Transcripts For BLOOMBERG Bloomberg 20240703

Move up. It has retreated from that level, 16 basis points. Really big moves in both directions. The u. S. Dollar index also lower, 12. 67, level on the bloomberg dollar index and you can see oil retreating as well down almost 3 . Two dollars and . 50 for nymex crude, john . When we saw the change in the bond market story, when investors showed a willingness to get into equities they took a closer look at technology, you have nvidia, four down days, rallying 3 right now when the s p 500 at the top of the leader list. And a mike walgreens, jp morgan suggesting that their analyst team sees the worst is over. They like the Management Changes and they see a new path forward. We have been tracking Union Stories across north america. You have a strike action and the st. Louis seaway in canada and we continue to monitor the situation in detroit. Makes performance for the auto stocks. The stellantis tour you have been covering, we have 6800 workers tied to a very lucrative pickup truck plant in the state of michigan walking out. Matt we are talking about ram trucks, the 1500, very high margin vehicle for stellantis. I am wondering about what will happen in canada because they have a branch in ontario which makes the dodge challenger. I believe as well as the dodge charger. Those vehicles are due to end production this year . Let us talk about the uaw strike watcher with gabrielle, you have been following this story for the sixth week we have begun . Questioning up action against stellantis where it hurts ratcheting up action against stellantis where it hurts . This is stellantis vegas plant in the u. S. All of the automakers derive profit from pickup trucks. This plant, people call it shaft, sterling heights, michigan, they made the new version. This is the biggest selling vehicle in the u. S. They rely on three different places, the shaft, michigan, and a plant that makes heavy duty. Their strategy is the newest trucks with all of the nice bells and whistles, the most pricey and profitable, those are made at shack. That is what the uaw president is taking down right now. Hated telegraph this last friday and he gave he did telegraph this last friday and he gave reasons. Stellantis and the uaw were getting close if stellantis was the closest to get the agreement. It is also true this is an important point, stellantis has more temp workers. 12 . These are people who currently start out at 15 and . 78 15. 78, one dollar less than others. Stellantis has always have had a lot of temp workers and they have the labor cost advantage over gm and ford in u. S. And the uaw wants to close that gap with all of them. They do not want temp workers being such a huge lever the company can pull for cheap labor. People feel like they are being overworked, they do not have as many rights, they do not get the same benefits as a fulltime uaw member does. The is is that this is one of the key differences in the uaw represented companies and other shops, nonunion companies tend to have more temp workers in their workforce. Uaw is wanting to get rid of abusive they call it abuse, reliance on temporary labor costs. They want to talk about going after nonunion Auto Companies after the strike is settled. Everything they are doing here is not just about the variants, the uaw wants to set new labor standards for automotive manufacturing. They are going to try to bring two other Car Companies that. Jon you have covered every twist and turn here, it does feel like even with this new strike action, it opens up the door to a new story as you allude to the idea here that maybe sean is ratcheting up pressure on the stellantis ceo who really helped in the turnaround story for the company. Specifically through keeping a lid on costs . That is a great point. It has been stellantis come back terrific store in the short 10 year, this merger, it closed in 2021. Almost two years out. Stellantis profit margin was over 3. 3 , compared to gm or ford. How did they achieve that . Stellantis is notorious and respected and admired for its ability to control costs and find efficiencies. That hold reputation, that strategy is just running headlong into the uaw and this revitalized event. And will be interesting to see how much it will be interesting to see how much stellantis will give, how much are they willing to go . While they give up their advantages or what will that do . For the longterm financial goals that they say they need to makeevs affordable . Jon we will continue to track this story in detroit. We alluded to the story of strikes, a major maritime trade route between montreal and the great lakes is shut down after Union Workers walked off the job early sunday morning. They are seeking a wage increase for his workers and there is a look at that key waterway here in canada. That is the point, a lot of times with these actions that there is a conversation that needs to be had on wenches and that could be a disruption to activity . Jon all of this, of course, having a big effect on the pricing of especially new vehicles. Matt that affects the price of used vehicles. Since it is artificial it will be interesting to see of a solution is found. How quickly that changes and what it does to the market. Minister to our wall street let us turn to our wall street beat. Signing too much risk in the ackman is citing too much risk. The move in the incredibly gigantic bond market to bill ackmans blog post here . They covered the bond short and right now, 1 37 pm you have seen a move in the bond that he said he was shorting. What is interesting is if you take a look at just how much the yield had moved forward to. 517. He has below where he thought it would go, the reason he is taking off the short position is he says theres too much risk in the world to remain short and longterm rights, the economy is slowing faster than recent data suggests. That implies worries about a further bit in the bond market, a haven bid as the economy starts to slow down. We are well off from the 5 50 he said that could reach given the supply dynamic he is seen in the longerterm. Jon should we prepare for more wall street titans to track posting their views on x what they feel the bond market looks like . This did feel like the effect in a market that was that we saw in the equity field was deep in the right to start the day. Many have taken to x to voice their views, treasuries have certainly come centerstage. You look at Boaz Weinstein who took to twitter in aim larger way and talking about cvs markets and jeff gundlach, keep an eye on as well. Though grossman is taking to twitter or x two voice views on the bond market. Matt you can feel free to call it twitter i appreciate that these are specific cues, you can look at the time he that is interesting, when bill ackman made that comment on next it was days after the treasuries made that comment on x it was days after the treasurys announcements. When he was talking about may be exacerbated. I think it is worth noting the rationale and not just the call itself. The idea of why he is taking off the short position and why he thinks it will go to 5 58. Matt pretty far off, if you are joining us. Bill out of the treasury market. Coming up, chevron will buy hess. And make a deal that puts u. S. Companies at the top a deal that puts u. S. Companies at the top of gas industries. This is bloomberg. Financial health and youre trying to do that through multiple systems, that makes it very, very cumbersome. Its not just tech, its not just people. Its how they Work Together to provide that experience to the customer. As a finance organization that is what you want to do. Be ready for any market with a liquid etf. Get in and out with dia. Jon this is bloomberg markets, time for our stock of the hour segment and the big corporate story we have been tracking this chevron closing this acquisition to acquire hess it if 53 billiondollar deal which gives chevron a significant share in guyana. We saw the move between exxon and pioneer with a focus on ua shale. Matt with a cool story, i learned a lot about it on the bloomberg. Take a listen. Our stock for the last five years was the number one total shareholder return for the industry. Whether it is independent or major oil company. Our stock went up 94 . Number two on the s p. We have created a lot of value. At the same time, now that the pricing we arranged for chevron and for hess, i think we came up with a winwin. Hess brings growth and resource in production and cash flow. Chevron brings financial strength in terms of diversity of worldclass assets, in terms of sterling balance sheets, and in terms of industryleading cash returns. When you put together you have the ideal gas company for a n energy transition. Could you do this on your own . Code you build what hess could you build what hess has built from the ground up . This is about longterm growth and value which we are always seeking. Hess has a unique portfolio that strengthens our portfolio, we are always looking to find. The biggest discovery in more than a decade in this industry. It is a unique and compelling asset. It would be difficult for us to do on our own. We will continue to explore, everybody in our industry is looking for things. This is a great opportunity for us to join a partnership, a terrific job in our asset. It will be added to the deepwater gulf of mexico, southeast asia. And very nice fit for portfolio level, nice at the cultural level and we create more value for shareholders. Matt alix steel connected that conducted the interview with guy johnson. I watch the whole radio studio watching this morning, we care mostly about the truck, not many people outside of the east coast know that it is important that they put out a new hess toy truck every christmas. Alix the hess truck was a big deal, they select one million in the u. S. Every christmas and that is the first thing i asked. Will you continue the truck . They said yes. They talked about in negotiations, the truck matt two ceos agreed about it alix it was a big deal that they talked about it jon i love you got to the heart of where this deal originated over a meal between these two ceos. There were comments about the challenges that chevron might face if they really want to catch up to hess in a growing market overseas. That was pretty interesting alix i think if you take a look at chevrons history with deepwater and longterm exploration assets, the impetus if you or any oil company to spend a bazillion dollars and decades to get one field going, even if it is a big deal, why would you do that when you do not know what the demand profile will be in 2050 . You have to go and buy the stuff. To your point, don and mike had had dinners and they have been talking about it for a while. It was not a spontaneous thing. It is just straight up buying inventory and buying inventory is going to be cheaper than going and building your own inventory at the end of the day. Matt does this continue this consolidation in hydrocarbons . We have seen 110, hundred 20 billion worth of deal in america over the past few weeks. Is that going to keep happening . Alix yes matt cool, thank you alex alix it has to. And may not be a transformative deal, it goes left in the u. S. But i do not know if they will make that kind of transformative deal. The smaller players in shale absolutely have to because how do you compete with the exxon pioneers and with the hess and chevron, they have more an elastic fashion they have more of an elastic supply. It will be much lower, that will provide in some way more consistent production and also more productivity in terms of getting more out her rig. It could be an interesting evolution of the show patch in the u. S. Jon great contacts and a great interview. The energy deal of the day, coming up, monty joe clinical tensions are putting the Global Economy at risk. We talk about israel, next. This is bloomberg. Explore endless design possibilities. To find your personal style. Endless hardie® siding colors. Textures and styles. Its possible. With james hardie™. Todays the day you graduate from Southern New Hampshire university. Ive been waiting for this day my whole life. The fact that i get to walk across the stage and get my degree, its honestly unreal. Dont ever stop. Keep on believing in yourself. It is never too late. If youre out there to wonder if you could be an snhu graduate today is the day to find out. Visit snhu. Edu. Encore energy, americas Clean Energy Company poised for production in south texas, energizing america with reliable and Affordable Nuclear Energy fuel with an environmentally friendly extraction process. Jon this is bloomberg markets, encore energy. Countries are intensifying efforts to stop the war with hamas from spilling over into the wider middle east. We want to get more from libya, head of Political Risk at js hale. Even in the markets we saw some weakness in oil and some suggesting that is because of delays in a likely Ground Invasion by israel into gaza. The bigger question might be what are the political and complicated ramifications once a Ground Invasion begins . How are you assessing that . Initially, we believe that they are most likely to carry out a Ground Invasion. Shortly after with bidens warning to israel should not be carrying out this type of invasion, biden has warned to not make the mistakes that the u. S. Made after 9 11. We have seen a little bit more restraint in caution on israels side. We believe primarily down to the fact there is a recognition that a Ground Invasion will cause huge loss in human lives. It will be urban warfare, it is brutal and rarely effective in eliminating your ultimate targets. Especially we do have to keep in mind that hamas is a terrorist organization that will be very difficult to simply eliminate all of its infrastructure. We are seeing a lot more caution right now on how this Ground Invasion will likely play out or not. Matt obviously, everyone has heard this language from leaders as well about worries about risks intensifying in the middle east. Jon let us talk about hezbollah, a possible second front as well in your assessment . At the moment we do not see this being an immediate risk, however it is something that we are closely taking into consideration. We have already seen a few skirmishes on the border, in our view what would trigger a full opening of the second front is if there was a perception that hamas was being heavily defeated , that would likely call some form of attack or retaliation from hamas which would then trigger an opening of the second front at the moment, we are not there yet. Matt is the u. S. Or israel or their allies going to just call out iran for what it is doing . We say hezbollah, but it is really iran that is behind all of it . So far we have not seen actually any hard evidence to suggest that iran is directly involved against israel. We have seen that western leaders including biden are being very cautious in terms of immediately calling out iran. There warning them that we do not want they are warning them that we do not want this conflict to escalate. We believe we see that everyone is taking a lot of caution in order to contain this conflict. They did not immediately found the flames of it and lead to a situation where they would be opening Armed Conflict with ira n. 3 you are watching the Global Implications jon jon you are watching the global ramifications, how Vladimir Putin is watching this situation right now . This conflict very unfortunately it plays really into the hands of water is on the sidelines like china, in the sense that russia sees this as a clear distraction from the war in ukraine and the u. S. Which used to very much support a in ukraine although we saw that starting to wane, ukraine is very much secondary compared to this conflict and the israelis play into the advantage of any weakness in the region and Vladimir Putin making himself a key negotiator possibly in a potential peace resolution. We saw him do this in syria, he backed the assad regime. The Obama Administration or not active in the middle east at that point in time were not active in the middle east at that point in time and Vladimir Putin made himself a mediator and we are likely to see putin continue to take this roll over the next few weeks. Matt thank you, managing director talking to us about the israelihamas war. I am matt miller this is bloomberg. Romaine 5 for the benchmark 10 year treasury. Katie we are kicking you off to the closing bout. Two hours to go and a bit of a rally, at least when it comes to the s p 500, up. 4 . Nasdaq 100 up. 9 . The lot of that has back potentially to what we are sen