with all the ways they are bringing up their expectations for the full year and yet they have the sort of gives and takes. Guy there is some confusion there. Thats probably why we are seeing the Market Reaction we are getting. Thank you for jumping on with us. The close is next. We are running through the numbers. This is bloomberg. G returns. Avalarahhh ahhh the chase ink business premier card is made for people like sam, who make everyday products, designed smarter. Like a smart coffee grinder, that orders fresh beans for you. 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