Transcripts For BLOOMBERG Bloomberg Markets European Open 20

Transcripts For BLOOMBERG Bloomberg Markets European Open 20240711

The postelection risk rally faltering. Of good morning, everybody. 7 00 in london. Eight in paris or berlin. Lets have a look at the equity markets. Look like europe this. Negative. This is indicative of what we have seen on u. S. Futures or are seeing. U. S. Futures down 0. 5 . Nasdaq futures off their lows but still pretty negative. We are losing our nerve on Global Equity markets. Three days into this neverending election account it seems, the context of course is important. The rally we have seen must have been forgotten when we look at nasdaq futures, up nine, down one. Lets have a look at the gmm. Going on other things here. Oil prices are interesting, down by just over 2 . Dollar, not all about what is going on the dollar. Inflation trade unwinding. Investors wait, the electorate in the United States waits for the counting to continue. The race for the white house is still too close to call. Counting continues in crucial swing states with joe biden catching up in georgia and pennsylvania and extending his lead in nevada. Pres. Trump it has destroyed our system. It is a corrupt system it makes people corrupt even if they are not by nature. They become corrupt. Good continue to feel very about where things stand. We have no doubt when the count is finished senator harris and i will be declared the winners. I ask everyone to stay calm, all people to stay calm. The process is working. The count is being completed. We will know very soon. Anna President Trump takes no questions after the news conference. Bloomberg report there is no evidence of widespread voting. Important to say that as we bring you those comments. Markets get no respite from the electoral drama. Lets bring in ed ludlow who has the latest on the politics. Talk us through the race. From a topdown numbers perspective, things not shifted in 24 hours, have they . It is still a close race and close we are paying attention to georgia and pennsylvania. In georgia biden has been able to whittle away President Trumps lead down to around 1800 votes, though the Georgia State elections website is not updating at the moment. There are local reports that suggested could be as close as 1200 1400 votes. He is doing well in urban areas. Atlanta, savannah, the counties surrounding them. Clayton county, home to the late congressman john lewis, there are still 5700 votes to count and it looks like joe biden in terms of the mailin ballots is returning 70 , maybe 80 . Similarly in pennsylvania, philadelphia, other urban areas, he is returning a very high proportion of the main in mail in ballots. The gap between trump and biden is around 18,000 votes. When i walked in this building it was around 40,000. Those are the most active states where we expect data throughout the evening or morning your time. Direct route to the white house is nevada. Our current electoral count is 264 provide an bloomberg, but we have not expected any more accounts to come through this evening or morning. We are going to have to wait to get more results from that state. Anna still some concern and confusion about arizona. Two networks called it for joe biden. We have reflected that in our count. Some News Networks have not decided who has won arizona and that explains why different News Networks are carrying different numbers. Is stillatically it possible for trump to come back in arizona. The gap has been tightening the last 24 hours. Statewide it is around two percentage points. Were 60 ricopa county of arizonas electorate lives the mother is still ballots. They expect those to skewed democrat even though the president has been whittling away at the margin. Is theyon one reason counted the election day boat, then the early vote, mailed in prior to election day. What they are now taking into account is the ballots that were dropped off in person on election day. The bet from the Democratic Party is that those will be favorable to joe biden, although trump is still doing well in other more rural counties. On paper he could still do it and the Trump Campaign feel he has a chance. They pushed fox news and the Associated Press who made those calls to walk them back because they still feel there is a transfer arizonas 11 Electoral College votes. So much. Nks ed ludlow up late in San Francisco with the latest details. Lets get into the markets with mark cudmore. You. Very good morning to it seems as if globally equity markets are losing their nerve a little bit. No change in the overall voting situation the past 24 hours, but the senate does look much closer perhaps than it looked on election night. That could be decided by whoever becomes Vice President. What do you think equity markets are looking at . What they are looking at is a chance to sleep this weekend and get a break. This week has been chattering and exhausting for most. At this stage people are pretty confused about exactly which outcome they want. The start of the week it seemed like a blue wave was the most favored outcome for every market. When it looked like a divided government, maybe that is even better because we dont get the regulation and the tax increases that might have come with a blue wave. There is a real confusion. A lot of it has just been position. Momentum at the time. Markets are looking more tired today. Equities have done phenomenally this week. I am slowly suspicious how long this can continue. I dont know about equities, but certainly global news is looking a lot more tired the last few weeks. Let me ask you about the downtrend. Is that intact . Time spannds what youre talking about. The longerterm dollar time trend is intact. In the short term, im not so sure. I think people are complacent in the short dollar position. There are a lot of positions based on longterm fundamentals and i think they risk getting derailed in shortterm volatility. I do not have a strong conviction either way on the dollar. Off the top of my head i might say it is going to go higher, because a little more pain. Anna that will be another reason to focus on the underlying u. S. Economy. Thanks very much. Remember, you can join the debate. Get involved with the markets live team. Next we will keep you across all the Market Reactions. Can Technology Keep up . And why arent markets faced by the uncertainty . Perhaps a president like joe biden who is focused on quote unquote making deals and compromises might be a very positive outcome for the country going forward. I have been in the room with her then Vice President biden and mitch mcconnell. They can work well together. Like trump and like obama and bush and cheney before him would do a lot of governing through executive order. A lot of things trump passed on he can reverse or stop doing. But will that satisfy people . No. If there is gridlock that is something they will be concerned about. The mortgage side seems to be comfortable with the potential for gridlock. We have to step back from the election and realize covid is what is driving this market and this economy. The more unstable things are in the next 60 days only increases the probability we get a bigger and the other thing is they have made it clearer now taxes are not going up and people can go by risk assets. Still no confirmation on who the u. S. President will be. Trumps unfounded accusations of fraud have not rattled markets. Up. Nasdaq is futures lower today, but postelection risk rally looks set to leave indexes well in the green for the week. We are joined by the chief strategist at Ubs Investment Bank. Good morning to you. Hanging on for all the latest details. We have had no change in the numbers for 24 hours. Do you have some an assumption of some sort of gridlock or a constrained presidency . It is a tentative base case because we do not know if a democrat sweep is precluded. It doesnt seem most likely we are not going to get a democrat sweep and we are going to get a bite and presidency. That is not bad for the s p but it does mean for the economy we are looking at gridlock. Sense, the a difference in fiscal stimulus under a democrat sweep could be Something Like 3 trillion dollars of spending. A split congress, we are likely to get less than half a billion. It is a very big difference. It is 100 basis points in terms of global growth. Not just the u. S. , it is important for markets elsewhere. I think the market is celebrating right now because we are not going to get a trade war in the same way under bite also because ahead of the under biden, but also because the democrat sweep was the base case for most people, they have bought a lot of protection on the nasdaq. The fact we have seen a decline in volatility has led to stocks moving forward. We have seen the biggest decline in nasdaq volatility since march. This is of earnings, less then a democrat sweep. Just to reiterate, you are saying there is a huge difference in the size of fiscal stimulus that should be expected by markets versus an expectation of a blue sweep. Something like a sixth of the size. Is there a way that number could change though . You have a very low number if you have a constrained biden presidency for fiscal stimulus. I guess that does depend on the underlying u. S. Economy. It has not in the recent past because you have actually seen through the course of week times of the u. S. Economy in the last six months, you have seen very poor ability to agree between democrats and republicans. It has not changed over the last six months. We are skeptical we will see much more about. Unemployment rate increases tremendously we could get more. In the past we have seen with the democratic president and republican dominated congress, it has been very hard to get any fiscal stimulus through. We think gridlock ought to be the base case. We get more spending time whether the markets will have to. O down before they get up ann the strike is going to be far away. Anna we have seen a big unwinding in the inflation trade. Where does inflation had for you . Treasury yields had modestly headr over time modestly higher over time. Although the fed is buying supply on the market, spending is so large you are going to get steepening in the curve moving forward slowly but steadily. That is quite important because one of the markets aspects of the markets rally is if you are not going to get the physical stimulus, you are going to get liquidity from the fed. I think the ability of real Interest Rates to decline much further from here is very limited. Yields are not likely to come down beyond 70 basis points 10 year and also breakevens are unlikely to rise. As a result i think real Interest Rates are closer to 1 . We are not going to see the much lower. There has been a step for step correlation between real Interest Rates and higher equity valuations. Anna thank you very much. We will try to establish a better connection for our next conversation. We are getting some development coming out of georgia. The counts are ongoing. 16 electoral votes of course up for grabs. Trump is leading. Votes a leading by 1775 few hours ago. That has shrunk a little further. We are getting this ongoing feat of information from the county in georgia. , solead President Trump has tight is the race, trump does have a small lead, but it is fading with the latest information to come through on the count. Standard chartereds ceo strikes theptimistic tone as majority of european banks gravel with more lockdowns. Where we took a cautious stance in terms of what future losses could be, early data points suggest it was not that close. It is really there. Bill winters strike me an striking an optimistic tone. Optimism about the pandemic seems to be returning in some parts of the asian story. Europe is still facing the worst of it. Chief strategist at Ubs Investment Bank is still with us. Lets focus on the fight against the virus and what that means for your investment horizon. Looking at your baseline and you are talking about the end of seeingar, for 2021, only a global population with 34 immunity. That does not seem very high. That does not sound encouraging. I imagine there will be a huge distribution around that average depending on which country we are talking about. That is right. The question is a logistical one. How quickly can Different Countries produce and rule roll out the vaccine and how effective the vaccine is. In an optimistic scenario we would get 3 billion of the global population vaccinated and immune to this virus. We do not know whether we will get immunity but we are assuming in our best case we will. The question is where are immunity levels . 65 . D 60 , around if you get around 3 billion that will not be very far but that is an optimistic scenario. We will have to get a vaccine by early q1 next year and rule it out quickly. The success or failure for vaccine is less exciting than the u. S. Election debate, but for markets and economies, it is much more important whether or not we get a decent Global Recovery will depend on whether we get a successful vaccine. Anna indeed they might be linked, different strategies we would expect from the contenders in the u. S. Election. Assessing go about how much of a vaccine is priced into markets . Where do you see it priced or not priced . It is a difficult calculation. It is very sensitive. We try to calculate how much vaccine is priced as we first look at how much the markets have been helped by liquidity. We look at how much markets have been helped or hindered. Howr than that, we look at much vaccine hope has been priced. Across markets we find between 70 is already in the price. U. S. Growth you have priced in about 80 already. U. S. Value is pricing in about 46 vaccine growth. That is where the trade is much more were we to get a vaccine in the next one to three months. U. S. Values are underpricing a vaccine more than emerging is not are, which intuitive, but once you normalize for liquidity it begins to make sense. Anna thank you very much. Really interesting conversation. Thank you very much for joining us. Let us check on the u. S. Political side. The state of play the same as yesterday. 260 four for biden including arizona and there does seem to be difference between Different Networks in the u. S. President trump on 214 right now. This is the tally as we have it at bloomberg right now. The u. S. Election too close to call as we heard from ed ludlow, a lot of focus on georgia. The gap is narrowing. Trump still has a very small lead, but the count continues. We will continue to see votes from georgia through the european morning. We are not expecting news on arizona and nevada, but those estates crucial, as is pennsylvania, still waiting for details there. Have a look on the markets. President trump is keeping us busy being active on twitter, critical of twitter saying twitter is out of control, claims to easily win the presidency with what he calls legal votes cast. We should say in many states there are laws about the receiving and counting of those postal votes and there is not any evidence to suggest there was anything illegal going on. President trump keeps making those comments. This is the picture on equity markets. Euro stoxx 50 futures down by 0. 6 . Nasdaq futures down just shy of a percent. Contexthat all in the of gains we have seen since the u. S. Election. It does not look as if we will get the blue wave priced in, but still, lots of questions on the senate. Too close to call in the race to the white house. Anna it seems the vote count ,hich continues in georgia President Trump has a slight lead, but as more votes are counted, joe biden does play catch up. Counts President Trump has been making his feeling known. He does not like the count is continuing. In terms of the overall tally, including in bidens count the number for arizona, 264 for biden, trump, 200 14. Counts continue. Lets get back to the market story. Euronext says it has had talks with regulators on the second trading outage in two weeks. Reporting ebay keep it a ebita. I wonder if you could tell me how the revenue side of things is performing. Your reliance on cash trading, i wonder if that has been something that has supported business or hurt the business over the most recent quarter. That has been a Strong Quarter after an excellent q1 and q2. Theave performed both on core business of the cash markets, the cash equity trading business, but we have also benefited significantly from the diversification of revenue over the past year. It is a combination of resilience of the core business combined with strong contributions of new assets like post rate assets we have acquired over the past two years. In terms of the technology issues, you are taught have talking to regulators. Have regulators proposed any changes . It is performing extremely well. We had one incident on the 19th of october, but no one is challenging the fact that for the past 20 years euronext has powered by a Single Technology platform which is performing. We have a dialogue with regulators, we have a normal dialogue with clients who are very important partners of us. Do is tore trying to a problemons from that does not challenge the fundamental architecture of what we are trying to do with the European Union, which is a very efficient platform. Clients want more efficient platforms. The clients want bigger and deeper Liquidity Pools. The regulators want more visibility over a single platform. No one is challenging the ofject, nor the architecture the euronext platform. The dialogueake is during an incident. Affect others exchanges, no one is questioning the fundamental architecture should be revisited. Anna it is just that the head of equities at asme, a lobby group that represents banks and investors, has said this raises questions about the consolidation of Exchange Operators and whether that increases risk because if you are bigger and your system goes down, that has a bigger impact on investors. Reality across the industry. There are other players and when there

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