Have announced today will provide strong support for the economy. We are saying that roommates rates will remain accommodative until the economy as far along. Leaves stimulus untouched. No move expected either. Todays action could come from south africa as they battle we growth. President trump contradicts his health officials, saying a vaccine could come by october. Deutsche bank says new york city staff can stay at home until next year. 6 00 a. M. In london. Lets get you uptodate with the interpretation of fed speak. Good morning. I take you to ing. Its about the credibility andeen Forward Guidance state contingent Forward Guidance. We got both last night. That makes for more potent situations. Perhaps doubly irrelevant. Annmarie a note this morning saying theres no pleasing some people. What else could the fed have done . Maybe qe. Also talking about the fact, they were saying, monetary stimulus, its time to focus on policies for the real economy. In that moment, jay powell is right. Will d. C. Stepped up . He pointed the finger to congress. I love what john authers said. Nothing was broken. No trends were broken. Therein lies the fine line point. I have a roll call for you. Mentored and dalio. All warning about the malevolence of the underbelly of the resurgence of inflation. Lets take a look at where we are this morning. Nasdaq 100 futures to the downside. We are seeing a risk off sentiment this morning. Moving on. We see the bluebird dollar index getting higher. 3 10 of 1 . We are now below 40 a barrel on wti. Also hitting oil market is stockpiles. Meeting. Sters we have been discussing three more years. The rates will stay near zero until 2023 to help the economy rebound. Jay powell says the recovery has been faster than expected. Activity remains well below prepandemic levels. We believe that this very strong Forward Guidance, very powerful Forward Guidance we have announced today will provide strong support for the economy. Rates will remain a connotative until the economy is far along in the recovery. That should be a powerful statement and supporting Economic Activity. Inflation persistently below 2 . Inflationm to receive above 2 for some time. The average is 2 over time. Longerterm Inflation Expectations remain anchored at 2 . The labor market has improved. Its a long way from maximum employment. My sense is that more fiscal support is likely to be needed. The details are for congress, not for the fed. We believe strong policy guidance will serve the economy well by promoting our goals through the many possible paths the recovery may take. Long were covering for that labor market. Joining us now to discuss all of it is marija veitmane. Thank you for joining us this morning. Powell talked about the fragility of the market and how it needs fiscal response now. Are equities starting to wake up to the reality . The divergence between the real economy and wall street. Marija yes. Good morning. Its veryr view, difficult to talk about stock markets. Its very difficult to talk about economy on average. We see this recovery as very much case shaped. It will have winners and losers. Companies thatr have stronger fundamentals, have managed to shift the business recovery, it the has actually been really well. In the performance of technology stocks. Insee that in recovery certain parts of the retail activity. We see that in metal prices. Other parts are really struggling. We see that fiscal and Monetary Policy is really targeted towards weaker parts of the economy. Trying to support them. Ironically, that will provide more ammunition for the stronger parts, materials, that can benefit from this low Interest Rate. Thats probably more interesting. Manus lets just pick up on that differential and how we go forward. Growth versus value. Will value catch up with growth . You are of the mind that gross growth outperforms. Do i need to be more selective in growth . If so, what does that mean . Marija yeah. Growth will outperform. The key reason for us has been sluggish economic Earnings Growth. That hasnt gone anywhere. Very low Interest Rates. The fed has told us to not even bother looking at Interest Rates for the next four years. Quality component of growth stocks. Having better are underlying fundamentals. Higher margin, lower debt. That is still there. Yes, you can talk about valuation of growth stocks. Thats really challenging. If we know that Interest Rates, not just a it zero but stay at zero for a very long time, that makes this valuation more palatable. Im still very much in the growth camp. I cant see how value stocks cant perform. One thing that can help value economic recovery. We know that its a great hope. I hope that its coming sooner rather than later. Its difficult to see that vaccine will be very widely available in the next six months. Markets anticipate some impact from that. Happen, airlines and hotels stocks might start performing. I really struggle to see tech stocks going into there. I would rather see investors putting down cash allocations and going there. Not getting out of the fastgrowing highquality stocks. . There annmarie theres a lot of commentary that rates will stay near zero. The dots can change if the Economic Situation worsens or it gets better. Is there a risk that investors are not pricing that in it all . Marija yeah. I suppose the debate as very much on the average inflation targeting. If we were in the old regime and Economic Growth picked up and Inflation Expectations picked up, markets begin to reprice Interest Rates. Is, if wenew mandate think its credible, then we need to see inflation really we need to see the economy overheating. We need to see the economy getting a lot stronger than the previous cycles. One of my colleagues did an experiment. We looked at the previous rate hike cycle with the new fed mandate. The one before would never happen. You need to see a lot faster acceleration in Economic Activity than you would otherwise see with the new mandate. Manus ok. We will find out whether that ties into the inflation narrative. Maria stays with us. Dont bail on tech. Your first word news. Laura President Donald Trump says a Coronavirus Vaccine could be widely available as early as october. He is contradicting his top oath officials. They made estimates ranging from march until the end of 2021. Anthony felt he told bloomberg hes confident the vaccine will be available by the end of the year. Widescale adoption takes time. Keys johnson is making a concession on his brexit plan to get it to parliament. He agreed to give the house of commons a veto over whether the government can override parts of the divorce agreement. It comes as one of the governments Senior Officers resigned over the proposal. Deutsche bank has told its new york city staff they can continue to work from home until mid2021. Thats in contrast to rival banks. In the memo, Deutsche Bank said workers only have to return in july. Citigroup employees have been paste on played leave pending an investigation after revelations he operated a qanon Conspiracy Theory website. Site has since been shut down. No specific comments from citigroup. The bank says employees need approval for any outside business activities. Global news 24 hours a day on air and at bloomberg to take quicktake, powered by journalists and analysts in more than 120 countries. This is bloomberg. Annmarie thank you. Tech takes a hit as opposed pandemic world. Our guest host says not a time to dig tech yet. Thats coming up next. This is bloomberg. The ipo is a price discovery process. We were after a set of institutional investors. People that can hold multibilliondollar positions for 510 years. People that dont chase momentum either up or down. His companys record ipo. Bring up the board. Snowflake made a name for itself yesterday with the biggest u. S. Ipo of the year. The largest ever for a software maker. Look at that. Up 111 on its debut. Manus it did get higher than that at one juncture. It made it to a 70 billion valuation. We will stay with tech. Commentswell, his pushing the sector lower today. The s p 500 fell aztec stalled as tech slid by 2 . Nasdaq futures traded layer this morning. Looking at snowflake. Im going, wow. At one stage, this was worth 70 billion. Thats as much as goldman sachs. Of by everything tech . What does that ipo signal to you . Frost or opportunity . I dont want to specifically comment on snowflake. Tech is a king now. You want to buy anything tech. Is isat tech highquality, highmargin businesses that are very adaptable to the recent economy. Work from home, shop from home, entertain from home, school your kids from home. Unfortunately for us, thats an economy that we need to adapt to. We will be in it for a long time. Those companies can easily function. They can function very well. They can grow their profit. Backwas saying, when we go to normality, those Companies Still have 30 margins. They still have return on equity in about 30 . Thats great. I want to have those companies. Even when the economy is normal. What is normal . Normal Economic Activity. When i started, we talked about real Economic Growth below 2 being a sign of recession. Now its a sign of fantastic recovery. We would die for that. Economic activity, Earnings Growth is never going to go in double digits. Yeah, i will have tech. Annmarie it has been suggested many times its time to rotate. You would have missed out on opportunities. I understand what you are saying. At the same time, these valuations are so much higher than we have seen in the past. Bill gross was saying its time to get defensive. About the me, think asian model. You discount future dividends, some discount factor. We are told now that the discount factor is not just zero. It will be zero for a very long time. In the world where money is really free and expected to stay free for a long time, you have to buy high duration, highgrowth assets. To answer your question, valuation begins to matter when rates start going up seriously. Not five or 10 basis points. Interest rates going up 4 . Then you start worrying about valuation. How weits interesting now qualify what is serious rate hike might be. Had was 25te hike we basis points. My gosh 50 basis points, im having a panic. 75 basis points, we implode. Our perception of normalization is completely different. What is the ability of the equity market to continue higher if bond yields get back towards 1 on a recovery narrative . Does it dislocate the equity story at all . I will throw it back to you. Dollar futures are discounted now. Interest rates are going up 1 in about nine years. I think thats the duration. [laughter] are having a very theoretical discussion this morning. Nobody is expecting Interest Rates to go up 1 . [laughter] i will leave you there. I struggle to see very substantial Interest Rate increases. If money is truly free, we are looking for some sort of slow and gradual and uneven recovery. Ill take it. Ill buy stocks. High duration tech stocks. Annmarie marija veitmane. You are very bullish on textiles. Tech stocks. Coming up, the central bank thing. More action to come. Some emerging markets as well. South africa, russia, are they primed to cut . We discuss that next. This is bloomberg. After we had such a deflationary shock with covid and the lockdowns, now we are getting a bounceback. People, retailers have had to liquidate big inventories. They were very cautious in ordering for christmas season. I think we will see further up pressure on inflation over the course of the year. That doesnt necessarily mean its a circular rise. It means it is a shortterm increase. Guggenheim was the global chief Investment Officer talking about inflation in the aftermath of the feds rate decision. Annmarie we have more Central Bank News as well this week. We could see a rate cut in south africa after gdp shrank an annualized 51 in the second quarter. Friday, further details from the bank of russia. The central bank is likely to keep its key rate on hold. Our guest is still with us. Thank you for joining us this morning. Many expect Central Banks to remain dovish for a long time. In emerging markets, this is much more challenging. How do they remain dovish and attract capital in this type of environment . Marija thats exactly the challenge Central Banks are facing. They need to support economies. They justifiably cut rates. This year, it is probably ok. Asrentaccount deficits activity came down. Should people start spending again, it would be very acute problem. For this year, they are probably all right cutting rates. Next year would be problematic. With the performance of emerging markets. Emerging Market Countries struggled to issue local currency debt. A lot more issuance in dollardenominated debt. That probably has to do with between emerging and developed markets. Now there is no reason to go and by emergingmarket debt. I see a lot of reasons to by emergingmarket stocks. With debt, it is very challenging. Investors are finding it hard to come into that market. Central banks are on the receiving end of it. Between a hard place yeah . Manus you cant say i would like to by emergingmarket stocks and say thats for another conversation. His daybreak europe. Marija [laughter] manus short answer or long answer. What draws you to em stocks over debt . Be as brief or as long as you want until the bell rings. Marija emergingmarket debt, 80 of it is in asia. Emergingmarket debt. Half of it is tech. [laughter] guess why i like it. Manus [laughter] marija its exactly the same story. Where do we get tech . Absolutely. Cheapermarket tech is than u. S. Tech. I venture a guess that its probably less old given the tensions between china and america. People may be more scared to go there. We think if anything, the government is far more likely to how stack than the american government. We like it. Annmarie right. That goes into one of the things we love. The bifurcation of the tech world between beijing and washington. I want to ask you about fx. Theres a debate on whether we will see a fullblown currency war. Theres obviously tension in the fx market. What is the impact on that into the em world . I think youre right. I think its very difficult think of em, fx as very attractive opportunity. That probably goes back to the discussion we had. Theres a lot less reason for investors to go and by emergingmarket bonds. It, it is faruy less interesting for them to hedge it given the Interest Rates. It as a block is probably less interesting. Having said that, there are definitely opportunities within emerging markets through red that would have relative value rates. There are possibilities there. Thats more interesting. Is reallyory in fx dollar debasement and the dollar going down. Everything else is going up against it. Thats probably a far bigger driver than anything happening in fx. Much. Thank you very we got the message loud and clear. All tech, any tech. A little bit of asia tech over u. S. Marija veitmane. The message is strong at state street. May the tech be with you. We could not do it daybreak europe without a little bit of opecplus coming to bear. Will the laggards we brought to heel . We discussed, next. U. S. Equity futures. There you go. Hes holding his hand up. His Royal Highness. Herding cats, opec style. We speak about oil. Thats next. This is bluebird. Bloomberg. Annmarie good morning from bloombergs European Headquarters in london. This is bloomberg daybreak europe. These are todays top stories. Three more years. The fed predicted rates will stay neozero until 2023. His caution on the economic wave rebound ways on stocks. In this very strong Forward Guidance, very powerful Forward Guidance. It will provide strong support for the economy. We are saying that rates will remain highly accommodative until the economy as far along in its recovery. That should be a very powerful statement and supporting Economic Activity. Annmarie the boj leaves stimulus untouched. No move expected. Todays action could come from south africa as it battles growth. President donald trump contradict his health officials, saying a vaccine could come by october. Deutsche bank says new york city staff can stay home until next year. Good morning. I cant imagine staying at my Kitchen Table until next year. I guess its their choice if they want to come in or not. Driving the markets is the fed. You pointed out to me that ing markets just want more. Are they greedy . They are like that carnivorous plant in little shop of horrors. Should you keep meeting them feeding them . Manus [laughter] three weeks together. Im not usually lost for words. I will raise you rapacious demand from the markets for more, more, more. Really, john authers captive for me in his opinion piece. He says that no trends were broken in the making of this guidance. The question is about the rhetoric. The path ahead is uncertain. Annmarie highly uncertain. One thing jay powell did do, i will bring it back to whether we get stimulus out of d. C. Hes walking this fine line. Adding involved in the politics. With the fragility of the economy, he says that fiscal support will be needed. Even donald trump took to twitter, saying that they want to make a deal. Whether we can get there, thats the question. Manus absolutely. That and a vaccine are the narratives. Have a look at stocks. The path ahead remains highly uncertain. It seems as if weve all focused in on that. John authers says unemployment needs to get back to blow 4. 1 . Dovetail trace. Down j