Transcripts For BLOOMBERG Bloomberg Daybreak Americas 20240713

Many expect to more in the first half of the year. Time now for global exchange. We are going to bring your todays market moving news from all around the world. From hong kong to new york to washington, or bloomberg voices are on the ground with this mornings top stories. Coronavirus cases around the world are over 93,000. Joining me now is yvonne man, and with some data to go with it that is not so supportive. Yvonne right. South korea now topping 5600 cases. The government there now seeking 9. 1 billion to help businesses. We have seen surging cases in italy and iran. Rate for this is now at 3. 4 . We also saw in the u. S. , reporting its ninth death, and china, more signs of containment. We saw the number of total cases have topped 80,000. We also learned of 15,000 that dischargedred and from the hospital. China come of the total death toll now at 2981. We saw car sales out of Mainland China falling a record 80 as this virus keeps shoppers away, and you see more pressure added to these automakers that have been struggling already with this unprecedented slump in the industry that we have seen. The Hong Kong Monetary authority essentially following the fed when it comes to cutting Interest Rates to 1. 5 , and additional 50 basis points. Now we are seeing more events being canceled. Nonessentialng travel, and japan now saying they could postpone the tokyo games later this year. Alix thank you very much. Now we turn to centralbank response to the Virus Outbreak. The feds surprise basis point cut seemed to unnerve markets by signaling it is unclear how long the virus will last. Joining us is michael mckee. Why did the market hate it so much . Michael if i knew what the markets were thinking, i would be a very rich man. Nobody really knows why the market tanked. A lot of speculation, but we might as well ask why the futures market is up this morning. Lets look at some questions that may have some answers. Who is next, and whats next . The bank of canada is widely expected to cut Interest Rates later today. Take a look at this chart here. More action coming from the European Central bank, according to futures traders, and the fed will cut again in march at their regularly scheduled meeting. Look at the white line, though. That is the bank of england, weirdly decreased on a rate cut. Still mostly priced in, however. What happens next in terms of the economy . That much. We got adp today not much. Weve got adp today, jobs numbers friday. You can forget about those because it is old news. Infections are just starting to ramp up in the united states. Maybe you will see something on march 17, when we get retail sales. People stocking up on Hand Sanitizer and masks may show up a little bit of a bump in the sales, but it is going to be a while until we know anything in terms of how the virus is affecting the u. S. Economy. Alix thanks very much. Coming up later today on bloomberg daybreak, we have an exclusive interview with james bullard, the st. Louis fed president. That rate cut pushed the 10 year yield below 1 for the first time. Putting me for more on the Market Action in new york is bloombergs annmarie hordern. Annmarie we are in uncharted territory, as you said at the start of the show. The 10 year yield since the start of the year down about 90 basis points, nearly a full percentage point lower. It just shows this flight to safety and the worry about the coronavirus, and the fact that this rate cut might not prevent the damage we see in the u. S. Economy. Many are saying that the real question is the unknown. Could this trigger a recession . The market is now pressing in another 25 basis points. Many on the street say for the first half of the year, we can get about 100 basis points from the fed. The second big question, is this the right tool . Many people in the market are saying, how does a rate cut fix a Public Health policy . We could potentially see the selloff yesterday. The futures are coming back now, but yields flipping because the fed acted alone after that rare g7 call. Potentially today, we could see some more action. Alix thanks so much. We want to end on u. S. Politics. Former Vice President joe biden performing well on tuesday, and what appears to be a street fight with Bernie Sanders to challenge President Trump in november. Mr. Biden for those who have been knocked down, counted out, left behind, this is your campaign. [cheers and applause] mr. Biden just a few days ago, the press and the pundits declared the campaign dead. Then came south carolina. They had something to say about it. Alix joining me from washington is kevin cirilli. Some of your big takeaways . Kevin call him the comeback kid. This was a big night for former Vice President joe biden, who beat expectations and was even able to pick off texas, but it is not over yet. The second point i would make, senator Bernie Sanders, im told, behindthescenes has been preparing for a contested convention for weeks now, and that this fight increasingly comes a twoperson race. In just over a week, theres another series of contests, including in arizona. The Sanders Campaign feels they are poised to have this for the long haul. Questions now surround the campaigns of former new york city mayor Mike Bloomberg, as well as senator Elizabeth Warren, and weather is not and whether or not them staying in a race could ultimately hurt the candidates it would like to see become the eventual nominee. If youre looking ahead and down the line, look to see how senator Bernie Sanders looks to say he would still be able to unify the party and break past the democraticsocialist ceiling of sorts that has hindered his chances for expansion, and also look for how the Biden Campaign is able to make inroads with the Progressive Movement in a rivers political strategy of sorts to try to say they would be able to boost turnout in a general election. Alix thank you very much. Michael bloomberg is seeking the president ial nomination, and is the founder and majority owner of bloomberg lp, the Parent Company of bloomberg news. General electric says it will take a hit from the coronavirus. Ge came out with an adjusted First Quarter forecasts that missed estimates. Asian om ge heavy from ge aviation is expected to shrink. They expect that the grounded 737 will return to service in the middle of the year. Coming up on this program, more of your morning news, trade, and analysis of the markets in todays first take. This is bloomberg. Alix time now for bloomberg first take. Joining me from our inhouse team of wall street veterans and insiders, Damian Sassower. ,lso joining us, David Lebovitz j. P. Morgan invest the Management Investment Management Global market strategist, and adam posen come up peers and for International Economics resident adam posen, Peterson Institute for International Economics president. Damian our friends at Credit Suisse put out a piece last night which was excellent, and it shows that since the coronavirus broke, the funding, we havent really seen funding stress in the market. Finance,r trade Commodity Finance has all come down. That is a temporary boost to bank Balance Sheets. Manifest,t seen that but now we may begin to see that manifest, and i think that is what the fed is trying to preempt. Alix is that a worse Case Scenario . The credit markets are still relatively functioning, right . Damian since september of last year, the fed has only injected 150 billion. We can see in places like southeast asia, Companies Like apple have supplied their key suppliers, funding them in the near term to get through this. They could be really feeling the pressure. If we start to see real credit stress, we will start to see libor blowout. Cross currency basis is starting to we can hear. E weting to weaken hwe can weaken here. Keep in mind, this is a fed that likes to shoot first, ask questions later. They wanted to give the Business Community a bit of a pat on the back. There are concerns that with companies having cut all their capex, if they begin to get really nervous about the outlook for growth and profit ability, the next drop is going to be on the unemployment side. Was kind of an attempt at shock at all, but really saying, weve got your back. I think theyre going to keep buying short bills. I think they will probably reduce rates further. The question is when the recession eventually shows up, a question of when, not if. Economies work in cycles. What tools are they going to have left . I think you are looking a significant Balance Sheet expansion. Alix adam posen come away in on this one. What did you think about the cut yesterday . Adam i think it was probably fine, but unimportant, relatively speaking. The emphasis now has to be on fiscal. Summers,f us, larry janet yellen, mario draghi have been saying that this time around, you would have to use fiscal policy. The g20 keeps saying it is time for fiscal policy. It is not doing Monetary Policy. On top of it, you get the coronavirus shock driven by nonus by nonfinancial factors. Ive got to disagree with some of your colleagues. I think the Financial Stress is really secondorder, and i am not sure that this fed response is going to matter that much. David the fiscal point is really interesting because it is something everyone has been waiting to come to fruition. Particularly in europe, this could get things moving in that direction, but the question is, we are now talking about very low rates, fiscal expansion. What does the toolkit look like Going Forward . More importantly, what do investors do . When we think about building portfolios in this environment, now you need to think about three different buckets. Youve got your risk bucket, which is your equity beta, your income bucket, and then things like 10 year treasuries, where you are not getting paid. Alix and you have Duration Risk. David but you are buying it for the percussion for the protection. Adam i went to agree very strongly on that, that this is about what germany and the rest of europe decides. Ive got to assume that the combination of uncertainty about fiscal tools and about monetary was what drove the fact that we didnt get a g7 statement of any meaning ahead of the fed decision. When youre looking around, i do think that people are overestimating the persistence of the cycle, and theres going to be distressed Credit Opportunities and comeback opportunities in 12 to 18 months. Alix does that imply that you thought the g7 didnt act because they are going to go do more fiscal . Adam my interpretation was you held the meeting. You raised expectations that there was going to be some kind of coordinated response. Then suddenly, the fed is out there on their own. I think this means the europeans were unable to decide on what the next steps were. I hope this is a Tipping Point for germany and europe because once they start to move on fiscal, theres room for everybody else to move. Damian we may as well be waiting for godot at this point. The u. K. And china can definitely stimulate fiscally, adam isree with what saying, but if you are waiting for fiscal stimulus, youre going to be waiting for a long time. I think that is what the fed really identified, and the building,should be given what we are seeing from the coronavirus. Look at china factory numbers overnight, falling off a cliff. Youve got to believe that is something they are seeing. The fed is saying this is a very real problem. We need to get ahead of it right now. Im not disagreeing with you that fiscal is a longterm help. What i am trying to emphasizes that the monetary actions of the fed and the others are a very pale substitute. If we dont get that, the fed is not come to save us. , the in addition to that fed is the world central bank. Whether it is a slowdown in growth, the potential rerate think it employment, the tightening potential reratin the tightening, of spreads, what can the other major Central Banks do . Fundamentally, im not sure, like weve been talking about, that reducing Interest Rates really addresses the underlying problem here. Alix what i find confusing is where is the talk of fiscal in the u. S. . We are talking about it come about after the fed cut yesterday, the tweet from President Trump saying the fed is cutting, but must further ease. Are we going to bet our hopes this is not going to come, and we have a safe haven bid coming into u. S. Equities that is going to wash out . Ian adam to be crude about it, maybe there isnt that much hope. You are going to have to deal with the reality that things are going to be bad for year and a half with some downside risk. I totally get what you are saying about trump, but this is so straightforward. You just treat the hospitality towards the transport sector the way you treated the auto sector. Loano targeted sba rollovers, targeted employment support in that sector, all of which fiscal can do in no time. Thats not to say it is going to happen. It is just an incredible shame that the president is foolishly yelling at the fed rather than trying to amass some agreement to do something straightforward. David i think what is so challenging about this, usually the fed drops rates and stimulates things like spending more housing rates or industries we know are cyclical and account for a lot of volatility in gdp. To your point, what are the industries that are going to come under pressure here . Hotels, tourism, services. If im not going to the mall because im worried im going to get sick, im not sure how dropping the fed funds rate gets me to go to the mall. Thats the big challenge, and that is why we need to see some fiscal. Theres going to be debate about it, but that is the only thing that can really break us out of this malaise. Otherwise, there will be some pain involved, and investors need to understand those bifurcated outcomes. Damian the rate cut was not designed to stimulate. It was designed to lubricate. We should expect more easing ahead, for sure. Alix if that is the situation we are heading for in the u. S. , for emerging markets that are pumping fiscal stimulus, that are cutting rates, does that make them a good bet or not because the u. S. Is weaker. Been thinking about that. Emerging markets have kept a lot of foreign reserves, and that should be a buffer against any liquidity stress, but they take those and invest to those in the fx swap markets. That is going to manifest itself in the short end of the u. S. Market. That is what you have to stay focused on today just to see what we have witnessed in the last 24 hours. Adam i think theres another angle on emerging markets, even though i think that is all right. The Health Crisis is a stress test for governments and governments and governance. Youre going to see a few of these countries fail the stress test. The quarantine and other resources. This will lead to real governance problems. Does the market sort out those causing a fullut selloff . The first round effect is what was just said, but i would emphasize looking at each countrys ability to survive this global pandemic. Alix to wrap it up here, what is your favorite buy today . David there are two things im watching very closely. The energy sector, im going to say it, is looking more and more interesting as it continues to get cheaper and cheaper. In a world where everything is expensive for longterm investors, unless using the Energy Spaces going away, you will have to sit through some pain first. I alsonk gradually think value is gradually coming on sale. Even in banks, the rerating of yields had made value look attractive. You can look through the stress we are going to see in the economy and with respect to corporate profitability, but not completely abandon cyclicality in their portfolios, and focus on quality and income. At the end of the day comes that is going to be the right approach. Alix Damian Sassower of bloomberg intelligence, thank you so much. Adam posen of the Peterson Institute and David Lebovitz of jp morgan are staying with me. For more analysis of our program come i go to gtv on the terminal our program, go to gtv on the terminal. Browse the features, check it out. This is bloomberg. This is bloomberg. Viviana this is bloomberg daybreak. Reaffirming its guidance for this year at t reaffirming its guidance for this year. At t saying by the end of the second quarter, it plans to have nationwide 5g service. Saudi arabia pushing opec and allies for deeper production cuts than planned. The saudis what the cartel to cut more than one billion the more than one Million Barrels a day of output. Oil prices have been battered by the coronavirus. That is your Bloomberg Business flash. Alix thanks so much. One reason theres a call for deeper cuts in production is the big jump in the flow of oil from opec middle east exporters. Take a look at this. Crude supplies from middle east exporters rose to the biggest , despite the016 fact that opec and allies had agreed on cuts for the first part of the quarter. Glenn sacks is not far behind, downgrading their price forecast to 47 for brent, a brutal price drop. Coming up, joe biden pulls off a stunning super tuesday come back. We will have more on the primary results and what it means for the markets. This is bloomberg. Awesome internet. Its more than just fast. It keeps all your devices running smoothly. With builtin security that protects your kids. No matter what theyre up to. It protects your info. And gives you 24 7 peace of mind. That if its connected, its protected. Even that that petcamera thingy. [ whines ] can your internet do that . Xfinity xfi can because its. Simple, easy, awesome. [ barking ] how you watch it does too. Tv just keeps getting better. This is xfinity x1. Featuring the Emmy Awardwinning voice remote. Streaming Services Without changing passwords and input. Live sports with realtime stats and scores. Access to the most 4k content. And your movies and shows to go. The best tv experience is the best tv value. Xfinity x1. Simple. Easy. Awesome. Xfinity. The future of awesome. Alix this is bloomberg daybreak. Im alix steel. Yesterday was a terrible selloff. Today we are rebounding. Are we looking at a bounce, or is this about maybe biden getting the nomination for democratic president , or maybe other things cutting rates . You caned rate cut see the aftereffect of the fed rate cut. The twostens spread continues to bull steepen as you are still seeing a relentless bid into the treasury market. Yesterday, the 10 year yield moved 24 basis points. Crude up by about 2 . That feels like opec is going to come in and support the market. Like i mentioned, former Vice President joe bidens done with a super tuesday victory and places like massachusetts and minnesota. Me in new york is rick davis, Bloomberg Contributor and former manager of john mccains campaign. David lebovitz and adam posen still with me as well. What was your biggest take away from last night . Rick the only surprise was from the biden cant. Bernie did what we thought he was going to do. He won california, the big prize. He had been devoting resources to that tv and ground game at a time when nobody else was. That was really a lifesaver for him last night because without california, it was a dismal showing. All of the surprises were on bidens side. He beat Elizabeth Warren at home in massachusetts. He won texas, which had been written off for dead. His minnesota win was particularly crazy because he was pulling at 8 a week before the election in that state, and wound up winning it. These prize in the political world right now is looking up to find out that the Biden Campaign is no longer on lifesupport. If anything, it is the incumbent narrative now that bernie is going to have to be biden, not the other way around have to beat biden, not the other way around. Alix you got a boost inequities yesterday in the futures market because biden is more safe. Do you buy that narrative . David when i thing about markets over the last few weeks, i think it is 2 3 covid19, 1 3 concerns about what is happening with the president ial race. Investors are taking a bit of solace just because if you thing about what volatility represents, it were prisons a wide distribution of outcomes. What we are seeing is that the distribution of outcomes is still wide, but there is a clear path toward something everybody is more comfortable and familiar with, and that is what is giving futures abuse this morning. Theres still a lot of race to be run. I think this is definitely a positive development against a broader Global Economic backdrop, which was looking particularly fragile. Rick i cant agree with that more. The republican establishment has been hiding under donald trump, and last night was a time we saw an establishment try to embrace someone and add some stability. Bernie sanders is the insurgent trying to burn down washington, and i think by all rallying around biden, it gave the vice chance at some stability that hasnt happened a long time. David adam back in 2016, i pointed out that white suburban women where the tree swing vote, and that trump had a better chance of winning that people thought at the time. Did you get to 2018 and the congressional swing is driven by white suburban women switching back from republicans and democrats. I think that is the key factor going ahead, and that is why some of this argument on sanders part about this is the establishment, this is what is going to matter. It is interesting to thing about how the virus and a shortterm turn down in the economy plays out for those people. Our elections have been increasingly ideological, less economics driven, but no matter what, the trumpet minister she and is going to look bad even if they were doing a decent job on the virus, which the Trump Administration is going to look isthe Trump Administration going to look bad even if they were doing a decent job on the virus, which they are not. David coming into this year, one of the church that was always making the rounds is if you take some of the Unemployment Rate inflation and use that as a gauge for the state of the economy, it looks like the administration had a really good chance at getting another four years, but again, the economic strength has been called into question. How do people deal with something that is going to impact consumption and services, which are much more tangible to the average american, then manufacturing and investment spending . I think we have been dealt a hand that nobody saw coming. David, iadam completely agree with you. First, if you are doing this istically, the biggest going to be growth of income this year. We will see what happens with that. Secondly, youve got an issue ine just saw with argentina. The threat of the left coming in i have effects coming in affects the stock market. This is what happened with the kershner ticket in argentina. President trump is probably going to get blamed for what happens on his watch, whether or not he does it. The sentiment of the Democrat Party was on display during the midterm elections, when 9 Million People voted against the Republican Party a margin of victory for the democrats. The question you have to ask is can trump reduce that number down . He lost the general election vote when he won the presidency by 3 million, lost the midterm by 9 million, and there is no evidence that the administration is doing anything to prepare its image in the suburbs or with suburban white women voters, who will dictate the outcome of this election. Alix so as we walked this forward, no matter who wins the white house in november, what happens to fiscal stimulus . I want to bring up one chart and talk about budget deficits. We are already at 84 billion. What do we do with that when you have a 10year treasury yeild low 1 . Are we going to see mmt . Is modern monetary theory going to come into the vernacular next year, no matter what . David icerely sincerely adam i sincerely hope not. The deficits dont matter in that nobody votes on the basis of how big the deficit is maybe they should, but they dont. And second, what is much more important is the composition of spending and tax cuts that create the deficits. That is what distributes to the particular voters what it is they think they are getting or not getting. That is what determines the impact on the economy. I think unfortunately, the deficit ends up being a distraction as a total number. It is more about the quality and composition of what the government does. I totally agree. The deficit isnt going to be an issue, but perhaps it should be. I think what we are seeing globally is that expansion of deficits at very low rates. This modern monetary theory come into the conversation . Perhaps not, but we are looking at an environment where the lower for longer environment is forced to play out. Abovest rates move higher the face of nominal gdp. That will prevent governments from being able to service these debts, so i think it is a combination of all of this. Eventually, things will come home to roost, but that is five or 10 years down the road. In terms of the impact in november, i get a somewhat secondary. Alix we are not going to care until we care, basically. Rick it is a level Playing Field where basically, spending has been geared towards trying to find votes. Adam is right, i dont think theres a political issue. Alix why havent we seen fiscal come out of the Administration Due to the virus . Why are we seeing President Trump only focusing on the fed . There are speculations on that. Sorry to interrupt. Congress is unable to make decisions. Second, there is this overhang of ideology that visible, tangible spending is more indefensible than big tax cuts. That is wrong on the economics, and i think it is going to be wrong on the politics. Donald trump has tried to pull every lever he could. Hes already talked about a tax cut. Hes trying to distract from the coronavirus because he doesnt a plan that the public needs during a crisis like this. One is his favorite targets is the fed. Regardless of whether it is or not, you can expect some full counteroffensive by the administration on how the fed didnt do enough. It is not a rational approach to fiscal or Monetary Policy in this administration, steve got to assume that youre putting on your political glasses between now and november and hope it doesnt record the economy. The economy. Eck david we are having this in talkingt rate about fiscal expansion keeping rates low. You had a market showing signs of life going into last year. I understand it has been dealt a bit of a different hand in terms of the virus and the broad uncertainty that creates, but the one risk investors arent necessarily appreciating, and this may be a longerterm risk, is the potential for inflation to begin to come back. Look at the way government bonds are priced, equities are priced. People are assuming Interest Rates are going to stay low, so we have been expending that opportunity set we are focusing on in portfolios and focusing on things like infrastructure and real estate, which we highlight in our guides for alternatives coming out today. [laughter] david these do provide yield inflation protection and diversification. When it comes to building portfolios Going Forward come others are going to be key things that investors perhaps arent thinking about. Alix all right, adam. Last word to you. Adam if i am worrying about something, i would view inflation risk as a speculative investment. I think the biggest worry in this is the true message of the ratesalling into sub zero , very flat yield curves. That, the u. S. Is ranked to get ahead of come whether or not it works. Alix thank you very much for joining me. We really appreciate it. We want to get an update on what is making headlines outside the business world. Viviana hurtado is here with first word news. Viviana the coronavirus is causing more travel bands. More events being canceled. The partial list is significant. Amazon is banning nonessential travel. All Business Travel band. Scrapping its largest Business Travel banned. The Administration Says it is a good time for lawmakers to cut taxes. What the president hasnt done, come up with a major fiscal plan. We end with the Tokyo Olympics. They could be postponed because of the coronavirus. That is the word from japans olympic minister. Right now, the Tokyo Olympics set to begin july 24. Spentstimated japan has 24 million on this event. Global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Im the fiamma hurtado. This is blue im Viviana Hurtado. This is bloomberg. Alix coming up, why working from home in the face of the Virus Outbreak is not too simple. If you have a bloomberg terminal, check out tv. You can watch us online, click on charts and graphics, and interact with us directly. Review anything you may have missed throughout the program. This is bloomberg. Viviana this is bloomberg daybreak. Coming up bloomberg daybreak. Coming up later today on bloomberg markets, james, st. Louis fed president new york fed president st. Louis fed president. We begin with think meet makers cutting prices with fake meat makers cutting prices. Impossible foods has cut wholesale prices for its products by 15 . Big companies such as nestle plan to make their own plantbased burgers. Now to the billionaire family that has agreed to sell the thesurance business ream french Insurance Business team. Testing ah jp morgan, coronavirus plan for u. S. Employees today. Thousands are being asked work from home. Bloomberg has learned about 10 of the staff and Consumer Banking will work remotely. Thatabout 1000 2000 is about 1270 workers. Now its time for wall street beat. Deals pulled from leverage loans. The refinancing frenzy dying down as billions were pulled in the last six trading days. And kkr at the top of pe median salary pay. Joining us is bloombergs sonali basak. Can jp morgan do business from home . Sonali not everybody, for sure. You cant trade a big amounts from home. Volatility is going wild. Theres a lot that can go wrong. Short answer is no, but lets see how people start to play into these contingency plans, and security. The traders cant trade from home, but just a couple of weeks ago, we were talking about the bulletproof windows at retail banks. Like even those measures are not enough. People are rushing to do more and seeing how well they can bear this weather. Alix im having a hard getting a real read of what is happening in the credit market. Sonali as of right now, the window is pretty close. Leverage loans are much trickier than typical debt. If that window was just open for a little bit, the Leveraged Loan Market is really going to be impacted. So what does this mean . Private equity sponsors will have to pay up a lot more for saw someey probably tension in the market through the end of last year, and this is really adding to it. Alix this is also what happens with covenants. What happens if you guys have to keep it all in their books . Sonali exactly. We did see a couple of deals get. Tuck with the banks alix we will see how that goes. Out here on the median salaries. Sonali this is my favorite story. At firms like blackstone, you have the top three executives. Aking 800 million combined the median salary is around 200,000. Remember, these are a wide range of workers. The top Portfolio Managers get paid a lot. But there is quite a disparity between the top paid executives at blackstone or kkr and their median salary for a worker. Abigail where there alix where are they competing with talent . Theyil dave sonali been competing everywhere, and this shows you just how far the ceo is. Is 200 to one. It you look at the financial industry, and it seems really start, but you look at the Tech Industry and wonder if it is worse there. Alix thank you very much. In todays bloomberg green, called ceo mike worth for reducing emissions within its own operation. If you look at thirdparty assessments of flaring in the Permian Basin, we are the leader. A wide range of Companies Leader against a wide range of companies. We have not set longterm targets. Weve begun to march down the path of taking concrete actions that reduce emissions. We learn more, we invest in technology, and keep that going overtime. Alix he went on to say he wouldnt commit to a new budget a new budget. Coming up on this program, we are taking a closer look at how the fed emergency rate cut is impacting u. S. Spreads. If you are jumping into your car, tune into Bloomberg Radio across the u. S. On sirius xm channel 119 end of the Bloomberg Business app. This is bloomberg. Alix time now for traders take. Joining me is Damian Sassower. We were talking about it earlier, what stress we might be seeing in the dollar funding system. Damian if you look at the white and bluish gray im colorblind. [laughter] damian what you see yesterday is a pretty big spike. I think that is spilling over into credit markets. We have seen spreads widening and not coming back. I think that is something you have to keep a watch on in that environment when there might be payment pressure in dollar Funding Availability pressure. What youre looking at here is cross currency basis. This is offshore demand from offshore banks and Central Banks, etc. When the u. S. Cut rates, you should have seen the cross currency basis explode to the upside, but reversed overnight. Why . Because there is still relentless demand for dollars from offshore. That is what the basis is back down. But i was basically going to say is that that means theres demand for dollars, and that is building across orders on coronavirus and some of the fed pressures. So if you want to make a trade off of it, how do you do it . Damian unless you are a big bank, you dont have access to these markets. But you have to keep an eye on these indicators because the spill over into credit spreads, you just need to keep an eye on it. Theres no real trade there. Alix thank you very much. Coming up, we continue the coverage of the fed rate cut with michael these us that with michaels asos with Michael Zezas of Morgan Stanley. This is bloomberg. Alix welcome to bloomberg this wednesday, march 4. Im alix steel. Lets take it from the top. We have seen bookings decline declined by averaged 25 to 30 on a daily basis. Cases in surging italy, iran, and perhaps that is puts the fatality rate for this virus at 3. 4 . Kong pmi falls to a 17 year low. Fed chair jay powell surprises the market with a 50 basis point cut. Nk. Cks si it is all uncharted territory. I see another 15 decline from where we are now in stocks. Alix the market speculates the boe could also issue an emergency cut. Michael we got adp today, jobs day friday. You can forget those because it is old news. We might not see anything until april because it will take a while for anything to get into the data, as infections are just starting to ramp up in the united states. Alix now support is starting to mount for fiscal support. Mr. Biden for those who have been knocked down, counted out, left behind, this is your campaign. Alix former Vice President joe biden stages a huge comeback as wins theernie sanders california primary. Sen. Sanders i can tell you with absolute confidence we will win the democratic nomination. Kevin this was a big night for former Vice President joe biden, who beat expectations and was even able to pick off texas in the super tuesday prize, but it is not over yet. Alix Elizabeth Ryan and Mike Bloomberg face questions on whether to end their campaigns Elizabeth Warren and Mike Bloomberg face questions on whether to enter campaigns. Michael bloomberg is the founder and majority owner of bloomberg lp, the Parent Company of bloomberg news. We are seeing a relief rally. How sustainable is it . Eurodollar down by 0. 5 . The dollar sold off hard yesterday on the fed rate cut, now coming back. The 10 year yield sitting at 1 , clawing back from below that level. Where doing over from here, and what is going to support us . The said surprised with that 50. Asis point cut yesterday joining us here in new york is chief us, Morgan Stanley strategist of municipals and , mila richardson, richardson, nela Edward Jones Investment strategist, and nick maroutsos, Janus Capital management. Look at where bonds are trading. They are all trading at the fed funds rate. That means the fed is behind the curve. 10yearcalling for a 1 probably about nine months ago, more so on the back of the structural challenges that the u. S. Would encounter in moving towards zero. I think this was a catalyst to get there, and i dont think we will be moving too far off of it. Alix what do you think . Nela i think it is still too soon to tell. The fed has been motivated by providing this bottom to the markets, this liquidity. This is obviously not an economic move. This is a financially motivated ,ove to prolong the expansion not necessarily intended or expected were able to stimulate the economy. Been that, the fed may behind the curve when it comes to the markets, but i think they are ahead of the curve when it comes to the economy. We still dont know what the Economic Impact will be and whether the stimulus is actually going to help with that expansion. Alix jay powell was like, we have no idea. This could be bad. We just dont know. Which leads me to why the political sphere is still focusing on the fed and not fiscal. I think they are focusing on the fed because it is probably the only game in town a washington, d. C. At the moment. If you look at the levers available for the u. S. Monetary iso pull, one, and fiscal would be another come up at the u. S. Government basically has no track record of being proactive on fiscal stimulus. It has a track record of being reactive. Havevided government, you just laid of gridlock, so you are you have legislativ gridlock. You probably shouldnt mark up your expectations for that mess there is real economic pain in the data. Nela we havent seen that yet, and we probably wont see it in the jobs report either. Impactus has not had an on job creation so far. It is just going to be another data point that disproves that the fed action was needed right now. Alix we havent seen the stress in the funding markets that we did in 2008. That was the rhetoric yesterday. I wonder if you see that continuing. The biggest said, risk in the plumbing we see is the fed cutting rates aggressively and a mass drawdown of Corporate Credit lines due to missed payments to push the u. S. Banking system back into deficit in short order. Nick, how do you see that . Nick i think the fed and other Central Banks are going to adopt a kitchen sink mentality. They are going to throw everything they can at this situation. If that means providing more liquidity to the markets, they will. If that means quantitative easing, yield curve control, credit easing, everything is on the table. The fed is somewhat constrained as a result of doddfrank, but this is the new environment we are living in. Backstopping market chaos is now part of mandates. Monetary policy is not going to be able to address supplyside chucks, but the market is hoping that some form of psychological supplyside shocks, but the market is hoping that in some form, it psychologically can. Then implement some measures that will get us out of the woods with regards to the coronavirus and the effects of that. Alix does that mean you have to take on Duration Risk and credit risk at the same time . Nick in this type in the night are meant, you need to be this type of environment, you need to be offensive. You knew to be cautious, particularly in fixed income portfolios. We are trying to deliver some kind of income generation. We are owning high quality, highly liquid. We are buying duration. We are looking to hedge out some of the credit risk. Days like today, the market is up. Days like yesterday, the market is down. We believe the effects of the coronavirus arent complete yet. The defensive be as liquid as possible. Alix why would it be a duration trap . Nick to be honest, i dont think there is a duration trap. I think investors should be looking to buy duration. The fed is looking to cut rates again. The directory for the fed is lower. The market is going to tell them what to do, and the fed is going to oblige. That means, whether we are going to move towards zero remains to be seen, but you are seeing other Central Banks doing the same thing. So you are also looking at buying yields in australia, new zealand, canada, the u. K. Rba in australia just cut rates a couple of days ago. They are likely to again in april. Theres rumors of an emergency cut in bank of england. This is going to be the continued theme, and we are going to move towards that zero Interest Rate policy. Nela i think nick just spelled out the fed playbook very well. The one thing i would add is that each cut becomes less effective. More effective here at home, but if you look at global central , so their effects are going to be even less than here at home global Central Banks, they are lower or negative, so their effects are going to be even less than here at home. Theres a risk that we still dont have a good way of quantifying. Alix ultimately, it seems like other countries may have a better chance of fiscal stimulus, like germany, and we see italy interested. Is that a better playbook for the u. S. . I think that is a better narrative overseas. We are building a body of other countries about how the virus moves through populations. Public health concerns, and it is possible that as that progresses and we can confirm our own biases or push against them about how disruptive this actually is, it means couple of months outcome of the markets recognize this as a temporary disruption. I think that is a counterbalance to the idea that the fed and the markets have to be in a permanent risk off mode. Alix which begs the question, will the fed gives back those rate cuts . If that happens and everything is ok, are they really going to hike 50 . Michael i think that is a decent point. Perhaps they are reticent to take that back because it wants to be watchful and waiting, and the market recognizes the rebound. He could have Something Like a bear steepening of the yield curve. Thats not necessarily what we are projecting, but that is a risk we have to be aware of. Nela even though we were in the ,eat of this coronavirus event i think there is general agreement that this is not a forever risk. Thatis a temporary risk does delay, but does not derail, the grope will the Global Growth rebound. It does not end the economic expansion. In that situation, where we expect the risk to maybe be profound in the moment, but fleeting over time, what is the fed feds correct action, and what is the cost of another 50 basis point cut going to be with an event that you would expect to resolve itself by the end of the year . That is something the fed is going to have to grapple with. Alix in light of that, what is your counter to this . The fed has already called this, and that is the problem. They are really going to be pushed around by markets, and their mandate is focusing on what level the s p is trading at. If you are worried about a duration trap, hide out in the front end. The front end is where youre going to get kerry. The fed isnt going to get carry. The fed isnt going to be hiking anytime soon. Focus on the front end and roll down to maturity. I agree with the previous panelist. We are not necessarily in panic mode, so we dont want people to assume that we are just complete bears when it comes to the market. This virus is temporary. Theres a time of stimulus coming down the chute. Theres a ton of stimulus that already exists. You are faced with low rates and low inflation. In that sort environment, you want to own risk assets. We just believe that bonds will perform equally as well. Alix the pedestrian question for you, and we will move on and a second, how low can the 10 year yield go . Nick thats a good question. We made the call of 1 in july, and we didnt expect the coronavirus to be the ultimate iuse of that, but again, dont see why the 10 year cant go down to 0. 5 . If you read the tea leaves that Central Banks are going to continue to ease policy, if this coronavirus, if this worsens, if this intensifies, theres going to be a natural bid towards quality assets, and that is going to be treasuries. , nickMichael Zezas maroutsos, and nela richardson, all of. Your sticking with me stay tuned to bloomberg all of you are going to be sticking with me. Stay tuned to Bloomberg Television for our interview bullard, said lewis that president st. Louis fed president. This is bloomberg. Mr. Biden for those who have been knocked down, counted out, left behind, this is your campaign. [cheers and applause] mr. Biden just a few days ago, the press and the pundits declared the campaign dead. Then came south carolina. They had something to say about it. Alix that was former Vice President joe biden speaking after a stunning super tuesday come back. As,ll with me, michael zez nick but sue suits nick maroutsos, and nela richardson. Market thishink any noisy, it is hard to pin anything on political outcome. To the extent that you as an investor are looking at a binary between biden and sanders, saying one is more constructive than the other, i would encourage people to think critically and take a couple of steps ahead. It might not be the wrong way to think about it, but i think youve got to specify why that is. Our contention has been does not actually, if one of them became the candidate and ultimately president , that big of a difference between the policies they could practically get done. Obviously the presentation is different, but in our view, you need a unified government to get any major legislation passed. Get what you can actually through a unified government through the lens of a slim Senate Majority where you have to satisfy moderates, probably something that is fiscally expansionary, not as harsh on the tax side as you would think, but at the end of the day, very different. Fears thate of the were stated by some of the candidates platforms. Theres a regulatory story. Microair to say that on a level, theres going to be some binaries, but those are more driven by the republican versus democrat and the bernie biden binary. Nela with think politics will be a source of volatility in the markets. We have the same recommendation every four years, dont play politics with your portfolio. If you look at last weeks action, last monday was the first market trading open after bernies breakout in nevada, and the markets didnt really get a chance to fully digest that news before we had more news on the coronavirus. I think these things are getting conflated together. We dont know if todays bump is due to bidens breakout over super tuesday. We think there is going to be volatility driven by these new headlines. At all comes down to taxes. Which candidate is more likely to roll back the tax cuts that were enacted in 2019 . Once you get a benefit, it is very difficult to take it away, even in an undivided congress. That would be a big uphill battle for any candidate to actually take away or rollback a tax cut. Michael i think thats fair. Sandersy, the bernie tax program is much more aggressive than joe bidens, but the question isnt the candidate and what they can do with taxes. It is what you can get done with a slim majority. The answer is probably not a full rollback of some of the more aggressive tax measures. So you get some tax rollback, but insufficient to fund probably even Something Like joe bidens more Modest Health care proposals. You get some of that extra spending and stimulus, and of course, there are some mixed net,ts of that, but on the almost by definition, your nearterm growth Inflation Expectations change. Alix nick, from your perspective, do you hedge the election at all . Nela was saying, we dont politics dont play that big a role in our portfolios, but we need to look and examine what is going on. I think with what happened last night, with biden really coming back from the dead, politics is now less of a driver in markets. We know what to expect. I think that is what markets want, which is why you are probably seeing some level of bounce today in equity markets. The certainty may not be complete in the sense of who is going to be the democratic candidate, but we have a clear picture of who that might be. Now markets can focus on the macro picture, whether it is coronavirus, the fed, and say now we can put this to the side, knowing full well that even if biden or sanders is elected, they are going to have a tough time getting things through. But when there is a biden presidency or candidacy, it is less a risk of what is going to happen in markets. They dont like uncertainty because that adds to volatility and risk. Alix i think it is also important when you talk about Corporate Taxes as well, how much it actually did add to earnings. It happened a couple years ago, and it was really 2019 earnings were you did see a significant boost. That was significant. Nela thats correct. Alix taking that away would be huge. Nela we are already seeing the effect of Corporate Tax cuts. You can see that in q4 earnings, for sure. We think because of the coronavirus, they will be revised down for the first half of the year. Inyes, they had a big effect 2017, 2018, may be in the first half of 2019, but they have already basically lived their life in terms of their effect on earnings. Now we are looking for another catalyst. That was supposed to be trade. It was supposed to be the phase one trade deal that limited or reduced trade uncertainty. We are seeing the virus pick up where the trade tensions left off, and really cutting down supply chains in a way that may be more expensive, at least temporarily, than the trade tensions. We are not getting the catalyst we expected this year. Alix so it is like trade one deal later because now no one is going to buy anything . Michael it is interesting how the trade risk in the virus risk rhyme in terms of their impact, but i think at least in the short term, i would not view those things as multiplying on top of each other. Of phase one and moving to phase two is sort of an excuse to delay the hard stuff. The virus is another useful excuse to delay conflict. That doesnt mean you should feel good about trade because the virus itself is a much bigger risk. Alix Michael Zezas of Morgan Stanley, thank you for coming in. And nilautsos richardson will be sticking with me. 183,000 jobs were added in february, but january was revised down by about 80,000. This is bloomberg. Alix i want to check on some of the big movers in the markets. The markets reducing the odds of e for allnders medicar plan that might not become a reality. Thinkge really disappointing firstquarter guidance, saying they could have reduced cash flow as much as 500 million. Nordstrom getting creamed after the profit outlook came up short. Coming up, we will be speaking to chris debt. This is bloomberg. [ fastpaced drumming ] [ fastpaced drumming ] alix this is bloomberg daybreak. I am alix steel. Happy wednesday. Yesterday was painful. As a market participant. S p futures are now up 50 points. How much of that is a joe biden when yesterday and how much is just a rebound from the selloff we saw . Classes, a couple of things to Pay Attention to. Adp came in stronger than estimated but was revised down. The dollar gaining. The fed dragged down the dollar yesterday. We are seeing the bull steepener in the bond market. 2. 10 is where we set. Pay attention to the effect this has on the Corporate Credit market. Mohamed elerian wrote in a Financial Times that the likelihood of a growing number of fallen angels comes at a time when the longstanding structural deficiency of the 1. 2 trillion highyield market, a small space of dedicated investors relative to the amount of outstanding bonds is more apparent. Liquidity threats are being exacerbated by a lack of funds willing to cross over into junk territory. Still with me is Nila Richardson and nick maroutsos. What do you think . More foreign angels more fallen angels . Nick i think mohammed is right. You have an environment with a ton of excess debt. People have been reaching for yields for the longest time and now they are set up for an environment where there is the low liquidity in the credit markets, particularly in the fallen angels and highyield markets. That is where people get in trouble. They are looking to create a bond portfolio with equity like returns. You are buying bonds with a high correlation to equity. Bonds are supposed to be defensive. Highyield bonds do not do that. There is a reckoning coming in the sense you will see issuance continue to slow. Hopefully we will see the plumbing get unclogged, particularly in the investmentgrade market. There is still going to be a lot more volatility in the credit space. If there are opportunities to take on more risk, where would that be if it is not in Corporate Credit . Nick i do not think you want to be taking on too much risk right now. You up to watch what has happened over the last two weeks. It has been an exciting time. We have seen rates rally significantly. ,e have seen credit spreads both investmentgrade and sub investmentgrade. We are taking more of a patient approach, particularly right now as we see how things play out with the coronavirus, how things play out with the jobs number and how things finish off with the fed rate cut. Ultimately, there will be a silver lining. There its going to be good opportunities. We like looking at global assets, particularly in the short duration space. That is what our mandate and the font we manage does. We look for good opportunities globally where we can maintain a solid yield without changing the riskfully ofo the portfolio of the profile. There are a lot of good names out there. It is almost like the contagion effect we saw, not quite to the degree of 2008, but we saw a Quality Companies are widening and the equities are deteriorating, where these are actually Good Investments over time. Alix talking about plumbing, the fed repo operation is oversubscribed for the second state day. The narrative the fed will have to support the market when it comes to repo. Nila, what do you think . Nila diversification is a teachable lesson of last weeks market volatility. That onwith nick duration you need to take credit. I would also note that the highyield market, the spreads did not widen as much as you would expect from a 10 correction. Weve been told for the past year and a half that the risk was in the Corporate Bond market. When we got to last week, we did not see the risk pray the risk play out. This is a concern we are still watching. It becomes harder for companies to make payments. We do not think the Corporate Bond market is risky enough to trigger a recession, but if there is a slow down it could prolong or make it more pronounced. That is why we are watching it. Are for companies that able to come out and issue debt now, the window is open a little bit. Will we see a tougher covenant . What we see a different duration . What you think the result might be . Nela i do not nick i do not think we will see different covenants. Corporations are not stupid. Of course they will be issuing as long as debt as possible if there is demand. You will see a situation where there will be a lot of fixed rate debt. Problems for the end investor . Sure. You are buying longterm debt at below 1 in some cases. Moretly longer, maybe just than 1 . It is a tricky game and that is why we are big advocates of staying in the front. It is a great place to hide, and why you may not get the yield you are used to over the last couple of years, you can still get a decent return for a little bit level of risk. When we argue in our portfolio is you are effectively getting 85 to 90 of the yield of the u. S. , which is the standard index and debt. Taking on 10 to 15 of the Duration Risk. To me that is a great payoff, particularly in a stressful environment. Alix thanks for the conversation. Richardson and nick maroutsos. Thank you so much for joining us. I know you have to get up early. Just a point out, starbucks is holding its annual meeting virtually, citing the coronavirus. The next company to change how they will be running their business. Lets stay on the Corporate Credit market. If you, inside the bloomberg, this is one area seeing the funding stress. The yields blowing out, touching 1 . The blue line slipped below 50. Joining me as someone who might try to find opportunity and that, chris abbate, partner at riverstone, a Global Equity firm that focuses on energy, and infrastructure and looks for district for distressed debt opportunities. The past couple of weeks the Oil Companies have been stressing about their cash flow. What kind of opportunity is it for you . Chris it is a great opportunity. We are looking to fund midmarket Energy Companies looking to fund our growth. We have seen great opportunity over the last several years and accentuated now. This shows what you dabble in. Companies that are not a startup but not big enough to ipo or get taken out. Youre in the middle range. Why do you see that is a Good Opportunity . Chris thats right. Riverstone is a 20yearold firm focused solely on the Energy Markets. Initially it was private equity only. About six years ago my partners and i started the business to create a middlemarket Energy Lending firm within riverstone. Banks love to lend to Energy Companies, or they had until recently been very interested in putting capital apps the energy sector. The highyield markets have traditionally loved energy. Your charger showed with spreads widening, certainly cause for concern, but that is the highest part of the highyield index. Highyield investors do like Energy Companies. In the middle market was not anyone there. We looked to be the middlemarket replicating what other direct lenders had done in other sectors and we like that space. Alix where you sit in the capital structure . Lien we are typical first at the top of the capital structure, taking the place of the bank. Alix how do you buy energy when everyone hates it . In 2016 everything was distressed but no one thought energy would be out of vogue. Now everyone hates it so much. Chris we use an Asset Based Lending strategy and try to value the asset from the ground up and set an advanced rating against that. We max out at about 60 loan value. Whether oil is up or down you should be able to value the asset based on the current market and we think a 40 equity cushion in a loan investment is solid. In todays market, when everyone is running away, making those types of investments is attractive. Alix how long do you typically have the loan, and then when you accept, what is your exit strategy . Chris the strategy initially was designed to help bridge people from when no one would lend them money alix like a bridge loan to buy a house . Chris Something Like that. When you have a real piece of land that has one cost of capital and you make improvements, you get permits, you put a foundation on, you build a building, you rent it out, it has another cost of capital. Energy is similar. We tried to be that bridge lender going from the real piece of land into something that was a renting structure. Donerically, what we have is try to bridge people into the bank market. That is becoming much more challenging right now is the access to those markets has been reduced. I think right now we are focused on cash. If we cannot lend money to somebody and have them cash flow out of the zone for 24 years, it is not an investment we make. Alix have those investments dried up or not . Today the opportunity is bigger than ever. It is the past investments we made where we were hoping to get to an ipo or highyield offering where that is not an exit. We are having to go back and find other ways to help the Companies Get their debt paid down and get out of the loan we made to them. Alix do you see the narrative and the market is Energy Markets will be cutting their capex, there will be a lot of m a, do you see that in the market, or these Companies Going to stick it out . Chris it is front and center. Funding is scarce on the equity side. The banks are cutting back as well. It will force capex down. Companies will have to combine and reduce overhead. They will have to reduce cost to capital as well. We see that all live. Most of our portfolio is considering some type of merger or combination with somebody. Alix was your favorite position or what is the favorite thing youre looking at . Chris all of our deals are private, so we cannot talk about the names, but a theme we like is there is one bright spot in the u. S. Energy landscape. That is crude exports. President obama legalized exporting crew from the u. S. , it set off a huge amount of Capital Spending from the Permian Basin and other basins to get crude out of the water and into the global markets. We like participating in that in any form or fashion. We have done a number of deals on all ends of that value chain. It is a bright spot, despite where prices sit. Alix thank you so much. Chris thank you. Alix chris abbate of riverstone. I want to give you an update what is making headlines outside of the business world. Viviana hurtado is here. Viviana tuesday was super for joe biden, the former Vice President refining his hopes on the biggest night of the democratic president ial campaign. Joe biden winning nine states, including upsets in texas and massachusetts. Bernie sanders taking the biggest prize of the night, california. He also one in utah and vermont. Bet days ago sanders seem to on the way to an insurmountable lead, now biden has momentum. Now to the number of u. S. Deaths from the coronavirus. It has risen to nine, most of those taking place near the seattle area. Global infection rising above 93,000. The World Health Organization saying the coronavirus does not transmit as efficiently as the loop but the mortality rate is higher, 3. 4 based on cases. Saudi arabia pushing opec for deeper production cuts than planned. The saudis want the cartel to cut more than one Million Barrels a day from its output. That is more than recommended by a technical committee. Opec meeting in vienna. Oil prices has been oil prices have been battered by the coronavirus. Global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. I am Viviana Hurtado. This is bloomberg. Chevron carbon, reduction reality. Well hear from chevron ceo on how the company is taking a more realistic approach in reducing admissions. Remember bloomberg users, go to gtv on your terminal for any charts you may have missed on the program. This is bloomberg. Viviana i am Viviana Hurtado coming to live from the principal move. Later on balance of power, lawrence called, ge chairman Lawrence Culp, ge chairman and ceo. Viviana youre watching bloomberg daybreak. Im Viviana Hurtado with your Bloomberg Business flash. We begin with general electric. The company says the coronavirus could cut up to 300 million from First Quarter operating profit. Ge is Still Standing by its fullyear forecast but it says for the last three quarters, the impact of the virus was not incorporated in expectations. Later today, we will speak with ge ceo Lawrence Culp at noon. Now to jp morgan, the Company Testing a coronavirus plan for u. S. Employees. Thousands being asked to work from home. Bloomberg has learned about 10 of the staff will work remotely. The division has about 127,000 workers. Makerswith fake meat cutting prices. Startups are battling Food Industry giants for a share of the growing markets. Impossible foods session. Nestle anducts cargo plan to make their own plantbased burgers. Alix time for bottom line. Well take a look at Companies Worth watching this morning. Our focus is on chevron. The company showered investors with 80 billion worth of buybacks and dividends, and pushed back somewhat on the longterm industry push for carbon neutrality, opting for shorterterm targets like reducing methane emissions. I spoke to mike wirth, chevron ceo, and asked how he plans to combat Climate Change compared to his peers. Mike i think we have to be taking action. We are taking a lot of actions. We have set four different Greenhouse Gas intensity reduction metrics across our entire portfolio. Those are tied to the compensation of all employees in the company. We are investing in renewables in support of our core business around the world, and we are investing in future technologies and funds and other investments to try to find breakthrough technologies. We are taking actions across the board. That is what investors are looking for. Are you engaged . Are you taking action . Alix the story is the European Oil Majors are way ahead of you guys. Mike we are all in this together. Everybody is trying to achieve the same end. We all want to be part of the solution to the big climate challenge. The challenge in energy is there is a growing population of rising standard of delivering standard of living that will demand more energy in a way that is affordable and reliable for those people and do it with a lower carbon footprint. All of the ceos i know how we are approaching that in terms of longterm aspirational goals, our approach has been to get on the path. Start taking actions towards shortterm accountability metrics. Alix the story is bp has everybody aggressive for 2050 climate goals, perfect omissions for their own operations, why arent you going to do those things . Mike we are doing a lot of those things right now. If you look at thirdparty assessments of flaring in the Permian Basin, we are the leader against a wide range of companies, including large companies. We are taking actions today. We have not set longterm targets and we are not sure how we would get to, but we have begun to march down the path of taking concrete actions to reduce emissions. We continue on that journey over time. Alix can you tell me what it is like to talk to investors where as a ceo you need the revenue from oil to work on the energy transition, but at the same time you need to pay out dividends and buybacks. At the same time you have to continue to run your business well. How can you walk and chew gum at the same time and dance at the same time . Mike im not much of a dancer so i will tell you about the walk and chew gum. We have High Expectations of ourselves. The biggest thing investors are looking for or improve returns. It is a sector of the economy that has invested a lot of capital over the last decade and investors are expecting to see something for that. Risk andlowering the improving shareholder distribution. That is what we talk about today with our investors is our ability to continue a 5 billion a Year Share Repurchase Program to grow our dividend at somewhere between 5 and 9 compound annual growth rate and we are already yielding about 5 and invest in our core business and future energy at the same time. It requires a strong Balance Sheet, requires capital discipline, and cost discipline. Alix how can you do it all under capital discipline . That is what i feel is the missing piece for big oil. You want capital discipline, investors need that, but then you have to spend on energy. You know you have to spend it on new technology. How do you do that . Mike the challenge is to find things that are good for the environment and good for shareholders. If we do things that are only good for shareholders jonathan that is possible alix that is possible . Mike it is hard. If we do things only good for the environment and not for shareholders, that is not sustainable. If we ignore the environment, that is not sustainable. It is finding the intersection. Alix is that the permian . What is the intersection . Mike it is reducing the emissions footprint in everything we do. Our Oil Emissions are coming down. Methane emissions coming down. And then investing in renewables in support of our business and investing in breakthrough technology. We have a wide range of things we are spending money on. What is important is the people you have smart people challenge to find solutions to these big problems. There is no one company, there is no one industry, there is no one country that will find all the answers. We reach outside and collaborate with others. Alix that was part of my conversation with mike wirth, the chevron ceo. You can see more of that on bloomberg commodities edge. Tomorrow at 1 00. At somegaining, we look of the trades in todays technically speaking. If youre heading out, tune into Bloomberg Radio heard across the u. S. On sirius xm channel 119 and on the Bloomberg Business app. This is bloomberg. Alix time for technically speaking. We set you up at some traits for the day. Bill maloney, voice of bloombergs equities brought joints me now. Listen to bill by typing in squa on the terminal. Ill futures are up big s p futures up 60. The first levels to watch, 3061. That is a retracement level. Above that, 3987 and 3100. Your first levels 3061. Alix walk me through what to do with tech. You will be selling the winners. What do we see . Bill nasdaq futures up 161. Looking at those resistance level, 88 65, that is your first retracement level. That is 38. 2 of the move. Is 8865 for the nasdaq. Alix lets wrap it up for the 10 year. How low can the . , i asked how low can the yield go . Bill we will give you a level. Right now around 1 . It was at. 9 yesterday. 2019, reachingto out. 85 . Hopefully that is your loafer yields. Alix bill maloney setting up for your levels of the day. That wraps it up for me. , wellsup, chris harvey fargo security head of equity strategy. We are seeing a furious bounce back the futures market, yesterday closing below the 200 day moving average. Is this part of abide in potentially winning . Is it a dead cat bounce . Or some calm into the market . This is bloomberg. Jonathan from new york city for our audience worldwide. Im jonathan ferro. The countdown to the open starts right now. Jonathan coming up, pricing out sanders, pricing in a bounce. Jay powell stuck between a rock and a hard place as 10 year yield dropped below 1 for the first time ever. 30 minutes until the opening bal, good morning. Lets get you your wednesday morning price action. Equity futures positive 59 points on the s p, up 2 . In foreign, the eurodollar down to 1. 1125. There is your move on treasuries