Rose. Microsoft saw a better First Quarter revenue, helped by demand for Cloud Services as more people work remotely. Sales through september topping 37 billion. Melbourne, the merge from a melbourne emerges from a strict lockdown. Ours and restaurants are reopening, even home visits are allowed. Shery lets get you started with a check of the markets. U. S. Futures opening lower, down. 4 . This after stocks fell to a three week low in the regular session. We had cyclical stocks taking the brunt as virus cases continued to climb globally. We have the nasdaq composite pulling back of yesterdays losses on the deal around amd. Durable goods orders coming in better than expected. Lets see how things are shaping up for the asian markets. Here is Sophie Kamaruddin in hong kong. Sophie we are seeing losses continue here in asia. Chip stocks very much a focus after amds deal to buy. Earnings. We have results from sony, zte, as well as budweiser asia to name a few. And a straley or, we have had coles and others delivering updates. Flipping the board to see how we are seeing fought seeing proxies behave. Began holding below 105, amid 104 levels this morning drifting higher than the two week ball for the currency at an april hi. Mode. S in a wait and see aussie strength faltering a morning, after commodities got a lift overnight from the rise we saw in crude prices. In hong kong, the authority intervening once again in the forex market. As we wait to hear whether financial will close its institutional order book by this wednesday. Offshore yuan back above 671 as the pboc signals it to go easy with a ruled week allowing banks to submit weaker fixings. Marketsets discuss the with ubs private wealth managing director. Great to have you on. We had tech stocks again leading the gains. We had also investor David Einhorn saying the tech stocks are in an enormous bubble. What are your views of what will be driving the markets in the next few weeks as we headed toward the november election . Thank you. We are seeing the markets trying to adjust trying to digest a lot of conflicting signals. Obviously, a setback as we are starting to see covid raise its lockdowns. Back into lots of governors here trying to figure out what they are going to do as well as states around the world wondering if we need to start stepping back away from the get out and get back to normal. Some of the tech stocks we were giving back are part of the stayathome basket of stocks we have been looking at. That. E seen a lot for we have started to see a rotation into cyclicals and that unfortunately got interrupted by this bad news on the cold front. And finally, in washington, d. C. , all eyes are on the race in the house, the senate, in the presidency. Shery talking about that rotation, this gtv chart on the bloomberg showing how small caps may be having a comeback. This is the russell 2000 set to outperform the s p 500. Where would you go, in terms of sectors, to see some Growth Potential as we head away perhaps from these large tech stocks . Rod right now, we are looking at ms. Cat midcaps. You mentioned of small caps showing recovery. We really think there is an opportunity for investors to take advantage in the midcap sector. We also are looking for that rotation. And there is some attractiveness in the value sector. The key question is whether those stocks will look more attractive next week . Reallyestors are expecting to see heightened voluntarilys. Not just through the elections seven days from tonight. But on into the next several weeks. So we are seeing them start to stay on the sidelines and really begin to build up their cash positions, hold onto those cash positions. We are seeing trading volumes drop ever so slightly as we head into the election. Because i think there is still a lot of uncertainty. The sensible allocation to cash at the moment . And in extension of that, are you seeing much haven demand . Rod that is a fantastic question. Cash iscation to something that is really very, very difficult. Because every investor has a different tolerance for risk. What but we really are seeing cash levels build up. Im told even our institutional trading desks are seeing institutional trades at 121 and a half standard deviation below the normal exposure to the markets. That cash is building up. And we are seeing a little bit of support here for treasuries. We are seeing, some attractiveness, for example, in Chinese Government bonds. A little difficult for u. S. Investors to access. But we are seeing a lot of the trades going to the safe haven trades. Paul if you have an appetite for risk, do you see anything appealing in emerging markets, particularly in asia . And a lot of these countries have covid cases reasonably under control. Right. U are absolutely and we are seeing a little bit of a risk on. As we look farther afield from a u. S. Perspective, we are looking into the emerging markets, and we see some real opportunity in emergingmarket value stocks. Those have really not been recovered, or they are starting to show some recovery there. We think as trade picks back up, that will be very, very helpful. Looking there, we like energy commodities, we see some potential there. And in the debt category, we like asian high yields. And looking into china, we like chinese property. Paul all right, ubs private Wealth Management managing director and private Wealth Advisor rod von lipsey. We will have to leave it there. Thank. You for joining us lets go to Karina Mitchell for a look at the headlines. Karina covid 19 cases continue to soar in the u. S. With rising numbers in 32 states and in washington. Hospitalizations jumped 60 in new mexico. 50 in wyoming. 38 in connecticut. Paris is, reports from saying francis planning a thursday. Rom midnight while there are claims that one in four airports face collapse as the virus devastates air travel. China says it has completed testing of a whole city in a bid to control a new outbreak of covid19. 5 Million People in kashkari and chin Zhang Providence are said to undergone checks after a symptom attic cases were reported at the weekend. Authorities say they found five confirmed cases and 100 a symptom attic ones. With all other people testing negative. Top brexit negotiator is in london as the two sides try to hammer out a deal ahead of the split. Michel barnier is expected to remain in the u. K. Until wednesday before talks move back to brussels. The eu councile president Charles Booker charles says negotiations are at their most difficult stage with the clock ticking until the u. K. Leaves the single market. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Im Karina Mitchell. This is bloomberg. Shery we have the latest lines out of microsoft. We have First Quarter revenue climbing better than projected at 12 earlier. Strengthened by corporate demand for Cloud Computing services. Now it is saying it Second Quarter intelligent cloud sales will come in between 13. 5 5 billion and 13. 8 billion. Saying Second Quarter productivity sales will be 12. 75 billiond to 13 billion. It expects Strong Demand for new xbox consoles. Although the hardware supply for those consuls could be constrained. Still ahead, the u. S. Election campaign enters its final week. We will see how President Trump is trying to tip the odds back in his favor. Details next. Plus, companies hedge their exposure to asset volatility. Senior Strategy Officer wilson custer discusses the latest currency Impact Report. This is bloomberg. Just ahe u. S. Election week away. The latest polls continuing to point to a democrat victory. Joe biden is maintaining a seven point National Lead over President Trump, holding onto key states such as nevada and even taking a shot at republican stronghold texas. Congressional government report Emily Wilkins is in washington. President trump had high hopes of flipping nevada. Im wondering what his chances are now and if texas went to the democrats, with that put to rest any notion of a contested outcome . Emily well, we are going to have to see how close it is in some of these states. The big states, pennsylvania, wisconsin, michigan, nevada did go for clinton in 2016. Trump was hoping to flip it. But it seems like biden is maintaining his lead their. There are a number of other states that tend to be republican strongholds. Im thinking about georgia, arizona, texas as you mentioned. Trump still might be slightly ahead in the polls bud biden is closing that gap and making it a very, very tight race in those traditionally red states. Shery President Trump also seemed resigned to not having a stimulus package ahead of the election, the head of the vote. How much does this hurt him . Emily i think it has been going back and forth for so long on whether or not we will have a stimulus before the election. I think trump was pushing for a stimulus because he thought it could help him. But again, there were democrats and other lawmakers who were also pushing for stimulus because they thought it could help them. I think it is going to come down to probably a blame game. Both sides are pointing the finger at each other. The big question now for the American People is, can something get done in the lameduck after november . Or is it going to have to wait until a new congress is set in january to get any sort of relief . Viewers were watching President Trump live right now in another campaign rally. He has been really busy. I mean, what, three rallies just on monday alone, all in pennsylvania. How much does the strategy help him . We know this made a difference in 2016. Is he preaching to the same choir by now . Seeing,rom what we are he is. These rallies dont seem to be helping his poll numbers and a lot of states. Joe biden is still up in pennsylvania. He has been visiting there a lot too. I think these rallies have a lot of energy, you see a lot of people who are really big Trump Supporters turn out. But there are a lot of americans, their top concern is the coronavirus, and they see Trump Holding these large events. They dont see a lot of people wearing masks. It fuels this narrative that he is not taking the coronavirus seriously. I think that explains some of trumps busy numbers in the polls in these visuals at the events once again reinforce that narrative. Shery he is the only white well his own white house chief of staff saying they are not trying to control the pandemic, that they are pinning their hopes on vaccines and therapeutics. Emily wilkins, our congressional government reporter with the latest from washington. Health care sector also has much at stake in the u. S. Election, with the big pharma under immediate policy scrutiny in a blue suite. The first batch of earnings show largely bit mixed results with eli lilly tumbling after flagging 400 Million Dollar expense related to Covert Research and development. Ceo dave ricks told bloomberg he expects key data on the vaccine front soon. Dave in our business, we need data. I dont think it makes sense to the mostwhich would be effective. The good news is we will know that, and we will know that pretty soon. The only ones as he pointed out are the mrna, a new technology that has never produced a human before. It looks pretty promising in terms of the ability to generate our own antibody response. And that is a good sign for defeating the virus or preventing infectious spread. We dont know how long that will last. There is other approaches that have produced vaccines, moderate 5 modified virus, taking different viruses and mounting different viruses on them. And those are more proven. They are a little harder to scale. But they also may produce a good response. Mostly, im confident because we have so many shots on goal. Really an unprecedented number so quickly. I think science will win in the end. It is just hard to pick a winner at this point in the horse race. Tom john, that is a hockey phrase, not a soccer phrase. That is a hockey phrase there. Jonathan you dont know what dave meant. Im going to interpret it as a soccer phrase. You mentioned the word scale. I want to return to antibody therapies. Please help me understand how difficult it is to scale something up quickly in large amounts. As soon as you get the green light. Dave it is difficult. Because it is so difficult, we started commercial manufacturing in the first week in july. So we had to basically aim at a target that had not arrived at its point yet. We did not know the does, we didnt know whether the drug could work, we didnt know in which setting it would work. Yesterday we announced a study we had been conducting. We are going to pause because it is in a later a later stage of the disease. The antibodies will not be as effective. Early stages of the disease looks highly effective. We started that process. It is about four months from beginning to end, best case, to start manufacturing and have output. Theop of all of that, Global Infrastructure to make monoclonal antibodies which are some of the most complicated and expensive medicines to make, is limited. We have harnessed five different sites within our network, collaborating with angina and working with large contract manufacturer owned by samsung, actually, in korea, to sequester a significant amount of volume. Even then, we know it will not be enough of the needs based on rates. Infection we need to work on lower doses and concentrating these important therapies where they can make the biggest impact. For us right now, we think that is high risk patients right as they are diagnosed. Lisa there is a question of profitability. Your latest earning report which just came out said you expect to spend 400 Million Dollars on covid therapies exploring what could potentially work. There is a cap to whatever you can charge for these remedies because there is a Public Health now. And benefit right how profitable can these therapies actually be based on the Human Interest here . Dave today, we announced earnings, that is a good point. It showed another cup a solid quarter. We grew profit amidst the pandemic. If in it shows the resiliency of a company like ours. As we think about pricing and assets, our First Priority is patients pay nothing. We know if there is an outofpocket cost, economics will start to differentiate who gets the drug. We think Health Status should be the only factor considered. We are working with governments to procure and sell our medicines and distribute within their markets. In terms of pricing, what we are thinking about carefully is to create a price that immediately creates value, not just for us, but for the system. Meaning it saves money direct cost very quickly. And we demonstrated we can reduce hospitalization risk in highrisk patients between 70 80 . In the u. S. , hospitalization stay for covid is 22,000 per person. There is ample room to share that value, assuming the drug is approved. We are working on the exact price. It will not be as profitable as other products. We expect to have a modest return for shareholders based on our modeling today. Ceo eli lilly chairman and dave ricks speaking to bloombergs tom mccain Jonathan Ferro and lisa abramowicz. Microsoft posts a 13th straight doubledigit stale sale gain. This is bloomberg. Tech. A big day for big after the bell, microsoft the estimates with a 13th straight doubledigit sales gain. A deal between chipmakers amd and xilinx helping boost the sector. Su keenan joins us with the latest. Lets start with microsoft. Cloud computing playing a key role here. Su yeah, booming cloud demand is the story. It has been boosted by the pandemic. First quarter revenue climbed better than expected 12 after hours, we saw the stock trade lowered to about flat after initially jumping 1. 5 . Sales came in at 37. 2 billion for the quarter. That is well above estimates. As mentioned, a significant winning streak of doubledigit gains for the company. Since the pandemic started, corporate customers have accelerated a shift toward microsofts internetbased Computing Services and their online subscriptions for Office Software that covers everything from teleconferencing to work from home tools. The Cloud Computing related Services Sales alone were up 48 . Videogame sales also up. Note that the xbox sales are going strong, something the ceo says he is delighted about. All the tech analysts who were concerned the pandemic would companies, this latest quarter certainly alleviates those fears. Tech was already on a run after there was a 35 billion takeover. Give us the highlights of that. Su amd has agreed to buy the arrival chipmaker for 35 billion in an all stock deal that is expected to close at the end of 2021. It is also one of the history book markers, one of the most valuable deals in the chip industry. It also intensifies amds battle with intel in the Data Center Chip manufacturing area. Both amd and xilinx have been able to take away money chip from intel which has struggled with a lot of issues related to its ability to manufacture inhouse. Xilinxxecutive said solidifies its move to the head of the pack. Lets listen. Xilinx has a strong business model, by long product life cycles, best in class margins, and strong cash flow. All of which are significantly competitive to amds financial model. Amds business models, they made this announcement as they announced their latest earning result, in their quarterly profit came in at 148 increase. Definitely a Strong Quarter for amd, and a very wellreceived announcement in terms of its decision to buy. Back to you. Much. Su, thanks very you can learn more about that mega chip deal in todays edition of daybreak. Bloomberg subscribers can go to dayb and their terminals. It is also available on mobile. The bloomberg anywhere app. Lets get a check of the latest business flash headlines. Airbnb has chosen where it will list following its muchanticipated and delayed ipo, and it has decided to go with the nasdaq. No further details have been released, but the nasdaq has a reputation for tech focused stocks as it handles highprofile share sales from lift and zoom among others. It has often lost out to the nyse including mega listings from uber and snowflake. It is taking a 370 7 million u. S. Dollar charge against secondhalf earnings to cover refunds to customers and writedowns on new software. The sum includes funds for poor Financial Advice and wrongly imposed fees with a value of new tech is being downgraded. There is also a reduction in the value of goodwill, and costs for restructuring. Anz releases its earnings on thursday. Isrdquarter profit rose 8 business recovered from the coronavirus in the stock market rally boosted investment returns. Net income climbed more than 5 million from a year ago, compared with a 30 slump in the first half. Operating profit accelerated more than 4 in the first of nine months of the year. Later,up next, 112 days melbourne has finally reopened after one of the worlds strictest coronavirus lockdowns. How long is it going to take for the economy to bounceback . We will discuss all of that in a moment. This is bloomberg. Moment. This is bloomberg. Watchingou are daybreak australia. Im Karina Mitchell with first word headlines. President trump seems to have abandoned any hope of a virus pack should package, telling reporters the white house sees a vote. Oming after the he repeated his accusation that nancy pelosi is demanding funds to bail a Democratic State and local governments, and saying the best package ever seen is on the horizon after the election. Meanwhile, rising debt state levels is wearing the reserve india. A new report says states are taking on more financial obligations to fund the fight against covid19, and that is adding pressure on local governments. The pandemic has devastated revenues at national and state level. The federal governments borrowing plans to a record 177 billion u. S. Dollars. Hong kong is starting to show signs of recovery from the recession with exports rising the most in almost two years in september. The value of outbound shipments jumped 9 from a year ago to u. S. T 49 billion that is ahead of estimates and is largely due to deliveries from china which served surged 72 . Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Im Karina Mitchell. This is bloomberg. Karina. Anks, businesses are finally reopening across melbourne after one of the worlds strictest covid19 lifted. S was the 112 day shutdown across australias second largest city has hit the local economy hard and dragged down the National Recovery as a whole. Australia and new zealand managing editor ed johnson joins us from sydney. It has been a very long haul for melbourne. What has been the impact of this . Ed thats right. Good morning. Australias government estimates that about 1000 jobs have been lost on average a day across victoria state due to the second lockdown. And that has deepened the nations first recession in almost 30 years. A treasury official told Parliament Earlier on this week that the lockdown has cut about 100 million australian dollars a day from Economic Activity through august and september. On top of that, we have seen a huge social cost with about a 30 increase in demand for Mental Health services. Some Business Leaders are warning it may take years for melbourne, which was ranked as the worlds second most livable city last year, to recover. Shery countries around the world now, especially in europe with the resurgence of the virus, are weighing whether or not to impose renewed lockdowns. What lessons could they take from melbourne . That think the main lesson these countries predominantly in europe can draw from the melbourne experience is just how hard it is to bring the coronavirus under control. Victoria had so many factors working in its favor. It had closed international borders, it had a relatively easily defined Geographic Area in greater melbourne to control, and it had the popularity of the state governments which helped ensure compliance, and also the infection numbers were low by international comparison. They peaked at just 700 in early august, which is tiny compared to the tens of thousands of cases we have seen each day elsewhere in the world. But even then, it took the andrews government twice as long as initially expected to emerge from this lockdown. Had two new cases in victoria overnight. What is next for the state and australia wide . Victoria,xt steps for we are expecting another announcement next week on further easing, possibly on workers being allowed back into their offices in melbourne. And also we will have that restriction on travel around the state being dropped. In terms of what is next for the rest of australia, Public Health officials are warning that it is not over. We need to learn to live with the virus through mask wearing, through ongoing social distancing, good hand hygiene, and a rigorous testing in Contact Tracing regime. They are warning that ultimately, there is no room for complacency when tackling the pandemic. Shery our managing editor ed johnson with the latest on that victoria lockdown. And the easing of those restrictions. Fors go over to hong kong top calls and recommendations ahead of the asia trading day. Sophie, David Einhorn warning of this tech bubble. What exactly is he saying . Sophie his latest letter to there is saying yes, an enormous bubble, pointing signs to mania in the ipo space, market concentration, lost evaluations, rampup in intech trading and participation of retail investors. He has added short bets of mostly secondtier companies and recent ipos trading at what he calls remarkable valuations. We did have einhorn calling a tech bubble in 2016, which he said was premature, but this time, he says this is the real mccoy. Flipping the page, he thinks the bubble has already popped with september 2 marking the top for tech. A hypothesis he conceives may be disproven but he expects a shift in psychology from greed to complacency, from worry to panic. Panic, thereg of is a distinct lack of the market ahead of the u. S. Election. Perhaps investors getting complacent. Sophie yes, for all the talk about this being a contentious u. S. Vote, we have seen the jp morgan gauge of global volatility set by the biggest multidrop since may. That is compared to the equity investors. Kospi traders are underpricing for risk after november 3 with mark with markets expecting threemonth dollar to stay close to depressed levels. A balance saying that while short data for College Dollar cross it has been on the rise, current level for one month on threemonth vault are nowhere near 2000 highs. It expects it to climb after this years election. Noting that europe against the dollar and Swedish Krona are looking cheap. Sophie. Anks, we will have more on markets in a moment when we talk to our guest about why Global Companies are paying billions because of moves in the currency markets. This is bloomberg. Ency markets. This is bloomberg. The pandemic ravaged economies this year, Global Companies were bleeding billions and it was not just due to shutdowns. Movements in the currency markets cost north america and European Companies 17. 5 billion in the Second Quarter. That was up 44 from the march period. The numbers from a quarterly currency Impact Report from Risk Management firm caribe, Wolfgang Koester is their senior strategist and joins us now. Some profound moves in currencies having some profound impacts on a number of companies. Which companies were the worst hit . Wolfgang some of those were for example in anheuserbusch or a parolee, or an apple quite frankly. Those are big names. Materiality really should be anything that is more than 10, 15 basis points. These companies were all north of three, and in the case of apple, about 7 hit. 1. 8 billion hit due to foreignexchange. Theas not just because of movement, but also what you saw at the beginning of the pandemic is a lot of Companies Bringing their outside cash back into their home currency. Apple, im sure, went out and got a bunch of dollars euros back into the dollar. But they did not have the visibility to see. If you have accounts payable in a country and you took the cash out, you created more risk. That 17. 5 billion dollar number is actually probably the biggest impact, given the revenue reduction we saw at the beginning of the pandemic and continue to some degree. Probably the biggest number we have ever seen, and it points to the fact that there is still lots of companies who are not leveraging technology to understand their look did he and visibility, and act accordingly. About thosetalk companies that were not so badly impacted. Is it because they employ to strategies that you describe . Or was it just from a pure lack of exposure to these gyrations . Wolfgang the majority of them, as you look at the nordens and footlockers of the world, two point a billiondollar company, they are a producer of automotive parts, for example. The 2. 8 billion for the quarter, they had no impact. It is not because they did not have the exposure. All of these companies, you look at an s p 500 company, you look at even the hong kong market, you see a company that is over 500 Million Dollars in revenue. They will be in at least 20 countries. Even if you look at gross resource, they still source from outside. This is all about having visibility to the cash and to the risk and leveraging technologies to do so. Shery which currencies were the most impactful for these companies then . Wolfgang you certainly have the euro, you have the brazilian rei, for the u. S. Companies, some of the companies that were impacted. I think it is more about what actually these companies didnt do. April, theyarch and brought as much task back as possible. And lost visibility to what that actually was from an impact point of view. And they did not manage liquidity the Way Companies should. Shery we have seen a historically strong chinese yuan. This gtv chart for our viewers showing the volatility. The onemonth really at the highest level since march. Strength,ful was this and also, what are you watching out for in the next two weeks as we have a lot happening in china, including the antipo . Wolfgang we can talk about the alibaba in a second. The first thing im looking for, im troubled by hopefully not the misconception that we are not about to head a volatile spot. Are. Ually feel we with the no nones, or the unknown knowns, it is the u. S. Election. Are we really going to have results on the . Quite likely we are not. Covid continues. That is known. And then comes something that has not been looked at in the market much, and im sure it will already, which is there an opportunity for the Chinese Government to issue the electronic currency. That is going to have all sorts of impacts. Certainly volatility because if that happens, it will show the world that the chinese are first to go after this market. And it will also review people at, histors to look alibaba properly priced or is the Chinese Government going to actually take over part of that business . Which is another thing when you were looking at the ipo coming out november 4. There is a lot more going on, a lot more undercurrent. The recommendation is to make sure you are really prepared for what this is going to come up with. The corporations im talking to, and im talking to ceos, they are saying what do i do . You need to make sure you are fully digitalized. That means you need to have automated processes. If you are going to electronic currency, you do not have two days to settle that. You need immediate visibility. The companies that are not ready for this are going to have a competitive serious disadvantage. And a lot of companies are pushing really hard to get digitalized as soon as possible in the entire cfo suite. Paul so you are watching closely for a digital you on. What is it going to mean for the greenback and for the euro . Wolfgang ive been saying this for a while, that it is actually threatening what the ruling currency of the world is going to be. In it is taking these seismic shifts that have moved away from, for example, the sterling many years ago, before that, the portuguese were, before that, the romans. There were major changes that actually changed what became the world currency. And it could be an opportunity. The europeans are thinking about doing it. The americans are planning on doing it. The chinese have already tested it twice as you all know, the last test being a couple weeks ago with the raising of the 1. 5 million, give it to 30 people, and doing that. So they are in testing mode of what they have already built. Have had the way, i people us this question, what does that mean for aunt if they are going public at what is estimated to be the largest ipo valuation right after. It is a real issue. That is something that investors need to take into consideration. Shery it was great having your thoughts. Thank you so much. Wolfgang koester, to read the senior strategist. Commoditieswatching with Goldman Sachs seeing able market next year. There have been concerns about the virus impact on the sector. But goldmans jeff curry told bloomberg supply that told bloomberg that supply is the key factor. Every single commodity market , with the exception of coffee, cocoa, and iron or, are in a deficit. That is because they had to supply has been massive despite a whole worry around demand. One thing in terms of thinking about demand, is that the covid comes in waves. One third of the world right now is coming out of their infection rates. Places like melbourne and australia, india, for this is that. It is improving. While another third is going in, places like europe and the u. S. Then you have a group in the center that are moving around. The key point is much more supply is down substantially. Markets are in deficit. That is something that typically happens at the end of the business cycle. Not something six months after hitting a trough of a recession. We are in a very unique time period. Im not that worried about what is hitting one third of the world because another one third of the world is coming up. Ok. You arey mediumterm overweight. What you are saying is there is no shift to the right in terms of the timing as a result of, for instance, covid cases rising in europe . Jeff it definitely has an impact at the margin. But in terms of looking at all of these markets, im going to go back and say it again. Every single one of them but a few agriculture markets are in a deficit. Which underscores the structural shift in supply that we have seen. There are three key themes that we are focused on and why we are so bullish as we look forward. One is structural underinvestment. The second is policy driven demand. The third is the macro tailwind. Lets talk about the structure underinvestment. This is a theme we have been talking about since 2017. We called it the revenge of the old economy. Basically new economy sores, great returns over there, moved all the capital to the new economy, and starve the old economy. Crisis,covid particularly in oil when we saw negative prices on that, and then overlay esg concerns, capital has been siphoned out of the sector. That is. 1. 2 that is point one. We calculate the impact on copper demand because of infrastructure stimulus around the world is bigger than the impact china had a back in the early 2000s. And then you have the macro tailwind of a weak dollar, and inflationary concern as we start to look up two or three years beyond. Very robust backdrop for commodities right now. Im glad you brought up the china situation. You mentioned one third of the world are in lockdown but the other will be ok. I was assuming you were mentioning asia, and in particular, china. As china is outlining a new fiveyear plan that looks to be that they will go it themselves in certain industries, they want to be an export powerhouse, but that has to have some sort of shift in the commodity market. Jeff if anything, when you start to look at what is what has happened over the last six to 12 months, chinas share of global gdp has accelerated. All of the big commodities, particularly in asia, now occupy a bigger share of the overall pie of demand. Think about the growth in chinese Economic Activity. Stimulus on infrastructure, construction, and other activities. This has had a big impact. When i say we are bullish on commodities, i want to emphasize nonenergy commodities like precious metals, we want to be long today. Oil,nergy particularly in we think tactically, you do not want to be long until after the winter. The demand hit has been so much larger there. By the way, gas, we want to be long today. Theres only one commodity we would delay the bullish view. The rest of them, given what is going on in china, we want to be long today. Particularly copper. Globalhat is jeff curry, head of Commodities Research i global id Goldman Sachs. He was speaking with guy johnson steel. X if you are away from the screen, you can find indepth analysis and the days big newsmakers on bloomberg radio, broadcasting live from our studio in hong kong. You can listen via the app, radio plus, or bloombergradio. Com. Plenty more ahead. Stay with us. A quick check of the latest business flash headlines. Microsofts First Quarter revenue climbed better than expected 12 , driven by corporate demand for Cloud Services amid the pandemic as employees work from home and more businesses went online. Sales for the three months through september were over 37 billion, exceeding average estimates. Net income came at 14 billion which was above the average forecast. Indias number two Wireless Phone operator has posted a surprise loss after intense competition ended hopes for a increase in the cost of calls. It came in at over 100 million. Revenue was up 22 , which signals recovery may be near. Mobile tariffs were raised in december, following an intense price fall among indias main mobile rivals. Harleydavidsons main maintains the decision comes weeks after harley announced it will pull out of india as part of wider cutbacks. They will sell and service harleys and offer parts and accessories through exclusive stores in its existing networks. It will also develop a range of motorcycles under the harley brand. Struggling a lecturer carmaker has won more backing as it tries to shore up its finances. Mercedes benz will boost its stake to 20 giving access to hybrid and electric power trains and other components. They will separately raise more than 1. 5 billion dollars through new stock and bond offerings. The money will be used to debt. Nce existing tiffany and lvmh are set to be talking about lowering the price of their contested deal with seeking around 100 32 a share as a compromise. Tiffany wants a guarantee that lvmh will not back out of a revised agreement after lvmh said it could not complete the original one due to a request from the french government. The original deal was for 135 billion. About 16 shery lets get a quick check of how markets are trading. We are seeing qe stocks falling at the moment. Down a little bit flat. But still, a threeweek low given the losses we saw in the previous session. When it comes to the asx 200 futures under pressure. Down. 8 . They asx 200 has fallen for the past four sessions. Today, watch out for australias Third Quarter cpi numbers. Expected to come in below the rbas 2 to 3 your target. We do have after 12 weeks of lockdown, the restrictions being eased in victoria. Watch out for that. Japanese futures under pressure. The japanese yen Holding Steady around the 104 level. We are headed to the thursday boj decision. Kospi futures also down. We have the korean won spiking to a 19 month high. We will wait for the open this after thirdquarter gdp numbers beat estimates. Take a look at what u. S. Futures are doing. They are accelerating losses, down. 7 . Already the s p 500 has fallen low. Threeweek we saw a deal around amd lifting tech shares but that did not translate to the rest of the broader market. We have u. S. Stocks falling for a second consecutive session. Coming up in the next hour, we discuss the fate of emergingmarket assets with julia hermon. Plus, how the outcome of the u. S. Elections will impact south korea. We get some analysis from the Korea Economic Institute of America President , kathleen stevens. We do have the market open in sydney as we continue to see the aussie dollar Holding Steady against the u. S. Dollar. Down. 2 . This is bloomberg. Good morning. I am paul allen in sydney. We are counting down to asias major market opens. Shery i am shery ahn in new york. Welcome to daybreak asia. Tech lifts wall street as amd announces a 35 billion takeover, but it was not enough to stop the s p 500 dropping for a second straight day. President trump
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