♪ katie: welcome to bloomberg markets. stocks are lower to start the week as u.s. and from manufacturing data lessened the odds of a fed rate cut. let's check the markets. we started in the green but you are not seeing that right now. the s&p 500 is off to the tune about 0.3%. big tech is managing to hold on and the nasdaq 100 is higher by one just by 0.1%. we were higher earlier but we got the manufacturing figures and you can see the ripple effect when it comes to the bond

market. the two year treasury yield is up about nine basis points and you look at the 10-year treasury yield, higher by about 13 basis points or so. we have been taking stock of woods going on in gold. it hit another all-time high, currently have about half a percentage point. looking at the dollar, it's continuing to rally, up about 0.3%. bit coin is actually on a little bit of the downdraft right now off by about 3% or so. let's look at some midday movers on the equity side. let's start with at&t. the shares are dropping after the wireless carrier said data from 73 million current and former customers was leaked onto the dark web. that apparently happened two weeks ago and it still under

investigation. at&t is also under federal investigation for the widespread cell service outage in february. want to take a look at nickel which is flat but that's after it surged earlier because the ev maker is suing its former ceo in an effort to thwart his alleged board takeover. the stock has tumbled almost 99% from its high. let's go back to those broader market moves. a fifth straight months of gains in the s&p 500 index has some on wall street worrying that equities are too expensive. goldman sachs is telling clients that is no reason to set out this rally. alex reported on this today and she joins me now. i shouldn't worry about this, why? >> the stock market has gotten expensive by just about any measure.

if you strip at the magnificent seven stocks, it's expensive for the s&p 500 equal weight and that's expensive. we just have five straight months of gains with 22 closing records this year. because things have come up too far too fast, that's not a surly reason to be concerned and stay out of the market according to goldman sachs. bank of america made a similar point today. they looked at the s&p 500 equal weight index was has a p/e ratio of 17 which is about 13% overvalued and they found that times in the past it has similarly overvalued, it has seen gains in the subsequent 3, 6, and 12 months. because things look stressed doesn't and we can see further upside. katie: you have goldman sachs and bank of america linking arms but what about jp morgan? >> they've been among the rare contrarians with the lowest s&p 500 target among the big banks.

they are implying downside of about 20% from current levels and they have been sounding the alarm on high valuations. their chief global equity strategist last week said valuations are way too high and there is no upside catalyst and that ai excitement and nvidia are not enough and we need some oomph to justify the valuation so they are concerned about crossing -- frothiness. katie: you also track closely year and strategist target for the s&p 500. it was up 10% last quarter. how much movement are we seeing there? >> one of my favorite functions on the terminal go to spx equity and we have a nice round up of the wall street targets on the index for this year. we've seen a lot of people moving up like socgen and oppenheimer. they were the highest on wall

street. we've seen other firms like goldman sachs and bank of america in tandem revising their outlooks for the index. there is a concern that people have gotten on the same side of the boat. if you look at these targets, they are not implying much upside from here so it's not like everyone is predicting gains of 10-20%. sentiment apparently has not reached euphoria just yet. katie: it's only just april 1 and there is a lot of daylight left this year. thank you so much. let's run the conversation out with martin norton, the morningstar chief investment officer. let me pick up on the valuation talk. it seems that everyone agrees things look a little pricey when you look at the broad indexes but some disagreement over what that means. should we be worried about it? >> i still think there is dispersion and valuation.

the point that it's been a long rally that's been pretty strong equity returns for the course of 2023 and in the first quarter. a lot of 2023 was really fueled by the ai narrative and the magnificent seven enthusiasm. we've seen some breakup of the magnificent seven and some broadening out but i'm not sure that means valuations everywhere within the u.s. equity market really stretched. among the big tech upset and the subset for ai, there are stresses but when you look at the value leading areas of the market like consumer staples, that's an area that went nowhere. also utilities. value and small caps and those kind of errors and they're still valuation left to capture. i think investors have room to move into those areas. katie: looking through your notes, let's talk about a contrarian play in that is

chinese tech. it feels like we have seen more interest in people are trying to step in to catch that. how confident are you that space has bottomed at this point? >> it's a nerve-racking investment to make when you think about the headwinds that are facing the country at large on the consumer within china, there is a lot of things to be concerned about area that's where the valuation opportunity actually lies. because the concerns of been so extreme and because we are pricing in some armageddon whether it relates to growth or geopolitical concerns. especially the healthy stocks that exist within that technology area a price pretty well. when we talk about considering the risk of china, we have to focus on portfolio construction. we think there is massive amounts of opportunity but a wide range of outcomes. it matters how you size that position and make sure it cannot

capsize the whole portfolio. katie: that is important when you talk about things like chinese tech. i hear what you are saying when it comes to valuations and looking for discount there but the pushback is that some things are just cheaper a reason. when you look at the different valuations in this market, how are you avoiding value traps? >> it's a critical question. something like china has its own risk so in that instance, is that question a portfolio construction. when we think about the other areas that have been under pressure, i'm not sure some of these areas are kind of disaster zones or dumpster diving. utilities, consumer staples are cheap and they've been cheap because of concerns about rates or debt levels. the companies themselves are not necessarily falling apart. net instance we come think there were opportunities for macy's to

stick close to westchester. katie: that's the equity market discussions or talk me what's going through in fixed income. you did have treasury yields rise a bit but not too much relative to what we've gotten used to. credit spreads are incredibly tight. how are you thinking about debt in a portfolio now? >> you are raising that consideration between yields and spreads. that's a real conundrum for investors because yields and future returns on fixed income, they want to make sure you getting jazz you are getting compensated. when we look at the fixed income landscape, we like the much improved deals we see relative to the past few years. we are taking a look at the treasury yield curve. that's all above fair value and that's historic. with investment grade spreads

being so tight and high-yield spreads being tight, we think we can capture yield in the treasury side of things even within the hard currency emerging -- emerging-market side of things without taking a massive amount of spread risk. once we look at investment grade, we feel that's when it's at its worst. katie: are you more comfortable with credit risk? >> fundamentals are quite solid and the spreads are type it you are not looking at falling apart companies. there is some amount of spread risk. for duration, we are at the short and on the intermediate side. the big part of that is where the federal funds rate is. there is former utility ensure data bought that short dated bonds in the fed rate is above 4%. the current state of things, we

think there is former utility in the short and intermediate part of the curve than at the long end. katie: this is one of the biggest questions in the market now. when it comes to the short end of the treasury yield curve, it's one of the most popular places to be. what do you need to see that would make you feel more comfortable migrating out the yield curve into longer duration sectors? >> in terms of moving out of the short end of the curve, we are starting to make a little bit of adjustment there. that's as the fed pivot comes at more into focus, we think people will shift out a little bit. when it comes along end of the curve, there is more questions are an economic growth that need to be answered and maybe the correlations between equities and long-term debt that we want to see before we start moving into that area. if we start to see economic deterioration, think the long-term of the curve is more utility. but that's not our base case.

katie: really enjoy this conversation. that's the morningstar wealth chief investment officer. we want to bring you some breaking news -- advent international by canadian payments processor new bay and ticket prices for $34 per share. that represents a value of $6.3 billion. the potential for a deal has been reported over the next month with bloomberg news the latest today. nuway is backed by ryan reynolds and it provides pay services. the stock has halted at this moment. we will bring in those details as we have them. coming up, we will talk about ev demand is tesla pushes back sales and delivery orders this quarter. ♪

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katie: this is bloomberg markets. it's time for the stock of the hour. we are watching shares of tesla which have fallen nearly 30% this year. investors are awaiting with anxious breath its quarterly delivery report. waning demand for electric vehicles and elevated in interest rates take a toll on sales. analysts been lowering estimates in recent months and they expect an average of 6% drop in deliveries compared to the fourth quarter. ed ludlow joints me now on set sitting to my left. it's great to see you. ed: very good to see you and you set that up well.

there is a lot of anxiety that tesla misses the mark. with all pieces of data, there is a wide range of estimates from very good to very bad. the reason the consensus is interesting, i think it's fallen to 445,000 units. sequentially, it's a drop from the fourth order of 2023. year-end year, still represents growth so the worst case scenario is that tesla delivers fewer ev senate built a year ago. that would be the first time in many quarters where sales have slowed year on year. katie: you take a look at the sell side and estimates have been dropping. we got an interesting note about doing some math. ed: tesla posted on x over the weekend that they produce their six millions vehicle. if you do the math, you probably means they built 425 thousand vehicles at the time of the post on x, two days left in the

quarter and they've made -- and they may deliver 430,000 units which is the low rent but just the low end of the range but it was still represent growth. a lot happened in that quarter. production in berlin was impacted in europe because of a fire which was suspected as arson and sources say in shanghai, they ramped down output because they didn't think demand would be there. at the same time, high rates. you nailed with the factors are. katie: a lot of different headwinds which have combined to pressure the stock which is 30% lower year to date. the worst performer in the s&p 500. how much of the bad news is priced in? ed: that's a good point. tessa jumped to 101% in 2023 recovering from the 2022 collapse. tesla is doing what it said would do. they raise prices on model y

this morning but there is always a sprint at the end of the quarter with a incentivize just counts to get the last few days as many orders as possible. in markets like china, the big rivals and domestic players continue to cut prices even though tesla has reversed its strategy. it will be interesting to see in north america have a sprint finish cuts work. i leased a model y last week because the deal was too good to have set. one individuals not going to move the needle. katie: you never know. maybe you did move the needle. me, i haven't leased and ev because i don't know where i would charge it. if tesla which has been the pioneer of this industry is facing some of these headwinds, what today -- what does it mean possibly for other automakers? ed: in china, there are many more domestic players. there is more consumer choice.

there are more ev's america -- available in america but few have the availability of a 7500 tax credit. think about all of the gas engine cars on the market and consumers are used to having infinite choice. there is a school of thought that says the would be model y buyer has been and gone and what they're looking for something very low pro -- very low-priced or a big chunky suv. there were also signs that demand for the rivian suv is not there. they haven't brought many models online yet. they had a few limited options and maybe those have stopped resonating with the consumer. katie: great to see you in new york. that was ed ludlow previewing the tesla delivery numbers. tesla shares are off another 1.8% today.

coming up, we will look at the next chapter for bridgewater on today's wall street beat. that's next, this is bloomberg. ♪

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katie: this is bloomberg markets. it's time for today's wall street beat. we are looking at bridgewater's next chapter as it looks to move past ray dalio's reign. kathy burton is with us. it's been about 18 months for this idea, how's he doing? >> he has a mixed report card. he has tried to make a lot of changes at the firm to improve performance. there has been some perio of

good performance including this yeard but last year, they hads one of their biggest losses. it's not entirely clear yet he has figured out how to improve things there. katie: when it comes to what's going on at bridgewater, i feel this is part of a broader story when you have any industry having a hedge fund moving beyond the founders influence. it's tough to do. particularly at a place like bridgewater because it had a particular culture. ray was a very sort of dominant leader in that. i think it made it even more difficult for them to break away. katie: talk about the culture and what they are doing there. you described it as particular, unique and there are books written on the topic of bridgewater's culture. what changes have you reported that have attempted to have been made at bridgewater? >> ray had instituted a whole

waiver people to grade each other, to have an idea of how people did, what the best job for them might be. it became very oppressive according to people who worked there. people would have an interaction and then have to greet each other on an ipad. they have gotten rid of all that. katie: so no more baseball cards? >> no but there is still the idea that the idea of radical transparency when people want to talk to each other quite bluntly what they did or did not do correctly. katie: when it comes to the potential investors and investors currently with bridgewater, i imagine the turnaround performances top-of-the-line? >> they went through more than 10 years of pretty poor performance, one or 2% annualized.

people really like bridgewater for its research and that's what has kept investors there. there comes up point and especially after last years losses which was one of their worst losses, people are really impatient. katie: it's a fantastic article and that is bloomberg's kathy burton talking about help bridgewater ceo turnaround hinges on wooing restless clients. looking at the markets, the s&p 500 is in the red, down about 0.3%. big tech is hanging on is the nasdaq 100 is up about 0.1% in the bond market is losses after what we saw this morning in terms of the manufacturing figures. yields are up mighty across the curve. that does it for us, this is bloomberg markets and this is bloomberg. ♪

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