Continue to hold up well. Temporary laidoff workers in some ways have been brought back. 6. 6 million jobs. Guy no surprise the bank of canada has left the key rate at 25 basis points. So untilontinue to do capacity is absorbed. There is a huge output gap that exists in United States and globally. That needs to be sorted out before we see any sort of rate rise. Mirror whatting to is happening in the United States on an imminent. Many suspect on unemployment. Many suspect we will see the bank of canada mirroring what we have seen from the fed with a focus on average inflation. Atx we are taking a look elliot management trying to block chevrons takeover of noble energy. You have elliott trying to block the companies. Chevron is trying to buy noble energy. They got shut out of the anadarko deal. Both stocks are holding on with gains in the market. I dont know why they would try to break up the deal. Nevertheless they are trying to break it up. Turning to the vaccine and the race for the covid19 cure. Astrazeneca pausing tests after a patient got sick. Astrazeneca says the pause is routine. Sam. Ng us now is is this normal . What happens now . Sam hi. It is normal for the clinical data, which is why these Monitoring Companies are there, to stop anything that goes wrong. It is not something we would like to see you because we still dont know or how long it will take before you know if this was induced by the vaccine, and if , one case in 10,000 is not good. Guy how does this affect the timeline . Financial markets are getting excited over the last few days that we are getting close to a vexing. The president has been commenting as well. This is the vaccine leading the charge. What does this do to the timeline . Sam it is interesting you say that. Who might get over the finish 3, it is the phase likely to be pfizer and biotech. There are different views on the market right now. Some may argue it is not the case but this noise in social media is likely to put some worries into the hearts of people going into get vaccinated in these trials. I would expect some slowness or potentially a slowdown in the recruitment or vaccinations in the trials. Pfizer is likely to get something to us at best sometime in october. Much. Am, thank you very covering the latest news coming out on the vaccine front. Markets blowing past this news today, largely ignoring it. After three days of selling, maybe unsurprising we are seeing a stabilization. The session and u. S. Tech. In u. S. Tech. Joining us now is saira malik of global equities. Walk me through what you are seeing in the price action. Is this the moment you want to be stepping in and buying the dip . Saira markets are back to be more positive about the economic recovery and hopefully the vaccine. We need to grapple with the timing of the vaccine, and also china tensions and the election. It was eventdriven. Eventdriven recessions tend to be short, shortlived, and quick to recover. Normalized Economic Growth, we think the market can improve from here. Lower returns but positive for a longer time period. We think this is a buying opportunity, not only in largecap Growth Stocks that have been trading at a premium. Trading at more of a discount now. But you can balance your portfolio with u. S. Small caps, european self the goals cyclicals, and look for emerging markets. Alix it is not so much about other stocks rating higher, it is the nasdaq and tech going lower. If that is the case, what gives caps, valuece small stocks can continue . Saira you need a catalyst to go with those valuations. Is improving Economic Growth good for domestically oriented companies. They are less exposed. We think they could have that rally. Looking at the largecap Technology Companies and Growth Stocks, these are Real Companies with Strong Revenue earnings and low debt, and high return on investment. We are not in a bubblelike 1999. We were going into a recession. These are well positioned for the future and over the longerterm when you get back to moderate growth, Technology Companies will be the one over the period. Small caps are more of a snapback trade. A lot of people are making a lot of the fact the recent rally in the final phases were driven by call options in significant size. Where are we in this argument about justifying the valuations of big tech . It was only 10 days ago that we spent every day talking to analyst who said you could justify these valuations. These are Real Companies. The price is just continued to rise. That was the justification for that. Retrospectively it looks like it was something else. Are we clear if these valuations really do stack up given the almost parabolic nature of market is now presenting . Saira definitely in early august we saw earnings how to Companies Like salesforce who had an incredibly strong rally. They were getting crowded. All those were signs investors were becoming more nervous. Today it looks like a buying opportunity, especially on the strongest Companies Like salesforce, amazon, ones that have strong Business Models that continue to structurally grow for many years. Interesting Companies Investors can get their toe back into or by more if they already own them. Alix we saw recovery stocks did really well. Airlines, cruise lines for example. Have we learned anything about the vaccine trade . When vaccine comes out and it goes through its phases and they say lets do it, this is a good one, is this a precursor to that . Saira it is challenging. I agree this is a pause. It is normal for business into trials. I think this will cause hesitancy on the uptake by citizens or people are concerned about being the first group of people to take it. The path and timing of the vaccine and getting people vaccinated could be longer than we fact. You want to look for quality cyclicals, not going into the the deepest cyclicals affected by this. Outside the u. S. , areas in china are interesting like china gaming. And in europe it is intended to deal with the virus better, maybe you can get cyclical exposure outside of the u. S. Guy the case count in europe is beginning to climb. We will hear from Boris Johnson shortly about what the u. K. Is doing. About Central Banks and the fed, if we see stocks dipping, if the selloff becomes more significant, can i rely on the fed to step in and protect my portfolio again . Saira central bank some of the world have been ready clear they are going to provide support during any volatility or if the virus takes another downturn. Ver 500 global stimulus acts we think rates will stay low for a long time. You have an average inflation target rate of releasee a lever they can pull to get us there. Longerterm is not as positive on cyclicals. More of a shorterterm snapback trade. They work over a longer period and you need to see more signs of inflation. The stimulus package will help but that is currently delayed. You want to own these companies that are less leveraged in the economy. Growth will really be moderate over time when we get past this period of recovery. Alix usual. And what kind of cyclicals you want for the shortchain come back you mentioned . You mentioned industrials in emerging markets. Saira we like areas such as china. We think it is positive for those companies. Alix we were having a conductivity issue. Is taken break. We can get back to that question in just a moment. Saira malik will be sticking with us. We are talking about the long engagement breaking up. More on that, next. This is bloomberg. Guy i am guy johnson. This is bloomberg markets. Lets talk about the deal that was a long engagement. Very much broken off today. Tiffany shares plunging. Lvmh citing french terrorists on u. S. Goods as the reason for walking away, saying it cannot carry out the deal as a result. Bakerg us now is leon a liana baker. Liana not only are they walking away from the deal, but they say the french government is the reason. The government told him they keep this came as a big surprise to tiffany which is lvmh. Ewing out lvmh doesnt not have to pay tiffany anything for walking away, but tiffany will definitely try to sue them. Do they think the deal will still go through . Liana if you look at tiffanys shares, they are not trading well. Definitely under pressure. Lows not seen since 2018. As we mentioned, the unprecedented nature of the french government getting involved makes it a lot more difficult for the deal to go through because from what i understand, lvmh says the french government opposes the deal. Trying to keep a deal with tiffany would take a lot of negotiation and diplomacy. It seems like it is going to get harder for this to get done. About a bunch of things, isnt it . The french government feels like a fig leaf. How much of this was to do with price . And have been backwards forwards trying to get this sorted out. Everybody suspected this deal was on the rocks. Intou have any insight what happened behind closed doors . Liana during the pandemic it was not a surprise many u. S. Retailers, especially those focused on luxury goods, where really affected. Cfo said he did not think tiffanys performed well in the first half of the year. Windsis a lot of tail against the general business. That could be the reason, if i can speculate, what is going on in the background. Lvmh got cold feet over the state of tiffanys business and can be using these different elements. They are throwing the kitchen sink at tiffany to walk away from the deal. Alix really interesting stuff. Still back with us here is saira malik. Is this just the first of many deals that will be unwound with many different excuses . Like thislook at it is a tiffanylvmh issue. This is more likely price vmh. Tiation by l performing bee well in china. There have been price negotiations going on since the deal was announced precrisis. Tiffany is an interesting asset. The consumer has a strong balance sheet, housing prices are strong, stimulus has been good for the pocketbook. We are waiting for the next package to come through. We are of relying on the consumer and we dont think this is a sign of a poor outlook for the m a market. Guy lvmh, like a lot of companies has taken advantage of ecb credit buying, fed credit buying to basically get the deal financed for virtually nothing. They are not paying much on the interest front. What happens to that money now . Do companies are too much on the Balance Sheets . . Ell they do more m a what is the outlook . Saira a combination of deals. Companies are definitely strengthening their Balance Sheets have looking to pay dividends. Those companies are quite attractive right now, trading well below the typical priceearnings ratio. In a world where people are seeking deals, companies that pay dividends will become more attractive. Alix are there some industries or sectors that need more consolidation where the deals have to go through . Saira there are sectors with highcapacity. The Energy Sector has a lot of work to do from here. We may see something there. It has to do with where other premium assets and the prices we can pay for them. Tiffany is a great example. The premium, hard goods asset they could be of a lot of interest to companies. What price do you want to pay would you set the deal before the covid crisis hit . Guy where do the risks in my portfolio now lay . I have some bonds, some credits. If im long u. S. Tech. We have seen people talking about the risk of inflation. We have seen more of that today. Some people suggesting inflation could be circa 5 to 10 over a fiveyear horizon. Do i need to start preparing for it . Saira we are not seeing the longterm risk of inflation. They will be challenging to meet inflation targets from here. We are not surprised to see some pricing coming back. As the labor force reenters the market, longterm inflation is not on the radar. Have priced in anticipation of economic recovery, which is usually what happens when you come out of a deep recession. It will be a volatile end to the year for the election coming up, and china and u. S. Tensions are increasing. We think we will get a vaccine but the timing of it is in question. All these things will be issues for the market. Valuations are fairly high. The last few days have taken a lot of the premium out of the market. We are looking more at this as a buying opportunity rather than for people to time their way out of equity. Specifically are you looking for the value . Saira small caps, industrials. We like the consumer. Companiesc outside the u. S. China. Positive on brazil was a big laggard going into the covid crisis. They have not dealt with the crisis well. We think they had a stronger form story in place. Abesg at japan, if policies could continue with the new prime minister, they have done a good job with corporate governance. The stock market has performed well over the past couple of years. It tends to be defensive during periods of volatility. Guy over the last for years owning america has been the way to upper form. How much resistance do you get when you suggest people should move money out of the United States . Saira that is a challenge. It has been a decade plus if you own the u. S. , that is how you win and you for four earlier in your portfolio. You need a catalyst to get nonus companies to perform well. We think there will always be pockets of interest. You are looking at pockets of the emergingmarket, certain sectors. They can be somewhat of it and they have dealt fairly well with the virus. That will be a challenge going forward. That is why we would stay invested in the u. S. When you find good value, you should invest in it. Guy thank you for spending time with us today, saira malik. This is bloomberg. Is kicking off investor day at 10 00 a. M. They are releasing information around ipo. Scarlet fu has more on that. Thishing is investors, crisis is a tail wind. Scarlet that is one way of marketing yourself. Is registered to sell up to 244 million shares and will begin trading on our around september 23 under the ticker pltr. Its more of a resale of shares allowing early investors, including the founder, employees to monetize equity versus the traditional ipo where you have to create new shares, which can get very expensive. Ipos have more than held their own this year. Is up more than 50 this year versus spys 6 return. With that kind of performance, plus the surgeon volume for Retail Investors and an increase in volatility, companies rushing to come to market. Their favorite method is through special purpose acquisition companys. To counter that, the Longterm Stock Exchange opens for business today. This is a trading venue to prioritize longterm governance and return rather than meeting shortterm targets like Quarterly Sales and profit estimates. We have seen Financial Markets accelerate and shift to highfrequency trading and condense the time it takes to do anything. Flashpoint in milliseconds. On that note, scarlet fu, thank you. Tune in a little later on, we will carry out the conversation about longterm investing. That is 8 00 p. M. In london. My bonding up, b market guru. We will talk about that, next. This is bloomberg. Markets. S is bloomberg says defaults ceo could double due to the downturn the fed is distorting asset values and borrowing binges. Here to discuss is alexandra lebenthal. We will get to your new role in a second but we wanted to start with the market alix and market action. Asset prices are so elevated, whats happening in the Corporate Bond market . Alexandra if you look at the last six months, i think people have been predicting that for a long time. The amount of debt certainly has been issued since the pandemic hit has gone to extremely high levels. We are not out of this at all yet. I think there will be a lot of other shoes to fall, if you will. Effect of a ripple some damage in the bond market . We have seen it in the worst places and bankruptcy. Houlihan is an expert. What comes next . Alexandra we would like to get into the houlihan discussion. They do a lot in the restructuring and the bankruptcy space. We are not out of the woods in terms of the number of bankruptcies in retail on a daily basis. You are seeing fitness chains and Retail Stores like Neiman Marcus that are going into bankruptcy. I dont think we are done with that yet by any means. Dear family, for many years we have credited you guys with developing the word munis. Spent a lot of time with state and local governments. Big topics were heading into the next stimulus plan. What do you think happens to a lot of these cities, particularly new york city . Alexandra you cant be in the muni business without thinking of a Municipal Bond every time you use a service. When i get on the subway, i think of Debt Services when i use my metro card. Given the complete slowdown of activity, it causes me great concern. Amountas not been a huge of support from the federal government in terms of supporting cities and states. It is a very different situation to restructure muni debt in terms of bankruptcy. It is something that make me sad taking back to my childhood in new york city. Guy what does the federal government need to do . They are talking about a skinny deal there is relatively not much money for state and locals. What do we need to see . Alexandra there needs to be a comprehensive plan to address municipalities, and those with significant amounts of debt. The mta in new york alone has 49 billion in debt. They need to be a plan to address debt and generate revenues for those missing polities. Municipalities. Alix does this make a Good Opportunity if you are still in the market in a particular way . I am not sure i can really answer that. Im sort of an armchair quarterback at that point. There will always be opportunities and there will always be points were people need to be conscious of risk and the fact there will be fluctuations as there continues to be a lot of volatility in the economy. Guy people are returning to work. They are doing it slowly but it is happening. One demo