Transcripts For BLOOMBERG Bloomberg 20240703

U. S. Bloomberg dollar index down. Crude also coming down . 72. At 86. 97, it is a bit better than it was at the close on friday. Jon i want to keep an eye on what is happening with tech. There have generally been a bid for a lot of names. We will get tesla and netflix results this week. Weakness and apple shares. New survey data suggesting the demand for the current iphone in china is less than for the previous model. We covered the highprofile ipo of instacart recently. We are now at that point were in Analyst Reports start coming out. Most were bullish but that is not done too much for the stock today. One stock that is getting a lot of attention on wall street is lululemon. It will be the new addition to the s p 500, replacing activision blizzard. That is up 10 . Also, you are tracking some of the guidance from drug players like moderna, which is up 5 . Some of that strife ties back to pfizer. More on that later. Matt interesting staff. Stuff. I also want to point out that the israeli currency is reconvened weakening. As it times, that means the shekel is getting weaker and weaker. You can buy more of them and it has just crossed the threshold of four per dollar. It has lost more than 3 as he crisis in the middle east continues to escalate. This is worth watching. I think the world is doing just that. Jon yes. And we have been covering it here at our in partnership with other colleagues. Adrian global has been reporting from tel aviv. He joins us now. Looking at what the markets have been trying to assess, this idea of further diplomatic efforts, including from the u. S. Secretary of state, to avoid the war from spreading, where do things stand on the ground right now . Adrian we know that blinken has been crisscrossing the arab world for several days. Last night, he spoke on the tarmac in cairo, saying that a humanitarian corridor into egypt will be opening for foreign nationals stopped in gaza, as well as moving that aid back in, but that remains closed. Blinken arriving here today, back in israel. Heightened concern of what a wider work might look like wider war might look like. For days, israeli troops have been on high alert, stationed along the gaza border. Netanyahu will meet with them, ask if they are ready. We have been hearing about this imminent assault on northern gaza but it has not happened yet. There is speculation. No one knows exactly what is planned and how much of the u. S. Intervening . How much diplomacy is taking place . They are to find a way to stopping wider war from spreading and also let people out of Southern Gaza and letting aid in. Matt you are standing there 8 30 at night in tel aviv. Relatively quiet. What is life like during the day . What is it like when you hear the air raid sirens . Adrian it is quiet right now but 15 minutes ago, we were running for cover. Air raid sirens were sounding yet again. There were three separate sirens throughout eastern tel aviv throughout the afternoon today. In one word, it is unpredictable youre now in day 10 of the war. Nerves are frayed, the public is concerned. We are talking about a wider conflict if israel does make a ground assault in the than gaza, how does that impact hezbollahs action . Do they enter from lebanon . What could that mean . People are slowly trying to the their normal lives, but restaurants are closed, most stores are closed. People are staying home and seeking shelter. Matt adrian, thank you. Lets talk about the Market Outlook amid this geopolitical uncertainty. We bring in and we will silverman. Amy wu silverman. I wonder what investors are doomed to hedge the risk of that war are doing to hedge the risk of that war buttoning out . Amy if years ago, we had Russia Ukraine and xp around 35. We have gotten nowhere near that level of uncertainty. We almost touched the psychological 20 very are but the hedging has been there a bit part relatively complacent. I think people are holding on and waiting, seeing how this conflict escalates. Energy markets have increased but it is been stratified on the broader market. It is not going to the level youve seen in previous conflicts. Jon the fact that we are on the doorstep of a lot of big earnings, the standout sector of the s p, the magnificent seven getting ready to report the results. How does that play into some of this positioning . We hedge and we see or we do not see. Amy that is a very interesting question. What is happening is we have headed into this earnings season with folks saying this would be a relatively good earnings season. That is what is holding some people back the single stock the summer home and would be optimistic. Those macro headwinds company punished. One thing that is interesting is the magnificent seven, we have noticed that if the market goes it has to go because of that magnificent seven. Volatility looks inexpensive on Something Like apple, then you get weaker china sales those are good proxy hedges relative to the overall market. Matt how concerned are you about a Government Shutdown here . Only the one hand, a Government Shutdown and on the other hand, the fact that we run a 1. 5 trillion deficit . How do you worry about that risk . Amy it seems likely at the Government Shutdown, still have the uaw strike and the situation in israel. So many things serving throne in this market as it relates to the shutdown, memories are short. We have been kicking this can down the road since april. Volatility markets do not react. When we went back to 2011, this was a vix peak of almost 45. This can cause uncertainty. More relevant now because the house is still searching for a speaker. Bottom line, volatility should remain and be complacent right now. Jon lets also tie in the bond market and yields there. Ultimately, that has had an impact on Interest Rate sensitive origins of the stock market. If you are trying to figure out what kind of action we are going to see in that stocks, what does the hedging strategy or Derivatives Market formula there . Amy two things the first is investors like to look at this proxy of movement versus vix, rates volatility versus equity volatility. Equity volatility looks relatively inexpensive when you look across assets. The second thing is when you look at bond proxy etfs, Something Like tlt, that has had a substantial move in terms of downside skewed. It is not that hedges are not happening, not that skew is not moving. It is far more stratified. Investors are picking their spots, going to those rate sensitive etfs but not doing it on the broader market. A lot of it has to do with the influence of the magnificent seven as well as earnings revisions. Matt a lot of talk today about zero days to expiry options. When i talk about those, i have to look at the decks and see where we are doing. Right now, holding under 18. We have not been much above 20 for a little bit last week and the week before. But how useful is the vix now as we have seen an explosion in the use of the zero days to expiry options . Amy great question. Your regular vix is a 30 day wait on the s p. Essentially what you are not doing is capturing all that activity in the one day vix. What i will say is that is working earlier. You were talking about that etf that sells zero dte options. Over 30 of s p volume has gone so short duration. It has been this shrinkage that that is something structurally we are seeing across the board. All these indicators are a little less useful. Jon back to what you alluded to earlier, the state of affairs in the market today versus when we saw russias invasion of ukraine. The vix, we were at 35, going back to march of last year. Amy that is right. It came off that peak, but one informs the other. I think what happened was investors took a look. Russiaukraine for most people was a surprise. That is why that uncertainty peak happened. Two years later, it was about energy. For the most part, it cannot impact equity markets much. People are reading that into the israela mosque situation but this time could be different. We are still in the next of it right now. It ultimately comes down to what reaction we will see from iran and how that leads to energy. You do see that hedging and energy. It is extremely active. Leveraging energy makes sense. Matt great to get your insight carrie had equity derivative strategist Amy Wu Silverman talking to us. When we come back, pfizer cutting 9 billion from his annual sales guide but it is still one of the s p 500s top performers. It may be is gone. We will tell you what our thoughts are in our stock of the hour next. This is bloomberg. Jon this is a bloomberg markets. We have been tracking pfizer shares. They are higher. Despite the fact that the company is cutting upwards of 9 billion from his annual sales guidance, some analysts looking at this as an opportunity for investors to reset expectations. Matt maybe some certainty where you had them before. She covers the pharma sector for bloomberg news. What do we know about why this pfizer stock continues to rally at the same time as others in the Pharma Industry fall after a cut in guidance . It seems counterintuitive, but it is an entry point for investors. When the stock fell on friday, there was big news of the guidance cut, but it is also a chance for analysts in the market to reset their expectations uncovered, clear the uncertainty away, look forward to 2024 and beyond to the core business of pfizer with the bandaid off with all the concerns that were swirling around pfizer for so many months. Jon before the bandaid got ripped off, they went back and forth for the long 10 to try to figure out to do for a long time to try to figure out when to do on guidance. Is it fair to say that the story did not play out as they hoped . Nacha the second quarter, analysts asked why they had not cut into guidance. They said they needed more information. It would looking for the end of the year at how demand would continue in the fall when another covid wave was expected. The company kept pushing off the decision to make a change. That, i think, is why the whole market was expecting an 8 billion paxlovid sales figure. It was going on with it because there was no Firm Decision to make this cut. Finally, they said they had enough information and came out with these numbers. Jon in terms of the strategy with covid shots and pills that they have now, can you explain when youre reclaiming inventory how that plays into the story of how the market will interpret what happens from here . Nacha is an inventory story and a paxlovid story. The cut to guidance is 7 million for paxlovid and only 2 million for the color chat. Inventory 40 covid shot for the covid shot. Inventory was stopping them from selling to private buyers. The government was giving the shots away for free. So they have to find a way to launch commercially. That was essential. If they had not done this deal, we have data in our story about how there was so much inventory taken, possibly into 2025 before they could have launched. It would have taken longer to get the higher sales prices, perhaps better distribution channels, more sales. Jon really helpful breakdown. Wewhen we come back, bank earnings. Charles schwab rising the most in months. This is bloomberg. Matt this is bloomberg markets. Shares of Charles Schwab moving higher by the most since july after the Company Reported Bank Deposits for the Third Quarter that he analysts estimates. Sally joins us. They are doing well in terms of attracting deposits. How much are they having to pay . Sally lets explain why schwab is unique. It operates one of the biggest u. S. Banks grafted onto the biggest publicly traded u. S. Brokerage. Both are sensitive to rising Interest Rates. It got swept up in the turmoil earlier this year, saw a lot of depositors yank their money and got scrutiny for this ballooning pile of losses on its balance sheets. The numbers will be highly scrutinized because of this backdrop. Deposits fell but less than expected. As an management Asset Management fees were strong. We had assurances from executives saying that this trend of moving money from the bank to higheryielding products had started to slow. Matt what about the hold and maturity portfolio, the thing that sunk svb . How does that look at Charles Schwab . Sally they have always said it was never so extreme at Charles Schwab because they had ample liquidity, zero chance that they were needing to sell bonds at a loss to account for deposit withdrawals. They also never had this problem than manager depositors that svb had where they had more than 90 of depositors who were uninsured the bank was always able to tap federal hormone funding percent that was temporary home loan funding but said that that was temporary and limited. Any deposit inking trends with debate. These results seem to show that. Jon in canada, td bank has i ownership stake in swab. Has that ownership stake in swab. Another we have a look at wall street performance after the last three months, we will have a busy few days. What will be some of the takeaways by the end of the week are in what is happening in finance this quarter . Sally we had jp morgan, citi, wells fargo on friday. Goldman sachs tomorrow. Takeaways pretty similar. Jp morgan record reported a record in Net Interest Income. Wells fargo also able to do well in that Net Interest Income stakes. Citigroup had a boon with its traders. Fx market in volatility there. But they made more ominous statements about the uncertainty surrounding the environment. The most extreme was a jamie dimon who said this is the most dangerous time in decades. Matt that was an extremist statement by given the turmoil in the middle east, it may be different from the economic sid e of things. Sally bakewell covers Charles Schwab. We are looking at markets that continued to rally on this risk on monday. S p 500 gaining or than 1 as yields rise 4. 71 but the dollar comes down as does crude. This is bloomberg. When you automate sales tax with avalara, you dont have to worry about things like changing tax rates or filing returns. Avalarahhh ahhh nice footwork. Man, youre lucky, watching live sports never used to be this easy. Now you can stream all your games like its nothing. Yes [ cheers ] yeah woho running up and down that field looks tough. Its a pitch. Get way more into what youre into when you stream on the xfinity 10g network. The potency diplomacy having a calming effect on the markets at the moment. I am scarlet fu. I am vonnie quinn. Lets take a look at where we are and it is a risk on day and this does not necessarily reflect the idea that there may not be a diplomatic solution in the middle east but it does reflect the fact that there are diplomatic efforts being made and there may not be a broader regional conflict. That is to be determined but for right now, the s p 500 up almost 1. 2 in this reflecting the idea that markets are ready for a raft earnings