Transcripts For BLOOMBERG Bloomberg Surveillance 20240712

Busiest in surveillance is maria tadeo in brussels. She is door stopping. You have done a lot of door stopping. How do you doorstop anxious politicians in brussels . Nejra you call out their name with a big smile, you hold out your mic, and you fire your questions as quickly and ferociously as you can. We certainly have seen that this morning. There has been so much optimism priced into the Recovery Fund in terms of european equities, but also the btb bun spread. Some investors say we have been here before in terms of brussels often taking its time to come to an agreement, so you might not necessarily see a lot of pessimism and markets next week if we dont get agreement straightaway. As investors say, it will come eventually. Tom i am an amateur here. In thes that mr. Rutte netherlands is front and center. Is that how you see it . Never echo yeah, as usual, when you go into these meetings, you may get the ascents that we may not get an agreement straightaway. There is a lot of work that needs to be done. This is normal at this stage of the game, but it is going to be a long weekend and a lot is riding on this for european assets. Tom one of our big themes of Queen Victoria street i know Jonathan Ferro focused on the importance of these meetings. For our american viewers early morning, these meetings are different. The first word news in new york city, here is ritika gupta. Ritika Public Officials are warning that they could impose lockdowns again if people do not halt the resurgence to the coronavirus. Miami and los angeles have all floated the prospect, warning that it is not working to stop the number of infections and deaths. Case numbers are climbing in all but six states. Trumpals say president could reject a measure passed by congress if it does not include a payroll tax cut. Democrats solidly opposed and different republicans are cold to the idea. Prime minister Boris Johnson is bracing for a second wave of coronavirus cases. He will announce 3. 8 billion of extra funding. He is also due to undue plans to ramp up Virus Testing to 500,000 today by the end of october. And in china, peoples reluctance to travel and eat out is dragging on the economy. Supplementala report on secondquarter gdp, the industry shrank 18 from a year ago. Some areas in china still have pandemic restrictions in place, and tourism has shrunk has people as people avoid public places. Global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more i am ritikantries, gupta. This is bloomberg. Nejra . Tom . Tom there is something going on you need to know this morning. It is the second line there, with serious curve compression, and it is a twoyear space. Futures up this way, that way, and the rest of the tape is pretty boring, to be blunt. But watch shortterm yields. Four digits, the twoyear yield in the united states, and at twoyear. 11 on the yield. Im really watching that very carefully. Yields have come in in the last 48 hours. Ritika . Tom looking at the date nejra looking at the date on my side, youre seeing european equities pulling back. The e. U. Recovery fund is being discussed this weekend, one of the reasons that for example goldman, barclays, Morgan Stanley come have cited a preference for european equities over u. S. Equities. I think there is a different picture in equities today. Outperforming. We have seen underperformance in tech shares. The dollar hit for a third weekly lost. That weekly lost. Tom we will continue virus and pandemic coverage. I am proud of the team here that puts it together hour after hour, as the pandemic continues. We are not going to speak to someone we are now going to speak to someone with terrific experience on the ground. There are a lot of people who talk the talk like politicians, and a lot of doctors doing it in hospitals, and then there are people who are out there. From the world health organization, to reach us a jasarevic gives us a worldwide perspective to his w. H. O. Thank you for joining us this money. I see the tokyo lockdown, i see india over that her ex number of cases, over x number of cases, etc. What do you see as you go into the weekend . Intensehere is an transmission of the virus in different parts of the world. Recorded more than one million cases now. Obviously some of that is due to increased testing, but we see that there is a lot of transmission in the community in america, southeast asia, in the middle east, and it is very worrying because countries are struggling to put in place measures to try to stop this. With theom outside best possible advice to countries on how to review the mortality and morbidity, how best really to lead this response. We also work from our side on finding a solution. What is so important here, and certainly a focus in america but i would say a focus in tokyo and given a third world country where you guys are focused, is the transfer from cases analysis to death. What have you learned at w. H. O. About the mathematics or dynamics of death following on from these burgeoning cases . Tarik it is something that is it depends on how many cases are tested. As we travel, we see more people with mild cases. What we are seeing in the past week is the number of infections is increasing, but the number of deaths is relatively stable. That can be explained by increased testing, as we see more people who are not necessarily sick. What we are seeing so far with his virus, it has not changed much, but it is on the radar and we need to continue the genetic sequence of virus with different rates around the world. Nejra the concerns in the Investor Community seem to be that even if a second wave emergence emerges and it has in some parts of the globe that we will not see the full lockdown that we saw earlier in the year. From a health perspective, can the virus be contained sufficiently without going into another full lockdown . The big question that we have been saying from the beginning of this outbreak. The tactic would be to isolate, tontify, provide treatment this person and isolate this person as a contact. So we try to isolate the contact of the virus in the community. We dont know where the virus we have to go into this physical distancing through lockdowns, and that is very traumatizing. We understand that countries and most people would like to go back to some sort of normal, but the danger of that is that as we get to see each other more, we will see more infections, which is what is happening right now. Nejra and a conclusion whether the virus is airborne . Arik we are working with number of scientific groups around the world. We have been always saying that the virus can be transmitted areugh aerosols, and there special procedures being conducted such as aerosol generating procedures. Whether or not the virus can really stay in a small aerosol is something that is being discussed right now. Hopefully there will be more research and evidence that will answer this question. You have to remember, the virus is still new. We are still trying to gather the viable and scientifically sound evidence and we are calling for research on that. In the meantime, we know it is being transmitted through droplets. Much, tarikou so jasarevic. We have much more coming up. We are going to brussels in a moment, rhea taddeo Holding Court in brussels as the maria tadeo Holding Court in brussels as the leaders meet. From johnspekosz hopkins university. Futures up six. This is bloomberg. Nejra i am nejra cehic in london, with tom keene new york. The e. U. Is meeting today to settle differences over a 750 billion euro fund to europe leaders are divided over the makeup of the fun. Mark rutte spoke with maria tadeo in brussels. Mark we dont believe in this groundbased system. What we have said is that first of all, crucial, is to maintain rebates at a sufficient level. The rebates are now there, but we still need to negotiate what is a sufficient level. Need to reform so that if the south is in need of help, there is limited scope to deal with that financially themselves. Then i think it is only reasonable for us to ask for a clear commitment to reforms. And if then, loans have to be converted to a certain extent, then reforms are even more crucial. Ensureare you going to that those reforms actually happen . There has been a lot of talk about whether the council is becoming a troika with your proposals. Mark what exactly our proposal is, i hear a lot of rumors but i am not going to comment. I keep them to myself, but i will inform you completely afterwards. What does the compromise look like . Angela merkel has signaled she does not want to see the grants to be watered down. You say you have a problem with that. Will that change ultimately . Mark there are many issues on the table. The mfs itself and to how to make sure that there are net payers on loans and at the end of the day of course, there is the issue of the that themaking sure economies become more resilient. There is a reason for all of this. That is the fact that we need a strong europe in an unstable world. Look at what is happening in the u. S. And china, the situation in the middle east, the role that russia is playing. We need a strong europe, but a strong europe also means that countries left behind in terms of they were markets, etc. , need to step up the game. Summit, youo the are being portrayed as almost the bad guy, everyone versus mark rutte. Europe, inhting for the interest of everybody, including of course the dutch citizens. , which isurope economically more competitive, and can play with confidence a strong role on the world stage. The idea disagree with that it is all against mark rutte at this point . Mark it doesnt feel like that at the moment, no. With maria tadeo speaking mark rutte. Great work, maria, and thanks for joining us on the show. We have had comments from a number of leaders going into the meeting. I would like to highlight Angela Merkel in particular, casting doubt on clinching a Recovery Fund deal this week. Are they always difficult . Maria they are always difficult. What you need to factor here is that this has never been done before. We are talking about a lot of money, 750 million euros, 500 billion of which would be handed out and grants. There are the optics of a deal in europe. When european leaders come to brussels, they negotiate among themselves, but they also speak to their domestic audiences. Someone like mark rutte is playing this and needs to show to taxpayers that he is getting good deals, that there is value for money here. At this point, there are three major sticking points. We are looking at the sites. Just how big is the fiscal stimulus package going to be . What is the format . Are we getting it all in grants or will we see a more traditional bailout. And the idea of governance if italy is saying do this in cash, who is going to ensure that the reforms are carrying through . That is where the problem is at this point. When we speak to officials, there are optics here and nothing is guaranteed at this point. Nejra does that mean that investors should be concerned that eventually say, for example, we dont get a deal and an agreement over this weekend, that what we will see is a watered down version of the original plan . But angelaould be, merkel, who is still the biggest economy in europe and who is very much running the show behind the scenes she was on the phone yesterday with leaders in europe and has said that she does not want to see that 500 billion euros and grants being changed. We also heard from Christine Lagarde at the ecb that she does not want to see that figure changed. You could argue that we are going to get to a compromise. The optics of the difficult deal, but it is very hard to see in terms of the content what could change here. For the italians, they make it clear they are not going to take anything that looks like a bailout. The italian Prime Minister back home in rome coming he is seeing a very unstable coalition. Tom maria, tom keene in new york, good morning and good morning to the traffic in brussels as well. Maria, the building behind you has 42 elevators. I believe it has 12 or 13 escalators and 3000 people moving the can down the road. How far is the can going down the road this time . Maria i think when you look at the actual deadline, what is a real deadline, Angela Merkel, who i stress is really running the show right now, has said that she wants this deal done before the end of the summer, and there is a simple reason for that. When you enter into the third quarter, into the fourth quarter, there is a lot of volatility already. Uncertainty,t of and she is thinking we need to get the negotiations done before the end of the summer. Tom let me cut to the chase. What is the chancellor of germany going to get to the gentleman from the netherlands to get this thing done . Maria money, a rebate. The dutch want to make sure that if they pay too much, they get a financial contribution, and that is maybe what Angela Merkel could be willing to offer, that rebate to countries like the netherlands, who are concerned they are spending too much on the european periphery. That is when Angela Merkel could do. Ultimately it will come down to financial contributions and money. If the dust feel they have a good deal, there is no big issue then. Tom maria tadeo, thank you so much for this first report of a busy weekend in brussels. No question it is going to be a busy weekend with that. Futures up nine. Coming up, this is really anticipated. David blum of hsbc later in the morning. He has been brilliant about resilient dollar. Stay with us. , thisondon, from new york is bloomberg. Ritika this is bloomberg surveillance. Lets get the Bloomberg Business flash. The transformation of netflix into a Hollywood Studio is complete. The streaming giant has named longtime studio operations chief ted sarandos to be the coceo. He will be working along with reed hastings. Delivered a disappointing subscriber forecast. According to the financial times, it would prevent americans from using the video app. Theres growing concern that tictocs ability to gather data on americans is a huge security threat. That is the Bloomberg Business flash. Nejra thank you so much. The weekend head the week has been dominated by the virus and earnings. We look ahead to e. U. Stimulus talks that could give european equities some direction. Not getting any direction out of them right now. Some optimism in futures. Nasdaq futures, the 10year flip, and the dollar heads to a third weekly loss. Up, Geraldine Sundstrom will join us on the program, talking about building amid uncertainty. After five weeks of outperformance. This is bloomberg. 49. 50 i found you good job. Now im gonna stay here and you go hide. Watch your favorites from anywhere in the house with the Xfinity Stream app. Free with your xfinity service. Now any room can be a tv room. Stream live tv, on demand shows and movies even your dvr recordings. Download the Xfinity Stream app today to stream the entertainment you love. Xfinity. The future of awesome. Improvedic activity significantly in may and june. From its trough in april at the same time, Economic Indicators remain well below the levels reported before they pandemic. We know that this crisis may be protracted, so at least for the next maybe two years, we. Ill be willing to accommodate there is a lot of uncertainty around that scenario, but the message is pretty clear that Interest Rates will be pretty low for a long time. We could see a clear bottoming out of goods. In the second half, the economy is expected to improve. This will be heavily dependent on developments in the covid19 fund. Clear if confidence in resuming normal Economic Activities will return. Or at least return fully. I am supportive of the idea of letting inflation get above 2 before we take any action with regard to the fed funds rate. Tom good morning, everyone. Bloomberg surveillance. Aat is extraordinary, testament to matt winkler and our Economics Team to build out overentralbank coverage 20 years, ending with michael mckees important conversation with Patrick Harker of the philadelphia fed. All of them managing the pandemic message. Sundstrom manages the asset allocations of pimco and we are thrilled that she could join if this money. I am managing the bloomberg terminal, which shows me a renewed compression she could join us this morning. I am managing the bloomberg terminal, which shows me a renewed compression. What does that signal . Geraldine it signals the economy could be recovering in general, but the Interest Rate is unlikely to behave as usual. All of the central bankers around the world have promised us similar policy. Tothe curve decides not follow their desire, then yield curve control could be following, and as far as the eye can see, i would say that the market will have confidence that the rate will stay low despite flight becauset of the deficits around the world. And very below volatility in Interest Rates as a result. People take it for granted. Tom a number of years ago when you went from Brevan Howard to pimco, a guy named bill welcome to you to pimco. His phrase was financial repression. Everyone listening to this program knows that this can only go on for so long. How long is lower for longer . There is a beautiful chart on television, folks. How long is lower for longer sustainable for society . Forget about the central bankers. Geraldine i suppose it is a necessity. There are institutions that lead are being agedt around. You can see the price of other assets, which are less sedated by central banks, going up. I would say the biggest example of this is the price of gold. The ultimates currency, the one that is not being printed by the government of central banks, is rising, and this is the sort of corollary of what is happening. In a world of financial repression then, where do you go to search for yield . Geraldine well, there is it depends on your risk upside really, and there are a number of things that you can do. If we go with the safest part of fixed income, which is government bonds, we recommend u. S. And australia government bonds because this is where you still have some positive yield, especially, you know, a bit further out on the curve on the 10year point. There is still some juice to be extracted from this. Then you could move gradually into safer assets like Mortgage Backed securities in the u. S. , which are well supported by central bank and still a very high quality. Or aaa corporate. And then depending on the appetite, you can continue. However, we warn people that we are in an era of disruption. Covid is of course accelerating those disruptions, and i would point that further, even the recovery package will be highly disruptive because they are digital and green, and certain areas of the economy are going to be supported while others might lose out. The disruption means that you need to be highly selective where you go in your fixed income. Really pick your bonds and companies, and somewhat be a little bit kosher on high yields because the spectrum of potential outcome when it comes to the pandemic remains incredibly wide. Geraldine, in the corporate debt universe, and inequities as well i suppose, how do you get around the challenge that highgrowth companies are increasingly scarce . Something that you point out in your outlook. Geraldine of course. I think you need to handicap things, right . , when we handicap for their ability to generate cash flow, and for the quality of the Balance Sheets, they look much cheaper than you would think. A lot of the ways we have been looking at equities in the past, in a world that was more reversing as opposed to being disruptive, would point to it as something we would disagree with. So we still like those. Combined this with cyclicality, something we call cyclicality 2. 0, which is not necessarily what it has been in the past. It is not brickandmortar, it is around shifts, i run environment, things like solar energy. Tom perfect. I want to come back and talk about that. Geraldine sundstrom of pimco. Where you are heading into the summer. In new york city with first word news, heres ritika gupta. Ritika Anthony Fauci is optimistic there could be a new treatment for the coronavirus. He said to Mark Zuckerberg in a live event, that he expects antibodies ins on the next few months. That underscores the speed at which the government has been working to quickly approve and roll out a treatment. India has become the third country to record at least one million coronavirus cases. The virus curve did not flatten despite an expensive locked in march, and only the u. S. And brazil has had more cases. Indias population is more than double those two combined. The virus has more room to run. Scaramucci wants to see the president humiliated in november. The founder of sky Bridge Capital says president is obviously incompetent. Republican votes for joe biden. Him aent trump has called highly unstable not job. And two more airlines are saying goodbye to the jumbo jet. Saying airways is goodbye to 747s immediately. The plane was supposed to stay inservice until 2024, but that was brought forward because of the coronavirus. Service thatt ended Service Began service in 1970. The plane was much more efficient than twoengine models. Global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries, im ritika gupta. This is numbered. Tom thanks so much. In 1970, i stood at ohare with a crowd of about 15 people looking at the nose of the first 747 we had ever seen. It was absolutely stunning when that plane came out. Stunning as well is the ability to move the can down the road. Eo clearly made that analysis. Nejra cehic, your take . Nejra we cannot really overstate how highstakes this summit is. If you look at equities and credit and you start to ask about how much optimism has been priced in on the e. U. Recovery fund, of course investors in europe are used to this in brussels. The can being kicked down the road. We might not see it straightaway, but you have to ask how much longer the e. U. Outperformance and continue. You will see a lot of this coming friday. I cannot convey to the general audience, including myself, the importance of the pros put in these meetings. There,e bit of a tone the questions, the q as as well. We are going to come back. Futures up 10. I am looking at yield, yield, yield. Yields compressed. The 10year yield at 6. 1 . This is bloomberg. Nejra im nejra cehic in london with tom keene in new york. Pimcos multiasset specialists say the path ahead is a gradual of theirs healing during the Geraldine Sundstrom this to with us. Pimco is notably absent from the investors favoring european equities over other global stocks, notably the u. S. , largely on optimism around the e. U. Recovery fund. Why is that . Is it to do with a lack of resilience in european risk assets . Combinationt is a of things. The recovery packages is of course extremely important to generate growth and recovery within europe, but when you look at where is this going to create and generate revenue and profit, on the Balance Sheet, this money is on which Balance Sheet this money is going to end up, ween digital and green, when scan the horizon, we find that a lot of the profitability of these package of this package is going to be in asia and the united states. It is companies in china, japan, taiwan, korea, and the u. S. Which are likely to see strong growth thanks to the package because the package is the one being done in europe. I know it is very much on the headline number, but they dont look under the bonnet, what it is made of and where the money is going to go. You look further in china, japan, south korea, even the new program that candidate biden has put forward. They all have the same flavor. They are all green and they are all digital. What were doing is searching for those companies that are going to see doubledigit growth thanks to those recovery packages. Sadly, we find a few in europe but very few, and it looks like it might be the rest of the world enjoying the most, the nature of this recovery. World and the rest of the that you favor as well also includes japan. Talk us through your thinking then. A lot of the rhetoric that we hear from politicians because of covid is to diversify the supply chain, reshore , incentivize to bring production back on shore. We know all too well that this will only happen with major automation, globalization, with the industry, the Service Sector, and health care as well. Japan is a major supplier of all of this technology either with robotics, together with china, they are a major supplier of this. And companies with robust Balance Sheets and valuation, we find this. Tom on a friday here, im especially cynical, and you have so much experience, particularly with em strategy. Two or three years ago, everybody was on a journey here. It was a journey here, a journey there. If i hear one more marketing shop, with the word resilient, im going to scream at somebody. I love your idea that we have got to find Service Sector Technology Driven companies that are resilient. Does that mean Everything Else isnt he . Isnt . Geraldine at the moment, and especially in the value sector, we have seen enormous issuance for the first part of the year for all the reasons that we know, and the easiness of the monetary condition. As a shareholder, you need to pay attention. We are paying a lot of attention. When we value equities, we handicapped quite heavily for the Balance Sheet to make sure that creditors are only become an he. Toi were to if you want play higher in the structure, if you want to play growth and quality, do it in the equity market . I suppose this is a barbell that we are recommending. Tom thank you so much. Onaldine sundstrom taking us a journey of resiliency across asset allocation. Speaking of resiliency, he is especially resilient. Michael mayo is with wells fargo. Michael mayo has been on a journey for years, and he is especially resilient when he is on Conference Calls with ceos. They never ask mike mayo a question. He is resilient. Mike mayo, the 8 00 hour, stay with us. Futures up nine. This is bloomberg. Tom bloomberg surveillance. On a friday. We are looking at economic and investment with a real european event. Jon ferro really signaling the importance of these e. U. Meetings, and we will make that a good part of what we do. Right now this summer, every company is readjusting and adapting to the cultural structure of the nation. Facebook is no different. They have made very clear, they failed in black representation, in the technical roles of engineering and indeed computer technology. As they move through this decade. They have assisted Maxine Williams to come into the company. Maxine williams is there diversity officer. We listen as bloomberg and maxine speak about the social network and how to retain employees. Period, youme type will see that we have been able to increase women in technical roles. We have been able to increase women in nontechnical roles where they have a majority at 58 . And even black people in nontechnical roles. At 11 . S but in technical roles, black and hispanic people we have taken this multipronged approach where we have short, medium, and longterm strategies. Representation is not to just say that we have numbers. The point is, the reason we want more representation there is becomes we want is because we across build products these very diverse roles. We have a civil rights report the came out recently, and reason we invited them is because we wanted to get to excellence. Order to getite in accolades. You invite in order to see where we can do better. I think being innovative is a good thing. When we look at corporate america, we dont see as much progress as we should for as long as people have been working and investing. In the civil rights audit, the auditors said they are deeply concerned with how facebook handles president trumps posts. You have a president who has threatened violence on the american people, specifically protesters in the black lives matter movement. Now that you are at the executive table with Mark Zuckerberg, reporting directly to cheryl, what is your voice in the room about how they should handle these issues . Robust,ve a really confident policy team that does most of the valuations, and then escalating. Being in the room means i come from a background where i , where i represented trade unions. I ran a human rights organization. In the field are looking at the marginalized people at the center. Most of the time that is why you have the word marginalized. They are at the margins. At for us, they are at the center. Looking at things through that lens allows a different perspective. Me being in that room allows us to have a different perspective to consider, how will this impact those who are vulnerable. We have a very collaborative, robust debate culture. It is all times consistently in all the meetings helps us to have that logic. But on an upward basis. In some systems come systems that are based on imbalances of detrimentally have a with these marginalized groups. Critics say this is a failure of leadership, and i know that these leaders say that these things are important to them. What are they important enough to them . Diversityaking important . Absolutely, 100 . Where is the proof . I work in a lot of places come in different industries, and i have never worked in a place where there is this much leadership driving this. Leadership is saying we need to do even more, we need to do it faster, we need to do it better. Leadership is saying what are the resources that we need to do this . We will apply those. This is not a failure of buyin. Ip, a failure of you hear that in the space. These are complex issues, and that is where you will see that even we ourselves are frustrated in not being able to make more progress. It is just hard work. But it is work that we are committed to for the longterm. WithMaxine Williams there facebook, their chief diversity officer. Let me do a data check right now to set us up here. We have futures up nine, dell futures up one. Dow futures up one. 1. 1414. What i am focused on, not only across europe, but here in the u. S. As well, persistent yield compression. He 30year bond under 1. 30 the 30year mortgage in america, under 3 . Stay with us. Joe quinlan joints. This is bloomberg. Its pretty inspiring the way families redefined the word school this year. Its why, at xfinity, were committed to helping kids keep learning through the summer. And help College Students studying at home stay connected through our university program. Were providing affordable Internet Access to low income families through our internet essentials program. And this summer, xfinity is creating a Virtual Summer camp for kids at home all on xfinity x1. Were committed to helping all families stay connected. Learn more at xfinity. Com education. 49i found you good job. Now im gonna stay here and you go hide. Watch your favorites from anywhere in the house with the Xfinity Stream app. Free with your xfinity service. Now any room can be a tv room. Stream live tv, on demand shows and movies even your dvr recordings. Download the Xfinity Stream app today to stream the entertainment you love. Xfinity. The future of awesome. Tom this morning after lagarde, the elite meet and greet in brussels in the 800 and 54 billion question, will there be Fiscal Relief for europe by the start of next week or maybe by the end of the month . We all go in search of a quote, readiness to compromise. You are focused on netflix and amazon, but in baltimore and ohio, protip, look at bonds, yields compressed. The 30 year mortgage is compressed. In hey, the best seat aviation has always been 60 j on a 747, but angst change in a pandemic. British airways must and should and will retire my favorite airplane. Good morning, everyone. This is bloomberg surveillance. I thought they nailed it in that comment today, this is a different eu summit. Nejra