Katie welcome to Bloomberg Markets and it is a down day for markets, at least if you are looking at equities because the s p 500 off. 5 which does not seem to bad and the nasdaq is down by over 1 . There is some green to be found and no surprise it is in the cryptocurrency space. Bitcoin continuing to surge higher up about 2 at the moment. We are on watch for the alltime high, maybe today is the day. We have some breaking ism data for michael mckee. Michael this is not good news for those looking for a Growth Scenario in the u. S. The ism Services Index falls more than anticipated but at 52 point six after 53. 4 the consensus was from 53. What is interesting is the sub indexes are almost all better. In this case new orders are up to 56. 1 from 55. Production is up to 57 point two from 55. 8. Employment is one of the few that goes down. That is something to keep in mind for friday and it might have an impact on the Market Forecast for what we get on friday. Prices paid, 58 point six down from 64 which is also good news in that it tells a fed that may be inflation will not be a major issue. Yesterday we had Rafael Bostic talking about companies being enthusiastic about what is going on in the u. S. Economy and one of the things that he pointed out, inventories were law or were lower and they suggest that maybe companies will have to rebuild some dust stocks and that will boost the economy. A lot of crosscurrents. We also mentioned that factory orders coming in down 3. 6 after a. 3 to. 3 in december of factory orders. Transportation down. This is the hangover from boeing not getting any orders in january. Capital goods orders flat better than what we have seen before and a slight decline. So businesses are at least not pulling back. Katie before we get to friday and the jobs numbers we have to get through powells testimony and i believe that kicks off tomorrow. What are we expecting to hear from the fed chair . Michael wall street and washington want to know when the fed will cut rates and by how much. That will affect what you can earn and whether you get elected. But the fed chair will probably not talk about that too much and probably reiterate that the fed has more work to do on inflation and they will be watching the data and the decision will have nothing to do with politics. Plenty of other political topics could come up including bank regulation, the Balance Sheet in which they lose money and other things. It could be an interesting hearing, but nobody will get what they really want, which is a date certain for a rate cut. Katie thank you so much. I know you will be playing paying close attention as well as markets. Let us get the market implications. She is the founder and ceo and let us start with the broader macroeconomic environment and how that is informing risk assets. The s p 500 is down on the day and recouping some losses. What do you make of the set up as we hovered near alltime highs. It had strong Economic Data notwithstanding what we just heard. That has led people to believe that even with higher rates we could still have strong Economic Growth. That said, the data that just came out i think is a verbal for the folks who want the fed to cut rates. Anything that shows potential softening would be a good thing because we have had strong gdp growth and the job market remains tight and inflation remains elevated. The fed will be looking at data points that indicate the economy will soften to justify a rate cut, which is what they want to do. And up until now, there had not been a lot that they could. 2 to say that. Overall, i think the markets are looking at the overall trend. There is a feeling that higher for longer is bad. It is not so bad if the Economic Growth is 3 to 4 . Katie let us talk about the ultimate risk at said asset. Bitcoin. It is surging to its first record high cents november 2021. It has been quite the journey to get us there to say the least. And i mean, talk to me about that. The difference between november 2021 when fed funds were at zero, effectively and where we are now well above 5 . What do you make of those types of moves in the market . Shana risk is on and people want to be in risk assets and bitcoin is the ultimate risk asset. I think the launch of the 11 bitcoin spot etfs has a lot to do with driving market demand. If you look at the actual available liquidity in bitcoin, Something Like 85 to 95 is liquid and that is that 10 that is being played with and the flows are tremendous. I believe there are four over 1 billion. The blackrock one is at 9 trillion. If you think about it, the flow is very strong. I think those two sayings are part of the story. And then you have the having coming up in april which will also push the price up. A lot of tailwind from bitcoin right now, not the least of which is that people are more likely to take a chance on risk assets. Katie really appreciate that and you mentioned the spot bitcoin etfs upwards of 10 or so that launched as new etfs. As an investor, how do you do Due Diligence on those products and that they all hold the same thing . What does the process look like from your shoes . Shana for me i look at the issuer. The big winners are fidelity and blackrock with Overall Trust and a lot of experience running etfs. For me i like bitwise bit b. This has been dedicated to the crypto space for years now. I first met matt hogan in 2017 when they were just getting up and running. And he has really been able to help with the advising market and they are good at the education and dedicated to the space. I am encouraged that people see that but i want to be with an issue where who knows what they are doing and is dedicated to the space. I tend to prefer Something Like bit b, like more than ibit and fidelitys product which wouldve been the winners with a large scale of the firms behind them. The Due Diligence comes beef comes because of the issuer and not the underlying. Katie it is one of those beat etfs with a total market cap of 1. 8 billion. Talk to me about the rest of the risk asset universe. You have bitcoin ripping to record highs and an you have risky parts of the equity market, small caps, even though they had a great end to 2023, they have not been able to keep up the momentum in 2024. What are your thoughts on that space . Shana here is an interesting stat. 75 of the return of the russell 2000 is from subaru micro Super Micro Computer which should be added to the s p 500. 75 percent of the returns of the russell 2000 are attributed to super microcomputer. It is not a great thing for small caps. If you believe that we will have softening the u. S. Economy and you think about what happens into later stages of the Economic Cycle and then start a new Economic Cycle into the early stages, that is typically favorable. That said small caps have not behaved at all like they would have historically based on things like new bull markets and watching market trends. But i think that is because they are not as exposed to bigger trends other than super microcomputer, ai, Cloud Computing and things of that nature. There is not a lot with exposure and that is one of the biggest headwinds. Katie stick with us. We have not even talked about ai but you are going to sit tight because we will take a quick look at what is moving underneath the markets with emily sitting to my left. Tell me about target . Emily we had a good quarter, there adjusted eps Beat Estimates versus estimates of 240. The sales declined 2. 4 which slightly Beat Estimates but it did fall for the third consecutive quarter. Like a lot retailers target struggled with their profit as inflation is higher and consumers spend less on items when they go to these retailers which has been an area of focus. They are saying the biggest jump in november and another area of focus is the inventory and are they able to clear the inventory so they do not see as much of a loss when they cannot sell all of it because people do not want to pay for it. Target says they reduced inventory by 12 which was better than expected. Katie you can see that being rewarded in the shares up 11 . It is a different story for stitch fix. Emily this is a Small Cap Company down as much as 20 , the biggest intraday decline since june 2022. It is not looking good for this Retail Company where consumers can get a personalized stylist and they go online and take a style quiz and then stitch fix send you a box with five or six different items that are tailored to you and you can choose whether you want to buy it or not. They reported a heavier than expected loss per share. The fullyear forecast missed estimates. The street is bearish on this. Piper sandler has it underweight and this decline underscores the difficulties externally and within. A lot of those Clothing Rental Companies were big during the pandemic and they are falling. This one is down 80 . Katie the world has changed for a lot of these companies. Quickly tell me about sophia a stock really prettily feeling pressure. Shana this is an online personal finance company. They announced a proposed convertible senior notes offering. Bond offering june 2029. According to an article which sites people familiar they are offering a 1 to 1. 5 coupon further 750 million convertible bond. It does not seem like the street is long is liking it because the stock is plunging. Katie that is emily. Thank you. Coming up, china setting an aggressive goal of 5 . Just how the country will get there. Details next. Chances of a plane crash 1 in 11 million. Youre not gonna finish those salted nuts, right . Never waking up from anesthesia 1 in 185,000. Validate your parking or just see how it goes . What . Why stress about the unlikely . Does a killer clown worry about being struck by lightning while winning the lottery . Sure dont. But your odds of falling victim to online crime are 1 in 4. You need aura. You, your family, all protected from scary online stuff. [ laughs ] protect everything your family does online with aura. Katie china said a gdp goal of 5 at the 2024 National Peoples congress which is putting pressure on the top leaders to release more stimulus. Joining us with more is tom of Bloomberg Economics. 5 is the goal. How are they going to get there . Tom at first sight, 5 does not look like a particularly stretching target in 2023, china grew 5. 2 so why cant they do another 5 . Remember growth last year was flattered by a low base from covid lockdowns in 2022 which boosted the growth number, this year heading to 5 will be more challenging. Still, that is the aspiration. The question that the markets have is where is the stimulus going to come from to get us there . The growth target was in his speech, but there were not a lot of details on what would back it up in terms of fiscal spending or monetary stimulus or more support for the ailing real estate sector. Katie talk to us about the growth target in the context of geopolitical tensions. When it comes to the u. S. China relationship it feels like a lot of that is playing out in the semiconductor industry. One of the most read stories is about amd selling its ai chip tailored for china hitting a roadblock. How are you thinking about that at Bloomberg Economics . Tom it is interesting. I think wall street is looking at the premiers work report and saying wheres the details . It is certainly true that the details on stimulus are not there. But when you think about the priorities for chinas leadership boosting defense capacity, listing spending on science and technology to try and ensure reliance or independence from u. S. Tech, that is where the detail is in this National Peoples congress. And that speaks to a shift in priorities in beijing from a dash for growth to the crucial importance of securing the nation in a more hostile world. Of course, the mood on china has changed in the united states. One of the key initiatives from the Biden Administration has been a move to block Semiconductor Sales to china. Amd thought they had produced an ai chip that was regulation consistent on which they could sell into the chinese market. They have just heard from the u. S. Government that that will not be the case and they will need regulatory approvals. Katie really appreciate your insight. That is tom orlik of Bloomberg Economics. Let us welcome back shana. We were just talking about amd and i want to keep the conversation going on the chip sector because nvidia is just stealing headlines and eyeballs, really carrying the market forward. We did get their earnings a couple weeks ago. How are you thinking of how this mega cap company the fact that so much of the market gains euphoria seems to depend on a . Shana full disclosure i own the stock so i am happy about this. I think that nvidia is uniquely positioned and not a lot of competition. There is too much demand for the chips. They are not able to keep up with demand for their chips. They are in a a lot of really core markets. We talked about nvidia with ai a ton, but data centers and a thomas vehicles are a huge part, not to mention the foundational business which started the conch the company, the gpu chip. They have a lot of demand and not a lot of competition. All of those reasons are positive. I heard someone say this is 1999, this is the tech bubble all over again and i want to point out that is not the case. This is a Cash Rich Company that is growing revenue at triple digits. And that is very different from what we saw in 1999 when we had Companies Going up with no earnings or cash flow and no real business. This is a real business making real money and for those reasons, i think it will continue to benefit from the tailwind that comes with the ai revolution which we are really only in the second inning of and they are such an important component. Katie it is also a mature business. Nvidia has been around for decades. To your point it does not have a lot of true competition, let us bring it back to amd which is trying to rival nvidias lineup. How long will that headstart truly last . Shana i think it last long because as people develop new technology relative to ai, they will be using the default chip. And once that Technology Becomes dependent on their chips, it is hard for somebody to break in unless the chip is substantially better. I do not know much about what amd is working on and how much better it is than nvidia, but also nvidia has a great market share of all different types of Semiconductor Chips for all different areas of the market. I think it is a wellrounded business, and has been around for a long time and i have been following it since 2000. And i watched it get included in the s p 500 in 2002. It is a long tailwind, and i think there will be people who want to come into the space and there is demand and nvidia cannot keep up with demand. There is an opportunity to fill in the gaps and so nvidia needs to really focus on being able to increase the production and make sure that they can meet demands so that somebody like amd cannot sneak into take advantage. Katie there are rivals that would want to triple what two pull away. In addition, i know that you are also favorable on some of these energy names as well. Diamondback energy in particular, what is the opportunity in that name . Shana it is interesting because it is one of the few independent producers that can make good money and have strong margins on oil and at lower numbers. They are breakeven is 50 a barrel just different than larger producers which need a Higher Energy or oil price in order to really have good profit, revenue and margins. They are very much executing well and financials are strong. Management is strong. The company has the opportunity to be an acquirer or be acquired. That gives a lot of flexibility. It is also trading relatively at a reasonable multiple. And so these are things that i look for. There is not a lot in the Energy Sector but that is a stock that i do like that has done well and it has a great taker. Katie the taker is ticker is faang. Come back soon. That is shana. Still ahead, we will look at the Companies Making the most social blood social buzz today. This is bloomberg. You got this. Lets go. Gobble gobble. Ive seen bigger legs on a turkey rude. Who are you . Im an investor in a fund that helps advance innovative sports tech like this Smart Fitness mirror. Im also mr. Leg day. 1989 anyone can become an agent of innovation with invesco qqq, a fund that gives you access to nasdaq100 innovations. I go through a lot of pants. Before investing carefully read and consider Fund Investment objectives, risks, charges, expenses and more in prospectus at invesco. Com. Were lucky to have this team working for us. Our therapists give their eacy, by helping those who need it most. We take great pride not just in the job our team does, but in them as people. Our people. And while were in the business of taking care of others. Its important our therapists know that with benefits from principal, theyre taken care of too. it is a huge week in politics. Today it is super tuesday and former President Trump is looking to cement his place as a republican nominee. And then thursday as the border, the economy and the election hits the headlines, joe mathieu, kailey leinz will bring you coverage of both event starting at 9 00 p. M. Eastern. Katie time for social climbers, a look at the stocks making waves on social media. First up, get lab out with gitlab out with a weaker forecast. It might be reflecting uncertain demand. Next up, tesla on the skid after news that its china shipments pledged to the lowest levels in a year. F