Transcripts For BLOOMBERG Bloomberg Surveillance 20240712

Bloomberg surveillance. This is what the markets are focusing on. There is quite a lot of m a news. That is giving a lift to the market. What im looking at is a couple of technology stocks. Couple of other things such as crude oil edging higher, so does gold. Global shares off a back to back decline. To bloomberg first word news in london. Optimism over a coronavirus vaccine. Pfizeref executive of says its likely it will by the end of the year. They say theyre dependent on Regulatory Approval but says the firm has a good chance of knowing the efficacy by the end of october. Secretaryief cabinet won the race to replace shinzo abe. National in the group will use this majority to install him as Prime Minister in a vote on wednesday. The uks justice secretary has warned he may quit over the government plans on brexit. He says it hasnt reached that stage just yet. The controversial rule has this week. Boris johnson is facing a growing rebellion to override part of the divorce agreement already signed with the European Union. The agency is warning of a possible balance of payments crisis, citing the lowest rating is given to the country, five levels below Investment Grade. Moodys also kept its negative outlook on the rating. 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 leighann gerrans, this is bloomberg. Francine oracle is set to be the winning bidder in the battle for tiktoks u. S. Operations. Sources tell bloomberg that the deal with oracle is narrow and appears more like Corporate Restructuring. Terms are still being discussed. Joining us is our Senior International editor. What is the scope of this deal . The terms are being discussed. Options is oracle taking a stake in a newly formed u. S. Business while serving as partner u. S. Technology , housing their data in the cloud servers. About 25alue this at billion, that was before chinese officials weighed in with new rules. What is complicated here is makeg to both the u. S. The u. S. And Chinese Government happy enough to sign off on this deal. Stresse how does this address the pressure . Deal mayt side, this work pretty well that way. Deal unclear whether the would pass muster with the trump administration, but couching it as a corporate overhaul could help in beijing. It could strike this balance that would allay fears with the sensitive american data while addressing chinese concerns over the export of key ai technology. Oracle has pretty good s with the trump administration. That could help it on that side. Vice president pence recently visited oracle headquarters and people high in oracle have contributed to trumps Reelection Campaign according to federal Election Commission data. On that side it may work. Doing these things and getting both sides to sign off is whats going to be tricky. In this type timeframe. Thank you so much. View,give you a markets joining us is she fixed income strategist at Blackrock Investments institute. I know it is not your wheelhouse , but doesnt point to animal spirits we are seeing in the markets in general . My young daughter will be happy the tiktok survives. I think what we are seeing is that the economy is actually surprising to the upside. In terms of looking at activity restart out of the crisis. What we are noticing is in the Manufacturing Sector that the economy is responding better to the easing of lockdown measures we had anticipated. Generally the market and we look at the quality we do see that as being a leader given the current environment. Its a combination of the economy doing better. Very important Going Forward is going to be government support. How much focus and volatility will be see in the markets in general and also fixed income . I think is a very important point to reflect on. This election is different in a number of ways then elections in the past. The platforms are far apart, but also i would suggest in this election, we will have potentially three points of volatility. Withlection itself concerns about the way it is administered. So the mailin ballots versus the inperson voting. Second is the actual outcome. What actually happens, how close will it be, how clear will it be one person has won or lost. And the transition of power. How does the transition go through once the election has been decided. Each one could build on each other to have a very volatile period. When we look at the markets. An virus and reinfection are important part of market volatility Going Forward. But we look at a more contained knowable event, with the u. S. Election could be a big source of volatility Going Forward. Francine the other big question depending on the day impacting fixed income, what does that mean for taxes, the fiscal side of things . Should we Start Talking about it or do you just look at japan and say japan has been living fine with that much debt. Its not something investors should worry about right now. Is a difficult question to answer. We are reaching levels of deficits that are wartime like in many respects. It is interesting because it is a balance in the situational we have this for policy revolution which we talked about and a big part of it is effectively the Central Banks of these countries, governments working together to implement the policies. Concernedm we are about higher borrowing, a steeper yield curves and more inflationary pressures associated with that. In the near term you have this combo of policy where you have coordination between the central bank and the government to keep yields where they are. Japaneld curve control in where imports or imports are explicit in the u. S. They all suggest federal banks will be very keen on keeping financial conditions easy and yields low, or at least not volatile. So i do think that concerns around borrowing and deficits are something investors have to Pay Attention to. I dont know in the next couple of months. See the where do you best value in fixed income and when you are looking at treasuries, what are the chances we do get comprehensive u. S. Fiscal package. One is look at the volatility of the u. S. 10 year for a moment. The day the fed announced a policy, of u. S. 10year note was at 70 basis points. I think it is at 70 right now. There has been some volatility. Weve been down to 55 and up to 91. Effectively, the implementation has taken the volatility out of the treasury market, which has been good for assets like investmentgrade credit. Weve been positive coming out of the policy announcement because we saw a very powerful dynamic helping spreads recover. As we go forward, we have shifted that too high yield from Investment Grade because we believe highyield still offers value from an all yield perspective, but also from a real Economic Policy helping perspective. We expect to see better fiscal spending. May be delayed by the election or political wrangling. We expect policy to be delivered and for us, given the need for yield from of the valuations. Highyield looks attractive to us. Francine thank you so much. What are we expecting from the fed . Officials say rates will remain low until the economy recovers. Yields andk that and ecb. This is bloomberg. Francine economics, finance, politics. This is bloomberg surveillance. Lets get to the Bloomberg Business flash. For semiconductor industrys largest ever deal. Nvidia has agreed to buy softbanks Chip Division. Half the deal will be paid for in stock and softbank may receive a cash bonus if its performance meets certain targets. Regulatory approval may prove challenging. The deal needs finals from china, the u. K. , the eu and the u. S. Has agreed to acquire immuno medics. Its a substantial premium for the maker of the promising Breast Cancer therapy. The treatment Shows Positive results for hard to treat form of the disease that does not respond to many current options. Immuno medics plans to file for full approval later this year. Amazon plans to hire 100,000 new employees in the u. S. And canada. It will include full and parttime positions that pay 15 per hour plus benefits. The ecommerce giant is opening 100 new operations buildings in september across fulfillment centers, delivery stations and other sites. That is your Bloomberg Business flash. Central we are on banks watch this week. The fed holds its last meeting for the federal election. They are expected to keep policy flexible. Are still here with scott from Blackrock Investment group. Lets actually kick it off with the fed. If you look at the new average inflation target from the fed, does it change the way you view Monetary Policy in the u. S. . Is important. We will look for some more information around how the fed will manage that Going Forward. The idea of makeup strategies or average inflation targeting would suggest they would allow it to run hotter over the mediumterm before introducing policies to address that. It does suggest yield curves can be steeper and inflation could be something investors think about Going Forward. It turns is positive over the mediumterm. Markets and risk assets have done very well. I think its important, Market Participants will look at guard rails the fed policy, focusing what thement and potential inflationary implications could be for average inflation targeting. On balance for us, it suggests a more positive view, albeit the valuations have moved in the near term. But strategically it does suggest a bigger allocation to inflation bonds. Francine do you think average inflation targeting will be adopted by the european Central Banks . The ecb has a different issue. They need to address currency woes. Nott they are obviously going down the road of a policy change year. But the comments around the euro from members of the ecb is a shift in the communication. Draghi,were watching they were explicit about never making comments about the euro and euro level. I think it is part and parcel with the same idea the fed is working with witches they need to try keep financial conditions as easy as possible. , minorgthening euro strength and minor weakness i think makes a real difference. Tracksined stronger euro from those easier conditions. The currency markets will try and front the move. When they say they are worried about it, the euro jumps higher. You get the shenanigans that go on with trading markets. Of anance, the idea important take away is that easy financial conditions are missioncritical for the fed, for the ecb. So these comments speak to that desire to keep financial conditions easy. Where do you see the best value in fixed income in europe . Scott european highyield is interesting now. It is a number of policy support. Haveropean highyield you the paper market which is obviously going to be supported by policy. And you dont have that same type of susceptibilities of the u. S. Election situation in the volatility around that. We like highyield overall. Within highyield weve expressed a preference for european highyield, which includes coordinated bank francine thanks for joining us. Coming up, new leadership in japan. The ruling party makes their choice to replace shinzo abe. The details next. This is bloomberg. Is bloomberg. Francine this is bloomberg surveillance. Lets bring you the latest on japan. The countrys chief cabinet secretary, Yoshihide Suga, has been elected leader of the ruling party. Majority willary install them as Prime Minister in a separate vote. Look. At the challenges facing japan that the country pasta leader will have countrys leader will face. Liquidityk of Japan Campaign of massive bond buying and yield curve control. Was accompanied by his second policy arrow, direct Government Spending on critical infrastructure. The third arrow aimed at structural reforms, getting more women in the workforce to nurturing tourism. His tax cuts want to claim and doors opened to Foreign Investors but his other reforms missed the mark. His record on inflation is mixed. Aboutj did break deflation but it has not been able to reach its 2 inflation target and keep it there. Government spending did spur growth and push down unemployment but also led japan to the highest debt to gdp ratio in the world. An illtimed just before the pandemic hit pushed the country into its biggest recession. Leaving the next Prime Minister to fire his own arrows to lift the nation. Have plenty will more on japan throughout the day. Lets look at what your other markets are doing. The markets focused on m a out there. Higher, therehing has been a flurry of deal activity and signs of progress towards the vaccine. Treasuries, little change. If you look at the industry groups, they are all rising. Technology shares or leading the gains. U. S. Eal for tiktok in the is near its conclusion which means maybe there is a bit of an afterthought in the market that relationships can stabilize between china and the u. S. Gold edging higher. Coming up, the Worlds Largest Carbon Market is about to get bigger. The latest plans to cut Greenhouse Gas emissions. This is bloomberg. Look here, its your very own allinone Entertainment Experience xfinity x1. Its the easiest way to watch live tv and all your favorite streaming apps. Plus, x1 also includes peacock premium at no extra cost. This baby is the total package. It streams exclusive originals, the full peacock movie library, complete collections of iconic tv shows, and more. Yup, the best really did get better. Magnificent. Xfinity x1 just got even better, with peacock premium included at no additional cost. No strings attached. Francine economics, finance, politics. This is bloomberg surveillance. Im Francine Lacqua, here in london. Lets get straight to first word news with leighann gerrans. Rawhann the u. K. s circle ofs of six comes in today. Rising sharply at a pace not seen since may. According to the institute for employment studies, the u. K. Faces twice as many job losses in the coming months than in the recession following the financial crisis. Now israel has become the third country in the world to impose a second nationwide lockdown, which starts on friday. Prime minister Benjamin Netanyahu is brushing aside appeals from the Business World and the religious community. Limits on movement coincide with a major Jewett Charlotte a. The new restrictions will remain in force for at least three weeks. For a major jewish holiday. The new restrictions will remain in force for at least three weeks. The Government Council will assess all the information including Exchange Rates and adjust policy if necessary. The euro sits near its strongest level in two years. Policymakers remarks have failed to stop the currencies again. The currencys gain. 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, i am leighann gerrans. This is member. Francine . Francine the world several largest Carbon Market is about to get bigger. Europes latest plan to cut Greenhouse Gas emissions. The European Commission is set to impose a stricter carbon cutting target to reduce emissions by 55 from 1990 letters by the year 2030. 1990 levels from by the year 2020. The cofounder of imagine is putting his decades of experience to try to create a better world by looking for solutions to Climate Change and equality. He says business can be part of the solution or part of the problem. Thank you for joining us, paul pohlman. I hear that covid is an opportunity because it means you can reshift your priorities to become more green. Have you seen it concretely, or is it just happy talk . Any i think first of all, many people started to realize even before covid things were not quite working. We had Climate Change on a 3 and to fix that ande we were off track, i think covid itself has made people aware of things that we were not fully aware of, that we cannot have a Healthy People on a healthy planet. People are starting to realize climaterdependency of change, human health, social equality, the economy. Helping ishat is that during covid it was clear that companies that were run on a multistakeholder model and fire mental governance, the same created a higher level of awareness and has also resulted in an increase action and partnerships that we are seeing. Francine but do you see a real appetite of businesses taking it more seriously . Are we going to see new pledges . How do you avoid greenwashing . Bel well, there will always some of that, and im not going to deny that, but it is very clear that book businesses are pushing for the green deal in europe. There are broad alliances happening in the Financial Market, like the Net Zero Alliance to d carbonized the portfolio. The race to zero is one of the things where we have 50 of the global gdp in terms of Companies Making climate commitments, so i think we are seeing momentum in many different paths, and not surprisingly because the , companies have realized that d carbonized think the value changes not only a risk mitigation, but its increasingly becoming a tremendous opportunity, and we are seeing that with naturebased solutions. We cannot solve the crisis if we dont protect planetary boundaries. It is interesting to see how Companies Realize how we depend on nature. It is providing over 100 trillion of services, but also how important it is to protect that into your value change. Going to have a common language . What do businesses need to make sure to take the right decision . Do they need to be sure that they know exactly what they are talking about, and what they are talking about is the same as their rivals are talking about . Paul one thing that Business Needs is clarity, and right now with the lack of global governance, the issues are global. Notlack of transparency is really an advantage. Dealthe European Green which says the biodiversity clearly sends a message to the private sector, the direction that we are going. The second thing we need is science and clear dialogue. His sciencebased targets on clear measures and a price on carbon work, and that is very important. The third thing that you need is to ensure that the Financial Markets increasingly are their moneyput behind the transition itself. And obviously the clearer what we the targets of measure about the transformation will help the Financial Market put more money in at the scale and speed that is needed. Francine we have seen a big shift in terms of companies that have become more green, saw their share prices doing better, or even like green bonds doing better in the last couple of months. Im thinking of esg investments. If we see good returns come is that what is most important to convince the markets that this make sense . Paul i think at the end of the date the moral forces are going to move at a scale that is needed, but the financial forces people are now starting to realize that a more diverse organization, be it gender or disability or racial, is more profitable. People are starting to realize that companies that internalize the risk of Climate Change and take actions are actually more Resilient Companies moving forward. And most importantly, companies are stern to realize not only the risk and cost of not acting, but the enormous opportunities that are there to transform their business models. It is very clear that unemployment is going to be a big issue, especially amongst the young, and in fact these minorities are disproportionately affected. But we do need to create jobs. We need to create more jobs, better jobs, more resilient jobs. That is in the interest of business as well. Does this have the sense that there is no business they understand that a society does not have more people being included, then it is not good for the markets to and for businesses. It happens to be that the greener jobs, restoring biodiversity, greening our buildings, electrifying our systems, investing in education, create more jobs, better jobs and more secure jobs. That is the future we need to work towards. We missed the opportunity with the financial crisis. Of spending went to transforming our economy. Continuednslated into Climate Change issues, equality issues, political systems breaking down. This time we dont want to miss that opportunity. Issues that is broadly understood by most. It is about the speed and scale. Has been invested in stabilizing global economies getting it slightly to grow, only about 30 in this economy. So we can create high awareness amongst the private sector and public issues. Francine thank you so much for joining us. Paul polman, cofounder of imagine. More on the we will speak to the westminster leader, ian blackford, coming up next. This is bloomberg. Francine this is bloomberg surveillance, im Francine Lacqua and linda. Lets get to the Bloomberg Business flash with im Francine Lacqua in london. After the main rival microsoft announced officers have been rejected. The deal with oracle is narrower and appears more like the Corporate Restructuring than an outright sale. Terms are still being discussed. The Semi Conductor industrys largest ever deal, nvidia has buyed too has agreed to softbanks chipmaker division. May prove approval difficult. The deal needs signoff from china. The u. K. , the e. U. , and the u. S. China is tightening the rules on the finance arm of some of its falling conglomerate. It is the latest attempt to curb the risk in the nations 49 trillion dollar industry. The new regulations will require licenses for Nonfinancial Companies that do business across at least two financial sectors. That is your Bloomberg Business flash. Francine . Francine thank you so much. Lets get more on the controversy of boriss brexit plan. Allow thees would u. K. To unilaterally override parts of the e. U. Divorce treaty. Parts of the National Party are opposing the bill saying that it breaches International Law and also the devolutions settlement. Ian blackford, thank you for joining us on surveillance. What is the wider impact . Of the government admitting that it is breaking International Law . Ian it is an extraordinary secon set of circumstances. U. K. Expect can the any nation to go into negotiations with the u. K. Based on trust, when you know that within months of signing what is an international treaty, the u. K. Can wash away for can walk away from this. It is not a good look, and when we set aside other parts of the world in russia and china for not upholding International Law, how can we do that when the u. K. Is prepared to behave the same way that we would criticize others for . It simply isnt acceptable. Protocol,rn ireland which is in that Withdrawal Agreement if you short months ago, it is about preserving the peace in Northern Ireland and making sure that we dont have a hard border. All of a sudden that has been thrown up in the air. It is extraordinary that we have got these measures coming forward, and i want to appeal that members of Parliament Today that we have an amendment down. That amendment is perhaps a technical term, that it would decline to give that second reading to the bill. Im asking members of parliament to stand up and support the rule of law, recognize that what the correct,ing is not that this is a government breaching its obligations. You will recall last year the shut minister sought to parliament down. This is a government that behaves in a way which is not right, which i would simply say is unconstitutional, and they have to be held to account. Parliament in our case, we have a parliament that of thoseeferendum, 75 one today parliament. Education, health, and so on. Is pretty stunning that they are seeking the devolution sentiment, and we cannot allow this to happen. Francine ian blackford, what signs of dissent is there from the tory party . What is the likelihood that this gets shut down . Ian i think it is probably a longshot to say the least. The way this will work is we will have the second meeting tonight and then we will go into the Committee Stage tomorrow on the floor of the house of commons. I would say for members of parliament across the house, we have to recognize our responsibility to defeat what is a bad bill. That it will go to the house of lords. Each individual member of parliament, keep in mind that even for the governing party, none of this was they said they would put through the Withdrawal Agreement bill as it was. So this is a breach of the arrangement that the u. K. Government governing party went to the electorate and said it is perfect rewrite for conservative members of parliament on the basis of the manifesto given, stand up for what is right to vote down this bill and stop this nonsense. Francine ian blackford, even if the bill does go ahead and it breaches International Law, who can do something about it . Ian well, i think it is safe to say that the European Union are pretty angry about the whole thing, and it is going to make it extremely difficult if not impossible to achieve a good result for the trade negotiations over the course of the next few weeks. It makes and no deal brexit more likely and therefore has real risks for Northern Ireland. I guess there are things with the European Union, that he could do in terms of legal actions, that there is also the u. S. Angle because nancy pelosi has made it very clear that if the u. K. Plays with the good friday agreement, plays with the Peace Process in Northern Ireland, he can kiss goodbye doing a deal with the u. S. Francine why do you think the government is trying to do this . The i have almost got to point where i fail to understand some of the things that government does. And what we are seeing with Boris Johnson and his advisor, dominic cummings, they seem to create chaos. They seem to thrive on upsetting the apple cart. This is the height of irresponsibility, and i have said this morning that on the basis of what they are doing on the basis of geoffrey cox, the x attorney general of the u. K. Government, this is unlawful. It is a government that is out of control. Francine we have spoken to a number of highprofile pro brexit politicians and the tory party who are really against this bill. So this is the thing is this thing that could break the tories apart . Ian i certainly think it is going to cause some divisions. Im not sure that the conservative mps will have sufficient clout to stop this. I hope they do, but i think the bill will be in considerable difficulty in the house of lords. Im not sure the government can get the support he needs in the house of lords. We may be seeing a crisis over the course of the next few weeks. A lot of people have been asking questions about the suitability of the Prime Minister in office. I dont think he has what it takes. I think he has behaved in a way that demeans the office of Prime Minister. If you were to ask me the question do i believe Boris Johnson would still be Prime Minister in 12 months time, im not so sure. There well may be changes. Joining thank you for us, ian blackford. Coming up, frances finance minister says the you has to be strong and independent from the u. S. We will look ahead to today seven meeting between xi and merkel. That is coming up next, and this is bloomberg. Francine economics, finance, politics. This is bloomberg surveillance. Im Francine Lacqua, here in london. Europes the latest on political outlook with our new weekly segment, the brussels in addition. Every monday we will get you an essential need to know to your political guide to the week ahead in the countries that make up the European Union. Berea taddeo is in the brussels studio. An important meeting today between Angela Merkel and xi jinping. What are we expecting . The huge diplomatic effort. The head of the European Commission and the head of the european council, it is an effort to get the basis for the efta to be agreed by the end of the year. The question is, are we going to get one in a few months time . The word that we here in brussels today is recalibration, to recalibrate the relationship between the two, the europeans feel that they dont get the same access into the Chinese Market that Chinese Companies get, and they also worry about things like state aid. Companies that could engage in predatory behavior in europe because they have the backing of funding from the chinese. They want to look into that. It is difficult to say whether we get something out of this meeting today. The europeans are not so much focused on the deadlines but they want to seal real to see real substance and get a real deal. We are going to end of day without a joint communique that the europeans probably feel at this point not enough progress has been made to put out one. Francine what about the brexit bill. Has the e. U. Lost all trust in the u. K. Or are they still willing to negotiate . Maria this morning everyone that i have spoken to with tell you we want to see what happens with this vote, and ultimately at that point, all bets are off. It is a big difference for the europeans between tough language that as far as the negotiations and going into what they believe is a legal binding agreement going into that and undoing that for a country like the Irish Government is very tricky. The europeans have made it clear they will side with a member state on that. In principal and theory, we are being told the summit next week is not going to be about brexit. That could potential overshadow the agenda. That is what the brits have been asking for for a week, and now political intervention from merkel and macron. We are told there will be around of negotiations happening the week after, regardless of the vote. It will depend on the outcome of that vote, and it has taken aback a lot of officials who will tell you that this is a serious situation when you go into something that is legally binding and you try to undo it unilaterally. That is the word they used, unilaterally breaking a deal. Francine thank you for joining us, maria tadeo in brussels. M a dealsf maga of happened this money. This is what is happening so far. Lets get to the market so we can bring you uptodate with what exactly is going on. European stocks gaining 0. 10 . Aey are declining after twoweek slump because of a flurry of deal activity, and signs of progress with the vaccine. We saw for example, nvidia, nvidia agreed to buy the Chip Division arm for 40 billion. Im also looking at dollar, pretty much stable. Crude oil in the u. S. At 37, and you can see also the pound at 1. 2844. Bloomberg surveillance continues in the next hour. Tom keene joins me out of new york. This is bloomberg. Francine Yoshihide Suga is set to be japans new Prime Minister. The chief cabinet secretary overwhelmingly wins the partys race to succeed shinzo a bay that shinzo abe. Nvidia will buy arm, and there is a report that ubs is exploring a merger with credit suisse. Both banks declined to comment. And Boris Johnson prepares to send his brexit lawbreaking proposals to parliament. The justice secretary warns he could quit over the issue. Investors now await the boe Rate Decision on thursday. Good morning and welcome to bloomberg surveillance. Im Francine Lacqua in london. Tom keene is in new york. Tom, there is a lot of news for monday money. Tom huge news flow. Francine there is a lot of news for monday morning. Tom huge news flow. Francine im very focused on the swiss bank. Both banks have not talked about it yet, but huge news should it come to fruition. Tom it