Transcripts For BLOOMBERG Bloomberg Markets Americas 2024071

Transcripts For BLOOMBERG Bloomberg Markets Americas 20240713

Up, this is not the time for excuses. He continued, this is the time to pull out all stops. Elizabeth warren has dropped president ial race. She spoke to reporters a short time ago. I will not be running for president in 2020. Lets take a deep breath and spend some time on that. We dont have to decide. Mark senator warren never placed higher than third in any primary contest. Contests inning any the super tuesday primary, she had virtually no path to winning the nomination. A setback today for angela netanyahu. The final results from the election have confirmed he has again fallen short of a parliamentary majority with his allies. The results signal further political deadlock. Mondays election was the countrys third in less than a year. Previous elections also ended in deadlock. Global news 24 hours a day, onair, and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Im Mark Crumpton. This is bloomberg. Live from bloomberg World Headquarters in new york, i am taylor riggs. Amanda im amanda lang in toronto. Welcome to bloomberg markets. Here are the top stories we are following from around the world. Stocks are selling off, volatility surging again. Bond yields hit fresh record lows. This as investors weigh the impact of the coronavirus. Two more cases of the disease have shown up in new york city amid reports that the Trump Administration will not meet its goal for distributing virus test kits. And a billiondollar bet on the future of entertainment. I spoke with Jeffrey Katzenberg about the streaming video space and his plans to rewrite the equation. Taylor in the meantime, a quick check on the markets. We are proudly below the 200day moving average. Erasing a lot of the games that we saw yesterday. Firmly in a bear market, off 5 . Some of the Major Airlines are getting hit the hardest. Carriers looking at 113 billion of losses in revenue. That means you have a significant rally. Briefly dipping below 90 on the 10 year. Recovering from that. Theentire yield curve of tips market is in negative territory. This morning, the fiveyear, the lowest yield, now at a 64 basis points. To put the bond rally versus the equity selloff into perspective. We were talking earlier this week about the dividend yield minus the 10year yield at a record spread. Today i wanted to look at the dividend yield relative to the 30year treasury yield, the highest since 2008. That is in part why our next guests say they are not bullish low bondon, record yields, meaning stocks could be attractive, if you trust the dividend yield. Amanda and if you have the stomach for them. Another thing we have been talking about is the volatility in these markets. 5 move down in the energies of group in the s p 500 today. Youran see on the side of screen, a massive increase in the size of the moves. That is what we are seeing. A surge of volatility keeping many investors on edge. These volatility spikes. Bigger swings in volatility. Part of this is the anxiety of the unknown. Coronavirus, the elections. Politics will be a source of volatility. Companies are not giving guidance. Managing through a crisis is hard. Earnings will be revised down. Earnings will have to be revised down drastically. Ofwe are at the extreme side fear and nervousness around the macro fallout around the virus and what will happen next. Isnda Brian Jacobsen joining us from Wells Capital management. We have seen these moves get ever larger. What is your advice when you are watching these markets . What are you saying to people about that volatility . A lot of people on the way down were referring to it as a roller coaster. It was more like a skydive, in freefall. The rebound tends to be more like a roller coaster, where you see this heightened volatility. A key thing to watch is whether or not we continue to get into an uptrend. Not to get too technical, but can we make higher lows and highs . Even though we are getting back to gains today, put that in perspective of where we were yesterday at the open relative to the close. Ut some gains o despite the choppiness, that could bode well for the outlook that the market is trying to wrestle with, this unknown, what will be the fallout from the coronavirus as far as the supply and demand disruption, possible destruction that has taken place. Amanda one of the other things that has been destroyed in recent years has been the thinking around rewarding sa vers. It is all topsyturvy here as we see that yield relationship between stocks and bonds changing historically. Is it possible to take away the punch full at some point, to use those famous words, can we get to a more sensible market, where the risks you are taking are done so adequately . Brian we were going into the , we haverrection lightened up on our equity exposure because we thought valuations were stretched. Get a correction and valuations look more reasonable. It depends on the time horizon as to whether you believe the possible reward is worth the risk. In these types of markets, we think it is prudent to actually maintain your strategic allocations. For us, that means we are pretty neutral stocks versus bonds, and looking for opportunities within stocks and within bonds. Not necessarily messing with that strategic allocation. More what are you doing under the surface in the asset classes. Like a lot of the exposures we are seeing in the higherquality, higher yield market, and even in the equity market. We have an overweight to large caps relative to small caps. We are playing a bit of a barbell approach, overweight tech and staples, relative to the broader market. Taylor talk about that. Staples and tech feel like a value in play in value and growth. We dont think the value and growth are mutually exclusive. We think value can be found within growth. If you look at the academic stylech that gave us this box, value versus growth, it started by talking about value versus glamour stocks. The question is where is the value. With the Current Operations are with the Growth Prospects . We think there is good value to be had across the value growth spectrum, mainly because it is not really a spectrum. It is not a dichotomy. We like to think about it more in terms of factors and sector exposure. Of the Tech Companies out there have good Free Cash Flow generating capabilities that might be underappreciated in this type of environment. If they go on sale, that is what we want to be binding. Forecastingysts are one half of 1 drop in q1. Is that in line with your thinking as well . We take a topdown approach, let the Portfolio Managers do the bottomup analysis. Our conversations, we think that is pretty reasonable to think it will be about a 1. 5 year on year decline in eps. When we are looking at over the next year, what sort of rebound get . We i know there is talk about whether this will be a vshaped recovery, more of a u, but it could be a w. We want to avoid those lshaped recoveries that flatline. That is when the fear of recession becomes fact. Looking at a year, we think we could get some decent earnings growth, maybe to the tune of a 5 rebound going into the end of the year. We are not really hanging our hat on whether it will be a vor ushaped. We are just trying to avoid the lshaped recovery. Amanda so much uncertainty in the world. It doesnt cause you to rethink where the unknowns are really unknown, especially in emerging markets . Brian it does get people to do knownearching about the unknowns. We have like emerging markets generally, for the last year, from a valuation perspective. But that is from a more longerterm. Valuations are not going to pay the bills in the near term, if you define it as anything shorter than three years. Valuations dont seem to matter too much, at least single metrics. Markets, we have a bias toward those dividend paying stocks. You can get a decent chunk of your total return from the Dividend Income that they pay. That way, you get paid while you wait. That doesnt work for everybody. You have to have the Risk Appetite to deal with those ups and downs, and it has to fit in your time horizon. If you are looking for a shorter horizon, our favorite plays right now are within the u. S. , these pair trades, large cap versus small cap. We also like canada and australia relative to the other developed markets. For that shortterm view, those are the areas we are favoring. For the longer term view, we want to have that decent exposure to the emerging markets. Taylor thank you, Brian Jacobsen. I want to get a check on those markets. See if we are getting paid while we wait. The s p 500 still below that 200day moving average. Dow jones and nasdaq also off. Tech stocks are often less. The 10year dipping below 90 points. Still ahead, my conversation with quibi sa founder Jeffrey Katzenberg about the companys 750 million second round funding. This is bloomberg. Taylor this is bloomberg markets. Im taylor riggs in new york. Amanda im amanda lang in toronto. Quick check on the markets. We are watching as they trade off the lows of the session but still deeply in the red. Lebron s p down 3 . Watching that 10year yield, the yield. Ow 1 on still trying to absorb the full impact of covid19 globally. Whichstreaming app quibi, launches april 6, has already raised one 175 billion, and that is thanks to the star power behind it, founder Jeffrey Katzenberg. I asked what investors need to hear to buy into this concept. Jeffrey they need to hear a great idea. They need to hear a thoughtful path to a profitable business. Meg whitman and i are like two old dogs who grew up in an era where we were taught revenues need to exceed expenses. [laughter] in a look at businesses very traditional way. To be as been built very powerful, profitable business. Having a great Business Plan was essential. Are astwo people that knowledgeable and experienced as we are, in our respective areas, i think we are one plus one equals 10. It is a combination of all of those things. As we get closer and closer to launch we are one month away you see every trend happening in the marketplace. This makes sense. It is what people are doing, what people want. I think that was the thing that came apparent to investors and the enthusiasm for it. We just closed on another 750 million. Amanda you are spending a lot of money on the content that you will go forward with. Leaving the ownership ultimately in the hands of the creators, which is kind of an oldfashioned idea. Why do that . Why not own it . Jeffrey i want the best talent making the best content. That is our promise to our customers. You have not seen anything like this before. The world of youtube, facebook, theygram, tictoc, what have done is fantastic and admirable, just different. They built great consumer habits. Is amount of content that being watched is almost up to 80 minutes a day on the phone, on the go, from those platforms. The idea that we could bring almost like what hbo brought to television when it came along in the late 1980s, early 1990s, by the way, when television was at its very best. , belief is that if we bring people all the experience, quality storytelling from the best people, it has always worked for me. That has never failed me in 45 years. That is the key to doing this. It is expensive. You have to pay for it. You have to give people a real, rooting interest in the upside for them to take the effort. Steven spielberg can do anything he wants. He can make a broadway show, movie, animated show, anything he wants. Greatest storyteller of our lifetime. He is going to do this on quibi because there has to be a reward for him. Massivewhen we saw the success of disney streaming, heart of that was because people knew what they were getting, they loved the library, some of which you helped create. This is all unknown. How long do you have to wait before people will say i will shell out five dollars for the service . Jeffrey that is frankly why this last fund raise that we completed this week was so important. We wanted to make sure that we have a long runway in which we have an opportunity to put this in the hands of customers, allow there to be wordofmouth, sort of let that viral thing happen. That is when you ask me how many we dont know. If we were 10 as successful as disney, we would be the most successful new platform release ever. [laughter] 100 years, the greatest brand, greatest library, mandoorian they got it perfect. Very encouraging, but we are not in their league. And we dont imagine ourselves to be in their league. Taylor that was Jeffrey Katzenberg. Lets quickly get a check on the equity markets. The s p falling. Some of those small cap domestic stocks getting hit harder. Perhaps they dont have the Financial Flexibility that the big multinationals have. The vix certainly captures my attention. The 10year hovering near record lows, above 90 basis points, but still around 92 basis points. This is bloomberg. Amanda markets are selling off even as the u. S. Senate vote is underway on a 7. 8 billion emergency spending bill to battle the coronavirus. Spoke earlier with Kevin Cirilli on capitol hill. I do believe that it is a Public Health emergency like this, testing should be free. Question on that. Should banks be provided more liquidity to be able to finance some of that testing rather rapidly . Have met with a series of banks on National Security issues today. I urged them to look at some Different Levels of financial forbearance, whether it be credit cards, interest payments. We could have a huge challenge here. They are going to need perhaps the ability to work with regulators on that. I think we need to make this happen. This is not only, by the way, about workers and families. About 30 startups last night in arlington, virginia. For are saying if this goes a few weeks, their businesses no shutdown. They could not predict that. From an Economic Security standpoint, the administration has not treated this, according to wall street measures, as a potential recession. What im wondering, from your vantage point, are you satisfied with the administrations response with regulators . We are not seeing the same response from a 2008 perspective. I do not think the administration has responded at least the white house is not responded appropriately. The Vice President is trying. The scientists are trying their darndest. But when the president constantly Undermines Health care experts. He said, last night even if you have coronavirus, go to work. That is not appropriate. Is, whileorried about we see the fed cutting Interest Rates to shore up the markets overall, we shore up the markets, and maybe that is fine for investors like me. What about families, start up businesses, people that have to rent . E if they are working on an hourly basis and they are quarantined at home with no pay, you have a crisis. Have would you rate the economic response from the administration so far . The feds response have been appropriate. The fact that the white house has been underselling the seriousness well, unfortunately, hurt us on an economic and health care basis. Can americans, the Business Community trust what is coming out of china, that they are handling this with the utmost transparency . Not believe china is dealing with this with full transparency. Their authoritarian regime allows them to lock people down in ways that we cannot do here, so im asking the Business Community, let us lean into this. Other countries have paid family leave. Lets make sure we dont exacerbate the health care and economic harm. Taylor that was senator mark warner. This is bloomberg. Mark i am Mark Crumpton with first nerve word news. Senator Elizabeth Warren is not ready to put her support behind any of the 2020 president ial democratic candidate. She told campaign staff, i refuse to let disappointment blind me are you to what we have accomplished. She never placed higher than third in any primary contest. Federal prosecutors have charged former head of the United Auto Workers with embezzling more than 1 million. The government says gary jones conspired with fellow Union Readers to steal from uaw assets over a nineyear time span that began in 2010. Prosecutors said they used the money for luxury vacations, as well as highend liquor and cigars. Afterresigned last year being implicated in the corruption scandal. Federal agents raided his home in august. President trump says he will deny federal funding to socalled sanctuary cities. On twitter, he called last months court ruling which said his administration could block Law Enforcement funds to states and cities that do not cooperate with

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