Transcripts For BLOOMBERG Bloomberg Surveillance 20240712

Anna absolutely. Trade commissioner phil hogan forced to resign because he attended a golf event which had normal times would not be that controversial, but these are not normal times. It is being investigated as to whether it broke the covid rules in ireland. As a result, he was under pressure and had to defend himself. Commissionropean needs to find a new person to fill that very busy trade brief. But this sets a very interesting precedent. Will we see other commissioners held to that . Tom lets do an unseemly data check. I will focus quickly to get to hurricane laura. Futures negative eight and we watch the real yield which is 1. 06. It is a huge deal as we go to the powell speech. Anna . Anna my data check has European Equity markets waiting for the powells beach powell speech. We heard from rollsroyce a little bit earlier on and they reported a huge loss. This is the maker of aircraft engines. In the stock is down 7. 8 in london right now. They get paid by the hour for flying these engines in the sky. When they are not flying, they dont get paid so much. A restructuring asset underway at rollsroyce. These are the kind of jobs government get themselves excited about. These are the highly Skilled Engineering job that no government wants to see lost. Tom to the hurricane. Our bloomberg meteorologist is wonderful. And we will go to randy newman in louisiana. 1927, it rained for a really long time. About thericane saltwater flood that doesnt reseed or about the torrential rain . It is about the saltwater flood that doesnt recede along the coast and then the rain is the big issue inland. We have flash flood in effect for lid mid to late morning for the western half of louisiana and extreme eastern texas. The storm made landfall at 2 00 this morning eastern daylight time. Ive seen soust far was lake charles louisiana, a gust of 128 miles an hour after the storm made landfall. It is almost due south of shreveport right now, moving to the north at 15 miles an hour. It will weaken rapidly. It is the fifth strongest storm to strike the continental United States and the strongest storm to hit louisiana since 1856. That00 without power and number will go up as the day goes on. We have a tornado watch for extreme eastern texas and most of louisiana through 8 00 this morning. Look for that to expand northward later today. The big problem will be the rain with the system. The system will wind down very quickly in regard to the wind now that the eye has moved inland. See out ofrting to shreveport that the eye is filling in. Arkansas, later today, it will weaken to a Tropical Storm it will put down about four inches to eight inches of rain. Storm intropical missouri by tomorrow morning. It should be downgraded to a tropical depression as it crosses the Tennessee River valley. It goes to the midatlantic region as a depression on saturday. And south of new england early in the morning on sunday. Anna that is the full mapping out. Anybody in that path will hope that it keeps moving and doesnt drop all of that rain in one place. Inund half an hours time louisiana, when sunrise comes up, what kind of damage do we expect to see for that bit of a coastline and further into lake charles . Considering when to sustain that 115 miles an hour, we will probably see catastrophic damage. I imagine the power grid will take weeks to replace because of the damage to more or less hundreds of miles of power lines and poles. We will see structural damage to highrise buildings. I have seen video of small vehicles overturned and glass removed. Fortunately, it was further east. Perhaps the damage wont be quite as bad around port arthur and towards beaumont where we got some of those refineries. It is more or less like youre dealing with a tornado about 120 miles across from the area where it hit the coast in cameron to the areas south of shreveport. So this will be substantial structural damage along the path of the storm, continuing right through midmorning. Tom we will get more of his reports on Bloomberg Radio through the east and across the nation. With first word news in new york city mike pence excepted the Republican Partys nomination to be President Trumps running mate. President andthe blasted joe biden. Pence thisnt president stood up to china and ended the era of economic surrender. Joe biden has been a cheerleader for communist china. He wants to repeal all of the tariffs leveling the Playing Field for american workers. And he actually criticized President Trump for suspending all travel to china at the outset of this pandemic. Spoke from historic fort mchenry in baltimore. Two people were shot to death after violent protests and with in kenosha, wisconsin. Demonstrators were protesting and a teenager was arrested about 15 miles from where the shooting took place. A curfew was imposed. The National Basketball association started a boycott over police shootings. It has spread to baseball, soccer, and womens basketball. It led to a number of games being canceled. The protest could lead to the playoffs being scrapped. And in japan, prime administration to abe should be able to serve out his term as party leader. That would end about a year from now. It has raised questions about his health. He is 71 and has been in office since 2012. Global news 24 hours a day powered by more than 2700 around the world. Now, one of the senators speaking in support of mr. Trump. It lets listen to the junior senator from iowa. Is a choice between two very different paths. Freedom, prosperity, and Economic Growth under a trumppence administration. Or the bidenharris path paved by liberal coastal elites and radical environmentalists. An america where farmers are punished, jobs are destroyed, and taxes crush the middle class. Fight in iowa. Kevin cirilli is with us. To spin forward to the president s speech tonight, but i have to ask you what lou holtz was doing, the former coach of notre dame questioning the catholicism of joseph biden. Why did he do that . Of religion and politics, joe biden is making a pitch to the Kennedy Catholic constituency from decades ago. If you go into workingclass communities around this country, catholicism does have a history of aligning with Union Workers dating back to the Kennedy Catholic era. It was quite remarkable in Vice President mike pences speech where he has ties to the evangelical christian base. He made the notion that america is a country of miracles. That was one particular moment that stood out. Looking forward to tonight, President Trump is going to speak not just of the working base, but trying to make inroads in those suburbs. I was struck by this, tom. I went back and did my homework on it. In 2010, 50 of the Republican Party was white workingclass voters. Flash forward a decade later to a party the president has remade in his image, 59 is white workingclass voters according to the wall street journal and nbc news poll from last week. Tom what is important is how the president treats tonight. Behis morning notes, will it fire and brimstone or will it give us any kind of Vision Forward . Kevin his temperament will be much more stoic in tone with a few flashes of quintessential donald trump tone. It comes at a time when the president and his allies feel that they have the longerterm momentum on their side given the buoy by the stock market, buoyed andaccination approval, they feel that on the issue of reopening schools and on the , they have the side of the public. Ofa every time the subject violence on the streets of america comes up, the republicans and President Trump pivot to a conversation on law and order. It must play strongly with the base of supporters. Kevin it does. They are offering this critique in saying the Democratic Political machines of the cities have not enacted the change that the citizens that the cities have called for. The reality is this country is having a National Recognition reckoning around social inequalities that have plagued it for decades. The Biden Campaign feels this is a winning message for them. At that they will be able to portray the administration as little more than a chaotic administration and make and eat ethos appeal an from 6000 pennsylvania avenue in an era that has been marked by several tweets and the like. So kevin cirilli, thank you much. Our chief washington correspondent. Coverage tonight, we have david westin at 9 00 p. M. Getting started. An important speech by the president of the United States. Ater on balance of power, m westin slips in his chair just time for lunch. Commerce secretary wilbur ross at the 12 noon hour. This is bloomberg. Good morning. Tom bloomberg surveillance, good morning. What an odd day. Im tom keene in new york. The powell speech, the Republican National convention, this horrific hurricane in louisiana. Thank you to Brian Sullivan and thank you to rob and carolyn for their very careful coverage of the storm just below shreveport right now. Right now, we turn to the markets and it is easy to do with been lately or who has been absolutely lights out on the bold nature bold nature bull nature of this market. Ben, reaffirmed the level of bullishness that you are right now because you can get very nuanced in your research note. Ben listen, i think all the risks remain to the upside. And i think this market is much better supported than some people think. It has been shocking how resilient activity has been throughout this recovery. I think the catholics that are a level of lockdown restrictions still remain very high. That winding trade begins to restart from here. We are reaching that moment where we will get definitive vaccine news. And i think those are all the upside catholics upsides. Yields,very low resident activity. Resilient activity. Thes historically good in Second Quarter and the u. S. Is now basically leading the world. The fundamentals are really beginning to move in your favor. We are getting altitude sickness at 23 times earnings. The key is, those earnings are beginning to recover. We are not looking for multiple rewriting. Tom your bullish stance is fine. But do you say it understanding there will be a price to pay three or four years out . Or is it a bullish stance that can be managed out with some form of relative calm and confidence . Guest i think so. There are too big drivers in the market. We have between half and two thirds of the market doing very well here. The broader tech sphere is coming out of this and much better shape than we were in with accelerated tech adoption. That story runs and runs. It does calm a little bit but i think that is a more secular story. The other story is the reopening stocks with cyclicals under market here. These stocks are at zero margins right now and earnings of absolute collapse. This is where we are seeing the operating leverage, that is sort of leading. That is the story that has barely started. Outperformingen and i think those are the stories. That is a 12 month story, at least. Most of them are reasonably positive. Levels forabout debt corporate and for governments . And all the disconnect we see between those dynamics and what we are seeing in the stock market. Do those drags ever catch up with the stock market and bring it down, clip its wings . Why the earnings recovery is so important. Question, does that ever become too big . Or does it become unjustified . Was he earnings pick up and follow the market. As long as that continues, i think the market is fine. I think the trajectory is very important. That is why im very focused on the incremental data point. Our cases coming down . Are we going to get more fiscal stimulus . Is that in committal data point going to be positive . Be pushing the earnings cycle . I think that this will keep grinding higher. I think a lot of people have missed the rally and have been reticent to get in here. There are lots of supports for the market. The fact that some new people have missed the rally and you have two weeks of inflows in the last three months, that is one of the many supports that i think the market still has. When you look at Earnings Releases from corporates, we talk about cases coming down for the u. S. Story. But cases are picking up in europe. Not in most cases, but in some. That is where the area of concern is, isnt it . When we go to the Northern Hemisphere winter, we go to localized lockdown to take the edge off of recovery and reduce visibility for companies. Ben that is absolutely right. I think this will be a bumpy street. We are not going back to full lockdown that we had two months or three months ago. We are not going back to cases that we had three or four months ago. I think the incremental movement is sort of positive. That twice asy is Many Companies gave guidance this quarter as last quarter. That guidance may be wrong. The fact that more companies have the comfort to do that, things are getting slightly less worse. And the final point i would make here is that the stock markets are not economies. Two thirds of the stock market is reasonably resilient to the virus. Itl do slightly better is one third of the market that is the cyclical side of the market, reopening trade where earnings have vaporized. That is most impacted. I think the risk reward is very positive. The margin is zero. We know it is bad. I think the sensitivity is on the upside and a little bit better the other way around. Folks, i cant say enough about how he was out front in december of i believe two years ago, the horrific q4 that we had. Please stay with us. Chairman powell at 9 10 a. M. We begin at 9 00. This is bloomberg. Anna im anna edwards in london with tom keene in new york. European equity markets down. 25 percent. Rollsroyce falls in london. We know the story there. We are waiting for jerome powell. It has been a bevy of central bankers at the jackson hole symposium. Is that the right collective . Tom bevy is the right word. It is more than just chairman powell. We will see that in the 9 00 hour. 68 over the last 18 hours. Im watching the real yield. 1. 05 . Later today, James Bullard of the st. Louis fed after the powell speech. This is bloomberg. Where we fought for free and fair trade and this president stood up to china and ended the era of economic surrender, joe biden has been a cheerleader for communist china. Because of the Strong Foundation President Trump poured in our first three years, we have a ready gained back 9. 3 million jobs in the last three months alone. Diedany heroes have defending our freedom to see Americans Strike each other down. We will have law and order on forstreets of this country every american and every race, creed, and color. We are on track to have the worlds first safe and effective Coronavirus Vaccine by the end of this year. We are not just opening up america again. We are opening up americas schools. After all the sacrifice in this year like no other, all the hardship. We are finding our way forward again. So with gratitude for the confidence President Donald Trump has placed in me, the support of our Republican Party, and the grace of god, i humbly accept your nomination to run and serve as Vice President of the United States. President. Ce of course, President Trump speaking tonight as well. Rick is the former Campaign Manager for john mccain. That barely describes his ability and his Historical Perspective on his Republican Party. He is a stone court capital. It rick davis, the elements here , the 1850s by the collapse of the whig party, the 18 Party American party of 1854. It is shocking the similarities i see. What does the future of your Republican Party look like . Rick i think there are two paths to take. One is a donald trump reelection. And you see more of the Republican Party taking on the identity of donald trump, not the philosophy and ideas shaped by Abraham Lincoln and Ronald Reagan and teddy roosevelt. But if donald trump loses, you have an opportunity in the Republican Party to reset, find new leadership, and try to get back to some of the ideals and philosophies that shaped it with those great leaders. Tom how do you reset after what youve seen for the last three days . Of this message versus the republican politics of six years ago, let alone lincoln of the 1860s. It is extraordinary, the separateness. Rick it is. In my political career, i got started as a Young Political operative after Richard Nixon left office. Time, it was curtains for the Republican Party. You had a corrupt president that had been forced to leave office. We lost a lot of elections across the country next year. Jimmy carter reigned supreme and an eraeard ushered in of Ronald Reagan and conservatism that govern the country for 25 years. The good news about politics is there is always a Second Chapter but you have to be willing to work at it. The is the big question, if political leaders in the Republican Party will realize they had skin in the game and do something about it. Anna good morning, rick. These parties do reinvent themselves. We see that in many parts of the world. Im in london and that is the case here. What do you expect to be the impact of what we hear from President Trump later on today . Do you think he can still win this . Or do you go with the polling suggesting that biden is in the lead . Rick i think you have to dig into the polling a little bit. One of the things that is going to be happening, by september 4, a couple of states will start voting. There are close races there. Donald trump is within shouting distance and most of the public polls. And he will claim in the private polls that he is leading. There are battleground states that are going to go to the ballot box in a very short time and he is competitive. If he can turn the tide overall will be a big question. Has been fighting for the suburbs this entire week. A part of this dystopian philosophy that these protesters are out there creating crime and opposing the police is to scare the suburbs into thinking that without his law order agenda, they are naked to that aggression. Whether he is actually able to do that tonight and sell that effectively and at the same time trying to paint a picture that the last four years has been successful is a real threat. We have seen people doing it all week. I think the convention has been effective in selling that. Whether it is effective with voters is another question. How do you deliver that message without making the whole thing about fear . Is that the opportunity for optimism . Rick it is interesting. I think you can take a lesson from Vice President pences speech. Coronavirus has been handled extremely well, in his remarks. And the government reaction was very effective. We have been effective all around the world stopping aggression, isis, china, and places like that. And at the same time, cities are burning. Riots and looting. In thehout their control law and order position, all hell would break loose. It is a very strange way to approach the election, especially at a time when polls show people think the country is on the wrong track and on the wrong track with their leadership. Narrow band toy operate in today and we will see what he comes out with tonight. Tom one final question. My radar is up because everyone i talk to is focused on the suburban voter. Where is the rick davis study . A look at another part of this electorate . Rick a number of things. Donald trump got to office on the backs of bluecollar that abandoned the Democratic Party and voted for him. Part of what we have heard at the convention is trying to keep them tight. Whitesf the bluecollar are christian evangelicals. We saw a lot of talk this week about how donald trump has been the protector of the religious right. That has been the box that people dont talk much about. Heard mike pence talk about the embassy in jerusalem being removed. Talking about antiabortion legislation. All of these things are to pump up that group. If they are not enthusiastic, and you can make the argument that they wouldnt be enthusiastic about the way donald trump has conducted himself in office, you start to lose the base. The first order of events has been to cover that. Tom rick davis, never enough time. Senator mccain over the years. Tonight at 9 00 p. M. , david westin with coverage of the Republican National convention and the speech by the president of the United States. With news in new york city hurricane laura is battering louisiana with high wind today. And theres also the threat of a catastrophic storm surge and flash flooding. The storm came ashore with maximum wind of 150 miles an hour. The mosttainly one of powerful hurricanes ever to hit the state. The wind has died down some. Is consensus that some areas could be uninhabitable for months. The cdc is defending controversial guidelines of coronavirus testing. Guidance says a symptomatically people may not need tests. Any Public Health experts say it is a wrong turn that could restrict the number of test performed. Notcdc says the change was influenced by the white house and meant to clarify the limits of testing. Tengion is rising between the u. S. And china over the south china sea. Chinese forces fired four missiles into the disputed waters at about the same time that restrictions on Chinese Companies were held to set up outposts in the region. Thefounder and chairman of electric truck start up is giving the first 50 employees 230 3 million of his own stock. 233 million of his own stock. Nelson is worth 4. 6 billion. Global news 24 hours a day on air and on Bloomberg Quicktake powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. The call of market 10, 20, even 30 years. It is Gary Shilling with disinflation and goods have outright deflation. It is the perfect day to speak to dr. Shilling. We will do that next. Bloomberg futures, negative seven. Tom bloomberg surveillance. Good morning, everyone. Anna edwards in london and tom keene in new york. Chairman powell speaking in the 9 00 hour. Right now, without question, the interview of the day on a dearth of inflation. It is the market call of a generation. Gary at marilyns economics years ago. They have called for persistently low rates towards deflation. I cant say enough about his classic book. Dr. Shilling joins us with the yield 0. 68 . Should chairman powell worry about a substantial negative inflationadjusted yield . Dr. Shilling yeah, i think he should. Course, they are determined not to see negative rates nominally. They are seeing that experiment in japan and in europe. It was the opposite of what they expected. They thought that negative rates would encourage people to borrow and spend, but it did the opposite. People reasoned their assets would be worth less with negative rates, so they saved more and spend less. As the fed has determined, they are zero bound. Means nominal rate, it real rates could be negative. And i think it is a concern because it is obviously very disruptive to the economy. Newsletter is laced with research that provides history. Is there any evidence of central bank could jumpstart inflation . Dr. Shilling i dont think so. I dont think so. Analogy ofarious leading a horse to water and it doesnt want to drink, pull on a string and you can get the effects. But if you try to push on a string, not much happens. The fed can raise and lower interest rates. It can buy and sell securities, but they cant actually get people to spend. Collapse inat the the velocity of money, you can see how ineffective the fed has been trying to recreate inflation. They have pumped out all these reserves. They have really moved into with previous Investment Grade bonds that are now drunk. Nothing has really worked and those reserves are just sitting there. I think the fed is almost powerless in terms of recreating inflation. Gary, good morning. Ahead to the jackson hole symposium later on and what were going to hear from jay powell, should we ask that something really creative in new policy terms or new guidance to try to create that inflation or is the battle lost . Dr. Shilling one thing you might do is what they have been working toward, throwing in the towel on the idea of this 2 inflation target. I think the flexibility of saying that they would be willing to see inflation above have,ch all Central Banks or below as long as it averages, been totallyhave ineffective reaching that goal of 2 . So whether they simply say we screwed up and cant do it, they say we will ease up the borders and open up. And he may be much more specific about that. It, itwere to announce would not be anybodys surprise. Danger in the fed suggesting it will allow the economy to run hot . Do you see any danger for the bond market or inflation ahead . Dr. Shilling not really. We are in a world of global excess supply of those are conditions in which you have pressure on prices. The only way you can really get inflation in my view is if we were to ring the country with protectionist tariffs completely and embarq on the huge monetary and fiscal stimuli. Are limiting supply and the result would be higher inflation. As long as there is any semblance of globalization, i dont think it is likely. Not likely, but never say never. Thank you so much, Gary Shilling. Bloomberg opinion columnist as well. Up next, jason folly and john hopkins professor of nursing and infectious disease, trained nurse epidemiologist. We will get to the latest surrounding covid19. This is bloomberg. Ina i am anna edwards london with tom keene in new york. This is bloomberg surveillance. Lets focus on covid19 as we continue to track the virus. Bloomberg has developed a unique partnership with a leading authority on covid19. Johns hopkins has been at the forefront of the international response. Every day, we will bring you insight from experts at Public Health, infectious disease, and emergency preparedness. Folly, thank you. Very good to speak to you. I have been reading headlines over the last 24 hours that talk about changing the rules for who is going to get tested in the United States. Testing fewer people, perhaps, who are asymptomatic. What would your guidance be on the sense of that kind of policy . Jason one of the most important things about testing people regardless of symptoms is that they can change behavior, right . If you think you have been exposed, getting tested regardless of symptoms is an important Public Health measure so that you can modify your future exposures and contacts. I sincerely disagree with the cdcs decision to roll back testing. Disagree. What about the relationship between quarantine and testing . Conversation, it has come up often. The people that think that if you get a test, you can get away with breaking quarantine rules. Im speaking about no specific geography, but where rules exist that say you must be quarantined for 14 days, some people say if i get a test i dont have to do that. What is the Science Behind that kind of thinking . Jason it is not good science. What people are saying in that regard is that i have been exposed, i will get a test. I test negative, so i can ignore the 14 day quarantine. That is really bad thinking because it depends on your state in which you were in postexposure. It is somewhere between four days and six days after exposure that you may develop symptoms. If you test too early, youre likely to test negative. If you test late, you may also test negative. It depends on where you are in that spectrum of infection. If you are testing too late and recovered, that is one thing. If you are testing too early, you may not have symptoms or enough virus to test positive. It is really bad thinking. More allare learning the time about this virus, of course. One thing that we are learnings about the aftermath of how recovery takes place and how long it takes. I have been reading about people that have coronavirus severely can suffer from rain problems, nerve pain, memory, sleep, dizziness. Is that something you are seeing . We are learning all the time, i guess. I have personal patients that have tested positive for the virus repeatedly for long durations. In those patients, the fatigue is really where their symptoms have been most pronounced. Continued and ongoing fatigue. That is common early in viral infection, but it tends to wayne and not to wane and not last for long periods of time. Sometimes, patients have prolonged loss of taste and smell. We have other complications in which patients have small blood blue,or their skin turns having some discoloration that can linger. There has been a myriad of both neurological and nonneurological symptoms. Anna we would all be hoping that we dont see winter and another substantial pick and infections. But many people suggest it seems likely. How much better at treating coronavirus are we now, jason, compared to earlier this year . What percentage better are we at treating this . Jason a percentage is hard to say, but weve certainly gotten some therapeutic that have helped reduce symptoms and hospitalizations. Onhave gotten details dexamethasone, the steroid reducing severity. Gotten a large data set that says early use of convalescent plasma may be beneficial. But it was not a randomized controlled trial. And we have some things we know do not work, right . From a therapeutic perspective, you have significant symptoms, we have made moderate progress. Maybe 20 better, i would suggest, if i have to put a percentage on it. I know we by no means do we have a good enough system to repair it. Anna jason farley, thank you for joining us. Thek at the bluebird for latest information on covid19. We have an inside look at battling covid19. Take into account some of the geopolitics with Johns Hopkins as well. Lets get to a quick data check before we go. European stock market and u. S. Futures are down by. 2 or. 3 . We wait in a Holding Pattern for further news from jay powell, tracking hurricane laura and you louisiana in louisiana as well. This is bloomberg. We are looking needed improvement in the economy, but the pace will probably slow down now that weve had this rebound. We see the possibility of further downside on wages. This is a secular downtrend on the dollar that could be 10 , 20 over a twoyear period. There is a certain logic to the markets doing better than the economy here. This is bloomberg surveillance, with tom keene, jonathan ferro, and lisa abramowicz. Tom good morning, everyone. Ferro continues his sabbatical. A most unusual thursday as well. A hurricane much greater than what was anticipated for five days ago, harkening back to 1856 , west of new orleans, far east of houston. Weve got unemployment, jobless claims coming up at 8 30