Transcripts For BLOOMBERG Bloomberg Markets 20240713

I want to look at autos, two moving in different directions. Investors taking advantage of the bargain. The valuation tesla commanded a month and a half ago is far different than the one it commands today. That stock is up 16 . Ford down 5 . Dividend,ed its share drew its guidance, as we have seen so Many Companies do during this crisis. Drawn down 15. 4 billion in credit lines. Also taking a look at ecommerce. Shwey is to read higher this morning. That is an online pet food retailer. Sales are up about 50 year on year as people start out because of the coronavirus. Down byownside, etsy 11 , downgraded by roth today. They say activity is slowing. I want to talk about the economy for a second. We got initial jobless claims this morning. Take a look at what we saw. 70,000 jobless claim spike him of the largest since october 2012, post superstorm sandy. Last week, before the shutdown here in the u. S. Really escalated. So these are poised to get a lot worse. Taylor my thanks to kailey leinz. Bank of england joining global Central Banks, cutting Interest Rates to a record 0. 1 , adding 230 billion to its asset purchase program. This after the ecb unveiled a stimulus package aimed at offsetting the impact of the coronavirus. Central banks are catching up in the right way. You dont do Monetary Policy decisions at midnight on wednesday. Its about one third of the previous qe program. Ecb buying a tepid program. A lot of liquidity in the system, helicopter money. We can debate whether that is too little or too much. But it is something that is very targeted at trying to calm markets down. Taylor for more, i want to welcome in columbia threadneedles colin moore. He joins me from boston. I first want to talk about the credit markets and the action we have been seeing from the ecb, boe. Is it helping liquidity, did anything feel better today as far as the technical and liquidity problems we have been seeing . N we appreciate the measures being introduced that we are not seeing the impacts of them just yet. We are hopeful over the next few days that we will see improvement, but if anything, my team of traders are saying that things are slightly worse today than yesterday. Taylor why is that . Colin there is still some confusion, exactly how to make use of some of these new facilities. We have been having a debate between some of the programs being available, but confusion with our partners on what that means for the capital they have to set aside. We have had guidance of the fed that maybe you could ease some of their buffers. Their reply is you have to be more precise to that as to what you want to do around capital. We dont want to get caught him by surprise. I get the sense there is extra work from groups like the fed to clarify some of the charges that will be against some of these initiatives. Generally very welcome, and so grateful that they are now focusing on liquidity than just Interest Rates, but definitely some further clarification tied to it. Taylor your note sounded fairly optimistic, you talk about the vix at 80 is classic peak panic. But do you see the equity markets bottoming out, if we have not solved those liquidity issues . Colin im looking at my bloomberg chart of the vix. As you can see, it is very rare that the vix can sustain volatility at this level. Thater, one of the things people confuse is a dropping in the vix volatility means the bottom of the market. We have examples where the daily calm down, so you get movement, but it can drift lower for a while before it starts to truly thought about and then begin to rise again. Like and mary are on valuation, where i think the market will be 12 once from now, it is pretty easy to get upside of 20 or more. We are coming to that bottoming process come in my opinion, particularly because the markets are taking more confidence on these coordinated measures around liquidity, as that is the proper solution, not just industries. There will be trading back and forth over the next few days, but i think we are beginning that bottoming process. Taylor where are you seeing the opportunities . Colin obviously, it is not clear how the economy will recover. I am personally in the camp that a lot of areas will recover quite quickly. I certainly expect general Economic Activity to pick up faster than it did after the financial crisis, but that will not be true of every sector. We are having the debates that im sure many are having, will there be a recovery in travel, cruise lines, aircraft . People are going back out to buy general goods and services, we expect that to rebound quickly. About everyone is suspect the data in china, but received reasonably good recoveries there. Anecdotally, we have quite a few staff from china, and they say their families are telling them they are beginning to get out again. Wem reasonably hopeful that will see a good rebound in a number of different sectors. If growth is scarce, we would still stick to the air is we have been excited about or some time, health care, technology. I would not make a bet on a full cyclical recovery. Taylor with a massive Dollar Strength we have seen, we would be remiss if we did not talk about em debt. Does anything look constructive on that side of things . Colin we are quite excited. I did a review with our colleagues in london this issue, they are quite excited about the valuations. Aterestingly, you cannot buy the prices on the screen. , theon as you make a bid price changes. Price discovery is a little bit strange at the moment, but we are beginning to see debt. Unities in em and em at the same time, if clients are withdrawing money, the capital you have available to take advantage of those opportunities go away. So a little bit of a trade off at the moment. Taylor my thanks to colin moore. Now i want to get an update on the news with mark crumpton. The state department is for theg to level 4 entire world, a move aimed at stopping americans from going overseas as the coronavirus pandemic continues to spread. Level four is the highest advisory in the state departments travel alerts system and essentially tells americans not to travel overseas at all. It is normally reserved for war. Ries in a state of u. S. Military says it is causing the movement of any new troops into afghanistan and is quarantining 1500 troops and civilians who arrived recently, in order to protect them from the coronavirus. Troops already in the country may have their deployments extended, so missions can continue. The u. S. Is reducing its presence in afghanistan as part is the peace deal signed last month with the taliban. China is sounding more optimistic about the coronavirus outbreak. Chinas premier said today most of the country is considered low risk and should consider returning to normal work and life. He added barriers to the flow of people and goods in lowrisk areas should be removed. China was the epicenter of the outbreak and has been the hardest hit country in the world. Nocases were reported cases were reported in the past before hours. The chief negotiator for the ecb has been infected with the coronavirus. The 69yearold made the announcement in a message on twitter. Well and in good spirits but is confined to his home. Tweet, the barniers second round of trade negotiations in london this week have been canceled because of the outbreak. Global news 24 hours a day, onair, and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Im mark crumpton. This is bloomberg. Taylor this is bloomberg markets. Im taylor riggs. Mixed messages from the u. S. Government. The fda is pushing back against President Trump claims that the antimalarial drug chloroquine has been approved for testing as a coronavirus treatment. For more on a path to a cure, i deka. O bring in nina talk about some of the companies that you see on the front line developing vaccines, antidotes for the coronavirus. One in particular is doing treatments to help mitigate some of the symptoms with the lungs that can help people get off of respirators. They are also working on a hopes to gete ceo them in travel by august. As a longterm investor, im not necessarily investing in them because of what they are doing. In the last 10 years, every time there has been a deadly outbreak, they have stepped up and have enabled to come up with exceeds. Every time they do it, they get faster. That means their genetic engineering case that capability is working and is scalable. Taylor in this broadbased selloff, where every asset class is falling, there are pockets of opportunities where you can be idiosyncratic and differentiate between companies between companies that could be winners. A lot of this uncertainty about recession, unemployment, is causing selling. Fromy a divorce fundamental analysis. If you look at their longterm growth opportunities, this selloff is a little overdone and is creating a lot of it doesnt opportunities. Specifically, i would look at longterm health care. Some of these things like telehealth, remote patient heartring, diabetes, disease, cancer, these problems are not going away with or without covid19. These companies behind them will continue to innovate. Taylor do you think these changes that we are seeing right now in telehealth, without running to the er, could be outlasting and at last the virus . Absolutely. Telemedicine is not new. Has been around since 2002. Companies in the last couple of decades have really made the infrastructure. They are already in almost every hospital in america, many globally. Could you imagine if we were trying to use telemedicine now and the infrastructure was not laid . Once the infrastructure is a 50 teledoc have seen spike in utilization over the last week. This is here to stay. Now that people know that they can get a doctor on the phone or Mental Health specialist, from home or the office, they will keep doing it even taylor some of the big shortages have come in the testing area, where we dont have enough tests for everyone who might need them. What is your take on the diagnostics and the Testing Companies who are making these . So Many Companies now have all gotten emergency use authorization to get their Manufacturing Capabilities up and running, scale this up, and shipped out millions of tests. All of these companies happen to htec. If anyone is looking for a single Stock Investment right now, if you want to invest in health term longterm, that is the way to go. Taylor my thanks to nina deka. The markets are trading on one thing only, news on the coronavirus. News from italy. The deaths have frozen to 3405, now surpassing china. I want to see how that pulls back into our market coverage. Some of those domestic stocks at the most beat up finally rebounding today. The 10year yield, it is a buy everything day. Falling by 13 basis points. The dollar, for the record straight on the dollar index. Dollar strength means em currencies have no fx liquidity. Gold is the one true that has not been holding up, a selloff as investors prefer cash in this environment. This is bloomberg. Taylor this is bloomberg markets. Im taylor riggs. Crude rebounding after plunging to the lowest levels in 18 years. As policymakers try to strengthen economies against the impacts of the pandemic. Nowsuries secretary mnuchin recommending that the president ask congress to buy 20 billion worth of oil to develop the reserves. Joining us now is rs energy nieboer. An i was speaking to people, and they are looking at brent at 10 a barrel. Is that in your forecast . That is a little over then we are seeing right now. Potential dislocation of the market means a lot of things are on the table. I would not be surprised if we but have existing prices there would be pretty extreme. Taylor what further Downside Risk is there . Ian the first is on the demand side. We are all trying to grapple with coronavirus, what the outlook will be. When the pace of change is as rapid as it is, it is hard to get your arms around it and protect a wide range of outcomes. The other one is on the supply side. Price combination of the of oil that we are talking about, but the saudis and the russians, potential risk of new barrels coming back into the market from libya, maybe youre on. That hangs over the market. Maybe iran. And then in the u. S. , we are thinking about this sharp feel back in productivity. Of those risks, the supply and demand, what worries you more . Ian probably the demand side. It is the unknown unknowns. We are grappling with what the potential impact is, not just now, Second Quarter, but longer run. Respond, how will economies respond on the other side of this epidemic. . Taylor talking to analysts earlier this morning, companies u. S. Shale, for example trying to cut capex by 25 from a month ago. How quickly can they do this to be breakeven at 25 a barrel, if that is even possible . Capex relatively quickly. To get to a point where you can keep your cash flow flat for a year or two, its possible, but it is a pretty deep cut. It starts to get into the bone of the company and what the outlook looks like 42021. To be breakeven and sustainable at this price will be difficult and painful, i think. Looking at any potential mergers as this potentially goes to smaller players, and you see them rolled up into the larger guys . Ian it comes up given how depressed valuations are. For those that have a Balance Sheet and are comfortable with the future, there are opportunities to consolidate in the industry, take advantage of the time. Right now, most companies are focused internally, trying to ensure their own survival and health coming out of this. At what price point per barrel does oil have to be to get russia, saudi, opec to come together and look at their output levels . Ian its a combination of price and duration. You are seeing hints in the market, at this price point, it is hard. Perhaps early of desire to think about it. Our view is it will take some time to get back to the table and think about what a renewed relationship may look like. It will take some time, so that means prices could be a bit soft for a while. Taylor we talk about the vshaped recovery in the economy. Any outlook on oil, into 2021 . Ian we are not calling for a vshaped recovery. It is a combination of the depth and degree of dislocation that we are seeing over this quarter, really putting a cap on prices, upside into the new year. At there of a u moment. Taylor my thanks to ian nieboer. Another check on the markets, a little rebound across all the major averages. You are getting a little buying on the 10year yield. Further Dollar Strength, record Dollar Strength now, stronger against all the other major currencies. Vix mix coming down b coming down slightly, 73. This is bloomberg. Shery live in toronto, i am greg pennell. Welcome to bloomberg markets. We are joined by our bloomberg and Bnn Bloomberg audiences. Here are the top stories we are following from around the world. The s p 500 locking modest gains on the heels of wednesday selloff after consecutive moves of more than 4 . Governments around the world rushing to hold on their economies as the coronavirus continues to spread. Fiscal relief packages spreading to nearly 2 trillion globally. Central banks erase and wrapping up asset purchases. Christine lagarde pledging therell will be no limits to the ecb actions as the Bank Launches an 800 billion buying program. Greg lets get a quick check on the major averages. Interesting moves today. Defensive names are not being snapped up. We are seeing some money move into tech stocks, some interesting moves. The s p 500 up by half a percent. The dow up. 75 . The tech heavy nasdaq up almost 3 . A lot of those big momentum names could not stop before we hit the covid19 crisis, getting a bit of a bit today. Interestingsome comments from donald trump, where he says he prefers the government taking an equity stake in some companies. Lets bring in kailey leinz for a closer look at this market action. You mentioned how tech is higher and investors are looking for bargains. When you look beneath the surface of the equity markets, some of the names that are up today are the ones that have the rsis. Ersold lam west is higher. Tiffany is higher as well. Investors are buying into some of those really aggressive dips. They are also buying treasuries, which has not been a consistent store the last week. Yields had moved up, but today we are heading back down toward that 1 level. Treasuries have a lot of computing signals, central bank stimulus, bond buying, but also people are looking for liquidity. I have a chart in my bloomberg terminal that shows despite the fluctuations and the fact that they have moved higher over the past week, breakeven rates are consistently going down. They have fallen for 21 days in a row, which shows you how much the growth and inflation outlook in the near term and longterm have been rated lower, even though we are not seeing that in treasuries. Muchtells me it is not so of growth expectations as it is about liquidity. Shery thank you for that snapshot on the markets. In more, lets bring valueworks founder charles limiteemonides. It seems to be all about liquidity, when in motion really seems to be driving the market right now. Are there any opportunities out there . Charles there are a lot of opportunities, but it is a very securities specific market. If you are simply trying to take fs and indexes, you are getting whipsawed. It is a tough market to navigate. Day when it comes to a like this, the gains are not that big, apart from the nasdaq. I know no one has a crystal ball, but at some point, can we expect some calm in the markets . Covid19 situation remains serious, but how much longer can these markets endure . Charles i think you have to be ready to see volatility on both sides. I dont think there is any reason to believe that things are going to become stable in the next three days or two weeks. There are a lot of moving parts here that are really complicated for the markets and investors to sort out. Be at 22 a barrel will really important to the world three months and six months from now. Interest rates at 1 on the 10 year treasury, give or take, is really going to be confusing and interesting. The pause in Economic Activity will be really hard to process and understand what happens. Verlay real uncertainty as to what the washington policy response will be. You are talking about republicans talking about nationalizing big u. S. Businesses. That is concerning. Then you are talking about, maybe they will not nationalize them, but step in as senior lenders. That is not good for the banks. There are a lot of problems and challenges here. They will not be over in two weeks. That said, if you look past this, the year in two years from now, certain stocks and securities will have made you money, but to say where they will trade in the next two weeks is tricky. Washington,ng about with the incredible strength of the greenback, are we going to see a backlash . We are in a global crisis, and it is hitting everyone. The strength of the greenback may be important, but it is just one part of a tremendously complex equation. Know that you have to worry too much about trade implications, of currencies moving right now, there are bigger things that are changing, whether you have import or export demand for u. S. Goods and services, german goods and services, currencies. You are not going to have an impact on tourism from currency levels. I think what is happening in the oil markets is really interesting. What is happening in the credit markets is really interesting. I dont think anyone will start to try to defend their currencies, except the kronor, perhaps. Greg i want to get your impression on the action we have seen from Central Banks, including the u. S. Federal reserve, are they doing enough to calm our nerves . Charles the central bank is doing the right thing in providing liquidity. I think it would be good to get some fiscal stimulus out of washington and the european governments. If that is done through sending people checks, that makes sense to me as a policy response. It is done by taking equity stakes in u. S. Businesses, that is not a great response. I think markets will react differently under different policy responses. Greg thanks for joining us, charles. It is time now for first word with mark crumpton. The fda has been told by President Trump to see if it can expand the use of an experimental malaria drug to treat patients infected with the coronavirus. At a press briefing today, the president and the head of the fda gave apparently conflicting comments about the availability of the drug. Mr. Trump said the medication had been approved and could be prescribed to patients. Minutes later, fda commissioner stephen hahn said use of the drug would be in Clinical Trial to see if it works, and if so, what dose would be safe and effective. A grim milestone for italy. It has surpassed china as the country with the most coronavirus deaths. More than 3400 people have died. More than 41,000 have been infected in italy. Italy has been under a nationwide lockdown since earlier this month. The worldwide death toll crept were 10,000, as the total number topped 200,000, including 85,000 people who have recovered. The pandemic continues to hit iran hard. Officials say another 149 people died, bringing the death toll to more than 1200. Iran has more than 18,000 cases. It is one of the countries that has been hit the hardest by the outbreak. India is taking more steps to contain the spread of the coronavirus. It is banning all International Flights from landing in the country for a week starting sunday. Has asked government states to enforce work from home for all private sector employees, except those in essential services. Global news 24 hours a day, onair, and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Im mark crumpton. This is bloomberg. Shery this is bloomberg markets. Im shery ahn in new york. Greg im greg bonell in toronto. Central banks stepping up their emergency efforts, trying to calm markets. For more on this, lets bring in kristina hooper, invesco chief market strategist. So much of talk about. The ecb, 750 billion euros in asset or kisses. Are we starting to see the effects that they are hoping from these dramatic moves . I think we are in that it is improving confidence. Keep in mind, at this juncture in a crisis, its all about cant dance. In particular, the confidence markets have in policymakers. Central banks have really stepped up in a big way this week. Market improvement over last week when we saw a lot of unease, particularly around the ecb. Shery what about the feds latest actions, especially their support of money market mutual funds . Is this a game changer kristina certainly an important step. I dont know if i would say game changer. I think we will see something more of an alphabet soup of different facilities, similar to what the federal debt during the Global Financial crisis. What we are seeing is a willingness on the part of the fed and other Central Banks to do whatever it takes to support markets in this environment. Yieldwhen the 10year fell below 1 , that cause a lot of anxiety. When i saw it moved back above cannot remember when, its been such a crazy time. On the 10 back above year, is it back above for the right reasons . The 64,000at is question we have to ask ourselves. Certainly, that is a portion why it is back above 1 , is expectations around fiscal stimulus. We have seen a lot of moves in the right direction this week. Confidence in policymakers when it comes to fiscal stimulus, is even lower than the confidence in policymakers in terms of monetary stimulus. Any news around fiscal stimulus has had an impact, i believe, on the treasury market, and is reflected in yields. Clearly, the bigger part of the recent move has been this dash to cash, and the desire for ultimate liquidity. Shery we are announcing jobless claims hit a twoyear high, forh does not bode well nonfarm payrolls in march. Kristina it does not bode well for nonfarm payrolls. But we know what is ahead of us. We are not in unknown territory. We have china as an example of what we are likely to expect happening. What we saw was this big drop in Economic Activity, and that is what we should expect the united states. That should include a real drop in employment. Greg do we think we have been well warned about the damage we will see in the Second Quarter on both sides of the border . We expect the jobless rate to go up. When we see those numbers and they will be ugly do you think there will be a reaction like we were not expecting it in the markets . Hopefully, markets have wrap their heads around what we are expecting. China is a perfect example of it. The way Economic Activity dropped off a cliff in february is what is ahead for us. The good news is china is on the other side of this contagion. It has been in relatively short order. Model we can hope for, if we can control the contagion. The irony, of course, is the more measures we employ to troll the contagion, the more recessionary they are. Shery Eric Rosengren speaking right now, saying the underlining economy ought to be fined over time. What are we seeing in terms of numbers . We also saw a retail numbers take a dive even before the mentreak contain the measures. Kristina the underlining economy has been sound and robust. Beenroblem is, there have vulnerabilities in the u. S. Economy for years, particularly around wealth inequality. Its uglynever rears head when the economy is growing at a decent clip and unemployment is low. N you see the cracks form and they have gone beyond cracks at this point is in a situation like this. We know there is a large portion of american households that do not have any savings, or a minimal amount. Timetunately, this is the when they are extremely vulnerable. That is my we need fiscal stimulus targeted at american households. Shery kristina hooper, thank you. Lets get a check on the markets. Traditional safe havens not acting in that way. We see the japanese yen weakening at the moment. We see the biggest fall in about a week. This as we continue to see the need for dollar liquidity. Sink, thisntinues to after having a short reaction after the ecb took extraordinary action with that expansion of emergency asset purchases. We also see the Pound Holding steady, this after dropping to the lowest levels since 1985. We saw a bit of an advanced after the doe rate cut. Boe rate cut. And the dollar at record levels right now. This is bloomberg. Greg this is bloomberg markets. Im greg bonell in toronto. Shery im shery ahn in new york. Breaking news. We are hearing that at t is in banks for a new term loan of roughly 3 billion. This as we continue to see rising funding cost. They will explore funding option to help the company navigate those rising cost in the market for shortterm ious, according to people familiar. The latest financing discussions coming as the Company Seeks to pay down one of the highest debt loads of any nonfinancial company in the u. S. Again, seeking a new 3 billion loan amid rising funding cost. Under a lot ofy challenge is the restaurant injury industry, in the face of the coronavirus up right. The National Restaurant association, representing half a million restaurants in the u. S. , sending a letter to President Trump and congressional leaders asking for relief measures. The interim ceo of the group joins us now. Great to have you with us. Do you have a sense of how big of an impact the industry will face from all of this virus containment measures . Marvin thank you for your time. We think it will be incredibly devastating for our industry. Economists are estimating anywhere between a 225 billion loss in revenues over the next three months, and that is the equivalent of 5 million to 7 million jobs. Greg when i think about the restaurant business, it seems to me you could be in a tougher situation than other industries. Given covid19 and the strains of the economy, people are putting off buying the fridge, tv, but they may catch up later, that pentup demand. But you are not going to have extra meals. How hard will it be to get that recovery, get people back in the restaurants . Was a big part of the proposal that we made today. That, 145art of billion, immediate fusion of cash, to support our restaurants. Andsecond piece is for loan insurance support, in particular, to help our small businesses. Finally, we are seeking tax reform. Side oft on the other this, this could help our industry recover. This coming as we hear from new york city recording 3615 positive coronavirus cases, 22 fatalities. Brooklyn has the most cases 1030 reported so far. What are we seeing in terms of toward delivery, takeout, drivethrough businesses . Marvin our restaurant tours are doing everything they can. There is a move toward social safety. Moving more to takeout. Many of our restaurants are physically unable to make those changes, and cannot make those changes weekly enough. In addition to the revenue decline, most of the restaurants dont have the authority to make those fixed costs to stay open. While we are doing everything we can, our Business Models do not support that, so it is a double whammy of the regulation and revenue decline. Greg it has been suggested to me on this side of the border, canadians trying to support local business. We know that they cannot go right now, maybe it is takeout only. Buy gift certificates, trying to get them through it. Its a small measure, but are you hearing about any efforts like that . Marvin it is so gratifying to see how much the American Public has stepped up to support us. Everyone of us knows something. Many of us have a family member. Most of us at some point in time have worked in a restaurant. It is gratifying to see that the American People are supporting us. We are asking for the opportunity to continues to support you. Shery are you receiving enough support from the government . Marvin we are pleased at the response to our letter yesterday. We had been on calls with officials in congress. What we are really asking for is we do not have months. In some cases, we do not have weeks. We need something that is decisive, aggressive. Many of our restaurants make decisions day by day. Greg thank you for joining us, marvin irby. Quick reminder, you can catch all the interviews on the bloomberg with the function tv. A bit of news in canada. One of our governors has put themselves in isolation out of abundance of caution. Of course, our Prime Minister in selfisolation as well because his wife tested positive for covid19 as well. This is bloomberg. 2 00 p. M. In new york, 6 00 p. M. And london. Im scarlet fu, along with romaine bostick. Romaine another wild day. Lets get something straight out of the way before we go further. All of these numbers, they dont tell you the price of anything. Right now no one knows the price of anything. This is bottom fishing, but what it does tell you, it gives you a gauge of sentiment and investor confidence. S p 500 to little bit today. A little bit up today. Scarlet i think that is the theme of today we are up today because we were down yesterday. There was concern on policymakers efforts on the policy and fiscal side. Yesterday it was deemed not enough. The policymakers move ahead with big steps at least for now, big pr