Transcripts For BLOOMBERG Bloomberg Surveillance 20240712

Surveillance. I am Francine Lacqua here in london. This is what the markets are doing, focused on the lack of stimulus coming from the u. S. They are also focused on the earnings. I see a bit of zigzagging. The other thing i am watching for is the pound. A lot going on, you know, in the next 12 hours, when Boris Johnson needs to decide whether to abandon talks with it eu, giving the clear signal of what he wants in order to remain at the table. We have a pack show today. Talk top at 9 30, we the irish finance minister that wedonohoe, and speak with ignazio visco, the Banca Ditalia governor. Now lets get to the bloomberg first word news in london with leighann gerrans. Hi, leighann. Leighann good morning, francine. The boeing 787 has been deemed safe to fly. The news comes besides a software upgrade, not being done it for up to two years. The max was founded in 2019 grounded in 2019 after two fatal crashes. President trump and joe biden held separate town halls last night, 1000 miles apart. The president clashed with the moderator and lauded his administrations handling of the pandemic. Aimed ate answers avoiding anything that could imperil his lead in the polls. President trump is ready to lobby the Republican Party for a bigger stimulus deal. In a call, treasury secretary Steven Mnuchin told nancy pelosi that the president will lead on the gop if the lean on the gop of the two sides can come to an agreement. He wants a bigger rescue plan than the 1. 8 trillion on offer. Senate Majority Leader Mitch Mcconnell says that is too much. President trump says the u. S. Will strike much harder if the eu goes ahead with 4 billion of terrace on american products. To imposence the wto the duty after a ruling on illegal state aid. The union. Union will likely hold fire until after the president ial election. 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 bloomberg. Francine . Francine leighann, thank you so much. Now, it is brexit decision date for Prime Minister Boris Johnson. Today, he will determine whether or not to demand trade talks with the European Union. The leaders are refusing to give a clear signal that he wants to stay at the table. Joining us now is maria tadeo in brussels. Maria, it is difficult to see whether he will walk out or not. Maria francine, there has been a lot of backandforth, and the indication we get from the u. K. Dilatation is he will give delegation is a clear signal whether he will walk out or not. The assumption is he will not walk out, purely because we won a deal, we just can give you one today, and we. And we need more time. The problem is he came up with a deadline, october 15. It is clear the europeans did not expect that deadline. He really wanted a clear signal that one way or another, a deal is coming. Statement, at that the European Union is still playing this very coy, so it is a difficult situation for him to sell something as a win, because he did not get that. Will continue. Ks he says he is willing to go on london on monday should he decide to stay in the negotiations. Francine thank you so much, maria tadeo, in london. Ahmed, us is salman global head of macro and Strategic Asset allocation at fidelity. Salman, great to have you. What doesund europe, that mean for Economic Projections and therefore where you want money in the market right now . Salman hi, good morning. Rapidly we have seen a big second wave now, both coming through in europe, and i also think sometimes coming through in the u. S. As well. Considering where the markets are, they were not price for the kind of, you know, rapid rise, especially given the fact that it seems like the pressure of policy makers and policies to pick up restrictions is lower than expected, so there is going to be some economic damage in the shortterm. Couple it with the fact that the physical response in the u. S. Is not very clear at the moment, and we know that the income numbers in the u. S. Are heavily, heavily dependent on this fiscal handout. So we are in front of what we call a reality check because the markets are not priced for another round of restrictions. Francine do the markets care, or are they just looking at Central Banks . The question we are looking out for, and we are asking on mliv, which i recommend, because it is a fantastic product, how are european stocks on this . Salman the issue is as the fixed income comes through, there is a comment that it has to be replaced by some kind of report, and over the last few months, it was done by fiscal policy mostly. Which was being financed by Monetary Policy. The Monetary Policy guys tell us clearly, but as we know, Central Banks cannot spend money, they can only lend money. That is why fiscal becomes so critical. And less they get this in place, they will have to be a little more cautious when it comes to market Market Pricing, because we have priced in a lot of volatility at this moment in time. Francine salman, so, where are you on that . Is a very unlikely we will not get extra support for our workers, that we are not going o get extra for low programs if we get into restrictions almost as bad as a lockdown we had in march, april . Salman we are thinking it will be much more localized. The Data Availability is much richer. In march, we had that data that was available, so it is probably going to be much more localized and focused, but having said that, the Major Economic centers are starting to go according to it, and the structures are going rapidly in recent days. We think this has to be taken into account,. At least for the short term. Even though our view is, what happens in the u. S. Election, a big fiscal may come through, but what about the winter months . There is going to be significant damage. Francine salman, thank you so much, salman ahmed from felt Fidelity International stays with us. Coming up, President Trump and joe biden class at two different town halls. We give you all the details, next. This is bloomberg. Oomberg. Francine economics, finance, politics. This is bloomberg surveillance. I am Francine Lacqua here in london. Lets get straight to the Bloomberg Business flash, heres leighann gerrans. Hi, leighann. Leighann hi, francine. Planning to increase devaluation target for its ipo to at least 280 billion. That istell bloomberg due to demand of the offering and plans to raise 25 billion dollars in the sale despite the wave of restrictions earned and it could be the Worlds Largest ipo ever. Account, citing off customer funds. Sources tell bloomberg the attacks were more widespread than previously thought. That is based on social media. Investors were annoyed because contacting the brokerage, which doesnt have a Customer Service number. Working from home has not played down wall street trading. The biggest u. S. Investment banks are on pace for the first 100 billion year for trading revenue in more than a decade. In just three quarters, they have already generated almost 84 billion, more than any year since 2010. And that is your Bloomberg Business flash. Francine . Francine leighann, thank you so much. President trump and joe biden competed in dueling town Hall Meetings on different tv networks. Here are some of the highlights from trunks town hall on nbc and joe biden with George Stephanopoulos on abc. Pres. Trump i knew it was a big threat. At the same time, i do not want to panic this country. I do not want to go out and say, everybody is going to die. We are in a situation where we have 210 thousand plus people dead, and what is he doing . Nothing pres. Trump we had the greatest economy in the history of our country, including florida, north carolina, louisiana, every place, we had the greatest economy we ever had, we saved 2 million lives, we are opening it up, we have a vshape, and it is coming back. Mr. Biden if you raise the Corporate Tax back to 28 , which raiseair tax, you would trillion by 1. 3 the same act. Pres. Trump i just dont know about qanon. You do now pres. Trump what i do know about if they are strongly against pedophilia,. And i agree with that. Mr. Biden if you take a look, we are not very trusted around the world. When you ask who they trust more, who is the better leader, and the president came in behind both the national survey, international survey, both andnd putin as well as xi, look what putin is doing. Francine well, that was an interesting snapshot of the town halls. Millions of americans ive already voted. What does the elections mean for the economy and for the markets . Still with us, salman ahmed from fidelity. 18 days. What is the Market Pricing in at the moment . Salman we have had clearcut pricing on a more clear outcome, you know, late in september, there was a fear that we may have a close election or a contested election. Obviously this is different because of the heavy share of thein voting and polarization and the pandemic itself. Days we have seen a clear outcome, but again, we go, and aal days to lot of cycle ships can happen. Ishave mapped out, and it clear to us that the 14th of september day is critical. If we do not get it by the 14 of december, in the event it is a close race, then we can be moving into a much more nonlinear situation, but that is obviously a risk, unpredictable by design, but it is important to keep that in place, because the procedural and electoral nuances in the u. S. System. Francine if you look at markets, will they move if the polls dont change them are they going to, you know, price in some of the volatility that you were just alluding to . Salman i think they already have, going into this election phase, elevated volatility compared to 2016. In fact, if you look at the vol curve, this election cycle could continue into december. That has been taken off a little bit over the last few days. Lls remain stable Going Forward, they will continue to be narrow. There is a discount on the reading because of what we saw in 2016, and of course we know at readingare better the National College boat than the Electoral College vote. I think the pricing of a more clear outcome will become even more stronger. Having said that, the next question will be the fiscal plan, because, from the market perspective, it is all about shape, scope, and size of the fiscal plan once a new or the same administration is in place after the 20th of january. Salman, what does the dollar do from here . Salman the dollar is under longterm pressure. Right now, it is in a different direction because of the shock of the rising. Correct that the markets will start to think about this in a second wave and the damage has been done, without immediate support, then i think the dollar makes gains, but overall, i think we are on the path we are on, which is good fiscal, big monetary come i think dollar will struggle, because the u. S. Economy now runs a very negative rate, but shortterm, it is going to be more about secondary risks right now for us. Francine if there is a second the, we talk about stimulus, inflation, or inflation surprise, is that risk taken completely off the table . Salman i think it delays inflation in part because we know Economic Activity is under restrictions. It is actually more than the inflationary point. Yes, there are some issues, but i think in march and april, the supply chain issues are much more. This time around, it will be more about demand. I think our own view is that Central Banks do need inflation much more now than they did before. Of course they have been trying to generate inflation for more than a decade now, but i think the fact that chairman powell fiscal,lagarde call for because debt ratio is very high. Francine what do you do with emerging markets . Is there a value play at the moment, especially if you are looking for yields . Salman i think in emerging markets, we are extending into china, emx china. I think there are some countries that have been beaten out because of the covid crisis, the fact that economics, you know, where extreme, for example, andy a is one case, and they may do case, andndia is one they may do quite well as a vaccine is in place. At the same time, there are of course a lot of hedges. All in all, in this cycle, e. M. Has not brought the same kind of support we would have expected from an overreaching Monetary Policy support, negative Interest Rates, very low rates than we thought it would, and that has a lot to do with the fact that the intraday crisis with greater balance sheets, but exchina, i think there are opportunities, the recovery intact, and i think that will remain the case Going Forward. Francine salman, thank you so much, salman ahmed, global head of macro and Strategic Asset allocation at Fidelity International. Coming up at 9 30 a. M. London time, we speak with the irish finance minister of paschal donohoe, and after that, the governor of the bank of italy, a mesial visco. That is ignazio visco. That is coming up shortly, and this is bloomberg. Oomberg. Francine this is bloomberg surveillance. I am Francine Lacqua here in london. Now, we did have that breaking news out of boeing, the maxis 787, and this is what we know so far, european regulators sailing max 8 safe to fly and it may return this year. This is according to bloomberg sources. Boeing in premarket is actually gaining 2. 2 . Again, europes top regulators say that changes to the max have been made, the plane is safe enough to return to the skies before 2020 is out. We will see exactly what that means Going Forward and if we have Additional Communications from the other side, but premarket gaining 2. 2 . The u. S. Chamber of commerce and a group of more than 150 companies are using President Trump to withdrawn executive order. Include contractors in inclusivity be training. We are joined by our quicktake reporter. First off, what does this mean . Francine, we know that they are making efforts to diversify their workforce. A month ago, the trumpet maceration caused some confusion with that executive order that you mentioned when they were questioning whether these efforts that companies were trying to make may actually violate federal discrimination law. So what we heard from the chamber of commerce, over 150 companies on thursday, they addressed a letter specifically to the president saying that might do more to confuse companies about what is it is not permitted, and they actually end up stifling any sort of address that the companies are trying to make to create a more inclusive workplace, so there really does appear to be a disconnect between what the Trump Administration is saying and what Corporate America is doing. Still, we are hearing from Companies Like starbucks who are still moving forward with their own diversity plan and trying to be a little bit more transparent as a result. Francine jen, some companies ,re taking more Decisive Action take starbucks, for example, what are they doing . So starbucks we heard from on wednesday, they say that executive order or not, they are going to move forward with their commitment one. Of the commitments they are making as they are going to have people of color make up at least 30 of the u. S. Corporate employees and 40 of retail employees by 2025. Not only that, they are going to tie those diversity metrics to executive pay. They did not specify exactly how that is going to work out, but, you know, i can only anticipate we will hear in the coming months. They also announced several initiatives and programs, of course, again, you know, going counter to what the government is saying, and they are playing on disposing the e. O. Reports, was details tha diversity of the workplace. They have been hearing from months this is what we want to hear from companies, so our colleagues in the Bloomberg News or tomorrow taking a look at several reports, so it is something we will watch over the several months. Francine we certainly will. Jennifer zabasajja there in new york. Coming up, we discuss the Economic Outlook on brexit. Great interviews, the irish finance minister and the Italian Central Bank governor. This is bloomberg. Bank governor. This is bloomberg. Francine economics, finance, politics. This is bloomberg surveillance. Im Francine Lacqua, here in london. Lets get to the bloomberg first word news with leighann gerrans. Decision it is brexit day for Prime Minister Boris Johnson. Today he will choose whether or not to abandon trade talks with the European Union. The blocks needed need to give him the clear signal that he wants in order to remain at the table. Local leaders in the u. K. Are in revolt after rejecting the governments regional lockdowns. Politicians in manchester, northern england, are refusing to move to the highest level of restrictions unless the government provides more financial support. U. K. Government scientists are also pushing for an Emergency National lockdown to slow the rates of infection. The latest study by the World Health Organization has found remdesivir and other antivirals have no definite effect on hospitalized coronavirus patients chances of survival. You will remember it is one of the treatments President Trump took when he contracted the virus. The maker of remdesivir says it is unclear if any conclusive findings can be made from the study. Restored andce was tweets began appearing again at about midnight london time. The company saw no evidence of the Security Breach or a hack but is investigating an irregularity in its apis that led Software Systems to talk to each other. Global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more im 120 countries, leighann gerrans. This is bloomberg. Francine . Francine the annual meeting of the imf and world bank have been taking place this week and perhaps the most difficult backdrop in memory. Leaders are coming together over the second coronavirus wave much sooner and perhaps much sharper than expected. Creeping back into the agenda. A no deal brexit remains an u. K. E. U. Trade talks make little progress. Were delighted to be joined by paschal donohoe, the republic of irelands minister of finance. The irish budget was on the assumption that we would have a no deal brexit just in case. What do you think are the chances today that there is a brexit deal . I still believe it is possible to get an agreement on brexit. The reason why i think an e. U. U. K. Trade agreement can be reached is that we have had many moments of difficulty like this politicalt, and with imagination and will and agreement i believe it is still possible. I would assure you that in the European Union if we were to pursue and agreement that is consistent with the Single Market and our political principles to the last moment. Francine do you think it is 50 50 if we get a deal, or are the chances much lower or higher . I have looked at this point is kind of an evaluation a precise evaluation, i do believe that an agreement is possible. I think it is finally balanced at the moment, and the reason it is finally balanced is that we are approaching the final days and weeks of the period in which an agreement as possible. As you know, this important engagement taking place now ahead of government and ahead of state level as we speak, and i do believe it is still possible in the aftermath that an agreement can be reached. But it is at the moment very evenly balanced. Minister, after brexit, ireland may have a supercharged economic powerhouse on its doorstep. In the u. K. How worrying is that for the Irish Economic model . Paschal well, yes, indeed there could be changes in many Different Directions taking place within the united kingdom. They will continue to be our friends and neighbors, but are never ship in the European Union, our memory shipment the Single Marketed the greatest access we have and how we can develop our own prosperity and our own Economic Security in the years to come. It is now and will be up to the government to decide what is the right path in the context of brexit having taken place. But i am very confident that our membership of the European Union and the resilience we have built up in our economy will allow ireland to continue to navigate its way through waters that at times may be difficult. Francine ireland appears to be on track to enter a level 4 blocked out, almost a complete lockdown. What will that mean for an economy at precisely the time we could see a no deal brexit . Paschal it is obviously a very challenging situation at the moment to be dealing with brexit on its own, less than a year ago at a moment of challenge to the irish economy, at the moment to be dealing with exit and covid19 at the same time means that it is a moment of unique challenge. However, that is also the case for the british economy and for the british government, and i know the consciousness of that i know the conscience of that, too. We are evaluating what is the right level of publichealth in our country. We are level 3 at the moment. Level 3 has a very demanding, constrained civilly situation , important constraints regarding the operation of our economy. Our focus at the moment is on making that work. We will evaluate whether it is necessary to move up a level, and moving up a level, to answer your question, what that means is particularly demanding change, for example, in the Retail Sector in ireland, a similar situation to social engagement. If we do have to go to that point, it will have Significant Impact on our economy and society, but it is very similar to the kind of debates and choices that are underway in many European Countries at the moment. Francine how do you Balance Health and economy concerns . What is the right mix . Paschal i believe that the way to achieve that very demanding by two different things. The first is having a framework in place in which we try to bring certainty to our society and our economy regarding what kind of choices we are making and what kind of choices may or may not be needed in the future. The multilevel framework that we have just discussing that we have just been discussing. The second thing is that if we do make changes, that they are in a gradual and predictable manner. Our country as at level 2 a number of weeks ago, and when we decided to escalate our publichealth guidance, i think it was very important to be able to explain why and to be able to outline the support that is needed for our economy when we make that change. Changesamework, making in a predictive manner are really important in getting that balance right. Francine can i ask you about the European Recovery Fund . It appears to be stuck. Where is the blockage . How does it get resolved . Paschal the european repair every Recovery Fund is developing exactly the way we would expect in the European Union. Germany,agues in currently holding the presidency of the European Union, are working night and day to deliver the Recovery Fund in a way that was agreed, and im very confident that they along with other european leaders will make it happen. The expectation was that countries would begin to be submitting the plans to access the Recovery Fund around now. That is all happening, and the European Commission will be doing their best to turn around a Quick Response to those recovery plans that delivers consistency across the European Union. And im very confident that the timings that we outlined within , that anean Union Unprecedented Recovery Fund will be delivered, and the funding needed for countries in 2021 will come in as agreed. Francine is there an extra sense of urgency because we have many more restrictions and local lockdowns in almost every major european country . Paschal i think that is a very fair point. There is undoubtedly a high level of urgency at the moment in the engagement that is underway. As you know, as you said early on in the interview, all countries within the European Union are making changes in the publichealth guidance. This is having an effect on the eurozone economy and on national economies, and why we always believed this was very likely to happen. Of course, it is now happening and it injects further urgency into getting the Recovery Fund actually operational next year. But this is well understood by everybody who is involved in these negotiations. As i said a moment ago, i am very confident that we will see this historic agreement become a reality in the lives of citizens of europe next year. Minister, would you support the push for the e. U. To work more on additional tax for Digital Services for early 2021 . Thatal well, i believe the inappropriate place for that engagement to take place is to see can we reach a new global framework on digital taxation. I expect the way in which Large Digital Companies are taxed will change and will become more effective, but i believe before any part of the world makes its own decisions on how they do that, i think we should renew our efforts to try and find agreement at a global level. The reason why i think that global agreement is possible and necessary is that it minimizes the chances of a tax discussion and agreement, further creating trade difficulties next year. We have enough trade difficulties at the moment, enough challenges in relation to Economic Performance across the world, and i would like to see that exacerbated by a disagreement over tax. Francine paschal donohoe, thank you. Coming up, and the deepest recession since the great depression, italy takes over the running of the g20 next year. That is coming up next, and this is bloomberg. Francine this is bloomberg surveillance. Dear italy will take over leadership of the d 20 of the g20, hosting the summit for the first time ever. Against this backdrop is the deepest global recession since the great depression, and many Group Leaders will be hoping that the next g20 will draw a line under the year 2020. Joining us for an exclusive conversation is governor it now ceeo vince governor ignazio visco. Thernor, you look at economy, it is tough because we are dealing with brexit, we are dealing with shifts in politics, and on top of that we are dealing with extra lockdown. How much do you worry about growth and if italy will give their idea for growth in the g20 he echo in the g20 . Ignazio we are monitoring the situation and we have started , very difficult for us to make in this period. The assumptions are clearly the aes that we are refining on daily basis, but we cannot change our projections on a daily basis. Ando scenario analysis, they also in the case, they hashow confirmed that there been a recovery going on next year, but we will not be back to aprecovid situation before couple of years at least. There is an issue of confidence, but there is mostly an issue of weis contagion will are here to consider the risks of stop and go, and we will have to the exit from the emergency measures is one issue that we have discussed a little g20 in our g20 meetings, but this will be an issue for the italian credits and see over the italian presidency. Have a vaccine if we do not have a vaccine, is there a danger that 2021 will be lost in economic terms . Obviously the legacy and the way forward from the pandemic will inevitably be at the center of the presidency. We have to be sure that way, as thosether same measures are not withdrawn too early, and it has to do both with other level countries where there are relevant issues of increasing poverty, as has been discussed. At the same time, we have to consider, however, the conditions under which it will be safe to exit, and be careful of Financial Stability risks. Some new Financial Stability risks that go beyond the ones that we have experienced so far in the Banking Sector especially, which have to do the lessons taken from the period we have been living in since 2018, and that has to be transferred. A newmportantly, we have way to grow in the future, and therefore the major transformations that we are laterering now have to be on, and the italian presidency will consider the effects of ititalization on how to make more effective for productivity and how to somehow consider Digital Innovation also in the payment and financial services. We have increased awareness and competencies, and more adequate supervision, and the consumer protection. These are all complementary interventions. Obviously we cannot forget the Climate Change, and our presidency will certainly bring it back to the center of the debate. These priorities are really in line with the main objectives of the italian presidency, which are which our Prime Minister with the recently people, prosperity francine what will happen for the economy to really grow to get out of this . Do you worry that we could have doubledip recession . Thezio the issue is first conjecture and secondly the structural issues. Expectedetter day than better data than expected for the quarter, but the increase in contagion was considered, but its effects may be worse than expected, so we have to be prepared in that. This means that policies have to onextremely accommodating the fiscal side, as well on the management side as we are prepared for the euro area at large. But italy has major structure problems to deal with, as we mentioned many times, and it is hard to repeat them. But clearly this is an occasion to improve substantially. Also it is a good use of european funds on issues like the effectiveness of Public Administration services. We have more innovation and better training of young people who are going to enter into first, and the innovation, the spreading of innovation, thinking about the broadband, notspeed, which is really and the country, and education at large. Also obviously the third leg of the european objectives that these environmental is crucial for italy, crucial because Climate Change effects italy, and we know that, but also because we have a natural inherited we have a natural which has to be preserved, detained, and for the better use at home. Francine are you confident that the Recovery Fund money will be spent wisely . You mentioned a couple of points where they could be spent, and how should investors actually look at italian debt sustainability . It has to be spent well. Most of it is debt, so debt has to be to have good news in order to be effective. , as i have said many times, is sustainable. The issue here is about no debt. There is a little bit less this aar than last year, as percentage of gdp with Interest Rates much lower. The italian treasury is issuing years. T 10 so in the process, there is a trend of reduction. The issue here is growth, and the return to a balanced budget when the measures will be over. And im confident that the end on the fiscal side, italy has not really missed that much. The big problem has been really the ability to grow, and to grow you need really to invest in Human Capital and technology. Se are the issues in which i think that the government is aware of that. Obviously there will be discussions and compromises will be made, but at the end, the important thing is that these will be used for investment to be effective. I have to be confident that this will take place. Francine governor, thank you so much for your time. Ignazio visco, the governor of the bank of italy. Coming up, we will discuss multiple challenges facing the u. K. Economy. Around 30 minutes from now, and this is bloomberg. Macs aremp as far as concerned, i am good with masks, i tell people to wear masks. Day a study came out that said 85 of people who wear masks get it. Thats what i saw. Every major study done, that if in fact we wore masks, we could save now and the end of the year 100,000 lives. George and avoid lockdown . Mr. Biden and avoid lockdowns. You dont have to lock down if you are wearing masks. Francine the election is data way is 18 days away. Coming up, we look at markets, we look at brexit, and we look at the Imf World Bank meeting. Happy friday, everyone. This is bloomberg. Francine a thousand miles apart. Donald trump and joe biden fight for airtime in two very different town halls. The election is 18 days away. Walk or talk. U. K. Prime minister Boris Johnson will decide today if hell abandon brexit negotiations. It comes as e. U. Leaders refuse to give a clear signal on prospects for a deal. And back to the skies. Europes top regulator deems boeings troubled 737 max safe to fly. The models could return to the regions airspace by the end of the year. Good morning, everyone, and welcome to bloomberg surveillance. Im Francine Lacqua in london. Tom keene is in new york. I dont know where to start. We have about 15 news flows. Focusing on the u. S. Election, focusing on brexit talks, because something could move there. Actually, i found the boeing 737 max story interesting, the fact that regulators find it safe enough to fly. Tom in a bit of a supply. We will know if the staff gets on it we wil t